Foreclosure filings fall 6% from April but still post third worst month on record.
NEW YORK (CNNMoney.com) -- Lenders filed fewer foreclosure notices in May, but the total number of filings was still the third-highest monthly total on record.
One of every 398 households in the United States received some kind of filing, including notices of default, scheduled auctions or bank repossession, during May. That was a decline of 6% from April but an increase of 18% compared with May 2008.
And the ultimate type of foreclosure filing - bank repossessions - increased during the month, according to RealtyTrac CEO James Saccacio.
"While defaults and scheduled foreclosure auctions were both down from the previous month, bank repossessions, or REOs, were up 2%" he said, in a prepared statement. "We expect REO activity to spike in the coming months as foreclosure delays and moratoria implemented by various state laws come to an end."
But overall, the May statistics underscore what may be a slight improvement. The number of filings trailed off toward the end of the month, according to RealtyTrac spokesman, Rick Sharga.
"We're still coming through a three-month period like nothing we've ever seen before," he said, "with nearly a million filings in all."
The month saw big increases of repossessed homes in several states, including Michigan, Arizona, Washington, Nevada, Oregon and New York. In Michigan alone bank repossessions went to 6,246 from 3,560 in April, a 75% increase.
And it could have been worse. Sharga said he's been hearing anecdotal reports of banks taking homes all the way through the foreclosure process and then suspending further action.
"We hear the servicers are pulling back from the brink," he said. "They want someone in the house."
Vacant homes are subject to vandalism and looting and often quickly lose whatever value they have. Thieves crash through plaster walls to get at copper wiring and plumbing or strip aluminum siding from exteriors, in many cases eliminating any chance of salvaging the property.
States of foreclosure
The foreclosure problem is widespread but reaches plague proportions in 10 states; those hardest-hit areas account for 77% of all foreclosure filings. California had more than any other state with with 92,249 - nearly 29% of all U.S. filings.
Florida posted the nation's second highest number at 58,931, up 50% from May 2008. Other top 10 states were Nevada (17,157), Arizona (16,865), Michigan (13,891), Ohio (11,360), Illinois (10,942), Georgia (10,516), Texas (9,813) and Virginia (5,385).
Nevada had the highest foreclosure rate with one filing for every 64 households. California, with one for every 144, and Florida, with one for every 148, were second and third respectively.
Working through the problem
The foreclosure boom has depressed home prices and that has brought homebuyers back into some markets. In fact, sales volume is much stronger in many states compared with 2008, and affordability has improved to levels not seen in many years.
"In some of the 'ground-zero' places, like Stockton, parts of Phoenix, San Diego and some others, buyers are bidding bank-owned homes up, way, way over the the asking prices" said Sharga.
What could slow down this market revival, however, is the recent bump in mortgage interest rates.
Rates for a 30-year, fixed-rate loan have jumped to about 5.5% from about 4.8% five weeks ago. That adds about 12% to monthly mortgage payments, almost as if the house increased that much in price.
If the higher rates cause demand for foreclosures to slacken, the nation could see further addition to its supply of repossessed homes. That could send more home prices plummeting, pushing more mortgage borrowers underwater (owing more than their properties are worth) and closer to foreclosure.
By Les Christie, CNNMoney.com staff writer, last updated: June 11, 2009: 9:01 AM ET
http://money.cnn.com/2009/06/11/real_estate/May_foreclosures_decline/index.htm?postversion=2009061109
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Showing posts with label foreclosure. Show all posts
Showing posts with label foreclosure. Show all posts
Monday, June 15, 2009
Tuesday, April 28, 2009
Home Prices Approaching a Bottom in Period Ahead
While the Federal Housing Finance Agency reported that home prices in February registered their first consecutive monthly gain in two years, FHFA Chief Economist Patrick Lawler cautioned it is far too early to conclude that home values have bottomed out. 
“There may be issues associated with the foreclosure moratorium. In January and February there were a lot fewer foreclosures than in previous months,” Lawler said while discussing current home price trends in a panel discussion at last week’s NAHB Construction Forecast Conference.
He also added that the FHFA calculated more transactions in areas across the nation where home prices are doing better. “That helped push up prices some,” he said.
From the fourth quarter of 2007 through the fourth quarter of 2008, FHFA reported that home prices fell 8% nationally, Lawler said, while the S&P Case-Shiller Home Price Index reported a drop of 18%.
Part of the discrepancy, Lawler said, is that the FHFA uses the prices of homes backed by mortgages or sold by Fannie Mae and Freddie Mac, and that subprime, jumbo and FHA mortgages are not included in the agency’s home price index. Another difference is that the FHFA encompasses rural areas while the S&P/Case-Shiller home price data are concentrated on major metropolitan markets.
A study last year by the Federal Deposit Insurance Corporation (FDIC) to ascertain the total number of home-price boom-and-bust markets found that of 104 markets that experienced a “boom” in 2006, just three were still considered boom markets in 2008 and only one, Detroit, was listed as a “bust.”
The analysis defined a boom market as one that had experienced a real price gain of 30% or more in three years. A market was considered a bust if had posted a nominal price decline of at least 15% in five years.
“The data show that home prices are essentially where they were in 2003,” said Richard Brown, chief economist of the FDIC.
Citing the S&P Case-Shiller Future Prices Index, Brown said that futures prices, which have lagged actual home price declines, suggest a floor in U.S. home prices by early 2010.
To help shore up home prices, Brown said a broader stabilization of the financial system — including policies to provide liquidity to mortgage markets and bolster the capital of banks — is necessary to provide more mortgage credit and to get financial institutions to start lending again. He also said that the number of foreclosures must be whittled down “to arrest some of the downward pressure on home prices.”
Nation's Building News, Photos by Morris Semiatin, http://www.nbnnews.com/NBN/issues/2009-04-27/Economics+&+Finance/3.html
“There may be issues associated with the foreclosure moratorium. In January and February there were a lot fewer foreclosures than in previous months,” Lawler said while discussing current home price trends in a panel discussion at last week’s NAHB Construction Forecast Conference.
He also added that the FHFA calculated more transactions in areas across the nation where home prices are doing better. “That helped push up prices some,” he said.
From the fourth quarter of 2007 through the fourth quarter of 2008, FHFA reported that home prices fell 8% nationally, Lawler said, while the S&P Case-Shiller Home Price Index reported a drop of 18%.
Part of the discrepancy, Lawler said, is that the FHFA uses the prices of homes backed by mortgages or sold by Fannie Mae and Freddie Mac, and that subprime, jumbo and FHA mortgages are not included in the agency’s home price index. Another difference is that the FHFA encompasses rural areas while the S&P/Case-Shiller home price data are concentrated on major metropolitan markets.
Pointing out that distressed sales accounted for 50% of the total in California during the last quarter of 2008, Lawler added, “we have fewer distressed sales in our index than Case-Shiller.”
A study last year by the Federal Deposit Insurance Corporation (FDIC) to ascertain the total number of home-price boom-and-bust markets found that of 104 markets that experienced a “boom” in 2006, just three were still considered boom markets in 2008 and only one, Detroit, was listed as a “bust.”
The analysis defined a boom market as one that had experienced a real price gain of 30% or more in three years. A market was considered a bust if had posted a nominal price decline of at least 15% in five years. “The data show that home prices are essentially where they were in 2003,” said Richard Brown, chief economist of the FDIC.
Citing the S&P Case-Shiller Future Prices Index, Brown said that futures prices, which have lagged actual home price declines, suggest a floor in U.S. home prices by early 2010.
To help shore up home prices, Brown said a broader stabilization of the financial system — including policies to provide liquidity to mortgage markets and bolster the capital of banks — is necessary to provide more mortgage credit and to get financial institutions to start lending again. He also said that the number of foreclosures must be whittled down “to arrest some of the downward pressure on home prices.”
Nation's Building News, Photos by Morris Semiatin, http://www.nbnnews.com/NBN/issues/2009-04-27/Economics+&+Finance/3.html
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Tuesday, April 21, 2009
Mortgage aid program will likely help millions
Some questions and answers about how it could affect payments, taxes
NEW YORK - It's welcome relief for homeowners struggling with mortgage payments.
The new federal program to let people refinance or modify their mortgages is expected to help millions of Americans lower monthly payments and avoid foreclosure. So what strings are attached?
You might be concerned about the impact to your credit report or the tax implications, for instance. Others who are still paying low introductory rates might fear their monthly bills could skyrocket.
Here are some questions and answers on concerns people might have about the Making Home Affordable program.
Q: How will my credit profile be affected?
A: Refinancing generally doesn't affect your score since it's simply a rewritten mortgage, according to Norm Magnuson of the Consumer Data Industry Association, a trade group based in Washington.
This is especially true of refinancing under the federal program, since one of the terms of eligibility is that homeowners can't have missed a payment in the past year.
It's not yet clear what impact a federal loan modification — an adjustment to terms of an existing mortgage, rather than a new one — will have on credit profiles, however, Magnuson said. Regulators haven't yet determined how the loan modifications will be reported, if at all.
If you're applying for a loan modification under Making Home Affordable, it means you've already missed payments and hurt your credit profile. A loan modification should improve your credit profile in the long-run since the idea is to get you on track for meeting payments.
It might also free up money to pay off other debts.
Q: Is it possible my payments will be higher?
A: If you're still paying a low, introductory rate, it's possible your monthly mortgage payment will increase slightly under the federal refinancing program. But the idea is to avoid the big interest rate spikes that typically come with adjustable-rate mortgages.
After applying for the Making Home Affordable program, your lender should give you a "good faith estimate" that includes your new interest rate, mortgage payment and the total cost of the loan. Compare the numbers with your current loan; you might decide that refinancing isn't an improvement.
You can also check out the payment reduction estimator on the government's Web site at http://www.makinghomeaffordable.gov/.
Q: Should I wait to see if mortgage interest rates come down in a couple of months before applying?
A: Probably not, since mortgage rates are at historic lows.
Last week, rates on 30-year mortgages inched upward to 4.87 percent, but that's still close to the lowest level in decades. Waiting for the rate to go any lower might backfire, said Ken Inadomi, director of the New York Mortgage Coalition.
Even introductory rates shouldn't be that much lower than fixed rates these days — in some cases, they may even be higher. So it's probably in your best interest to apply for refinancing now.
In case you decide to wait: The Making Home Affordable program expires on June 10, 2010.
Q: What are the tax implications?
A: Charges for refinancing a mortgage are tax deductible. The total cost should be evenly divided to be deducted over the life of the mortgage, Inadomi said. Other costs, such as attorney or appraisal fees, are not deductible.
You'll also have to adjust your mortgage interest deduction if you get a lower rate.
Q: Can I try to refinance or modify my mortgage on my own, without going through the program?
A: Working directly with a lender shouldn't be a problem if you think you're not eligible for the federal program. Just beware of getting a third party involved, especially if they ask for an upfront fee.
Last week, government officials warned homeowners of scammers that charge fees of $1,000 to $3,000 to help with loan modifications. Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.
Officials said the scams often go by official-sounding names designed to make borrowers think they are using the Obama administration's program.
http://www.msnbc.msn.com/id/30197516/
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Obama launches mortgage rescue plan
First participants in the Treasury Department's program to help homeowners avoid foreclosure include some of the nation's largest banks.
NEW YORK (CNNMoney.com) -- The Obama administration's loan modification program is finally underway.
The Treasury Department announced Wednesday the first six participants to sign up for President Obama's plan. They include three of the nation's largest banks: JPMorgan Chase (JPM, Fortune 500), which will get up to $3.6 billion in subsidy and incentive payments; Wells Fargo (WFC, Fortune 500), $2.9 billion; and Citigroup (C, Fortune 500), $2 billion. The others are GMAC Mortgage, $633 million; Saxon Mortgage Services, $407 million; and Select Portfolio Servicing, $376 million.
Additional loan servicers will be added to the list over time, a Treasury spokesman said.
Several major servicers, including JPMorgan Chase and Wells Fargo, said they began modifying loans under the government initiative earlier this month. CitiMortgage signed up for the program on Monday and will start processing applications soon.
"We view this modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership," Wells Fargo said in a statement.
Distressed homeowners and housing counselors have been eagerly awaiting the program's launch since Obama first announced it on Feb. 18. However, it took weeks for the government to clarify the terms and for the financial institutions to update their systems and start accepting applications, frustrating many of those in trouble.
Billed as helping up to 9 million borrowers stay in their homes, the two-part plan calls for servicers to reduce monthly payments to no more than 31% of eligible borrowers' pre-tax income or to refinance eligible mortgages even if the homeowner has little or no equity. The government is allocating $75 billion to subsidize part of payment reduction, as well as provide thousands of dollars in incentives for servicers and borrowers to participate.
The Treasury Department said Wednesday it is capping the payments to servicers to allow more companies to participate. It is allocating $50 billion to the program, with Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500) and the Department of Housing and Urban Development providing the rest.
The modification plan calls for the servicer to reduce interest rates so that the monthly obligation is no more than 38% of a borrower's pre-tax income, and then the government would kick in money to bring payments down to 31% of income. Servicers can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the servicer would have received if it had reduced the interest rates.
Only loans where the cost of the foreclosure would be higher than the cost of modification would qualify. Also, Treasury will not provide subsidies to reduce rates to levels below 2%.
It was not immediately clear whether the servicers must pay the incentives to homeowners and investors out of their funding share.
In addition to subsidizing the interest rates, servicers will use the Treasury funding to pay for incentives for themselves, homeowners and investors. The program gives servicers $1,000 for each modification and another $1,000 a year for three years if the borrower stays current. It will also give $500 to servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrower falls behind.
Homeowners, meanwhile, will get up to $1,000 a year for five years if they keep up with payments. The funds will be used to reduce their loan principals.
The Treasury Department set the caps based on public data about the mortgages the servicers handle. Though the program mandates that servicers modify all loans that meet the requirements, the department feels the servicers will have sufficient funds to cover all troubled borrowers' applications.
"We're confident we'll have enough money," said Treasury spokesman Andrew Williams.
Separately, major servicers also recently started accepting applications under the refinance portion of the program.
Friday, April 10, 2009
Obama: Timing right for millions to refinance
WASHINGTON — Declaring "good news" in the midst of an economic meltdown, President Obama on Thursday urged families to take advantage of record low mortgage rates by refinancing their homes.
"We are a time where people can really take advantage of this," Obama said, seated with a handful of homeowners who have already lowered their bills.
Rates on 30-year mortgages have fallen and last week hit 4.78% on average, the lowest on record. Rates are down by more than a full percentage point from a year ago.
"The main message we want to send today is there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates," Obama said in a photo opportunity in the Roosevelt Room. "That is money in their pocket."
The president encouraged people to take advantage of a government website —www.makinghomeaffordable.gov— to see how they can get help.
In just a handful of minutes of addressing reporters, Obama read the website address aloud five times.
But the top U.S. housing official said later that interest rates on typical home loans will probably continue to fall from their current, record lows..
"I think you will see them continue to come down, based on everything that we're doing, but recognize that they've already started to make a big difference," Housing and Urban Development Secretary Shawn Donovan said on CNBC.
Donovan was speaking after the White House press event where Obama touted his plans to rescue the housing market.
In late February, the White House announced a plan to help 9 million homeowners win lower mortgage rates or lower their monthly bills to a more affordable level.
"Home purchases are up about 20% since we announced the plan so we are already beginning to see a difference," Donovan said.
The president credited his own government's efforts, in part, for contributing to a recent surge in refinancing. The collapse of the inflated housing market helped contribute to a meltdown in the financial sector and the broader economy, and millions of people have lost their homes or been at risk for foreclosure.
Obama also warned people to watch out for scam artists.
"If somebody is asking you for money up front before they help you with your refinancing," Obama said, "it's probably a scam."
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
"We are a time where people can really take advantage of this," Obama said, seated with a handful of homeowners who have already lowered their bills.
Rates on 30-year mortgages have fallen and last week hit 4.78% on average, the lowest on record. Rates are down by more than a full percentage point from a year ago.
"The main message we want to send today is there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates," Obama said in a photo opportunity in the Roosevelt Room. "That is money in their pocket."
The president encouraged people to take advantage of a government website —www.makinghomeaffordable.gov— to see how they can get help.
In just a handful of minutes of addressing reporters, Obama read the website address aloud five times.
But the top U.S. housing official said later that interest rates on typical home loans will probably continue to fall from their current, record lows..
"I think you will see them continue to come down, based on everything that we're doing, but recognize that they've already started to make a big difference," Housing and Urban Development Secretary Shawn Donovan said on CNBC.
Donovan was speaking after the White House press event where Obama touted his plans to rescue the housing market.
In late February, the White House announced a plan to help 9 million homeowners win lower mortgage rates or lower their monthly bills to a more affordable level.
"Home purchases are up about 20% since we announced the plan so we are already beginning to see a difference," Donovan said.
The president credited his own government's efforts, in part, for contributing to a recent surge in refinancing. The collapse of the inflated housing market helped contribute to a meltdown in the financial sector and the broader economy, and millions of people have lost their homes or been at risk for foreclosure.
Obama also warned people to watch out for scam artists.
"If somebody is asking you for money up front before they help you with your refinancing," Obama said, "it's probably a scam."
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Tuesday, January 27, 2009
New Frannie, Freddie rules on the way
Regulator will issue new rules governing the mortgage finance company's portfolio holdings. Also coming, new capital requirements for Federal Home Loan Banks.
NEW YORK (CNNMoney.com) -- The federal regulator of Fannie Mae and Freddie Mac will set new rules early next week governing the mortgage finance companies' portfolios, which play a crucial role in the nation's housing market.
The Federal Housing Finance Agency is required by Congress to issue regulations ensuring the companies' portfolios are backed by sufficient capital, while keeping in mind their ability to provide funding for the mortgage market by turning home loans into securities. Their portfolios contain mortgages and securities backed by home loans.
The agency will also establish new capital rules for the 12 regional Federal Home Loan Banks, which provide much-needed low-cost funding for more than 8,000 banks nationwide. The home-loan banks have suffered in the economic crisis and may have to reduce their lending to shore up their finances.
"The regulations will address items critical to the safety and soundness of the 14 government-sponsored enterprises, which play a vital role in the nation's mortgage market," said James Lockhart, the agency's director.
Analysts, however, say it's more important to determine the future of Fannie and Freddie, which were taken over by the federal government in September, than to issue portfolio regulations.
"What Congress decides to do with these two companies is the real question," said Jonathan Koppell, associate professor at the Yale School of Management.
Portfolio problems
Fannie and Freddie are the largest sources of funding for the U.S. housing market. They buy mortgages from lenders and either hold them on their books or bundle them into securities. The companies also buy mortgage-backed securities.
Their $1.7 trillion portfolios have long been a source of controversy. Regulators had capped the growth of the companies' portfolios after the pair emerged from accounting scandals earlier this decade in an effort to minimize their riskiness.
But as the mortgage crisis unfolded over the past two years, the federal government has leaned more heavily on Fannie and Freddie to keep the housing market afloat. With investors shying away from buying mortgage-backed securities, the two companies are essentially the only players in the arena nowadays. Regulators lifted the portfolio caps last March.
Fannie and Freddie, however, continue to suffer as delinquencies rise. On Friday, Freddie announced it would ask the U.S. Treasury for up to $35 billion more in assistance as it anticipates losses in its fourth-quarter results. The company has already drawn down $13.8 billion of the $100 billion in federal funds made available to it when it was placed into conservatorship in September.
Trouble at FHLB
Meanwhile, the agency must also set capital requirements at the Federal Home Loan Banks, which are owned by the 8,000 member banks but have an implicit government guarantee. Established during the Great Depression, the home-loan banks are the nation's largest source of residential mortgage and community development credit. They provide low-cost loans, called advances, to member institutions, taking collateral such as high-quality mortgage-backed securities in exchange. Banks nationwide have increasingly relied on the home-loan banks for crucial funding as other sources dry up.
But as the value of the mortgage-backed securities drops, the home-loan banks are facing a credit crunch of their own. Some have cut back their dividends. Others have announced they may fall below their current capital requirements.
If the Federal Housing Finance Agency ups the home-loan banks' capital rules, they may not be able to lend as much. But that may not be a bad thing, experts said.
"The problem of the last five years is that people were doing too much lending," said Thomas Stanton, a lecturer at Johns Hopkins University. "They cannot be as big as everyone would like."
Tuesday, January 13, 2009
Fannie and Freddie give borrowers more time
The companies extend a moratorium on foreclosures hoping that more borrowers can solve mortgage payment woes.
NEW YORK (CNNMoney.com) -- Mortgage giants Fannie Mae and Freddie Mac have extended a moratorium on foreclosure suspensions for another three weeks, directing the mortgage servicers they work with to postpone any foreclosure or eviction proceedings through January 31.
Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) projected that, under the original moratorium, which began Nov. 26 and was scheduled to lapse on Jan. 9, 6,000 homeowners would avoid bank repossession and eventually qualify for mortgage modifications. The companies don't have any actual statistics tracking how many borrowers the moratorium has helped.
The extension should give servicers more time to help these at-risk homeowners enroll in the companies' Streamlined Modification Program.
That program is aimed at helping borrowers who are 90 days or more late on payments, who own and occupy their primary residences and who have not filed for bankruptcy to reduce mortgage payments to no more than 38% of their income. It was launched by Freddie and Fannie on December 15, 2008.
"Freddie Mac is committed to pursuing every responsible opportunity to reduce foreclosures and accelerate the return of stability to the U.S. housing market," said Freddie Mac CEO David Moffett in a prepared statement. "Today's announcement will provide Freddie Mac and its servicers additional opportunities to help put more families on the path to stable homeownership."
Renters benefit too
The foreclosure grace period applies to owners of single family homes as well as multiple family houses of two to four units that are occupied by renters. In addition to cutting the number of foreclosures, it could also help some families who rent apartments remain in their homes.
In the past, when building owners were foreclosed on their renters often faced immediate eviction, even when the renters were up to date with their payments.
In December, Fannie announced a new policy for renters called the National REO Rental Policy, which allows these renters to stay in their homes as long as they have legitimate leases and keep up with their rent payments.
The company said the additional three weeks of the moratorium will enable Fannie to put this new REO Rental policy more fully into operation.
It will also give Fannie more time to make sure all of its seriously delinquent borrowers who are eligible receive help from the company's "Second Look" initiative.
Under this program, which launched early last fall, Fannie Mae personnel work with servicers to make sure that all homeowners facing foreclosure have been contacted and told of the possible workout options available to them.
The more information the companies can get to homeowners, the more likely they are to save their homes.
Thursday, December 11, 2008
Foreclosure Activity Drops to June Levels
WASHINGTON (AP) - The number of American homeowners dragged into the housing crisis fell last month to the lowest level since June as new state laws lengthened the foreclosure process, RealtyTrac reported Thursday.
"We're going to have a pretty significant spike in January," said Rick Sharga, RealtyTrac's vice president for marketing. Plus, as job losses mount, "increases in foreclosure activity follow that pretty directly," he added.
Nationwide, more than 259,000 homes received at least one foreclosure-related notice in November, down 7 percent from October, but 28 percent higher than a year ago, RealtyTrac said.
The report comes as Democrats, including President-elect Barack Obama, insist that the government must use some of the bailout funds to halt rising foreclosures.
Last week, the Mortgage Bankers Association reported that a record one in 10 American homeowners with a mortgage was either at least one month behind on their payments or in foreclosure at the end of September.
RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 78,000 properties were repossessed by lenders last month, said the Irvine, Calif.-based company.
The worst recession in decades, falling home values and stricter lending standards have ensnared millions of U.S. households. The Federal Reserve predicts that new foreclosures this year will reach about 2.25 million, more than double pre-crisis levels.
In RealtyTrac's report, Nevada, Florida and Arizona had the nation's top foreclosure rates. In Nevada, one in every 76 homes received a foreclosure filing last month. Florida saw one in every 173 properties receive a foreclosure filing, and in Arizona it was one in every 198 homes. Rounding out the top 10 were California, Michigan, Georgia, Ohio, Colorado, Utah and Idaho.
Among metro areas, the Cape Coral-Fort Myers area in Florida was first, with one in every 59 housing units receiving a foreclosure filing. It was followed by Las Vegas, and the California cities of Merced, Modesto and Stockton.
December 11, 2008 9:55 AM ET, reported by the Associated Press news
http://news.moneycentral.msn.com/category/topicarticle.aspx?feed=AP&Date=20081211&ID=9442804&topic=TOPIC_ECONOMIC_INDICATORS&isub=3
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