The Loan Modification Forum

Bank of America Promises Faster Loan Modifications (NYSE: BAC) - American Banking News

2010-04-07T14:19:00.000-07:00

Bank of America Promises Faster Loan Modifications (NYSE: BAC) - American Banking News: "Bank of America (NYSE: BAC) says that it will respond to mortgage modification requests by customers and credit counselors within 72 hours, under a new program that is expected to launch within the next 90 days, according to a new report from the Charlotte Observer.
“From a customer experience perspective, we have to do better,” Rebecca Mairone, Bank of America’s national default servicing executive, told a group of counselors today.
Mairone said that under the “Kept Informed Routines,” or KIRs, “customers won’t wait more than 72 hours for answers,” during the Charlotte, NC gathering that attracted about 100 consumer advocates, community activists and financial counselors who work with people attempting to get modifications.
Currently, many homeowners are waiting for weeks and months to get responses from Bank of America.
The Charlotte event was the first as part of a tour featuring U.S. Treasury officials, bankers, counselors and advocates, to discuss what is working and what isn’t working about the government’s Home Mortgage Affordable Program (HAMP).
Mairone said that the bank is investing millions in the effort and will add 1,000 new employees by the end of the year in its loan modification and related divisions. She added that senior employees are being transitioned into the modifications unit and that the the bank is expanding its outreach efforts, including attempting to reach borrowers in person.
“My pledge is that Bank of America is going to be out there more,” Mairone said. Speaking with a community activist after the session, she said: “I want you to see and feel the difference.”"

IRS Supporting Commercial Modifications?

2009-10-06T07:13:00.004-07:00

There’s good news for the beleaguered commercial real estate market:

Some distressed borrowers will have an easier time renegotiating mortgages, now that the IRS has eased its stance. The agency decided to let lenders modify loans without taking a big tax hit, even if borrowers are current in their monthly payments.
Until now, lenders would be free from penalties only if borrowers had fallen behind. Lenders successfully argued that they need to modify loans before that happens. The appetite for loan modifications is growing as high vacancy ratesand falling rents take a toll.
More lenders in commercial real estate will modify termsthan in housing markets because they believe most owners just need temporary help. Subprime home buyers, in contrast, are likely to have trouble even with easier loans.
Not all commercial borrowers will get enough help. Servicers will ease terms, but not write down the principal. They can’t afford to stick investors with steep losses from commercial loan modifications.

FDIC Loan Modification Program for Unemployed

2009-09-16T08:25:00.005-07:00

FDIC Encourages Loss-Share Partners to Provide Forbearance to Unemployed Borrowers

As part of its loss-share agreement with acquirers of failed FDIC-insured institutions, the FDIC is encouraging its loss-share partner institutions to consider temporarily reducing mortgage payments for borrowers who are unemployed or underemployed. This program will provide additional foreclosure prevention alternatives to these borrowers through forbearance agreements that will give them an opportunity to regain full employment and avoid an unnecessary foreclosure.
"With more Americans suffering through unemployment or cuts in their paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures. This is simply good business since foreclosure rarely benefits lenders and would cost the FDIC more money, not less," said FDIC Chairman Sheila C. Bair. "This is a win-win for the borrower, who can remain in his or her home while looking for a new job, and the acquiring institution, which continues to receive payments on the loan. Ultimately, by reducing losses under our loss-share agreements, this approach helps reduce losses to the FDIC as well."
The recommendation to loss-share partners applies where unemployment, or underemployment, is the primary cause for default on a home mortgage. In such cases, the FDIC is urging its loss-share partners to consider the borrower for a temporary forbearance plan, reducing the loan payment to an affordable level for at least six months. The monthly payment during this period should be established based on an affordable payment – given the borrower's circumstances – and it should allow for reasonable living expenses after payment of mortgage-related expenses. The reductions in mortgage payments during a temporary forbearance period are not covered losses under the loss-share agreement with the FDIC, though losses incurred from subsequent permanent loan modifications are covered. If the home preservation efforts are ultimately unsuccessful, losses incurred in subsequent foreclosures or short sales also are covered losses.
Acquirers of failed insured institutions who agree to a loss-share arrangement with the FDIC must abide by the FDIC Mortgage Loan Modification program for assets purchased from the failed institution. The program's objective is to modify the terms of certain residential mortgage loans to improve affordability, increase the probability of performance, allow borrowers to remain in their homes and increase the value of the loans to the FDIC and assignees. The program provides for the modification of "qualifying loans" – those that meet certain criteria – by reducing the borrower's monthly housing debt to income ratio (DTI ratio) to no more than 31 percent at the time of the modification and eliminating adjustable interest rate and negative amortization features.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,195 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

ARM Alarm from WSJ

2009-09-10T11:33:00.004-07:00

ARM Alarm
The performance of option adjustable-rate mortgages is likely to get worse, as payments on $134 billion of these loans recast over the next two years, according to Fitch Ratings.
Option ARMs allow borrowers to make a minimum payment that may not be large enough to cover even the interest due. Monthly payments are expected to increase when the loans recast, although lower interest rates have blunted the pain. Loans typically recast after five years or when the outstanding balance reaches a preset amount.
Many borrowers with option ARMs are underwater and are falling behind even before payments jump. Forty-six percent of option ARMs are now at least 30 days past due, even though just 12% have recast, according to Fitch, which examined loans packaged into securities. Option ARM borrowers owe on average 126% of their home's value, Fitch said.
Roughly $10.5 billion of the $15 billion in securitized option ARMs that recast in 2008 are delinquent or in foreclosure or have defaulted, it said.

—Ruth Simon Printed in The Wall Street Journal, page C6 9/6/09

Arizona Foreclosures Drop - For Now

2009-09-07T15:31:00.003-07:00

For the first time this year, all three key measures of home foreclosures in the Valley have fallen. What that may mean is still unclear.
In August, the number of homes foreclosed on by lenders in metropolitan Phoenix dropped 26 percent from a month earlier.
The number of pre-foreclosures - homeowners notified of a pending foreclosure - dropped 4 percent.

And the number of foreclosure homes for sale fell 6 percent to its lowest level of the year.
This is the first time in 2009 all of those indicators have fallen during the same month. Though they are positive signs, the numbers do not necessarily mean the local housing market has finally started to recover.
"The foreclosure numbers are headed in the right direction," said Tom Ruff, analyst with Information Market. "It's just not clear why yet."
The numbers could be down due to the federal government's loan-modification program or possible changes to Arizona's foreclosure law.
The drop could also be attributed to the flood of paperwork faced by lenders related to foreclosures, loan modifications and other housing activity.
If the system is just bogged down, that could provide extra time for homeowners trying to avoid foreclosure.
Each possible reason has merit, but beneath the surface there still seem to be major problems in the Valley's housing market, which has been in a downturn since 2007. Home values and sales have plunged as record numbers of foreclosures have been taken back by lenders and put on the market at cut-rate prices.
Foreclosures fell to 3,939 last month, after a record in July, according to real-estate data from the Information Market/Cromford Report. Pre-foreclosures dipped to 8,810. The number of foreclosure homes for sale dropped to 4,900.
Loan help
Lenders have stepped up efforts to help homeowners avoid foreclosure through loan modification and short sales.
The 6-month-old $75 billion Making Home Affordable program to slow foreclosures has had a slow start, frustrating many Phoenix homeowners. In early August, the federal government came out with a report showing only 15 percent of U.S. borrowers eligible for a loan modification had been offered help from their lender. Of those homeowners, 9 percent have participated in a trial loan modification.
The government is pushing lenders to ramp up their efforts and help 500,000 more homeowners by November.
Non-profit housing groups in the Valley are starting to see lenders offering more loan modifications but not enough to account for a significant drop in area foreclosures.
Short sales allow borrowers to sell for less than they owe to avoid foreclosure and likely account for part of the drop. The government is also encouraging lenders to approve short sales for homeowners who aren't eligible for loan modifications.
"It seems that lenders are devoting more resources to working on short sales," said Mike Orr, metro Phoenix real-estate analyst and publisher of the Cromford Report.
He said more Valley foreclosures are being postponed so lenders and borrowers can work on short sales.
Foreclosure law
Some lenders held off on foreclosures during August to see if a controversial new law that would have allowed them to go after some borrowers' assets survived the current Legislative session.
Arizona legislation passed in July would have made some homeowners in foreclosure liable for the difference between their mortgage and the resale price of the house starting Oct. 1. In the current housing market, the difference is generally more than $100,000 on the typical Valley home.
Real-estate lobbyists fought the legislation, and it was repealed Friday. Real-estate attorneys say there were lenders waiting to foreclose on properties until October, in case the law went into affect.
The number of delayed foreclosures alone would not account for August's drop in foreclosures but could be a contributing factor. Those delayed foreclosures could boost September's numbers.
Lender backlog
Lenders may also just be swamped with paperwork, delaying foreclosure actions.
Extensions on federally mandated foreclosure moratoriums, failed loan modifications, changes to state laws and shrinking loan-servicing staffs are all hitting lenders now.
August's drop in Valley foreclosure activity could be partially due to lenders falling behind on processing homeowner foreclosures notices, filing court documents and reselling foreclosure homes.
Some market watchers believe lenders are holding onto homes taken back through foreclosure so they don't glut the housing market and drive down prices. Early this year, lenders placed thousands of foreclosure homes on the market all at once, which depressed prices.
Housing analysts say metro Phoenix's foreclosure activity must decline for at least three months before there can be serious talk of a recovery.
"There is increasing hope that the (Valley's) housing troubles are beginning to ebb," said Jay Butler, director of Realty Studies at Arizona State University. "However, many problems continue to exist that could hinder the timing of any recovery. The impact of foreclosures on the market has been the primary concern, and it will continue to be in the coming months, especially with the weak job market."

Struggling Arizona Homeowners Left in Limbo

2009-09-03T11:41:00.002-07:00

Five months into the $75 billion federal program meant to toss a lifeline to homeowners facing foreclosure, most people in need of help are still floundering.
Overall, about 15 percent of borrowers across the country who are eligible for the program have been offered help from their lender, according to a recent U.S. Treasury Department report. Of those homeowners, 9 percent have participated in a trial loan modification. President Barack Obama's administration is calling for lenders to ramp up their efforts and help 500,000 more homeowners by November.
For homeowners facing foreclosure, the loan modification process is slow, time-consuming and exhausting. Homeowners fall further behind as lenders, who say they are training more workers to handle the flood of requests, keep them waiting. Even when a loan modification is approved, some people discover the results are disappointing.

Thousands of Valley homeowners have experienced tough going with the program.
Cheryl Edgemon was laid off from her longtime position as a legal secretary in April 2008. The 66-year-old has been looking for a new job ever since.
Savings, Social Security and unemployment benefits allowed her to scrape by at first. But in April, after a year of being unemployed, her savings were gone and she fell behind on the mortgage for her Glendale home.
Edgemon has contacted her lender multiple times, asking for a loan modification. Because she has income from her monthly Social Security check, she was told that she qualifies for a loan modification under the Obama plan.
"At first, they wanted me to be three months behind before I applied for loan modification," Edgemon said. "I can't understand why they would want me to ruin my credit first. I have worked hard to have good credit."
When she did fall behind, her lender offered to let her skip a few months and then make a balloon payment.
"How did they think I could afford a balloon payment? I just wanted them to extend the terms on my loan, drop my interest rate, something to help me keep the house," she said. "I will pay, but my Social Security is $1,244 and my unemployment is about to run out. I am trying to find a job, but it doesn't help to spend so much time trying to save my home."
She contacted housing groups and her congressman, asking for help. But her pleas for help weren't enough.
Edgemon's home was sold in a short sale a few weeks ago. She is now renting a house in her neighborhood for $500 less then her old monthly mortgage payment.
"It was going to be my retirement home," she said. "Not only did I not receive help, the people who I talked to at my lender were nasty and made the process harder than it had to be."

Kasey Broach applied for a loan modification right after the new plan was announced. She sent her lender documentation on her income and expenses, including a student-loan statement and bill for the homeowners-association fees on her Phoenix condominium.
Broach, a public-relations specialist for a Valley law firm, was required to show receipts on everything from groceries to doctor bills. Her lender also required her to meet with a loan counselor. The counselor recommended her for a loan modification.
Broach bought her condominium in 2006, at the peak of the Valley's real-estate market, right before she was about to start an MBA program.
She had a roommate who helped with the bills. But her roommate moved to New York last year, and Broach hasn't found another. Payments on her student loans started this year.
"When I purchased my home, part of the deal was that I didn't have to pay HOA fees until 2009," Broach said. "The condo is in a great location. I thought I would be able to easily sell it in two years, allowing me to pay off my student loans and never have to pay HOA fees."
Her HOA fees are $150 a month. Her student-loan bill is $250 a month. Overtime at her job used to supplement her monthly income, but that stopped with the recession.
Broach's lender promptly processed her paperwork and modified her loan. However, her new monthly payment is only $40 lower than her old payment, not enough to help her.
Because condo values in her complex have fallen, Broach can't sell and break even, so she is a considering a short sale or deed-in-lieu-of-foreclosure deal with her lender. A deed in lieu requires a borrower to give back a house to the lender. In exchange, homeowners take a slightly smaller hit to their credit than they would with a foreclosure.
"What bothers me most is that I didn't mess up and could not have seen this coming," Broach said. "I have worked full-time since I was 19. I bought a small condo, which no one would consider lavish. I have had great credit and paid my own bills my entire adult life. However, I'm still stuck in this position."

Rick Scott asked his lender for help in October, before he fell behind on his mortgage payments. His annual income had dropped by $30,000. His roommate girlfriend was out of work.
Scott was trying to be proactive. He still had a job at Boeing, earning $50,000. But before the housing crash, he had also worked part-time as a loan officer. When that extra income stopped, he saw trouble ahead.
But the lender said he didn't qualify for help. He later fell behind on his $2,000 monthly mortgage payment and feared a foreclosure notice would come any day on his Mesa home.
When President Barack Obama announced the new loan-modification program in March, Scott immediately checked the details and found he was eligible. He faxed information on his income and bills to his lender, which told him he would have an answer in 30 to 60 days. By then, his savings were exhausted.
The foreclosure notice came several weeks later. He called his lender. The foreclosure was postponed for a month while his application for a loan modification was considered.
"So then I thought, OK, this is going to work, despite all the confusion," Scott said. "We are going to keep our home, and get a payment that's not more than 31 percent of my income like the program calls for."
Next, Scott received a Fed Ex package from his lender. Inside was a contract he was to sign that required him to pay half his current monthly payment for six months to show he could afford that amount.
"I happily signed the contract and sent them a check," he said. "A week letter, I received another Fed Ex with a letter saying congratulations, my loan modification is complete. Except the new contract called for me to pay $150 more than I was paying for my original mortgage payment. My payment went up."
Scott has an adjustable-rate mortgage. His lender proposed a fixed-rate mortgage, but at a higher rate, and would not lower the principal amount, so the monthly payment went up.
Scott asked again about a modification that would lower his payment. The lender said he could reapply, but consideration would take 90 days, and it might foreclose before that.
"I asked to speak to a supervisor with my lender's loan modification department," Scott said. "I was put on hold and then disconnected."
Scott isn't sure whether he's going to apply for another loan modification.

IndyMac's mortgage struggle

2009-09-01T12:38:00.002-07:00

Bank's new owners are required to adjust mortgages to get government aid. But getting a modification is not easy, borrowers and housing counselors say.

NEW YORK (CNNMoney.com) -- Five months after securing a sweet deal to buy IndyMac Bank, the new owners say they are fulfilling their obligation to modify troubled home loans.
Some frustrated borrowers and housing counselors, however, say it's anything but easy to deal with the institution, now known as OneWest Bank. They say the bank needs to do more for its troubled customers because of the perks it is receiving from the government.
"They're less responsive, more difficult to get affordable workouts from, and their reps are ruder," said Alexa Milton, homeowner advocacy director at Acorn Housing. "They have a responsibility to do better."
While many banks are getting a helping hand from Washington, OneWest is enjoying a special deal.
Once one of the nation's largest lenders of Alt-A mortgages made to borrowers who did not need to verify their income or assets, IndyMac was taken over by the Federal Deposit Insurance Corp. in July 2008. The FDIC used the institution to put into practice the affordable loan modification efforts championed by the agency's chair, Sheila Bair.
When the group of private investors bought the Pasadena, Calif.-based bank earlier this year, the FDIC promised to cover a majority of the losses in the institution's home loan portfolio. In return, the investors agreed to continue the loan modification efforts.
OneWest says it is committed to working with homeowners to modify their mortgages. The bank announced last week that it will extend President Obama's modification program to all qualified loans in its portfolio, not just those owned by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
OneWest has modified 3,605 loans under the president's program and 14,570 mortgages under the FDIC and other initiatives between March and July, the bank said. This compares to 16,158 loans adjusted under the FDIC between September and February. It did not provide details on the non-government modifications being done.
Responding to borrowers' complaints, OneWest said it is making significant investment in its servicing operations, adding customer service staff and increasing call center capacity.
"At OneWest, meeting the needs of our customers is our highest priority," the bank said in a statement.
The FDIC said it conducts periodic reviews of the bank's modification efforts. The agency also follows up on complaints that OneWest representatives are not being responsive or are denying loans that should be eligible for modification.
"We have not uncovered any indication that they are not complying with their agreement, but we are continuing to monitor their performance," said Michael Krimminger, the FDIC's point person on loan modifications.
Not getting help
Housing counselors and borrowers have a different view. While they acknowledge that modification efforts are bumpy at other servicers as well, they say that OneWest is worse than most.
"The counselors have to constantly call and check the IndyMac files," said Shawna Nelms, interim program director of the national homeownership sustainability fund at the National Community Reinvestment Coalition. "They really, really have to advocate for the modifications to take place."
Liz Caton, who works with distressed borrowers at the Northwest Side Housing Center in Chicago, said OneWest is constantly sending homeowners automated modification offers, only to deny them after they send in their paperwork. After a few rounds of this, homeowners lose hope, she said.
"There's no reason to trust them," said Caton, who has met several times with OneWest representatives with little result. "It doesn't seem they have any incentive to work with homeowners. They've shown no effort."
Borrowers have also contacted CNNMoney.com to say they are getting the runaround.
One of them is Sharon Clark. The Myrtle Beach, S.C., resident has gotten a different story every time she calls OneWest. In April, she was told the bank would cut her monthly mortgage payment to $3,000 from $4,800, since her family's income was cut in half.
The next month, Clark got a default letter and sent in her paperwork again. In June, she received a denial letter for the modification. A few weeks later, she was told to send proof of her husband's income, which she did, only to be denied again.
"OneWest made a lucrative deal with the FDIC," Clark said. "They should be working with all homeowners."
After CNNMoney.com contacted the institution, Clarkreceived an e-mail saying she was eligible to apply for the president's loan modification plan. But the representative warned that since OneWest only recently started participating, it "may take a bit longer to receive the decision."
Clark laughed when she received the package, since it's the same paperwork she's filled out before. But she said she'll submit it.
"I hope it's not another stall tactic," Clark said. "I'm just trying to get IndyMac to do what they're supposed to be doing."

Frustration rising over mortgage relief

2009-08-30T12:32:00.000-07:00

Government's latest effort to stem rising tide is mired in problems
By John W. Schoen

After months of dead ends, rejections and runarounds from bank representatives, Dan Binder is still in loan modification limbo.
When Binder lost his job as a media researcher, he and his wife left their southern California home in July 2008 and relocated to North Carolina where he found a new job in the media business.
Since then, he’s never missed a payment on the three-bedroom home in Riverside County, Calif., he said, though it's lost about half its value since he bought it in 2005 for $418,000. When his wife lost her job after the move, he called his lender, Wells Fargo, to see if the bank could rewrite the loan to lower the monthly payments.
Since then, he said, he’s gotten conflicting responses from multiple bank representatives, one of whom said he was days away from a new loan that was subsequently rejected.
At one point, after assurances that he submitted all the appropriate paperwork, he was told a form was missing. When he provided it, he was told the remaining paperwork was more than 30 days old and he would have to update and resubmit each document. At another point, he said, he was told his file showed a sizable credit card debt he didn’t owe.
After his latest rejection he asked for an explanation.
“They said the notes from the investors (holding the mortgage) said, ‘You spend too much on food,’ ” he said.
If all this sounds familiar, it's because homeowners around the country have been jumping through similar hoops with the same fruitless results.
Nearly two years after the federal government’s first program to slow the relentless rise in the pace of home foreclosures, the latest attempt, known as Making Home Affordable, is turning out to be another painful disappointment for millions of Americans at risk of losing their homes.
Dozens of e-mails from msnbc.com readers report months of futile effort to modify their loans. The list of problems includes misdirected calls, lost paperwork and conflicting advice from multiple representatives for the same lender.
A Wells Fargo spokeswoman said the company can't comment on individual customer's loans due to privacy restrictions. But she said the company is "working with all of its customers who experience hardships and need assistance with their mortgage payments up the point of actual foreclosure sale.”
“As the government guidelines have changed and as we have gotten more options to help people, there has been some communication confusion that we are working to absolutely get on top of and correct for customers,” she said.
HUD-approved housing counselors — the frontline professionals trying to help borrowers modify mortgages — have expressed frustrations with a variety of roadblocks, bureaucratic snafus and ongoing confusion about the program.
“Even if (the homeowner) gets hold of somebody, that person might not necessarily understand the complexity of (the program),” said Helene Raynaud, an executive at the National Foundation for Credit Counseling, an umbrella group that certifies and sets standards for housing counselors. “Counselors end up talking to different people as well, which makes it very difficult. Depending on who they talk to, and the level of seniority and the level of training and the different servicers (they deal with), they get completely different outcomes."
Downward spiralDespite recent signs of a bottom in the housing market, the pace of foreclosures shows no signs of slowing.
More than 13 percent of homeowners with a mortgage are either behind on their payments or in foreclosure, the Mortgage Bankers Association said Thursday. As of June, more than 4 percent of all borrowers were in foreclosure and about 9 percent had missed at least one payment. A separate report found that more than 272,000 borrowers were at some stage of foreclosure in July, up 8 percent from June and 55 percent from July 2007, according to RealtyTrac, which maintains a national database of foreclosure filings.
The continuing rise in foreclosures delays any meaningful recovery in the U.S. economy, in part because housing typically leads the economy out of recession. Although there have been recent signs of life in home construction and housing sales, they have been weak and from extremely depressed levels. Every new foreclosed home increases the unsold inventory on the market and cuts into demand for new construction.
Foreclosed homes sold in distressed sales or auctions also push nearby home prices lower. Unless the pace of foreclosures can be slowed or stopped, millions more homeowners who are current on their loans will be forced "under water" — owing more than their house is worth. Those homeowners become new candidates for default. One recent research report from Deutsche Bank estimates that roughly half of all U.S. homeowners will be under water by 2011.
Falling home prices also destroy billions of dollars of consumer wealth as homeowners watch their home equity evaporate. That loss of consumer spending power creates another major headwind to any economic recovery.
The collapse of home prices in high foreclosure neighborhoods also slows economic activity by forcing owners to make tough choices when they sell their house. Readers in high-foreclosure areas report that they're unable to relocate for a new job, buy a bigger house for an expanding family or downsize for a planned retirement because they can’t afford to sell their home at a loss.
When Carol Hardee’s daughter Laura died last year, she faced an uphill battle selling the daughter's Atlanta home, which was purchased in 2000 for $150,000. In February Hardee got an offer for $140,000. But with so many foreclosed properties in the neighborhood, the appraisal came back at just $75,000, and the deal fell through.
“There was a house just around the corner from her — it was like a three- or four- bedroom house — that sold for $25,000,” she said.
Hardee said she was unable to work out a loan modification with her lender, and the house eventually sold at a foreclosure auction for $100,000, which still left her with some equity to settle her daughter’s estate.
“I had no choice,” she said. “I had to sell the house. There were bills to pay with it.”
Frustration with mortgage relief efforts also has led desperate homeowners to fall victim to a variety of foreclosure "rescue" scams. Since April, the Federal Trade Commission has brought 14 cases over these schemes, while 23 state attorneys general and other agencies have taken action against 178 companies. Last year, reported incidents of all forms of mortgage fraud hit an all-time high — up 26 percent from 2007, according to the Mortgage Asset Research Institute.
Making Home Affordable is supposed to offer troubled borrowers two possible solutions. The Home Affordable Modification Program (HAMP) is designed to lower payments on existing loans by cutting the interest rate and stretching out the term. The Home Affordable Refinance Program (HARP) gives borrowers who are current on their payments but “under water” a chance to refinance into a new loan for the same amount, with lower payments.
The program pays incentives of several thousand dollars for each modified loan to mortgage servicers, which often are not the same as the lenders who hold the mortgage.
Lenders and servicers report their own frustrations with the MHA program, which was unveiled by the Obama administration in March with no advance notice to allow these companies to gear up and train workers. As recently as last month, key components of the program were still not in place, and some of the initial guidelines limit the program’s "potential to help homeowners," according to a July report from the Government Accountability Office, the investigative arm of Congress. The report also found that "a number of HAMP programs remain largely undefined."
Though many servicers had already increased staff to work on troubled loans, they've been overwhelmed by the volume of applications for affordable loans.
“The number of calls coming in is staggering,” said a representative from one of the 10 largest servicers, who asked not to be identified because she was not authorized to speak publicly. “You’re talking about call after call after call after call after call of people in bad economic circumstances needing attention for their loan.”
Servicers say they also have been frustrated by the tepid response to their efforts to reach out to homeowners at risk of default. The servicer representative who asked not to be identified said her company sent out one round of 45,000 packages to homeowners believed to be at risk; only 15 percent of them responded.
Staffing is also an issue at the Treasury’s Homeownership Preservation Office, which was set up in November to address the sharp rise in foreclosures. As of mid-July, the office still had no permanent executive in charge, according to the GAO. Eleven positions had been filled with permanent employees and three with temporary workers borrowed from other agencies while 17 positions remained vacant, the GAO said.
The Making Home Affordable program was proposed by the Obama administration and enacted by Congress after two previous government-sponsored efforts, the Hope Now Alliance and the Hope for Homeowners program, failed to make a significant dent in the foreclosure rate. Hope Now, launched in October 2007, has modified several hundred thousand mortgages, although the “redefault” rate from this first round of modifications ran as high as 50 percent.
The Hope for Homeowners program, launched in July 2008, was expected to reach 400,000 distressed mortgage holders. At first the program was hampered by cumbersome terms and red tape, and only one homeowner got help. Terms were loosened in November without any meaningful impact. This month, the government announced it is rewriting the program again.
The unchecked rise in foreclosures also is destroying the value of assets backed by mortgages that are held by banks and private investors. So far, most investors have refused to take that loss upfront and reduce the loan amounts for homeowners who owe more than their house is worth. Though most major lenders and servicers have signed on to the MHA program, the decision to make a loan more affordable or forgive some of the principal amount is entirely voluntary.
“(Investors) have already suffered this loss: They’ve suffered it on paper,” said John Taylor, president of the National Community Reinvestment Coalition. “They’re waiting for this loss to begin to dissipate as the housing market recovers. What it’s doing, though, is continuing to exacerbate the foreclosure problems and drag down the economy.”
That deep recession has amplified the pace of foreclosures. When the mortgage market began melting down in late 2006, many of those in default were subprime borrowers and others who were sold adjustable loans that “reset” to unaffordable payments. Now, with 7 million jobs destroyed by the housing-led recession, lost paychecks have become a much thornier problem for groups working to slow the pace of foreclosures.
“The (MHA) program is still not fitted to people who have experienced a severe reduction in income,” said Raynaud of the National Foundation for Credit Counseling,
That has cast doubt on just how many homeowners may ultimately get help. The White House has estimated that as many as 40 percent of the more than 10 million homeowners who are likely at risk of default and foreclosure could be helped. But the GAO, in its July report, found that estimate “problematic.”
The servicer representative who asked not to be identified estimated that only 20 percent of the loans serviced by her company were good candidates for modification or refinance. Under current guidelines, borrowers must show they can devote 31 percent of their income to the new monthly mortgage payment. Some servicers say that’s too high, and have suggested to the Treasury that the threshold be lowered to 25 percent to qualify more homeowners.
For whatever reason, voluntary efforts to modify loans have proceeded at a snail's pace. As of the end of July, only 9 percent of an eligible 2.7 million borrowers had seen their mortgages modified under the new program, according to the latest Treasury data. Bank of America, for example, one of the largest holders of home mortgages, had modified only 4 percent of eligible borrowers as of last month. Some lenders had not modified a single loan.
That has raised question about the need for tougher measures to determine how aggressively servicers are working to modify loans.
“What was the lever to mandate and hold them accountable?” said Taylor. “I just don’t see that. It keeps returning to what is the fundamental flaw in (former Treasury Secretary Henry) Paulson’s plan and now in (Treasury Secretary Timothy) Geithner’s: that it’s voluntary by nature.”
In its July report, the GAO agreed.
“No comprehensive processes have yet been established to assure that all borrowers at risk of default in participating servicers’ (mortgage) portfolios are reached,” the report said.
The government's "carrot" approach to stopping foreclosures — offering $50 billion in incentives to servicers to modify loans — was adopted after the financial services industry successfully fought back a powerful "stick" that would have granted bankruptcy judges authority to modify the terms of a mortgage loan from the bench. Judges can do that with any other form of consumer debt in a bankruptcy proceeding but not mortgages.
Congress proposed the so-called “cramdown” provision several times in the past two years, including separate bills introduced in the House and Senate in January. But for now, there are no proposals to revive the bankruptcy provision or adopt other measures to force lenders to modify mortgages.
“At some point we have to realize is that the voluntary efforts haven’t worked,” said Kathleen Keest, a senior policy counsel at the Center for Responsible Lending. “It’s time to make it mandatory, but that can’t happen without Congress acting.”

URL: http://www.msnbc.msn.com/id/32479139/ns/business-reinventing_america/

Arizona Countrywide Loan Modification Program

2009-08-28T14:29:00.002-07:00

Countrywide Loan Modification Program in Arizona
Attorney General Terry Goddard and Countrywide Financial Corporation entered into a Consent Judgment that was filed in the Maricopa Superior Court on March 13, 2009.
Countrywide customers looking for information about the loan modification program can call Countrywide, toll-free, at 800.669.6607 or go to Countrywide’s Web site, www.countrywide.com
Countrywide Consent Judgment
(Click here for a PDF of the Consent Judgment)
Countrywide Consent Judgment/Settlement FAQ's
Show All Answers Close All Answers
Which borrowers may be eligible for loan modifications?
The settlement provides for loan modifications for eligible borrowers who are 60 days or more delinquent, or become 60 days delinquent, on subprime or pay option loans that they obtained from Countrywide or from a broker working with Countrywide.
Borrowers with these loans may be eligible for modification if the first payment on their loan was due between January 1, 2004 and December 31, 2007, they live in the property that serves as security for the mortgage, they owe 75% or more of the current value of their home, and they can afford the new, lower payment under the modification.
I have a Subprime or Pay Option Loan. Does that mean I am eligible for a modification under the settlement?
The Attorney General’s Office cannot say whether or not a particular borrower will or will not get a modification. That will depend on the borrower’s individual circumstances, including whether the borrower can afford payments on the modified loan.
What if I am delinquent on my mortgage but don’t have a Subprime or Pay Option loan?
Countrywide is pledging to evaluate all other borrowers with payment difficulties for possible modifications on a case-by-case basis. If you are having difficulties making payments on your loan but do not have a subprime or pay option loan, you should call Countrywide at (800) 669-6607.
When will the modifications start?
On or before December 1, 2008, Countrywide will begin contacting borrowers who may be eligible for modifications.
Can I contact Countrywide to ask for a modification?
Under the settlement, Countrywide will contact all borrowers who may be eligible for a modification. However, you can also call Countrywide toll-free at (800) 669-6607 to ask for a modification. If you do call Countrywide, please write down the full name of the person you talk to, and the date and time of your call.
I think I should get a modification. Do I have to continue making payments on my Countrywide loan until then?
The settlement does not by itself change your loan payment or allow you to stop making payments. Borrowers who may be considered for a modification will be contacted by Countrywide and also can contact Countrywide at (800)669-6607 with specific questions about their loan.
You should not stop making payments on your loan just because you think you might qualify for a modification. If you have the ability to pay but stop making your payments, you will likely damage your credit, and may significantly harm your chances of actually receiving a modification.
What loan terms will borrowers receive if they obtain a modification?
The exact terms of a modification will vary from borrower to borrower, depending on the borrower’s circumstances (such as loan amount, the borrower’s income, and the current value of the borrower’s home). Generally, borrowers will be considered for possible interest rate reductions or conversion to an interest-only loan for five or ten years.
Borrowers with pay option loans who own only one home might also be eligible for principal reductions if they owe more than 95% of the current value of their home.
Will I have to pay a fee to Countrywide to get a modification?
No. Borrowers eligible to get a streamlined modification under the settlement will not have to pay any fees.
If anyone asks you to pay a fee in order to request or receive a loan modification on your Countrywide loan, please report this immediately to the Attorney General's office by completing our online complaint form athttp://www.azag.gov/consumer/OnlineInstructionsEng.html
What about late fees and prepayment penalties?
The settlement requires Countrywide to waive late fees for borrowers with subprime or pay option loans who receive a modification, as well as prepayment penalties for borrowers with subprime or pay option loans who receive a modification or are able to refinance or pay off their loans.
What if I am current on my loan now but think I will not be able to make my payments in the future?
The agreement requires Countrywide to make loan modifications for eligible borrowers through June 30, 2012. Also, if you think you will have any difficulties making your payments in the future, you are encouraged to contact Countrywide now at (800) 669-6607.
Can I call a local Countrywide branch or my loan broker to ask for a modification?
No. At least at this time, you should not call a local branch or broker. Instead, contact Countrywide at (800)669-6607 to ask about the modification under the settlement or to ask any other questions you may have about the settlement.
Can we trust Countrywide to make all these loan modifications?
The Attorney General's office will monitor Countrywide throughout this process. The settlement requires Countrywide to make regular reports to the Attorney General’s Office regarding which borrowers do and do not get a modification, and the reasons why.
Can I still sue Countrywide if I get a loan modification under the settlement?
Yes. Borrowers will not have to release any legal claims they may have against Countrywide in order to receive a modification of their loan.
What if I lose my house to foreclosure in the future?
The settlement also requires Countrywide to make relocation assistance payments to borrowers who lose their homes to foreclosure in the future. The amount of those payments may vary from borrower to borrower, depending on individual circumstances such as the size of the household.
Can you give me advice on whether I have other legal claims against Countrywide?
The Attorney General’s Office is not able to give you legal or other advice on this matter. If you would like advice, please consult a private attorney of your choosing, or a legal aid attorney if you qualify. The State Bar Association also has information about how to obtain a referral through its Lawyers Helping Homeowners program. Information can be found at its website,http://www.azlawhelp.org
Can I still file a complaint with the Attorney General's Office about Countrywide?
Yes. If you wish to file a complaint about your loan, or think you were denied a loan modification when you should have received one, please contact us. You can send a letter with copies of any supporting documentation to the Office of the Attorney General, Consumer Information and Complaints, 1275 W. Washington, Phoenix, AZ 85007-2926 or you can file a complaint on-line by clicking onhttp://www.azag.gov/consumer/OnlineInstructionsEng.html
Is this Consent Judgment part of the bailout passed by Congress?
No. It is a separate settlement between Countrywide and the Arizona Attorney General.
Does the settlement include non-Arizona borrowers?
Countrywide is adopting the mortgage modification plan nationwide. However, the monetary relief for borrowers who have already been foreclosed is only available in states that have formally agreed to participate in the settlement.
Where can I obtain more information about the Attorney General's Consent Judgment with Countrywide?

Loan Modification Business Opportunity

2009-08-27T10:13:00.003-07:00

Intake Officer-Nationwide/FT/PT (Commission only)
Are you an experienced professional in the industries of Mortgage, Loan, Real Estate, and/or Solution Sales and interested in expanding your earning potential? If you have a real estate, mortgage or solutions sales background along with an entrepreneurial spirit, please read on!
About Our Client
Our client has created a model to provide loan modification services for those who are desperate to save their homes; they modify existing loans allowing people to keep their homes by getting clients a lower interest rate. They have hundreds of well qualified attorneys in their network to help facilitate and close deals quickly. This allows people a sense of security and affords them to bypass dealing with stress of hassling with the banks. They process all necessary steps start to finish and have had over 5,000 successful modifications to date. Our client is in excellent standing with the Better Business Bureau and has processed hundreds of files successfully to date!
Job Description
Our client is seeking professional Intake Officers to sell these services to those that will qualify and benefit from a loan modification scenario. This is a commission based program and you will be given access to a robust CRM tool to manage those clients as well as administrative assistance to help you with your sales efforts. Our client is looking to grow their existing sales force of Intake Officers nationwide substantially over the next 3 months! This is a full-time or part-time position with substantial money making potential! Excellent for people who don’t like to be chained to a desk and enjoy the benefit of a flexible schedule! They do provide you leads once you have successfully closed a few deals.
Compensation
25% commission of the retail rate of all completed files.
If you are interested in learning more about this opportunity, please go to http://www.crsintake.com/Real-Estate-Professionals.html and read the information carefully. If you would like to be considered as a candidate, fill out the form at the very bottom of the page (http://www.crsintake.com/Mortgage-Real-Estate-Form.html). We will contact you within 3 business days once we receive your form back.
If this opportunity is not for you but you know someone that is a strong sales person that may be a good fit for this, please forward this email to them.
Thank you and we hope you will visit the information page to read more about this incredible opportunity!

Loan Modification Business Opportunity

2009-08-27T07:09:00.000-07:00

Link

Are you an experienced professional in the industries of Mortgage, Loan, Real Estate, and/or Solution Sales and interested in expanding your earning potential? If you have a real estate, mortgage or solutions sales background along with an entrepreneurial spirit, please read on!
http://www.crsintake.com

Tips and Steps to Resolve Mortgage Difficulties

2009-08-26T14:23:00.002-07:00

Tips and Steps to Resolve Mortgage Difficulties (Source US Housing and Urban Development) (en español)
Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?
Don't ignore the letters from your lender
Contact your lender immediately
Arizona Foreclosure Prevention Helpline
Toll FREE 877.448.1211
Contact a HUD-approved Housing Counseling Agency
Toll FREE 800.569.4287
TTY 800.877.8339
If you are unable to make your mortgage payment:1. Don't ignore the problem.The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.2. Contact your lender as soon as you realize that you have a problem.Lenders do not want your house. They have options to help borrowers through difficult financial times. 3. Open and respond to all mail from your lender.The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.4. Know your mortgage rights.Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office. 5. Understand foreclosure prevention options.Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the Internet.
Mortgage Payments Sending You Reeling? Here's What to Do? (FTC)
Federal Housing Administration
6. Contact a HUD-approved housing counselor.The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call 800.569.4287 or TTY 800.877.8339.
7. Prioritize your spending.After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses -- cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.8. Use your assets. Do you have assets-a second car, jewelry, a whole life insurance policy -- that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home. 9. Avoid foreclosure prevention companies. You don't need to pay fees for foreclosure prevention help -- use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three months mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.

Arizona Judge Orders Wells Fargo to Explain Loan Modification Policies

2009-08-25T12:52:00.002-07:00

Judge Orders Wells Fargo Executive To Testify In Court

PHOENIX -- A federal bankruptcy judge has ordered a top Wells Fargo executive to testify in court about the bank's loan modification policies.
The order came in response to a Phoenix woman's complaint that Wells Fargo had ignored her modification request.
"I sent them everything they asked for, and then when I called to follow up they said, 'What paperwork? What modification? We don't know what you're talking about,'" said Bobbi Giguere.
Giguere said she applied for a modification after she lost her job in December.
"I've got a 15-year-old boy that's depending on me to raise him, and he wants to stay here," she said.
Instead, she said she received a notice of foreclosure while she thought she was still trying to work out a deal with Wells Fargo.
Now Judge Randolph Haines wants a senior officer at Wells Fargo to defend the charges.
Bankruptcy attorney Randy Nussbaum said it is very unusual for a judge to issue such an order.
"The judge is trying to send a message to Wells Fargo and other banks that they need to pay better attention to customers who want to modify their home loans," said Nussbaum.
Wells Fargo responded by issuing a statement from Mary Coffin, the bank's head of home mortgage servicing.
"We appreciate the court giving us the opportunity to share our servicing practices, which include working with all customers facing hardships -- even if they declare bankruptcy -- until every reasonable option to prevent foreclosure has been exhausted," read the statement.
In a phone interview, Coffin said Giguere's case is very complex because her circumstances changed after she initially applied for the loan modification.
However, she said the bank could have offered better customer service.
"We definitely could have communicated better," said Coffin.
After our initial news report, many homeowners contacted CBS 5 News, sharing remarkably similar frustrations. Getting the runaround about lost paperwork was amongst the most common complaint. The complaints came from customers using a variety of loan providers, including but not limited to Wells Fargo and Bank of America.
When asked to grade banks on how well they responded to customers’ requests to modify mortgages, Arizona Attorney General Terry Goddard gave a D minus.
“We find the take up on the (homeowner assistance) program is pathetic. The banks just are not doing what has been asked of them and not taking advantage of financial benefits that are on table.”
A Wells Fargo executive is scheduled to testify in federal court September 3rd. The hearing was originally scheduled for this week, but the judge granted Wells Fargo an additional two weeks to research internal records and prepare their case.

Arizona AG Fights Foreclosures

2009-08-24T14:19:00.000-07:00

AG Goddard helping Tucsonans facing foreclosure

Arizona's Attorney General was in Tucson Saturday to help home-owners facing foreclosure and warn others about fraud.
Homeowners seeking information came to El Rio Neighborhood Center for the Making Home Affordable Program Consumer Awareness and Education Forum.
According to the Mortgage Bankers Association more than 13 percent of US home owners with a mortgage have fallen behind on their payments or are in foreclosure.
Attorney General Terry Goddard says he's working to help Arizonans protect their properties. "The goal today is to try to work with each family to try to find a modification to their loan to allow them to stay in their house."
He also warns home owners threatened by foreclosure to avoid scams. "Fraud related to mortgages and foreclosure is at an all time high. Unfortunately many times home owners lose that last money they have to try to stay in their home but they give it all to somebody who's really just stealing from them."
Goddard supports President Obama's proposed federal plan to protect consumers from fraudulent loan modifiers.
He's asking residents to report loan modification scams to his office so his team can investigate.
For more information:
http://www.azag.gov/consumer/foreclosure/index.html

Morrison Law Center

2009-08-24T12:05:00.001-07:00

At the Morrison Law Center, PLLC we provide long-term solutions for our clients that keep them in their home and avoid foreclosure.

We design a Loan Modification Plan to reduce your mortgage payments and keep you in your home.

The Morrison Law Center takes a systematic approach to protecting the rights of financially distressed consumers by reducing monthly mortgage payments while avoiding the painful process of foreclosure.

more about "Morrison Law Center", posted with vodpod

Loan Modification Business Opportunity

2009-08-24T11:52:00.001-07:00

Chase Residential Solutions, the industry leader in attorney-performed loan modification, is currently looking for experienced individuals to join our team. If you are an experienced real estate, mortgage, insurance, finance or sales professional interested in making HUGE COMMISSIONS by helping your current client base and attracting new ones in need, then we are the partner for you! For more go to www.crsintake.com

more about "Loan Modification Business Opportunity", posted with vodpod

BusinesWeek: Where Housing Will Be in 2012

2009-08-23T14:11:00.001-07:00

Home prices are likely to fall for the next year, then stabilize, with a rebound in 2012 as the overall economy takes off again

By Peter Coy, Mara Der Hovanesian, Christopher Palmeri, Amy S. Choi and Tara Kalwarski

Americans have not seen a boring housing market since the last millennium. You know—the average, ordinary kind of market where supply just about matches demand, prices are steady, and real estate ceases to be a topic of daily conversation. Instead, we've had six years of upside craziness followed by three years of downside terror. Now we're in a tug-of-war between those who think we've finally found a bottom and those who are convinced that the overhang of unsold homes is going to push prices considerably lower.
By 2012 we may finally get back to blissful boredom. With any luck, three years should be long enough for the U.S. economy to recover and for the nation's housing inventory to shrink to more normal levels. At that point, housing will return to its old ways, with prices governed not by national mood swings and global credit crises but by local issues ranging from zoning to immigration to job growth.
Prices? While they're likely to keep falling a while longer under the weight of foreclosures, the market is definitely closer to the bottom than the top. "We expect prices to drop for another year and then stabilize before starting to rise with incomes," says Standard & Poor's (MHP) Chief Economist David Wyss. Moody's Economy.com (MCO) predicts the S&P/Case-Shiller U.S. National Home Price Index, maintained by data specialist Fiserv, will fall about 16% this year before regaining ground. Based on the National Association of Realtors national median home price of $180,000 for the fourth quarter of 2008, that would mean a median of $152,000 at the end of 2009 and then a rebound to $179,000 by the end of 2012.

ALL REAL ESTATE IS LOCAL

Of course, the national median price is an artificial construct, since there is no such place as National Median, U.S.A. That's why the following pages provide up-close looks at seven markets: Omaha; Seattle; Saratoga Springs, N.Y.; Salt Lake City; Nashville; Austin, Tex.; and Merced, Calif. Each illustrates a different trend that will have a big impact on sales and prices across the U.S.
Local job growth is one of the most important factors to study when assessing a market's prospects. Omaha, for example, which has attracted employers such as Yahoo! (YHOO) and Google (GOOG), missed out on the boom but is likewise dodging the bust. With the city adding jobs, the prospects for home prices look good. Detroit, where home prices fell by a third from 2003 through 2008, is likely to suffer even more in coming years as the auto sector continues to shrink. Demographic change, another trend examined here, is equally influential. For instance, Salt Lake City's youthful population is primed for house buying. While the bust left prices in once-bubbly Western markets such as Phoenix and Vegas lower in 2008 than in 2003, Salt Lake prices rose 51% over that period.
Other important factors are even more local than those, such as how far a house is from the nearest supermarket. You'll know we're back to an ordinary, boring real estate market when buyers focus less on the intricacies of foreclosures, short sales, and the like and go back to the things that used to matter most: What are the schools like? How quiet is the neighborhood? When am I going to have to replace that roof or cut down that diseased oak?
Sellers Mark and Maura Rampolla, who put their house in Oradell, N.J., on the market early this year, are coping with ultra-local issues such as their house being on a fairly busy road. They're also up against the national housing crisis angst. The Rampollas bought their house for $556,000 in 2004. Now they need to sell it because they're moving to the Los Angeles area to set up a West Coast distribution hub for their coconut-water sports-drink company, Zico. They listed the house for $599,000, which would represent a loss after factoring in closing costs and renovations. House hunters didn't even nibble on the property that the Rampollas and their two young daughters have grown to love. In mid-June the couple dropped the price to $559,000. "People say it's a beautiful house, but they're just very nervous right now," says Maura.
The Rampollas will probably end up being the first owners to lose money on the Oradell home since it was built in 1925—a phenomenon that's happening across the U.S. The classic American foursquare, with four bedrooms and original chestnut molding, was sold by the Bonavita family to the Riccio family for $47,000 in 1972, the first recorded transaction price. The Riccios made out by selling to the DeSouza family for $285,000 in 1997. The DeSouzas sold just seven years later to the Rampollas for $556,000. "We actually bought the house in a day," laughs Maura. "Mark ran through the house in 10 minutes, I kid you not, because he had to get to a meeting in Queens. ... We had nothing to sell, and we just said: 'Great!' "
The good news is that the Rampollas' loss could wind up being some first-time home buyer's gain. From now through 2012, lots of families that couldn't afford to buy when prices went through the roof will be able to get in on the ground floor. Based on today's household incomes and mortgage rates, the National Association of Realtors' Housing Affordability Index is bobbing around the highest level since recordkeeping began in 1970. "To generalize, yeah, it is a good time to buy a house. I don't think there's any urgency because I think it'll still be a great time to buy a house a year from now," says economist Richard DeKaser of Woodley Park Research in Washington.
Homebuilders are helping by absorbing their share of the pain. In general, the U.S. needs about 1.5 million new homes a year to accommodate the growing population and the demolition of decayed properties. Builders exceeded that rate during the boom, but now they're building fewer than 500,000 homes per year. Their cutback should reduce the glut of homes and bring the market into better balance by 2012, if not sooner.

A STILL-MURKY PICTURE

Most important, the economy should be growing briskly again by 2012, according to Moody's Economy.com. In May the firm predicted gross domestic product would shrink 3% this year before growing 1.4% in 2010, 4.7% in 2011, and a robust 5.8% in 2012. It's also looking for home buying and building to return to their pre-bubble paces—no higher and no lower—by 2012.
Even if the economy performs as projected, there's still plenty that could go wrong in the housing market. Because conditions have been so unusual, "it's very hard for the model to extrapolate, based on past experiences, what's going to happen this time," says Moody's Economy.com Senior Economist Celia Chen. In a study of global real estate markets, economists Kenneth Rogoff of Harvard University and Carmen Reinhart of the University of Maryland found that home prices fall for an average of six years after a major financial crisis. That would put the U.S. bottom in 2012, or later.
Another risk is that potential buyers will stay out of the housing market, no longer trusting in home appreciation to do their saving for them. Writes David Rosenberg, the former Merrill Lynch (BAC) economist who is now chief economist at Toronto-based asset management firm Gluskin Sheff & Associates: "Baby boomers are still in the discovery process on oversized real estate being more of a ball and chain than a viable retirement investment asset." Rosenberg also is concerned that an aging population won't need the kind of big houses erected during the boom. "The high end of the market will be in a bear phase," Rosenberg says in an interview.
So much has gone wrong with housing lately that it's easy to imagine worst-case scenarios. But in the more likely case, the market will fall some more, bounce off its lows, then gradually start growing. By 2012, families like the Rampollas may even get a warm, fuzzy feeling about homeownership again.

The Global Picture

Like the U.S., the global real estate market will continue to struggle amid a weak economy and rising unemployment, according to a recent report by research firm Knight Frank. The worst-performing markets over the past year: Dubai and Singapore, where home prices dropped 32% and 23%, respectively. Israel (up 10.9% over the same period) and the Czech Republic (up 9.9%) saw the biggest spikes.
To read highlights from the report, go to http://bx.businessweek.com/housing-market/reference/

Loan Modification Business Opportunity

2009-08-18T19:41:00.003-07:00

WEEKLY REFINANCING ACTIVITY REVERSES

2009-08-15T19:00:00.000-07:00

By Julie Haviv

The Mortgage Bankers seasonally adjusted index of refinancing applications decreased 7.2 percent to 1,853.8, following an increase of the same amount the previous week.

The refinance share of applications decreased to 52.3 percent from 54.2 percent the previous week, significantly lower than the peak of 85.3 percent in the week ended January 9. The adjustable-rate mortgage share of activity increased to 5.8 percent in the latest week, up from 5.4 percent the previous week.

Fixed 15-year mortgage rates averaged 4.71 percent, up from 4.60 percent the previous week. Rates on one-year adjustable-rate mortgages increased to 6.71 percent from 6.67 percent.

LOOMING FORECLOSURES TO PRESSURE HOME PRICES

2009-08-14T06:00:00.000-07:00

By Julie Haviv

[Celia Chen, senior director of housing economics at Moody's Economy.com in West Chester, Pennsylvania] said the biggest obstacle for the U.S. housing market is foreclosures.

Moody's Economy.com is expecting 3.85 million defaults this year compared to 2.7 million last year, she said. First mortgage defaults are the first step in the foreclosure process; not all defaults turn into foreclosures.

Although the housing market has been showing signs of stabilization, with sales rising and home price declines moderating in many regions, Chen said prices likely will fall again.

"There are a large number of foreclosures in the pipeline and once they hit the housing market, they will pull house prices down again," she said. "I expect house prices to continue falling until mid-2010."

Foreclosures rise 7 percent in July from June

2009-08-14T04:11:00.000-07:00

· By Alan Zibel, AP Real Estate Writer

· On Thursday August 13, 2009, 7:26 am EDT

WASHINGTON (AP) -- The number of U.S. households on the verge of losing their homes rose 7 percent from June to July, as the escalating foreclosure crisis continued to outpace government efforts to limit the damage.

Foreclosure filings were up 32 percent from the same month last year, RealtyTrac Inc. said Thursday. More than 360,000 households, or one in every 355 homes, received a foreclosure-related notice, such as a notice of default or trustee's sale. That's the highest monthly level since the foreclosure-listing firm began publishing the data more than four years ago.

Banks repossessed more than 87,000 homes in July, up from about 79,000 homes a month earlier.

Nevada had the nation's highest foreclosure rate for the 31st-straight month, followed by California, Arizona, Florida and Utah. Rounding out the top 10 were Idaho, Georgia, Illinois, Colorado and Oregon. Among cities, Las Vegas had the highest rate, followed by the California cities of Stockton and Modesto.

While there have been numerous recent signs that the ailing U.S. housing market is finally stabilizing after three years of plunging prices, foreclosures remain a big concern. Foreclosures are typically sold at a deep discount, hurting neighbors' home values.

The mortgage industry has been slow to adapt to the surge in foreclosures. Many lenders have needed government prodding to get up to speed with the Obama administration's plan to stem foreclosures.

The Treasury Department said last week that banks have extended only 400,000 offers to 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000, or 9 percent, those borrowers have enrolled in three-month trials in which their monthly payments are reduced.

"The volume of loans that are in distress simply overwhelms" those efforts, said Rick Sharga, RealtyTrac's senior vice president for marketing.

Mortgage applications drop as loan rates rise

2009-08-13T18:57:00.000-07:00

By Julie Haviv

NEW YORK (Reuters) - U.S. mortgage applications fell last week, reflecting a drop in demand for home refinancing loans as interest rates soared to their highest levels since June, data from an industry group showed on Wednesday.

Applications for loans to buy homes, an early indicator of sales, rose slightly. Tepid interest in purchase loans does not bode well for the hard-hit U.S. housing market, which has been showing signs of stabilization.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended August 7 decreased 3.5 percent to 499.0.

Celia Chen, senior director of housing economics at Moody's Economy.com in West Chester, Pennsylvania, said higher interest rates on mortgages tend to depress home buying, but that demand is not as sensitive to changes in rates as it is in refinancing activity.

"Even though mortgage rates are rising, they still remain quite affordable," she said.

"The bigger obstacle to home buying is job losses and tight qualifying conditions for borrowing," she said.

With the U.S. unemployment rate at 9.4 percent, many potential home buyers who have lost or who fear they may lose their jobs remain sidelined even though home affordability has improved significantly.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.38 percent, up 0.21 percentage point from the previous week. It was the highest rate since the week ended June 19 and significantly above the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.

Interest rates a year ago were at 6.57 percent.

Mortgage rates were above 5 percent for an 11th straight week. Some experts say rates at 5 percent and below are needed to make a significant impact on home loan demand.

The MBA's seasonally adjusted purchase index rose 1.1 percent to 267.2, the third, albeit small, gain in the last four weeks.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.7 percent.

5 Musts When Seeking a Loan Modification

2009-08-12T12:20:00.004-07:00

5 Things You Should Know When Seeking a Loan Modification

What exactly is a loan modification?
A loan modification is a process, which puts the borrower into a comfortable zone and gives the long term ability to pay their payments. Modifying the mortgage conditions and terms will reduce the interest rates and the rates will be fixed for a period of 3 to 7 years, and after the period expires the interest rates will rise to the current market rate. In some situations, the lender may choose to lessen the principal amount.

Determine whether you are eligible or not
To determine whether you are eligible or not, consult a legal representative. They will ask you certain questions such as your income, expenses etc.. You might be in a very bad situation like job loss, death, reduction in your income, divorce etc. and in such cases, many people try to do it by themselves without going for company or an a legal representative. It is good to get help from someone who know the laws well and can correct anything wrong in the documents.

Choose a company
If you can’t do the loan modification individually, try to contact a loan modification attorney. Many a people choose attorneys because their help will have a significant impact on the results. The lender should respond in a timely manner to an attorney or else you will end up paying penalties, expensive legal fees and possible loan recession. Once you fail at negotiation with the loan company, it will be a lot harder to use an attorney to stop a foreclosure because of the time constraints. So choose a company for the best outcome. In these companies, the processing fee might be more due to their attention to detail. If you have negotiated in the correct manner, then the result will be worth your paying for the company.

Keep lenders in mind
Keep in mind that lenders will mainly collect delinquent payments by not giving you a break. The loans loss mitigation department is not in the business of offering each and every person a great deal.

Check out for companies without an attorney
There are a lot of companies who claim that they can do a loan modification and later they tell that they are unable to do it after you spend a lot of money for the processing. That is precisely why you should always chose a loan modification company with an attorney. The process will be faster. There are companies known as loss mitigation companies and they will be marketing their refunds, principal reduction and success stories. If the company you have chosen guarantees a principal reduction, then look for other companies as one cannot assure a guarantee, period.

Mortgage Modifications Can't Catch Foreclosures

2009-08-06T18:19:00.003-07:00

From Business Week:
Real Estate August 4, 2009

Lenders have modified more than 235,000 mortgages under an Obama Administration program, but the first half of 2009 saw 1.8 million foreclosures

By Elise Craig

With unemployment projected to continue rising, leaving more homeowners without jobs and unable to meet their mortgage payments, Congress can expect an earful from constituents about what it's doing to stem the tide of foreclosures.
Against this backdrop, the Obama Administration on Aug. 4 unveiled an optimistic report on its signature foreclosure initiative: Mortgage companies have offered to adjust more than 406,500 loans under the Making Home Affordable program, and have actually modified more than 235,000. The Treasury Dept. lauded the program's "rapid progress," saying that it "puts the program on track to offer" modifications to 3 million to 4 million homeowners over the next few years, encouraging news for homeowners seeking to keep a roof over their heads.
That's an impressive start for a months-old program, if not the dramatic success many would have liked, analysts said. "The numbers are really good," says Jaret Seiberg, a policy analyst for Concept Capital's Washington Research Group. "This is a classic instance where reality and perception collide in Washington and disappoint everyone."
Some Shortcoming Acknowledged
Although the program has made fast progress, the mortgage modifications are dwarfed by the 1.8 million foreclosures already tallied in the first half of this year by Equifax (EFX) and Moody's Economy.com, and by projections for 3 million to 4 million foreclosures over two years. Not exactly good news for lawmakers to bring home to voters during a summer recess.
John Taylor, head of the National Community Reinvestment Coalition, a network of housing advocacy groups, said that while he's encouraged to see the modifications, he isn't convinced it will make much difference in the economy. "To the extent that people are hoping it will eradicate contributions to the recession [from foreclosures], we've got to see more significant numbers," Taylor says. Dan Clifton, a Washington policy analyst for Strategas Research, says loan modifications to date are "on a scale that's way too small to impact home prices."
Treasury acknowledged some shortcomings in its program—among servicers, there has been "uneven ramp-up and substantial variation in the pace of modifications," the agency said. The numbers show that a half-dozen servicers have modified between 19% and 25% of the mortgages they handle, while many others have modified just 6% or less. Some banks that accepted TARP funds—Wells Fargo (WFC), Bank of America (BAC), and Wachovia among them—fall into the latter category.
Calling for Legislative Measures
Industry officials cautioned against blaming individual companies just yet. "It's probably too early to say who are the good guys and who are the bad guys," says Paul Leonard, an official with the Housing Policy Council and a lobbyist for the Financial Services Roundtable, which represents large financial firms. That's because, as the Administration built its new program, servicers had to hire staff and craft procedures to deal with modifications, which some accomplished faster than others. "You're looking at large institutions that don't turn on a dime," says Andrew Jakabovics, associate director for housing and economics at the Center for American Progress, a Democratic-leaning think tank.
But industry critics have little patience for that kind of reasoning. In a blistering statement, the Center for Responsible Lending, a consumer advocacy group, dubbed the Administration's list of mortgage companies a "Wall of Shame." The group, like other housing and consumer advocates, is calling for legislative measures to force mortgage companies to give struggling homeowners a break.
That includes a provision that would allow judges to alter mortgages in bankruptcy court, often called "cram down" in the housing industry. In addition to forcing modifications in court, supporters say, the threat of these judicial modifications would encourage mortgage companies to make more substantial modifications to more loans. The measure passed handily in the House earlier this year despite fierce opposition from financial interests, but died in the Senate after moderate Democrats voiced concerns.
Bankruptcy Revision Is Possible
Now there are signs the measure could see new life. One senior Democratic Senate aide said party leaders in the chamber are likely to revive it this fall if another solution isn't found soon. And last week, Representative Barney Frank (D-Mass.), the powerful chairman of the House Financial Services Committee, made a similar warning, threatening that legislation the lending industry actually wants will go nowhere in his committee until there is a "significant increase" in modifications or lawmakers tack on the bankruptcy provision.
Without a significant rise in loan modifications, Frank added, "the argument for revising the bankruptcy option will be extremely strong, and I think there is a substantial chance that the outcome will be different."
Craig is a reporter in BusinessWeek's Washington bureau. With Theo Francis in Washington

New FHA Loan Modification Program

2009-08-05T15:06:00.001-07:00

HUD SECRETARY DONOVAN ANNOUNCES NEW FHA-MAKING HOME AFFORDABLE LOAN MODIFICATION GUIDELINESNew FHA guidelines projected to help thousands avoid foreclosure per year
WASHINGTON - U.S. Department of Housing and Urban Development Secretary Shaun Donovan today announced the Federal Housing Administration (FHA) has implemented changes to its loan modification program to ensure consistency with the Obama Administration's Home Affordable Modification Program. By August 15, FHA borrowers will be able to significantly reduce their monthly mortgage payments by seeking a loan modification through their current mortgage company or loan servicer under the new FHA-Home Affordable Modification Program (FHA-HAMP).
"Today, we're bringing another important tool to the table to help struggling families who are desperate to keep their homes," said Donovan. "Tens of thousands of FHA borrowers will now be able to modify their mortgages in the same manner as so many others who are taking advantage of the Administration''s Making Home Affordable program. This is just the latest tool we are providing to help homeowners prevent foreclosures through the Making Home Affordable program. Earlier this month we announced an expansion of the Home Affordable Refinance Program to borrowers who are up to 125 percent underwater. Together, these actions will significantly increase the help available to homeowners."
The Helping Families Save Their Homes Act of 2009, signed into law on May 20, allows FHA to give qualified FHA-insured borrowers the opportunity to reduce their monthly mortgage payment by modifying the mortgage through FHA-HAMP. FHA released the program's implementation guidelines today. FHA expects all servicers to implement the changes by August 15. The program permanently reduces a family's monthly mortgage payment through the use of a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off.
FHA has used the partial claim option in the past, which allows a lender to advance funds on behalf of a borrower, to reinstate a delinquent loan that was up to 12 months delinquent. Now, this program will allow HUD to bring the borrower's payment down to an affordable level. This will be accomplished by bringing the mortgage current, buying down the loan by up to 30 percent of the unpaid principal balance and deferring these amounts in a partial claim.
FHA will pay an incentive to loan servicers for each FHA loan modified under this program. A Mortgagee Letter, along with detailed requirements for the FHA-Home Affordable Modification Program, was distributed to all FHA lenders today. The implementation of this program will further the Obama Administration's efforts to stabilize the housing market by helping homeowners to stay current on their mortgages and stay in their homes, therefore preventing the destructive impact of foreclosures on families and communities.
Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Obama Administration on February 18. More than 200,000 trial loan modifications are already underway, tens of thousands of refinancings have closed, and informational mailings about the program have been sent to more than one million borrowers who may be eligible.
FHA borrowers who are experiencing difficulty making their mortgage payments should contact 1-800-437-2185 to speak with loan modification counselor

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HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.