The California State Legislature will this week debate a bill this week that aims to further assist Californian households keep the foreclosure dragon from their doors while they attempt mediation. This legislation introduced by Democratic Representatives Senator Mark Leno and Senate pro-tem President Pro Tem Darrell Steinberg is targeting banks that foreclose while they agree to mediate, but faces an uncertain future as commercial opponents do their worst to block it.

The Democratic partners are proposing that mortgage firms be required to post new types of notices to borrowers, advising them on the options that they have, and finally (and if this applies) explain why they did not qualify for loan modification in plain American english. They are also proposing that if lenders break their rules, then their borrowers might sue them for compensation, perhaps asking in addition that the property confiscation be reversed, and their homes returned to them.

According to Senator Mark Leno, this will plug a gap in HAMP that does not provide for aggrieved borrowers to seek relief. “We’ve heard so many horror stories,” he told me “In some cases, borrowers have been approved for a loan modification, they’re making loan modified payments and their home is foreclosed upon. That should not happen.”

The Senator and his pro-tem President are facing determined opposition against their efforts. The California Mortgage Bankers Association is complaining that the bill duplicates existing State law, and the HAMP program too, adding complications to an already convoluted bureaucratic process, and encouraging litigation by delinquent borrowers.

On the far side of the debate individual Californians like Gina Gates-Portales are adding different kindling to the fire. The businesswomen lost her home in Evergreen to a lender who foreclosed just as she was completing the modification document pack it had asked her to prepare. “All along, I’m thinking, someone’s going to realize this is a big mistake.” she says. “These servicers are not doing their jobs ethically, and their excuse that oh, we’re just overwhelmed is not an excuse [al all].” The feisty lady tried (and failed) to have her repossession reversed, and ended up renting in a condo.

Current Californian legislation requires that mortgage firms must make multiple attempts to discuss options with their clients at least 30 days before they file a first notice of default. The new bill proposed by California Democrats adds layers of detail to this, further strengthening householder’s chances of getting a fair chance to debate matters with their bank. This would tip the scales back the other way in a situation where the beneficiaries of a mortgage originally thought they signed as Americans with the same judicial rights.

Get the news first at www.foreclosureconnections.com.

In a bizarre twist to the foreclosure tale, increasing numbers of American borrowers are indulging in DIY modifications, in terms of which they simply stop paying, and dare their lenders to do their worst.

Take the case of Florida residents Alex Pemberton and Susan Reboyras, for example. They went underwater for a variety of reasons, including the property crisis, medical issues, and the “stupid” decision of their bank to allow them to re-mortgage their home so that they could purchase a truck for their attic-renovation business. They were face with two choices: bankrupting themselves by paying off more than their house was worth, or stonewalling while they rebuilt their business, and their lives.

The latter option has been good for them. Since ceasing their mortgage payments last summer, Alex Pemberton and Susan Reboyras have been concentrating on their future, not their past, and even spoiling themselves from time to time with an occasional steak out, a trip to the local casino, or an outing in their airboat. “Instead of the house dragging us down, it’s become a life raft,” Mr. Pemberton told me. “It’s really been a blessing.”

The pair form part of a growing throng of Americans who refuse to retreat into the dunce’s corner. Rather than throw good money after bad, they have decided to use what they have to get back on their feet, and move on. They don’t have to beg and scrape for mercy at a public counter any more – they can make their own decisions, and any moral reservations that they might otherwise have had are masked by a conviction that it is their bank that is to blame, not themselves.

The 1.7 million foreclosure suits current in the United States are increasingly bogged down by legal counter-suits, pressure from government to re-the negotiate, and the sheer volume of workload. The fact that the average borrower facing foreclosure is delinquent for an average of 438 days strengthens the stance of those who refuse to pay – even if they did for a while, they argue they would likely not get any money back once the sheriff had called.

Alex Pemberton and Susan Reboyras are using the $1,837 they save every month wisely. Following a campaign of printed advertisements they managed to afford local television too, and their business is flourishing again.

Needless to say the banks are still sandbagged around the moral high ground. Their spokespersons accuse people like Alex Pemberton and Susan Reboyras of milking the system, of being free riders, and of taking advantage of the lifelines offered by Washington.

What would you do if you were underwater right now? You can follow the news at www.foreclosureconnections.com.

The current American foreclosure crisis is affecting people right across the social spectrum. This includes the wealthy, the middle class, and the emerging successful too – stories affecting previously disadvantaged people are especially distressing.

Take the case of African-American Tyrone Banks, for example. The single father had been seeing his economic hopes dawning as he worked for Mississippi Fedex, moonlighted elsewhere, built a fine brick Memphis house, put his eldest through the local college and worked on his retirement plans.

The recession that is still rolling through has hit our friend badly as mortgage interests shot upwards and his career nosedived. These days a fit intelligent man in his fifties is facing both foreclosure and bankruptcy as he cleans toilets and mops up spills for a survival living. He’s still proud of what his past accomplished, but equally sad to see his personal tides of fortune ebbing out.

Memphis – where the foreclosure rate is twice the national average – used to be the symbol of an America beyond racial history where her black sons and daughters could also join the middle class. These days the city paints a blacker picture of a different hue – America’s current woes have pushed black wealth back two decades, all but erasing progress made.

Until five maybe six years ago the median incomes of African-Americans in Memphis had been rising steadily, but now it’s back down to 1990 levels – and just on half of what white people earn. Their neighborhoods are in tatters with foreclosed houses standing empty in Cordova, Orange Mound and Whitehaven and prices following accordingly.

Memphis black unemployment is also worsening. It currently stands at almost 17% compared to 9% two years ago, more than three times worse than the local white unemployment rate of 5.3%. The worst long term effect of this will be the impact of current milking of savings, retirement reserves and other assets in an attempt to stay above water – is America building another generation of poverty stricken black older folks while the nation sleeps?

Expect the repercussions to be long lasting, says the Institute on Assets and Social Policy at Brandeis University. The historic gap in wealth between black and white Americans is a long unhealed and festering sore. According to the Federal Reserve, for every dollar a white American family holds, their black neighbor possesses just 16 cents.

“This cancer is metastasizing into an economic crisis for the city,” said Mayor A. C. Wharton Junior. “It’s done more to set us back than anything since the beginning of the civil rights movement.”

The Memphis mayor and his officials point their fingers at banks like Wells Fargo. Do you agree? Read more at www.foreclosureconnections.com.

The foreclosure debacle across America is saddest when individual stories are laid bare.

The Port St John, Florida John Doe of this morning’s story was laid off from construction over two years ago, and has been struggling to keep a roof over the heads of his wife, three children and two dogs since then. The replacement job he managed to secure pays two thirds less, and, inevitably he sank slowly under water.

Wells Fargo was initially disinterested in restructuring or even temporary deferral, and filed foreclosure in December 2009 when his default reached six months. Undeterred, our John Doe hired a lawyer to get him into court appointed mediation, hopefully, for him, leading to lower monthly repayments.

All repossession notices in Florida are supposed to automatically lead to mediation – the lawyer for the household is at pains to stress that his client is just asking for temporary relief, and certainly is not expecting an exception to get his home for free.

Head of Wells Fargo Home Communication Teri Schrettenbrunner says that, although the bank is keen to help American families stay in their homes if their financial hardship can be proved, it is also bound to honor contracts on the input side of its cash flow.

This morning’s John Doe and his lender bank are not alone in their predicament – millions of working class to middle class families (and their banks) are facing similar dilemmas. Analysts estimate that up to 10% of all American home mortgagees are sixty days or more delinquent, with Florida double this. While judicial mediation seems attractive, the bottom line is that, so far, Obama’s strategy has hardly made a dent, with HAMP’s Home Affordable Modification Program having achieved just 300,000 loan modifications out of a potential 3.2 million customers to date.

Washington’s efforts are being underpinned by a number of individual State initiatives that are hopefully bringing power to Obama’s elbow:

• Nevada implemented a mediation program that empowers troubled borrowers to insist on mediation, and appointed 150 mediators to get things rolling.
• Maine set guidelines for scheduling mediation conferences, granting stays of execution and proving good faith. It also penalizes lenders who decide not to go along with things its way.
• New York State amended its mandatory settlement regulations to embrace all foreclosures affecting borrowers’ primary residences
• Many other States have something similar in place.

Florida, on the other hand, is sadly lagging, which is perhaps the reason why its foreclosure numbers are so high, as it can be verified in foreclosure listings from there. The Bill introduced by Senator Bill Nelson in December 2009 with something similar in mind has been assigned to a Committee, with nothing else forthcoming since.

Be first with the news at www.foreclosureconnections.com.

America’s foreclosure analysts are in agreement that the rate of foreclosures is leveling out across the country, but will not be declining soon. This means a considerable number of properties is still available on the countrywide foreclosure listings.

One leading online analyst has reported that foreclosures were 9% down in April compared to March across the States, adding that this was the clearest evidence yet that the rate had reached a plateau, and could start going down. Other positive news that they reported was that the April rate was 2% down year on year too – the first countrywide annual drop since the current round of property market troubles began.

This opinion was echoed by another leading reporter of American property data – according to the firm April 2010 bank repossessions and advertised auction sales affected just 333,837 American properties, similarly 9% down from the previous month and a drop of 2% year on year.

The company’s Chief Executive summarized the current position as follows:

• While these were two important milestones indicating that foreclosure activity had begun to plateau, it would not drop from current heights soon
• April was the first month since the crisis began that showed an annual decrease in American rates of foreclosure
• Actual bank repossessions continued at a record monthly high, while up the pipeline notices of default were substantially less both on a yearly and a monthly basis.
• These trends would most likely proceed for most of 2010, with the period characterized by surges of activity as unrelenting lenders disposed of backlogs as they could.

A third well-known analyst has been quoted as saying that for the first time in the current crisis, a greater number of foreclosured properties are completing the cycle than are the new ones entering it.

Although banks in historically hardest hit States like Arizona, California, Florida, Nevada and Texas continued to have high inventories of foreclosed property, several did see noteworthy decreases. This further confirms the claim that the pipeline is now receiving less than it is discharging. While the ratio in favor of the back end of the process is at least partly due to increasing foreclosure completions by both government lending agencies and banks, the stabilizing opening notices served is hard evidence of a steadying of the market.

This does not however mean that the rate of new foreclosures will drop soon – the ongoing recession and accompanying unemployment is still a determining factor, especially in troubled economies as still exist in Idaho, Michigan and Utah (and Georgia, Illinois and Massachusetts to a lesser degree as well).

The situation is set to continue for a while, and we’ll continue reporting on it at www.foreclosureconnections.com.

The Foreclosure Road show convened by 13 of America’s largest commercial banks, the Treasury Department and a posse of the more reputable foreclosure-counselors keen to get in on the act stopped off in Columbus, Ohio recently.

Here’s how a fictitious delinquent American might have experienced the show:

Mary Doe fell behind with payments after ceasing work to care for her son

She joined 463 other Ohio citizens at the Great Columbus Convention Center queuing eagerly to learn if they could keep their homes. All were behind on mortgage payments. Some had lost jobs, some were recently divorced, and some had faced a recent family medical crisis, while others were simply just too deep into the swamp. Many had brought packs of documents along, and some were even accompanied by children, in the hopes of charity perhaps?

Mary received a brochure that explained she might qualify for reduced payments courtesy of her lender (or HAMP) if the following were true of her:

• She was able to document a hardship case demonstrating her inability to meet her monthly mortgage payments
• Her first mortgage was dated prior to 2nd January 2009
• She owned and occupied her home
• $729,751 or less was outstanding on the mortgage
• Her payments (including insurance, tax and home association obligations) were greater than 31% of her monthly gross

The camaraderie in the queue was good, and the conversation brisk. Mary Doe got chatting with a gentleman and his wife, who’d been in the queue since daybreak. “We’ve been trying to work this out since November,” they told her. “They won’t let us talk to anyone at the bank, or every time we call they say the computer is down.” She learned he’d lost his job about a year ago.

What he told her did not map across to what she’d heard the banks say on the television – Mary Doe shivered in the cool morning air as she wondered what her chances were. Then she left the queue, and returned home disappointed.

Foreclosure is a lose-lose solution, and its failure all way the round. So why is so much of it still happening? And why have a scant 20,000 Ohioans been helped out of a population of 208,000 with troubled loans? The problem could lie in HAMP’s $729,751 debt ceiling. Could it be attracting people to the game who never had a hope in Hades of servicing their debt, even were it reduced?

When will the foreclosure crisis finally come to an end, and American households be able to sleep better in their beds at night? More news is waiting at www.foreclosureconnections.com.

While the total number of American households behind on mortgage payments went up again in the first quarter of 2010, and this time to record heights, the Mortgage Bankers Association (MBA) is also predicting that the nation’s problems may be starting to ease.

Meanwhile the growing rate of delinquency is alarming economists who prefer a straight line between economic growth and honored credit.

The seasonally adjusted rate published by the MBA reflects that 10% of all indebted American households are in financial difficulty – that’s up from 9.1% the same time last year, and 9.5% from the last quarter of 2009. Nevertheless, the Group’s Chief Economist Jay Brinkmann believes the rate of increase is slowing down.

“We are in extraordinary times,” he says. “How much of the change is being driven by seasonal factors or the fundamental changes in the trend is unclear … if mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse. However, a bad situation that is not getting worse is still bad.”

That’s great techno speak from an acknowledged expert in his field. But of what use are his platitudes to otherwise impeccably decent American borrowers who have no hope of recovering their delinquent situation?

Around 68% of troubled households are three or more payments behind. Approximately 4.6% of mortgages are currently in the foreclosure pipeline, the end of which discharges straight into the Sheriff’s in-tray. This is about the worst it’s ever been – the rate was 3.9% last year. The worst affected area continues to be Washington where 10.4% of borrowers are now in trouble compared to 9% year-on-year. The rate in Virginia is 9.4% (up from 8.3%) while Maryland is the region’s black sheep with 13.8% for the first quarter of 2010 compared to 11.3% last year.

While modest but welcome improvements in the American economy have helped some borrowers stay out of the foreclosure courts, banks have been getting more aggressive lately as is reflected in their increased foreclosure activity. Mary Hunter, who’s a Director of the Hyattsville Housing Initiative Partnership, was showing signs of strain the other day.

“The people who have fallen into delinquency have slowed down,” the said, “but the other side of the process is speeding up.”

Bank foreclosures continue to be a thorn in Washington’s side despite an exceptional federal program that includes paying them to reduce borrowers’ monthly payments. Approximately 300,000 sinking households are now shored up by permanent loan modifications – more could have been assisted if somebody had better explained the process to them. What a shame the government forgot to tell them how to do it properly.

Information courtesy of www.foreclosureconnections.com.

According to the Federal Department of Housing and Urban Development, Maryland’s Baltimore, Montgomery and Prince George’s Counties are set to receive a further $3 to $6 million this fall, thanks to a grant from Washington that aims to further help local communities purchase foreclosed real estate for re-development. The idea is to provide a steady hand to neighborhoods staggering under the aftershocks of foreclosures that include rock-bottom selling prices that drive the rest of the market down.

The process began in 2008 when Washington handed over a total of $4 billion to State administrations. Each received a base allocation of $19.6 million, with the rest going to targeted areas where the need was deemed greatest. The grants were subject to being used in an approved way within 18 months, failing which the funds would revert to Treasury Department coffers.

This Tuesday, Housing and Urban Development Secretary Shaun Donovan ran out of patience, and announced that not all States appeared to need all of the monies allocated, and that unallocated funds nor committed by this fall would be challenged elsewhere where they could be better spent, based on recent trends in foreclosure rates and vacant property.

“We will not know how much money will be recaptured because the deadline is not here yet,” Donovan added, although he did mention Prince George’s as a likely candidate for further assistance.

According to an unidentified Housing and Urban Development spokesman Montgomery and Baltimore have been earmarked as well. This is despite the fact that just 80% of the $26.7 million allocated to Maryland has been used thus far – that’s because the State expects to have expensed the remaining 20% by the 27 August deadline.

Beneficiary States may use their windfalls to acquire discounted properties for demolition or rehabilitation, or they can apply them in the form of first-buyer deposit and other assistance. They are also allowed to create Land Banks to manage purchased properties and sell them onwards. In the case of Maryland, over half the 2008 allocation has gone on specific projects with over 17,000 homes built, renovated or demolished. This effort has been bolstered by a further grant of $9.5 million received in the course of 2009.

It’s good to know that the State officials in Maryland are using HAMP’s grants wisely and expeditiously – it would have been a tragedy if the funds reverted to Treasury Department when the need remains so great in Baltimore, Montgomery and Prince George’s Counties. The additional monies in the pipeline will be warmly welcomed by officials with too many clients to help.

Keep in touch with us at www.foreclosureconnections.com while the 27 August 2009 deadline looms.

Information just released provides a hard-hitting summary of HAMP’s success (or failure, if you prefer) in recent months – over twice the number of American households tripped over Obama’s hoops as made it through the maze to permanent relief. That’s around 120,000 devastated hopes compared to 60,000 homes saved – for now at least.

On the upside it seems that things are finally happening. But, we shall never know the tragedies that lie behind these numbers.

This is the first month that rejections have exceeded approvals since these results have been reported on – in fact cancelled modifications jumped 82% month-on-month this April.

As might be expected, the Treasury maintained an upbeat stance. Chief of Treasury’s Homeownership Improvement Office Phyllis Caldwell recently told reporters that “… it’s important to remember that our focus has been on getting homeowners in trial modifications through the decision. As those decisions get made, it’s certainly expected that there would be some that would fall out of HAMP and be considered for other foreclosure alternatives.”

“The number is a very, very small percentage of the total amount of permanent modifications, she added.

Over 290,000 American households are currently benefiting from 5 year modification programs. These are often described as permanent because the rate of interest (which is at a historic low) is considered unlikely to grow much during the period of the loan.

So why did April cancellations exceed the sum of new permanent and trial modifications combined? And by 27%, compared to the Treasury Department’s own report?

“I think it’s great to take these numbers in context… with the broad efforts to stabilize the housing market,” says David Stevens, Chief of the Federal Housing Administration. David points out further that both home prices and the number of new foreclosures have begun to stabilize, and credits the government’s efforts in holding down interest rates and helping American households refinance their mortgages with lower rates and lower payments.

“We don’t claim that the housing market is totally out of the woods, but it’s certainly showing signs of stabilizing,” adds Herbert M. Allison Jr, Treasury’s Assistant Secretary for Financial Stability.

According to Allison, the cancellation side of the equation is up, in part at least, on account of an earlier version of the mortgage modification program that allowed trial applicants to merely state income, as opposed to proving it. He predicts that the proportion of approved permanent modifications will correct itself once these are through the system, and should be closer to 100% successful once the application criteria are correctly applied.

Do you think this solves the problem, or merely re-arranges the deckchairs on the Titanic? Find out at www.foreclosureconnections.com.

Tough new laws in New York State are helping curb the worst foreclosure excesses and here’s hoping it takes a good long time before crafty lenders pick holes in them. These days lenders have to give at least 90 days notice before proceeding to foreclosure, and are mandated to hold a settlement conference with their trouble client as well. It has also affected all the countrywide foreclosure listings.

In March 2010 (just one month after these new regulations took effect) foreclosures were 7% down year-on-year despite a national trend in the other direction. In April things went even better for New York legislators – foreclosures were down by 21% compared to a median 2% lowering countrywide.

But what will happen after the 90 day period of grace? Will the trend continue, or will the banks pick up again where they left off?

Ellie Pepper, Assistant Director at Better Neighborhoods Incorporated (a nonprofit housing group based in Schenectady) sides with the latter option. “We anticipate that foreclosure filings are going to pick back up in May and June,” he told me.

New York’s foreclosure laws were already consumer friendly before the current crisis in sub-prime loans kicked in, with an average one year processing cycle already an impediment to over-hasty lender action. In 2009 the State Legislature took steps specifically aimed at protecting this class of borrower further, especially those with lower incomes and troubled credit. Then, in December 2009, the State applied their new measures across the spread of mortgage lending.

“Now, every borrower (facing foreclosure) is entitled to a settlement conference,” Pepper of Better Neighborhoods added. “Everyone is getting the opportunity to work something out in front of a judge. More people are hearing about the assistance that’s available, more people are getting help before it’s too late.”

Further legislative teeth require lenders who foreclose to maintain the outward appearance of their new assets (this should go some way to prevent dilapidation of struggling neighborhoods) and bans upfront fees for foreclosure consulting services too.

All this puts New York State ahead in the game to our-maneuver greedily foreclosing banks and put back some balance into the borrower-lender relationships. Not surprisingly, the New York Bankers Association opposed these ideas in December last year, claiming that lenders would become less keen to lend, even to exemplary borrowers.

Will pigs fly, or banks stop lending money? Personally, I think neither. This is not all that different from the way in which all other sectors of the American economy squeal about consumer legislation. We’re still selling cigarettes in the States, aren’t we?

We’ll have to wait and see what happens after 90 days has passed – follow the news on this at www.foreclosureconnections.com.

The biggest single problem with President Obama’s plan to turn the tide of foreclosures is that, like King Canute himself, he’s sitting on the beach waiting for the tide to quietly agree to turn ahead of time.

I’ve just been reading the disturbing tale of three distressed households in Queens District, New York. Each of these three had met all the pre-approval criteria for mortgage reduction, all three had verified their incomes and paid their three month’s trial modification installments in full – and met all other contractual obligations they had with JPMorgan Chase.

Chase’s response was a quick as it was brutal. All three permanent modifications were denied, all three were reported as delinquents to credit rating agencies, and all three had their homes foreclosed under them.

How can this be possible, after all the efforts during the past year of HAMP? All three affected family wage earners were working full time too, and up to six days a week. Has JPMorgan Chase forgotten how to feel, or had a double lobotomy? This time through, the big and sometimes ugly face of banking has had more than a custard pie shoved up its nose – all three abused clients are suing the delinquent bank in the Federal Court of Boston with the support of the Urban Justice Centre (a New York non-profit legal services provider).

“We [just] want Chase to live up to the contracts they entered into and give permanent modifications to these homeowners,” said Ted De Barbieri, an attorney at the Urban Justice Center. “If you’re going to sign onto HAMP, you have to follow the rules. These homeowners followed the rules, and now it’s time for Chase to do [that as well].”

An unusually meek JPMorgan Chase spokesman is on record as saying that
Chase would be happy to talk with the customers, review their situations and see if they could help.

Isn’t it peculiar how big financial institutions change their tune under the media spotlight? According to Urban Justice Center’s Du Barbieri, they had hardly got a decent acknowledgement from the bank prior to filing.

To ram the point home, here’s the short history of the three gallant musketeers:

• JPMorgan Chase Customer One lost her job as manager in a retail business and fell behind on payments. She has subsequently taken up two jobs that between them keep her busy seven days a week. In the interim, her taxi-driver spouse has been making trial modification payments for the past eight months.
• JPMorgan Chase Customer Two fell behind on her mortgage payments when she lost her job in November 2008, but has been able to make three trial modification payments this winter. She is working part time and also attending school to improve her qualifications.
• JPMorgan Chase Customer Three alleges that the bank told him to skip payments in order to qualify for permanent modification – the first time he ever missed a payment in the lifetime of his loan.

Will JPMorgan Chase see the folly of its ways and make peace with these three musketeers? Follow the story at www.foreclosureconnections.com.

Washington has announced its intention to hand over $2.1 billion in grants to 10 States considered worst hit by the property market debacle, specifically charging them with getting their citizens back in work and above water again.

The States that qualified in principle but will benefit only if they are able to come up with convincing, innovative ideas are:

• Arizona
• California
• Florida
• Michigan
• Nevada
• North Carolina
• Ohio
• Oregon
• Rhode Island
• South Carolina

To date, only Arizona, California, Florida and Michigan have gone public on their proposals. Their ideas include variations around the themes of principal loan reductions and mortgage subsidies. Nevada has submitted a proposal that is still under wraps, while North Carolina, South Carolina, Ohio, Oregon and Rhode Island are still working on their ideas.

The Obama Administration’s hand-outs are sufficient only to assist a small percentage of American households battling with the twin devils of economic fall-out and the collapse of the property market – the pain being felt at the State Capitals right now is how best to justify helping the fortunate few.

This is what the first four States out of the starter’s blocks are planning to do:

• Arizona

State Officials in the Grand Canyon State (where there were approximately 74,000 foreclosures in 2009) hope to use their $125.1 million share to assist 4,000 compliant households, by matching lender forgiveness dollar-to-dollar up to a total contribution of $50,000 over 10 years. Assistance will also be provided to unemployed home owners in the form of helping reduce their loans to water-level, and then covering up to 30% of their new monthly payments for 24 months (up to a maximum value of $12,000). To qualify in principle, applicants must be in imminent danger of default, and be able to prove both household income on par with or below 12% of median local income, and that their hardship is not self-inflicted.

• California

The Golden State of California is planning on spending its $699 million on the futures of 38,095 people, by servicing 50% of an unemployed borrower’s mortgage payments to a maximum of $1,500 a month and for up to 6 months only. Homeowners who can start paying again, but have arrears may qualify for a one-off reduction of $15,000 in their principal amount, as long as the lender matches this, and what is paid to them is not more than 50% of their total outstanding debt. Loan amounts may not exceed $729,000; beneficiaries must live in their own homes, and also be able to sustain their new monthly payments.

• Florida

In the Sunshine State where 153,540 foreclosure notices were filed last year, Washington’s $418 million has been earmarked to assist up to 12,000 American families. Unemployed delinquent borrowers could qualify for 100% subsidies for up to 9 months – provided the bank concerned comes to the party too. A further $25 million has been set aside for legal support and another $40 million for down-payment assistance to first-time buyers.

• Michigan

Officials in the Great Lakes State have similar ideas on how to spend their $154.5 million bonus, this time focusing on borrowers who have become delinquent following medical emergencies, income contraction or unemployment. The State’s plan is to subsidize up to 50% of a qualifying lender’s mortgage payments (up to $750 a month), plus granting a $5,000 payment bonus when they are able to resume full payments once again. Consideration may also be given to making $10,000 contributions to principal reductions, provided that the lenders are willing to play ball as well.

This information was supplied by www.foreclosureconnections.com.

When Treasury’s Chief of Homeownership Preservation Phyllis Caldwell signed on 6 months ago HAMP was already in trouble. That’s because a huge majority of the 650,000 troubled homeowners who had signed for it still hadn’t the faintest idea of what their lot was going to be and, for many, their clocks were running out of spring.

Caldwell’s first step was to try to lever banks into accepting the principle of permanent loan modification – it there was a tougher entry point into the situation, then I haven’t come across it yet.

“I think the first month was a very steep learning curve [on the program],” the lady of understatements mentioned modestly.

Before becoming Leader of Washington Women’s’ Foundation (which channels grants to low-income and matriarchal families) Phyllis Caldwell spent her career in the financial services industry, touching bases with CitiGroup, First Chicago and Bank of America in the process. I should imagine that (office politics aside) managing a staff of thirty trying to reverse some risky banking decisions can’t be an easy transition, especially since she took over from a string of three interim leaders when she came of board.

Caldwell’s main brief, within an overall remit to help underwater borrowers refinance, is to administer the $75 million sweetener that’s designed to convince doubting Thomas lenders to play ball.

“I think she inherited a mess, a challenge I wouldn’t envy,” said President of the National Community Reinvestment Coalition John Taylor. “But I do know that because of her background, she knows what the solutions need to be.”

Caldwell’s new project has been fiercely criticized by some lawmakers and industry analysts for being slow in doing nothing. Even with Caldwell at the helm, the administration has still only helped around 200,000 borrowers through the process – a small piece of the action given the 4 million borrowers the Treasury originally targeted.

Last week, Treasury Secretary Timothy Geithner announced at a Senate Subcommittee Hearing that lenders that did not comply with the program were in danger of losing their taxpayer-funded program payments already granted.

“I certainly had to have a number of difficult conversations with servicers who may not understand why they need to do everything they need to do for this program,” Caldwell has said. “If servicers are going to get taxpayer dollars for modifying these loans, they have to modify them the right way.”

On a more positive note, short sales (where homes are sold below mortgage value and lenders forgive the difference) have begun to increase in number, although many have benefited owners who wanted to move for career purposes anyway. This seems to suggest that the latest HAMP initiative has failed to address the original target, which was to keep underwater families in their homes.

It’s a long and winding road that keeps Americans in their homes. You can follow it further at www.foreclosureconnections.com. Seize the opportunity and start investing in foreclosure homes through our huge foreclosure database, which provides the best deals on bank foreclosures for sale and a lot of kinds of cheap foreclosed homes.

Its time for the wealthy analysts who sit in judgment over lower and lower-middle class Americans laboring under foreclosure to catch a wake up call, take a dose of reality, and face up to the fact that foreclosure is affecting the super-rich too.

That’s right. Foreclosure is a national economic illness, not a just a blight on the humble poor who do not know to handle money. In witness to this fact, an increasing number of million-dollar homes are in possession right now – and that includes those with multi-auto garages, ocean vistas, year round pools and even media rooms.

Why only now? It’s simple. People with the money to buy these in the first place had reserves to sandbag tidal waves, at least ’til now. The top-end foreclosure peak occurred most recently during February 2010, with over 4.100 high-end homes somewhere in the pipeline between notice of intention and transfer to new owners – that’s a staggering 121% up from a year ago, and happening too just as the low to lower-middle quartiles are showing signs of stabilizing.

According to a well-positioned independent analyst, lower-end borrowers were the first to experience escalating foreclosures, because they did not have spare cash reserves or credit available. Luxury homeowners did (at least till now) – they simply flashed their credit cards and carried on as if nothing untoward was happening.

Will this continue, perhaps even through to 2011? It seems it could, although reliable regional data is still not yet available. According to Vice President Jim Kinney of luxury home brokers Baird and Warner, the trend is definitely up in Chicago, where 37 out of 295 million-dollar-plus single-family homes that sold in the first quarter of 2010 were either short sales, or foreclosures. A year ago, these sales amounted to just 10 in three months. The situation is not much different in Fort Myers, Florida either, where Mike McMurray of McMurray and Nette is expecting the pipeline for upper-end homes to swell accordingly.

Another indicator is likely to be the fact that the jump in the 90-day delinquency rate for houses worth a million dollars or more was 13.3% for February 2010, compared to 8.6% overall. The bigger difference, however, may lie in how far the better-heeled borrowers may be prepared to go before accepting the foreclosure baton. This is because there’s more at stake, and legal fees a relatively smaller amount.

For this reason the top-end of the American market is likely to be characterized by more re-negotiations and short sales, as opposed to foreclosure auctions. The prospect of high commission short sale bargains reportedly has salivating realty agents already flying in good prospects – is that innovation, or simply greed?

Whatever the case may be, high-end foreclosure and short sale bargains are back in town. You’ll find more than a few cherries available for picking at www.foreclosureconnections.com.

As HAMP finally begins to get its claws through the American banking industry’s thick hide, a face-saving scramble has started to ripple through Wall Street. Chase Bank seems to be catching up with the mood of America, and will be funding a series of foreclosure prevention counseling events starting in Chicago on May 17th, and continuing through Atlanta, Washington, D.C, New York, Northern California, Orlando, Phoenix, and Southern California at dates to be announced.

The intention of these information sessions, which could be staffed by up to 40 counselors, is to assist troubled Chase clients apply for loan modifications or obtain approval for short sales. The venues will also serve as temporary Chase offices for customers needing to sign documents or submit applications for relief.

These sessions are not a totally new idea – the Bank kicked off with the idea early in 2009 and has already provided face to face advice to many who have fallen behind with payments or face underwater situations. In Florida, for example, 3,200 clients were serviced and many were able to be assisted almost immediately.

According to ProPublica (a non-profit investigative organization) JP Morgan Chase subsidiaries have already modified over 43% of the 431,000 loans available for loan modification in terms of HAMP. This sounds impressive, particularly as Chase ranks second highest loan lender behind Bank of America.

The news would be even better if Chase had as a good a track record in this regard as some of its opposition. The latest Treasury Department league table of major lenders (with at least 5,000 eligible loans) reveals the following:

• Eight have modified a significantly larger proportion than Chase
• Wells Fargo is right on Chase’s heels
• Bank of America (the largest lender) lags far behind with a paltry 26.6%

Although big banks may argue that it’s the sheer volume of the work that’s holding them back, more skeptical observers claim that bigger also means more idle hands to help, and its really just a combination of the bigger the tougher, and those with least to lose heading the pack.

The question in my mind is whether Americans will still remember how their favorite banks are treating them in these tough days, when, at some time in the future, the housing markets finally turn, and the banks are back on television purring like cute kitty cats with 100% loans on offer.

Visit www.foreclosureconnections.com daily to be informed on the housing market. If you want to invest in foreclosures, join us today and find not only bank foreclosures for sale here, but a lot of types of foreclosed properties available in all parts of the country.

Treasury Secretary Timothy Geithner advised a Senate Panel yesterday that banks were still not doing nearly enough to help American households out of foreclosure. He added that some distressed borrowers who were entitled to federal aid were continuing to lose their homes.

This is bad news for millions of distressed American families who didn’t cause the problem, and who are already facing the prospect of being put out on the street.

While Geithner conceded that some lenders were doing better than others, he advised that all banks participating in the foreclosure program would be subjected to Treasury Department’s targeted, in depth compliance reviews, adding that some lenders could even lose out on future incentive payments if they did not improve the way they were towing the Treasury line.

“None of this is acceptable,” he told the Senate Appropriations Sub-Committee. “We are committed to making sure that servicers [lenders] hold up their end of the bargain,” Geithner added during his hard-hitting speech.

The Appropriations Sub-Committee would have been only too aware yestarday that, thus far, HAMP has helped just 200,000 borrowers with permanent loan modifications. This is miserably short of the 3 million plus American households who were supposed to benefit. Moreover, millions more homeowners are expected to fall victims to foreclosure in the next two or three years.

“I want to be clear that we do not believe servicers are doing enough to help homeowners, not doing enough to help them navigate the difficult and often frightening process of avoiding foreclosure,” Geithner emphasised. “They are not responding to the needs of responsible and increasingly desperate homeowners.”

Banks and other lenders would like America to believe that they have already bailed millions of distressed borrowers out, often without input from HAMP.

“While we share the Secretary’s continued frustration with anecdotes about lost paperwork and mistaken foreclosures, I don’t think blanket indictments of an entire industry are helpful,” responded Mortgage Bankers Association President John A. Courson. “Nevertheless, the industry is continuing to try and streamline and improve the loan modification process.”

In March 2010 Treasury announced incentives to persuade lenders to forgive short-sale under-runs by underwater sellers, and also require them to offer temporary relief to unemployed borrowers. Unfortunately this participation is still largely voluntary, and many banks are still dubious about the principal of forgiveness that would reduce their equities significantly. Moreover, many observers believe that a three month period of grace is still far too short to be of much use.

“These changes won’t be implemented until the fall, maybe too little, too late,” said Senate Majority Whip Richard J. Durbin.

Are you less than optimistic too? Perhaps you are also affected by the crisis? Read on at www.foreclosureconnections.com.

There’s good news for the property market in more than a few of the top 20 American metro areas, with 14 out of 20 reporting year-on-year improvements in their foreclosure rates compared to the first quarter of 2009, despite a general increase across the States.

According to a real estate services provider these declines are indicative of some successes being achieved through government intervention efforts, although the company was as pains to stress that this did not mean that the back of the problem was anyway near broken.

Of the top 20 metros, the Sun Belt continued to feel this most pain, with the four Sun Belt States occupying the four worst positions in the table and contributing largely to the overall less than acceptable 14 / 20 result. By comparison, 14 / 16 of the other leading American areas showed improvements in their foreclosure rate for the first quarter of 2010 compared to the same period in 2009.

Elsewhere in the States things were not nearly as good. Of the top 20 metro foreclosure rates, California claimed 10, followed by Florida with 7. Nevada scored 2, with Arizona bringing up the tail with just 1.

“The decreasing foreclosure activity in some of the nation’s top foreclosure hot spots in the first quarter is largely the result of government intervention and other non-market influences, and not a sure signal that those areas are out of the woods yet when it comes to foreclosures,” James J. Saccacio, chief executive of a real estate listings provider, told me. He added that a government program launched earlier this month and intended to facilitate short sales (where a lender agrees to accept a selling price that is less than the amount owed by a mortgagor), may have caused delays in the lodging of some foreclosure notices and skewed the results.

The real estate company has also confirmed that over 76% of large American metro areas reported year-on-year increases in foreclosure activity for the first quarter of 2010, at an average rate of increase of 16%. Of these, Las Vegas posted the worst foreclosure figures, with 3.5 % of total housing units entering the foreclosure cycle during the period – that’s 4.9 times the national average and 28,480 dwellings in three months.

Foreclosures continue to be the most serious threat to the American housing market, and, by implication, to the U.S. economy. The improvements in some major urban nodes are helpful, however there remains a great deal more to be done elsewhere.

If you found this information useful, then there’s more breaking news for you at www.foreclosureconnections.com.

The State of Indiana has started making renewed efforts to implement a nine month old bill that is intended to replace foreclosures with mediated solutions. This time it’s taking the novel approach of paying incentives to mediators.

State Government and Judicial Administrators released details on Wednesday of pilot projects in Marion and two other counties aimed at getting parties to the negotiating table through the application of incentives.

The program will pay facilitators $150 per every four successful mediations between lenders and financially embarrassed borrowers. There’s also a further $150 on offer to attorneys and logistical co-coordinators provided settlement is reached that extends the period of grace before foreclosure by at least 60 days.

Let’s hope, for everybody’s sake, that the principle of pay-for-performance works in this instance too, because there’s a lot rolling on it in Indiana.

The pilot project, which will be rolled out later to all Indiana Counties, will be financed from the $50 fee that lenders now have to pay to file a foreclosure in the State of Indiana.

To date, the State law requiring mediation before foreclosure hasn’t really worked – by the end of 2009 just 2% of eligible borrowers have exercised their rights to mediation.

This is a disgrace. Are things getting that bad that financially disadvantaged Americans have stopped believing in the open arms of Liberty?

According to Indiana Chief Justice Randall Shepard, the current drive aims to personally induce troubled home owners to work through the settlement process aided by energized facilitators. The program envisages ensuring that homeowners complete all the paperwork required so that they do not trip on administrative hurdles.

“This partnership will allow us to reach troubled borrowers more effectively and get them on the road to recovery,” an influential insider told me yesterday.

Marion Superior Judge Cynthia Ayers has high hopes that the re-jigged program will get more troubled householders into settlement conferences that could avert foreclosure. She told me that many threatened borrowers just don’t know their rights, and that the opportunity was stapled to the back of a stack of foreclosure documents up to twenty thick.

At least from now on, borrowers in the pilot areas will be contacted by telephone by a facilitator who will personally help them understand that they have the option of negotiating a mortgage modification that would have the effect of reducing their monthly payments.

One in 356 housing units in the Marion Metro Area was in foreclosure sometime in February 2010 – that means that 2,119 households were under threat that month, down by just 69 families compared to the same time last year. Since July last year around $600,000 has been collected in foreclosures fees. It’s not a lot of money, however, in these troubled times, every bit helps.

Follow the Marion Metro story at www.foreclosureconnections.com.

No everybody in Washington is in a mood to compliment HAMP unreservedly, and that includes influential SIGTARP Special Inspector General Neil Barofsky.

SIGTARP is Washington-speak for the modification to HAMP announced last month that aims to address negative equity issues and fumbling lender participation.

This time Barofsky lunched into highly critical mode on Tuesday as he unpacked the Governments foreclosure prevention program, in particular the new strategy to come to the aid of underwater and unemployed borrowers.

He was, however, diplomatic enough to concede that Treasury’s latest initiative is an important step forward – especially to the extent that it seeks to grow borrower participation and takes on the troublesome problem of assisted borrowers defaulting yet again as negative equity bites even deeper.

His hard-hitting report states that: “Treasury’s urgency in rolling out the new initiatives, laudable as it is, risks significant costs in the form of ill-defined goals, incomplete program guidelines, increased vulnerability to fraud, incentives that may prove ineffective, and the potential for arbitrary treatment of participating borrowers.” Barofsky’s counter suggestions include:

• Transparent participation goals and identified likely costs for each subcomponent of HAMP
• A unified set of property valuation requirements based on FHA standards for principal reductions and short sale programs, which will apply across the full spread of HAMP and will help counter fraud.

Barofsky is concerned that, because current rules don’t require formal valuation-appraisals before mortgage write down are sanctioned, this could leave a gap for dishonest borrowers to exploit. “No program of this type and scale can be considered well designed without robust protections of taxpayer funds against the predation of criminals,” his report added.

Another concern is current emphasis on voluntary participation by banks. Barofsky wants mandated principal reduction in terms of specific Treasury scenarios that will force fair play for all similarly distressed households and effectively manage borrower conflicts of interest. He’d also like to see the current three month waiver program for unemployed Americans extended.

Despite good intentions by Treasury to date, the Inspector General’s report is peppered with remarks like “very little progress” and “foreclosure crisis has not abated”. He also pointed out that the almost 2.8 million repossessions initiated during 2009 and 2010 were likely to “get worse.”

In the first three months of 2010 the nation saw 932,000 foreclosure filings, and bank foreclosures went up 35% year on year. HAMP has hardly scratched the surface with just 230,000 permanent mortgage modifications thus far.

Hopefully, Barkofsky’s closing comment “Until Treasury fulfills its commitment to provide a thoughtfully designed, consistently administered, and fully transparent program, HAMP risks being remembered not for catalyzing a recovery from our current housing crisis, but rather for bold announcements, modest goals, and meager results,” is still echoing in the White House and down the halls of Congress.

Read more about this on www.foreclosureconnections.com.

A leading industry player today reported that foreclosures are up almost 7% last quarter compared to the previous one. This comes as a shock following the relatively good figures for January and February 2010, and was caused by the worrying 19% increase in March.

Is this a sign that underwater borrowers are just giving up in the face of an emasculated HAMP, or are lenders benefiting from fresh confidence following the stonewalling of Congress by a few big banks recently?

Neither scenario bodes well for the distressed American property market or for the economy as a whole. It’s also turning back into bad news for politicians. Just about every American knows somebody in trouble right now, and the voters are bound to remember current events come next election, especially how the main political parties bickered while the tidal wave rolled in.

Knowing that average statistics can be misleading, I decided to dig deeper to find out where the hot spots actually were.

I found that, whereas foreclosures are rising, default notices, which herald new foreclosures, actually dropped 1% in the first quarter of 2010 compared to the same period in 2009. This was in sharp contrast to a 36% increase in bank repossessions over the same two periods.

Repossession is typically the final step in the foreclosure process, after which the affected property is usually sold. Talk is that the banks and other lenders have a huge backlog of foreclosed property in their possession and have decided to shift these in the interests of cash flow. This is tremendous news for buyers, because the increasing over-supply in the face of softening demand will push prices further down, meaning that we could be looking at a significant drop in median house prices drop in the months ahead.

Drilling further down into the statistics for the first quarter of 2010, I unearthed the following regional detail:

• The three highest foreclosure rates were reported in Nevada, Arizona and Florida, although Arizona is actually 16% down year on year.
• The only other top ten State that returned a year on year decline was California (6%)
• Utah, which only recently joined the top ten, recorded a 75% year on year growth, followed by Idaho at 48%.
• California reported close to 84,000 new defaults in the first quarter of 2010, which was far more than any other State. Nevada was the second worst, followed by Michigan.
• Colorado still holds the number ten position with a 27% increase in year on year foreclosures.

This is critical information for foreclosure buyers. It enables them to predict where the next round of value lies, and where to look for bargains on www.foreclosureconnections.com.

While it appears that there may be a slight slow down in foreclosures next month, things are set to look less rosy for commercial properties in the State Capital of Texas.

Over 300 commercial properties in Fort Worth, Dallas – worth $879 million in terms of original debt – are up for foreclosure next month. These include a full spread of shopping centers, apartments, offices and warehouses. What’s more, this number has remained static for the past few months.

George Roddy, President of Roddy Real Estate in Addison, expects the trend to continue. “I think it likely that, with so little lending going on, we’ll stay in the same rut where un-sold commercial property ends up getting foreclosed,” he told me yesterday. “Mortgages keep on falling due, and there is frequently nobody prepared to re-issue finance. In other cases the problem is low occupancy rates with not enough income to cover the debt.”

One of the major drivers stonewalling re-financing is the tougher lending rules that banks have introduced. What was easy to achieve just a few years ago has become impossible, and this is squeezing commercial landlords even more.

Although most of the affected mortgages were taken out in 2005 with a low average value of $3.3 million, there are some bigger exceptions too. California based investor Bentley-Forbes borrowed $193 million from CW Capital to finance the purchase of the 431-room Four Seasons Hotel and Resort in Irving, Texas. Now CW Capital is ringing the bell for foreclosure while Bentley-Forbes continues to negotiate.

Four Seasons Hotel and Resort Living is not the only headache for the investors. Bentley-Forbes also holds an interest in the Park Center office building in Dallas Park, Plano. In this case the hunter-down is JPMorgan-Chase, which is about to foreclose against an original loan of $43.4 million.

Another classic example is the Mosaic Apartment Complex in downtown Dallas which is once again posted for foreclosure by Prudential Insurance Company. The mortgage value on the loft residential building is $66.5 million, and analysts are predicting that the high foreclosure trend in Dallas commercial property will continue.

Latest estimates from Delta Associates & Real Capital Analytics suggest that there are $5.4 billion distressed commercial properties in Dallas and its immediate surrounds, with over 50% of the pain lying in offices and retail facilities.
In March this year the Dallas area held the 6th worst spot on America’s ranking for distressed commercial real estate, according to influential Delta Associates’ Top Ten ranking scorecard. Those above it include Manhattan, Florida, Los Angeles, Washington, D.C. and Chicago – all previously regarded as good places for commercial real estate investment.

This information is provided as a public service in the interests of intelligent foreclosure investment by www.foreclosureconnections.com.

The Congressional Oversight Panel recently released a 216 page report criticizing the Federal loan modification program as being “not effective enough”.

It was supposed to forestall America’s accelerating foreclosure, but right now just about everybody knows that this is not happening.

The Panel’s report also had harsh words for the Treasury Department, which is supposed to kick-start the program and bring help to American householders who are in danger of ending up in the street. Because the administration had not done enough, the foreclosure crisis had continued unabated, the report concluded.

The Congressional Oversight Panel was put in place to keep an eye on activities surrounding financial bail-outs and related initiatives. “It now seems clear that Treasury’s programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble,” the Panel report concluded laconically.

Obama’s Making Homes Affordable program (otherwise known as HAMP) was introduced in March 2009 with great fanfare to assist households where the primary wage-earner was either unemployed with a second lien to service, or sinking underwater – estate agent speak for a situation where the outstanding loan exceeds the current value of the property.

Nobody actually said how many borrowers would actually be helped at the time. Now at least the Congressional Panel has come clean with a comment that, at best, just one million American home owners could expect to receive aid.

According to the Treasury Department, by last month approximately 230,000 households had been assisted, with a further 781,000 passing through the trial modification phase.

This didn’t exactly bring the Congressional Oversight Panel out in praise. Their report noted that, even among borrowers who receive five year modifications, some will fall again and face foreclosure for a second time. “In the final reckoning,” the panel notes, “the goal of HAMP falls miserably short of the 4 million American householders it was supposed to assist”.

The Treasury Department argues that it was never the intention to help everybody – right from the beginning borrowers had to be in good standing with their payments before they even had a look-in. The Department seems to be overlooking the fact that many delinquent borrowers are facing a problem not of their own making – it was not they who shook the pillars of Wall Street, but the major tenants thereof.

It’s a vicious circle. Foreclosures are still on the rise, every foreclosure drives prices further down, and every price fall vacuums in more underwater borrowers.

Treasury Secretary Timothy Geitner isn’t mincing his words these days. “It’s going to be a painful process for many Americans,” he told me. “But we’re going to do what we can to deliver to as many people as we can reach.”

Are you personally affected by the crisis, or just following the news on broken promises? Read more at www.foreclosureconnections.com.

The Federal Government’s fight against foreclosures is hardly making a dent on the plight of millions of Americans who are sinking under water, according to the Congressional Oversight Panel tasked with monitoring progress with bail-out efforts.

Their report, issued on Wednesday, confirms long held opinion that, at best, only one million foreclosures will be prevented – this is hardly likely to please the millions of other troubled borrowers who do not end up being part of this small fraction.

According to a report issued by the Treasury Department on the same day, the number of Americans who have obtained permanent mortgage modifications has now crept up to 230,000. This is an improvement, but how much longer can the rest hang on?

The Treasury report added that, of the many more borrowers who entered the system, 150,000 have disqualified themselves by missing out on payments or have been bounced by the banks. Even more are still in limbo, and eviction is a constant threat.

Elizabeth Warren, who heads the Congressional Oversight Panel, puts some of the blame on Treasury’s tardy response to the emerging crisis. “The tragedy is that their program simply will not reach the overwhelming majority of troubled households in time,” she lamented. Treasury officials have responded by claiming that their program was never intended to help everybody in the first place. “It’s still going to be a very painful process for the rest,” said Treasury Secretary Timothy Gainer. “We just need to work harder to catch as many as possible in the net.”

Last month Obama announced new tweaks to HAMP that encouraged lenders to forgive underwater capital – that this is necessary is evidenced by the fact that, of those borrowers helped so far, 75% were already sinking.

Washington and surrounds is following the foreclosure trend itself, and has created its own Capital Area Foreclosure Network to help combine outreach efforts to troubled borrowers. The new network will include the Metropolitan Washington Council of Governments and the Non-Profit Roundtable of Greater Washington, as well as Fannie Mae and Freddie Mac. The four parties aim to share information among non-profit groups and banks while also encouraging a combined regional response to the problem.

An impending report from the Urban Institute will state that, while nearly 3% of Washington mortgages were delinquent and had entered the foreclosure process by the end of 2009, there are signs that the situation may be already turning.

“The region still faces a sizeable challenge,” says Peter Tatian of the Urban Institute, “and there are still a large number of trouble households behind with their payments.

The situation clearly needs a steady hand on the tiller. Why don’t you stay with us and keep an eye on the action at www.foreclosureconnections.com?

As American house prices continue to slide and a double-spike in foreclosures could be looming, there’s talk again that Obama’s well-meant HAMP may have to fall on its sword.

I chatted first with Stella Hopkins of the Charlotte Observer. The first alarming fact I learned was that, when the latest round of changes takes effect, unemployment benefits will not count when a lender looks to see whether a mortgage payment reduction could be feasible. That means, if you’re a distressed borrower on unemployment benefits you’re back to where you started.

Is that crazy or what? Did the Federal Government really intend to strengthen the arm of firms that benefit from foreclosures?

“This means is that the loan modification tool, which is supposed to help unemployed people keep their homes, is fatally flawed,” concluded Stella wryly.

I paid a visit to the N.C. Justice Center next, where I met up with nonplussed Attorney Al Ripley. “I’m afraid the guidelines are impractical to the point of being ridiculous,” he agreed. “Whoever wrote them simply doesn’t understand the needs of unemployed home owners.”

Helping people out of work to keep their homes is the keystone of Obama’s $75 billion plan known as HAMP that’s intended to put a brake on foreclosures. It’s supposed to help up to 4 million Americans between now and 2012 – but, if this keystone fails, the whole building will collapse like so many distressed Americans’ dreams.

Thus far a mere 170,000 home owners have received long-term relief in the form of modified mortgages – does this mean that the plan is flawed, or are the lenders not trying hard enough? While it’s true that HAMP does provide short term relief to underwater borrowers on unemployment benefits for at last three months, the six month cap on that is cruel, given the state of the unemployment market.

The uncaring twist in the tale is that, although home owners may apply for permanent relief later, if they’re still relying on unemployment benefits, then that income can’t count when their ability to pay anything is played off against their prospects of permanently downsized mortgage payments

Top N.C. Mortgage Regulator and leading light in national anti-foreclosure efforts Mark Pearce summed things up for me. “Any program that provides even temporary air space is good,” he commented. “What we need now is follow-through for those folks that remain unemployed for a longer time.”

“Think of it as band-aid,” N.C. Housing Finance Agency’s Foreclosure Prevention Team Leader Rich Lee added. “Although HAMP as it stands will not help a significant number of people permanently, at least we’ve bought some time.”

You’ll find more like this at www.foreclosureconnections.com.

The Federal Government’s objective to recycle foreclosed property into fresh opportunities for America’s hard-pressed lower and middle-lower income classes doesn’t seem to be working every time, as their richer countrymen hunt for bargains in the debris.

Ambassador Bridge owner Matty Moroun has been going on brave shopping sprees at Wayne County’s annual auctions of confiscated real estate for several years, and may have achieved the bargain of his lifetime in the process.

The normally astute real estate investor stayed underground during this time, buying 90 parcels through a corporate network of interlinked entities and paying the minimum bid of $500 per parcel in the case of 53 of these. On other occasions he paid up to a few thousand dollars each. Possibly someone else was sniffing around – alternatively he may just have been redeeming back taxes.

At first sight the ninety pieces of real estate that Moroun has bought – mainly residential and lying vacant – are among the bleakest in the city. The area has maintained an appearance of London after the Blitz ever since the Coleman A. Young International Airport fell into disfavor, with whole sets of blocks containing no more than a handful of houses from which the residents may view the foolishness of their investments across the bleak vista.

Has Moroun made one his rare investment faux pas? Not so, say local real estate experts. Moroun is buying forward against plans to revive the airport, perhaps even for privatization. If that happens, then the astute investor could be literally laughing his way to the bank in the not so distant future.

But Moroun is denying that he is speculating. In fact, he insists that the opposite is true. “I’m planning to build trucking facilities here for my automotive clients,” he claims. I’m in it for the longer haul and have no intention of making a quick buck on this one. I’m also planning to create new jobs for local people – it’s the right thing to do under these difficult circumstances.

Put this way, Moroun may well end up an unwitting partner to Obama’s plans for derelict real estate – if, and this is the big if, he follows through with construction and job creation.
Moroun’s choice of property reveals several interesting aspects of his world view:

• He does not buy at random, preferring instead to group his purchases near a potential development hub that could promote transportation or industrial growth in the future
• At least as far as the land near the old city airport goes, his model also includes snapping up dirt-cheap bargains.

Food for thought for others on the prowl? This information is provided by www.foreclosureconnections.com as a service to our clients.

President of Silicon Valley Association of Realtors Jeff Bell is a man with a mission as he goes about promoting HUD advice on foreclosure prevention. “Half the delinquent owners I speak to are just too scared to speak to their lenders’” he says. “They think this will speed up foreclosures, but in fact the opposite is true.

“Nobody wants to see a family out on the street, and the real truth is that lenders are keen to help them stay at home, especially with current government attention and media hype. Borrowers just need to start early enough to ensure there’s time enough to make a plan.”

The Department of Housing and Urban Development (HUD) recommends that distressed home owners take up the following advice as soon as alarm bells start ringing:

• Don’t ignore the problem: Do something straight away when you realise that you might be late with a payment. The longer you delay, the more complicated the recovery process becomes.
• Contact your lender immediately: Lenders want regular payments and profits, not problem houses to sell at a loss. They have various cards up their sleeves to help you.
• Open your mail: Your post and emails could include messages from your lender – your failure to read your mail will not be accepted as an excuse at foreclosure court.
• Know your rights: Revisit your loan documents to learn what your lender may, and may not do. Pay a visit to your local HUD office as soon as you can, and discuss your situation openly with a counselor. Remember, HUD is on your side but they need your cooperation if they are to take on a bank on your behalf.
• Get your mind around foreclosure options: Visit HUD online at http://portal.hud.gov/portal/page/portal/HUD for a comprehensive explanation.
• Make an appointment with a HUD-approved counselor: Low cost or even sometimes free advice is available countrywide. An independent counselor can help you better understand your situation, straighten out your finances and represent you with your lender. Call HUD at 800.569.4287 or TTY 800.877.8339 for more information.
• Prioritize the way you spend your money: Your home is your top priority after family health. Keep a record to see where your money goes; eliminate what you can, and set affordable budgets for the rest. Defer what you can, but please remember that what goes around will come around.
• Raise extra cash: Do you have a second car, jewelry or a whole life insurance policy you can sell? Who’s at home, not working and why not? Everything you do to help yourself will help your lender help you too.
• Stay away from foreclosure prevention companies: You don’t need to pay for help – you already helped pay for HUD with your taxes and now its payback time.
• Watch out for scams: Foreclosure prevention companies often hide a clause in their documentation that means you cede your home to them. Do not sign anything to do with your mortgage or your home without first consulting HUD or your attorney.

Did you find this information useful? If so, there’s more free information on our website at www.foreclosureconnections.com.

PMI Group led gains among mortgage insurers when it ramped up 17% to $6.73 last week following Barclays Capital Analyst Eric Berg’s prediction that the improved HAMP model will have a positive impact on the mortgage protection sector.

This is good news for borrowers too, because lowered predictions on mortgage insurance payouts means less foreclosures too, i.e., this will have an effect on the countrywide foreclosure listings.

“My recent conference call with Investors and Treasury Mortgage Specialists like Seth Wheeler and Laurie Maggiano was encouraging,” reported Berg in his regular Monday update to Genworth stake holders. “I’m now expecting paid claims to be lower across the sector and countrywide, with Genworth posting lower losses in successive quarters and its value settling between 16 and 22 dollars in the foreseeable future.”

Eric Berg is basing his opinion on the likely success of the Treasury Department’s upgraded campaign to bring the rate of foreclosures down, and the positive impact that this would have on mortgage insurance claims.

“This is because mortgage insurers are satisfied that there can be no valid claim against a mortgage insurance policy, when the lender offers the borrower loan forgiveness voluntarily,” he added.

Other analysts are questioning Berg’s outlook, arguing that banks will go for the more lucrative option of foreclosing and pocketing an insurance claim where this is better for them.

Treasury mortgage specialist Maggiano sides with Berg. “HAMP rules require lenders to run a net present value test to determine whether they’d be better off modifying loans as opposed to doing nothing. If the answer is that they’d be better off there is no choice, and the lender must comply.

“Even if they won’t be better off they still have to touch sides with the insurer, who can opt to force the lender’s hand by making a contribution such as a part claim payment under the modification. If this is cheaper for them than a full claim payout they will likely do this.”

While Berg agrees that there will be many instances where lenders will opt for foreclosure followed by cash back in the form of mortgage insurance settlements, he also believes that, in a significant number of cases (especially where the borrower’s loan to value ratio is very high) lenders will go the route of keeping the borrower in the house though part loan forgiveness.

This new variation to the theme of HAMP is set to be good news for distressed property owners because it takes some discretion away from banks in the direction of more logical decisions.

The symbiotic relationship between banks and mortgage insurers that’s emerging adds an interesting new twist to the HAMP tale. Follow the thread of these and other property market dynamics at www.foreclosureconnections.com.

On Friday last Washington announced further tweaks to HAMP of which the most profound is a provision for the downsizing of principal amounts to eliminate the underwater gap, and slow down American foreclosures which now top 300,000 a month. If this works, prices on the property market will stabilize and recovery will accelerate.

In doing this Obama is cutting with a two-edged sword – he’ll be both helping the unfortunate victims of the recession, and propping up dodgy speculators and risqué lenders with guaranteed FHA loans.

An anonymous Wall Street veteran has been quoted as saying “… investors in weak securitizations that were worth nothing last month will be swapping underwater real estate for government-insured paper… “.

To date the federal approach to the problem has been a combination of lowering rates, extending mortgage periods, and modifying troubled mortgages – while at the same time massaging the demand side with buyer inducements. So far nothing seems to have worked and just 4.25% of the 4,000,000 prospects have converted across. The jury is also still out on how the banks will react to Obama’s offer to part-share the pain of principal loan reduction – their mood to date has been to sit it out.

The other tricky question is how much banks and other investors stand to lose in the process. It could be substantial, but will still be better than staring down a double dip protected only by downgraded paper assets. In this regard it’s worth noting that the majority of mortgages are already part-paid meaning that the knock is going to be less in many cases than might be thought.

When the dodgy mortgages have been converted into FHA loans the banks will be free of risk again, thanks again to the generosity of the American taxpayer that they have been over-charging for years. This why many analysts believe that HAMP is just one more sleight of hand, and that Washington is conniving once again with banks and other financial institutions.

Here’s how the program will work in practice:

• Lenders are required to write mortgages down by at least 10% of the principal loan amount for compliant borrowers so that the quantum is no more than 97.75% of true value and the repayments are no more than 31% of monthly income.
• This will enable more Americans to keep their homes, slowing the foreclosure rate and reducing the high inventory which is driving prices down.

Barry Ritholtz summed this up neatly in a recent interview with NPR’s Robert Seigel.

“These programs are designed to do two things. Firstly, they’re huge hand-outs to protect banks from foreclosure knocks and major write downs. Secondly, they do the politically correct thing of keeping Americans in houses they cannot afford which maintains a feel-good factor among voters.”

Notwithstanding the underlying motives, Obama’s tweaked HAMP is set to do better than before, although still not tackling the root cause of the problem and carrying a high cost factor with it. At the end of the day, houses prices must be allowed to react to supply and demand, house owners need to more realistic, and federal authorities need to sort irresponsible underwater lenders who are being downright dishonest about the true state of their balance sheets.

Want to Know More?

Visit www.foreclosureconnections.com for more information. They’re specialists in re-cycling foreclosed homes.

Rhode Islanders are the latest group of distressed lenders to benefit from the federal program to beat foreclosure blues and bring United States real estate markets into line. This is largely thanks to the efforts of Senators Jack Reed and Sheldon Whitehouse who supported the Rhode Island Congressional Delegation in their efforts to have their constituents added to the beneficiaries of the Obama Administration’s latest efforts to keep Americans in their homes.

The State had previously been omitted despite having the 3rd highest unemployment rate and the 7th worst record of property value decline. Hopefully the $43 million grant will be of some help to Rhode Islanders with distressed mortgages, in particular those unemployed or in other financial difficulties. The funds are to be administered by Rhode Island Housing to ensure that they are dispensed with skill and local understanding.

Executive Director Richard Godfrey immediately expressed profound gratitude for the gesture. “These funds will provide much-needed relief to our beleaguered home owners,” he said “especially those on the brink of losing what they have worked for all their lives.”

Today’s announcement has highlighted the state of the local economy in Rhode Island, which has the highest rate of failing mortgages in New England. The seriousness of this is underlined by the fact that every eviction leaves between one and four families on the street without a roof over their heads.

“The greater tragedy is that the crisis affects us all,” Richard Godfrey continued. “Home owners, tenants, neighbours living next door to abandoned neglected homes all feel the pain, and all should hopefully now feel some improvements too.”

Senator Jack confirmed this. “The much needed assistance will definitely help communities that have born the brunt of the current economic downturn, and help turn their neighborhoods around. It’s good to know that Washington now finally understands the plight of Rhode Islanders, and is committed to help.”

Although details were still sketchy at the time of writing, Richard Godfrey will have his work cut out at Rhode Island Housing as he makes those tough choices about who to help first and by how much. Fortunately he has a record of working with community partners and already has the networks in place to tap local opinion. He will also need to manage expectations carefully as he builds priorities. The $43 million may bring relief to the worst hit – however the real problem is the building tsunami of potential foreclosures resulting in the time lag before improving economic circumstances trickle through to the Rhode Island property market.

Need to know more?

Rhode Island is a not-for-profit public agency and exists to provide support to its constituents. Unfortunately many will have to wait for help because the $43 million will only be available in 3 to 6 months from now.

Don’t have the luxury of time? Give www.foreclosureconnections.com a call today, and see what they can do to help you?

In case of judicial foreclosure, court summons all parties involved with the property including the lender, lien holders and the homeowner. Though the pleas of all parties are heard, court gives priority to the interest of the lender. After the hearing, court orders for formal foreclosure through auction. The money got through auction is distributed in such a way that the lender and lien holders are in a safer zone. If any money remains, it goes to the home owner. These properties can be purchased only through auction. The highest bidder gets the opportunity to own the property.

The priority given to lenders in case of judicial foreclosure has opened the gateway of power of sale. Here, the borrower sells the property himself, repays the existing debt burden with interest and keeps the remaining amount with him. No court intervention is required if the property is foreclosed through power of sale.

The property can be purchased in pre foreclosure stage too. It is the time period when the borrower finds it really tough to keep pace with installments of home equity loan. He is desperate to sell the property to get rid of the mounting debt burden. Here, the buyer has the optimum bargaining capacity as the seller is in a distressed financial situation.

The number of foreclosures is increasing due to the global economic recession and job market instability. Before buying such properties make sure that you are aware regarding its pros and cons. They are definitely a cost-effective alternative to buy home. However, while purchasing them, make proper inquiries related to location, litigations and dues pending on the property. Internet can help a lot in this regard by offering you all relevant information. Before buying do your homework properly and fulfill your dream to become a homeowner.