When I first heard about the new housing bill, that would force banks to modify loans to keep people in their homes, or face stiff fines. I was excited. A housing bill that would help keep people in their homes, and slow or stop the dreaded foreclosures. Woo Hoo! How wonderful for the many people faced with losing their homes.

Then I viewed my Active Rain site and read a blog by JP Lowry of Preferred Financial Funding, titled What are We Doing America? in which he VERY ADAMANTLY stated why the bill was Disgusting, Ridiculous & Entitled. I have to say after reading it there were some very good points. Now I am not sure where I stand and was wondering what other opinions were.

I am very happy for the families that will be able to keep their homes, but at what cost? I agree that some people bought homes that they knew they could not afford, but… the lenders let them. Also as tax payers have already bailed out the banks shouldn’t the money be used for what it was intended?

Despite efforts by the federal government and banks to stop the home foreclosure disaster, frustrated borrowers are still battling red tape and delays in their attempts to negotiate lower payments, even as hundreds of thousands of them lose their homes every month. Banks say they’re swamped with inquiries and are just now completing the first mortgage “loan modifications” under the Obama administration’s Making Home Affordable plan, the program begun in April 2009 requiring borrowers to make three months of renegotiated payments before securing new loan terms.

Though the reasons are many, the problem is simple: Banks aren’t renegotiating enough loans to stem the rising tide of foreclosures, either through the federal program or on their own. If the banks wanted it to work, it would work.

The banks, however, continue to urge patience, particularly with the federal plan: “A lot of people had expectations about this program who didn’t understand it would take time, but the intention is there and we will move ahead,” said Rick Simon of Bank of America Home Loans.

Many banks started their own programs for modifying mortgages-lowering payments by changing the interest rate or the length of the loan, or in rare cases, forbearing some principal-before the administration’s plan was unveiled.

Foreclosures continue at a high rate. There are something like 2.5 million U.S. homes in foreclosure now, and 250,000 new foreclosures started every month.

Bankruptcy lawyers are particularly critical of the banks. The banks’ current efforts are “largely a farce,” according to Cathy Moran, a bankruptcy lawyer in Mountain View. She said most of her clients have been unable to modify their home loans. “I don’t think the people in the loan modification departments at banks are empowered to make deals,” Moran said.

“There is an amazing lack of staffing to support the flood of modification requests the banks are getting,” said San Jose bankruptcy lawyer Norma Hammes, past president of the National Association of Consumer Bankruptcy Attorneys. “Lenders lose stuff all the time, and they ask for stuff they don’t need. We have to jump over hurdles and through hoops.”

Chase is moving through a backlog of 155,000 loans “as fast as we can, having hired nearly 3,000 people to help in the process, including 950 loan counselors,” spokesman Thomas Kelly said. The bank, which took over failed sub prime lender Washington Mutual, has approved 87,100 trial loan modifications under the federal plan, Kelly said, and an additional 50,900 under the bank’s own program.

Help for homeowners

The Obama administration is working with banks to help homeowners refinance into new loans or modify the terms of their existing loans. Here’s how the programs work:

-Refinancing program: Helps homeowners with existing Fannie Mae or Freddie Mac loans who are current on their mortgage payments but unable to refinance to a lower interest rate because the value of their home has declined.

-Loan modification program: Helps homeowners who have fallen behind on their payments because of a loss of income or other change in circumstance. Banks may agree through this program to change the interest rate, length of the loan, or even forebear some of the principal.

For information, visit www.makinghomeaffordable.gov.

The worst U.S. recession in 70 years should end over the next three to six months, judging by recently released data that showed that the economy’s contraction eased considerably from April through June.

The Commerce Department reported that the economy shrank at an annualized rate of 1% in the year’s second quarter, less than most analysts had expected, and far less than the dramatic 6.4% shrinkage in the first quarter, a figure revised downward from the initial estimate of 5.5%.

Independent economists think the economy now is poised to grow, albeit slowly.

The key point is that this is the last negative (growth) report in the Great Recession, signaling the end of the downturn. The economy won’t come charging back, but at it’s back.

Recent reports on improving home and auto sales also argue well for the near future. Leading indicators of activity are pointing up, and the housing sector appears to be stabilizing. As more stimulus dollars hit the street, we should see improvement in the difficult employment and financial conditions in many hard-hit regions of the country.

President Barack Obama credited the $787 billion economic stimulus plan that passed earlier this year for the emerging signs of recovery. “This and other difficult but important steps that we’ve taken over the last six months have helped us put the brakes on recession,” he said at the White House. “I am guardedly optimistic about the direction that our economy is going, but we’ve got a lot more work to do.”

There’s plenty that still can go wrong, I worry that we don’t have the foundations for a durable recovery, that we still have banks with large unrecognized losses. Layoffs were expected to continue throughout the year, with the jobless rate rising above 10%. That’ll test bank balance sheets. That’ll test business models generally. A lot of manufacturing and retail activity doesn’t look good when the unemployment rate is above 10 percent. 2010 remains a question, and nothing in these numbers tells you anything about 2010.”

In another worrisome sign, real personal-consumption expenditures fell 1.2% in the second quarter, after increasing 0.6% from January through March. Consumer spending powers two-thirds of U.S. economic activity. Sales of durable goods-big-ticket items such as large appliances and wide-screen televisions-shrunk 7.1% from April to June after expanding at a 3.9% annual rate in the three previous months. Consumer spending is unlikely to return to pre-recession levels until the nation stops shedding jobs. That’s bad news for retailers and restaurants. I think consumers are going to need a little more proof. These are certainly welcome signs, but I think it is going to take a little more time before we see consumers shift from necessity to discretionary purchases.

The National Restaurant Association was equally cautious. Its latest outlook, said that June marked the 13th consecutive month of sales declines for restaurant owners. Restaurant operators continued to report declines in same-store sales and customer traffic in June, and their outlook for sales growth in the months ahead remains mixed.

All in all it is starting to look the like the end of the recession in is sight.

RealtyTrac®, a leading online marketplace for foreclosure properties, has released its Midyear 2009 U.S. Foreclosure Market Report, which shows a total of 1,905,723 foreclosure filings – default notices, auction sale notices and bank repossessions – were reported on 1,528,364 U.S. properties in the first six months of 2009, a 9 percent increase in total properties from the previous six months and a nearly 15 percent increase in total properties from the first six months of 2008. The report also shows that 1.19 percent of all U.S. housing units (one in 84) received at least one foreclosure filing in the first half of the year.

Foreclosure filings were reported on 336,173 U.S. properties in June, the fourth straight monthly total exceeding 300,000 and helping to boost the second quarter total to the highest quarterly total since RealtyTrac began issuing its report in the first quarter of 2005. Foreclosure filings were reported on 889,829 U.S. properties in the second quarter, an increase of nearly 11 percent from the previous quarter and a 20 percent increase from the second quarter of 2008.

“In spite of the industry-wide moratorium earlier this year, along with local, state and national legislative action and increased levels of loan modification activity, foreclosure activity continues to increase to record levels,” noted James J. Saccacio, chief executive officer of RealtyTrac.

“Unemployment-related foreclosures account for much of this increased activity, and the high number of
borrowers who find themselves owing more on their mortgages than their homes’ are now worth represent
a potentially significant future risk. Stemming the tide of foreclosures is a critical component to stabilizing the housing market, so it is imperative that the lending industry and the government work in tandem to find new approaches to address this issue.”

Nevada, Arizona, Florida post top state foreclosure rates
More than 6 percent of Nevada housing units (one in 16) received at least one foreclosure filing in the first half of 2009, giving it the nation’s highest foreclosure rate during the six-month period. A total of 68,708 Nevada properties received a foreclosure filing from January to June, an increase of 23 percent from the previous six months and an increase of 61 percent from the first half of 2008.

Arizona registered the nation’s second highest state foreclosure rate in the first half of 2009, with 3.37 percent of its housing units (one in 30) receiving at least one foreclosure filing, and Florida registered the nation’s third highest state foreclosure rate, with 3.08 percent of its housing units (one in 33) receiving at least one foreclosure filing. Other states with foreclosure rates ranking among the nation’s 10 highest were California (2.94 percent), Utah (1.46 percent), Georgia (1.42 percent), Michigan (1.34 percent), Illinois (1.31 percent), Idaho (1.26 percent) and Colorado (1.25 percent).

California, Florida, Arizona post highest foreclosure totals
A total of 391,611 California properties received a foreclosure filing in the first half of 2009, the nation’s highest total and 2.94 percent of the state’s housing units (one in 34) – the nation’s fourth highest state foreclosure rate. California foreclosure activity in the first half of 2009 increased nearly 14 percent from the previous six months and increased nearly 15 percent from the first half of 2008.

With 268,064 properties receiving a foreclosure filing in the first six months of 2009, Florida documented the second highest state total. Florida foreclosure activity in the first half of 2009 increased 7 percent from the previous six months and was up nearly 42 percent from the first half of 2008.

Arizona’s 89,799 properties receiving a foreclosure filing in the first six months of 2009 was the third highest state total. Arizona foreclosure activity in the first half of 2009 increased 13 percent from the previous six months and was up nearly 55 percent from the first half of 2008.Other states with totals among the 10 highest in the country were Illinois (68,932), Nevada (68,708), Michigan (60,786), Ohio (58,937), Georgia (56,391), Texas (49,144) and Virginia (28,368).

Report methodology
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported during the first half of the year at the state and national level. Data is also available at the individual county level. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population.

RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default – Notice of Default (NOD) and Lis Pendens (LIS); Auction – Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS) and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). If more than one foreclosure document is filed against a property during six-month period, only the most recent filing is counted in the report.

Happy thursday! here is some more info on the existing home sales. Some good some bad news.

Sales of existing homes showed another gain in May, benefiting from favorable affordability conditions

and a first-time buyer tax credit, according to the National Association of Realtors®. May’s increase

was the first back-to-back monthly gain since September 2005.

Existing-home sales-including single-family, townhomes, condominiums and co-ops-rose 2.4 percent to a

seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66

million units in April, but remained 3.6 percent below the 4.95 million-unit pace in May 2008.

Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very

affordable even with a recent uptick in rates. First-time buyers also are being drawn off the

sidelines by the $8,000 tax credit, which is helping to absorb inventory. However, the increase in

sales is less than expected because poor appraisals are stalling transactions. Pending home sales

indicated much stronger activity, but some contracts are falling through from faulty valuations that

keep buyers from getting a loan.

Total housing inventory at the end of May fell 3.5% to 3.80 million existing homes available for sale,

which represents a 9.6-month supply2 at the current sales pace, down from a 10.1-month supply in

April.

The appraisal problem is serious. Lenders are using appraisers who may not be familiar with a

neighborhood, or who compare traditional homes with distressed and discounted sales. In the past

month, stories of appraisal problems have been snowballing from across the country with many contracts

falling through at the last moment. There is danger of a delayed housing market recovery and a further

rise in foreclosures if the appraisal problems are not quickly corrected.

A NAR practitioner survey in May showed first-time buyers accounted for 29% of transactions, and that

the number of buyers looking at homes is nearly 10 percentage points higher than a year ago.

The NATIONAL MEDIAN existing-home price for all housing types was $173,000 in May, down 16.8% from a

year earlier. Distressed properties, which declined to 33% of all sales in May from 45% in April,

continue to downwardly distort the median price because they generally sell at a discount relative to

traditional homes.

First-time buyers are concentrated in the lower price ranges, which include most of the distressed

sales.

Single-family home sales rose 1.9% to a seasonally adjusted annual rate of 4.25 million in May from a

pace of 4.17 million in April, but are 3.0% below the 4.38 million-unit level in May 2008. The median

existing single-family home price was $172,900 in May, down 16.1% from a year ago.

Existing condominium and co-op sales increased 6.1% to a seasonally adjusted annual rate of 520,000

units in May from 490,000 in April, but are 8.9% below the 571,000-unit level in May 2008. The median

existing condo price4 was $173,800 in May, down 21.9% from a year earlier.

Existing-home sales in the Midwest jumped 9.0% in May to a pace of 1.09 million but are 4.4% below May

2008. The median price in the Midwest was $145,800, which is 10.4% lower than a year ago.

In the South, existing-home sales were unchanged at an annual pace of 1.74 million in May but are 8.9%

below a year ago. The median price in the South was $157,400, down 9.9% from May 2008.

Existing-home sales in the West slipped 0.9% to an annual rate of 1.14 million in May, but are 11.8%

higher than May 2008. The median price in the West was $197,700, down 30.6% from a year ago.

 The Obama Administration has announced efforts to help bring more relief to responsible homeowners under the Making Home Affordable Program. There has been an effort for greater affordability, for homeowners, by reducing interest rates on their second mortgages as well as a set of measures to help underwater borrowers stay in their homes. Treasury secretary Tim Geithner said “With these latest program details, we’re offering even more opportunities for borrowers to make their homes more affordable under the Administration’s housing plan.”  “Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is critical to stabilizing our financial system overall.”

The Second Lien Program, one of the new details, will work together with first lien modifications offered under the Home Affordable Modification Program to deliver a more conclusive, affordability solution for struggling borrowers. Second mortgages can create huge challenges, even when a first lien is modified. Up to 50% of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien. The second mortgage always has a higher interest rate than the first lien.

Under the Second Lien Program, when a Home Affordable Modification is initiated on a first mortgage lien, servicers participating in the Second Lien Program will automatically reduce payments on the second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury.

Separately, the Administration has also announced steps to join the Federal Housing Administration’s (FHA) Hope for Homeowners with Making Home Affordable. Hope for Homeowners requires the holder of the mortgage to accept a payoff below the current market value of the home, allowing the borrower to refinance into a new FHA-guaranteed loan. Refinancing into a new loan below the home’s market value removes a borrower from a position of being “underwater” to having equity in their home. By increasing a homeowner’s equity in the home, Hope for Homeowners can produce a better outcome for borrowers who qualify.

Under the recently announced changes and, when qualifying borrowers for a Home Affordable Modification, servicers will be required to determine eligibility for a Hope for Homeowners refinancing. Where Hope for Homeowners proves to be viable, the servicer must offer this option to the borrower. To ensure proper alignment of incentives, servicers and lenders will receive pay-for-success payments for Hope for Homeowners refinancings similar to those offered for Home Affordable Modifications. These additional supports are designed to work together and take effect with the improved and expanded program under consideration by Congress. The Administration supports legislation to strengthen Hope for Homeowners so that it can function effectively as an integral part of the Making Home Affordable Program.

Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners. Two weeks later, the Administration published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin modifications under the plan immediately. Twelve servicers, including the five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75% of all loans in the country are now covered by the Making Home Affordable Program.

Continuing to bolster its outreach around the program, the Administration also announced a new effort to engage directly with homeowners via MakingHomeAffordable.gov. Homeowners will have the ability to submit individual questions through the website to the Administration’s housing team. Members of the Treasury and HUD staffs will periodically select commonly asked questions and post responses on MakingHomeAffordable.gov.

For more information, visit www.MakingHomeAffordable.gov.

Every day, more people are headed closer to foreclosure, and toward the day they may have to leave their home. What should you do if you are soon to join the people getting a foreclosure notice?

First and foremost, you should forego the natural human tendency to freeze and do nothing. Face the problem head on and prepare, for hours and hours, weeks and weeks of making phone calls and writing to people who may be able to help.  Don’t think it’s too late to do anything, As long as you are residing in the home, you probably have some opportunity to keep your home.

People facing foreclosure have more avenues to pursue than they might realize, for instance they have more options than (pay up or move out) that many homeowners think is their only choice.

- Negotiating a Loan Modification.
- Refinancing the loan.
- Have an agent List the home for a possible "short sale."
- Selling the home to an investor.
- Declare bankruptcy.

Short sales, are where the lender agrees to accept less than is owed on the home, to avoid the expense of a foreclosure-typically are handled by real estate agents, which at least takes some of the pressure off of a stressed homeowner. Many professional Realtors are completing more short sales these days and have many buyers looking for bargains, though the process can be slow and frustrating.

Due to falling real estate prices and rising foreclosures on the West Coast, sales of existing homes rose to its highest level in 13 months and highest percentage increase in five years, according to a report released today by the National Association of Realtors (NAR). The increase resulted from buyers responding to improved affordability, the organization stated.

Existing-home sales-including single-family, townhomes, condominiums and co-ops-rose 5.5% to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August, and are 1.4% higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains. “The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island,” he said. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said low home prices and low interest rates have been attracting buyers. “This is the first time since November 2005 that home sales have been above year-ago levels,” he said. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04% in September from 6.48% in August; the rate was 6.38% in September 2007.

Total housing inventory at the end of September fell 1.6% to 4.27 million existing homes available for sale, which represents a 9.9-month supply² at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly reductions since inventories peaked in July.

The national average existing-home price for all housing types was $191,600 down in setember 9.0% less than a year ago when the median was $210,500. “Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40% of transactions. These are pulling the median price down because many are being sold at reduced prices,” Yun explained. “The current market is not being dominated by speculative investors. Rather, 80% of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

Single-family home sales increased 6.2% to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8% above the 4.45 million-unit level a year ago.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 560,000 units in September.

Regionally, existing-home sales in the West jumped 16.8% to an annual rate of 1.25 million in September, and are 34.4% higher than September 2007. The median price in the West was $253,600, down 18.5% from a year ago.

In the Midwest, existing-home sales increased 4.4% to an annual pace of 1.19 million in September, but are 2.5% down from a year ago. The average price in the Midwest was $152,500, which is 7.9% lower than September 2007.

Existing-home sales in the South rose 2.2% in September to a pace of 1.90 million but stay 7.8% below September 2007. The average price in the South was $167,200, down 4.1% from a year ago.