Foreclosure-Answers.org

Upside Down on Mortgage?

BankRate.com has Q&A related to trouble refinancing because the bank says that they are upside-down on the mortgage (mortgage is higher than house is worth).  The key take-away from the article is to make sure you know how your ARM works when it resets.  The Fed has already dropped the fed funds rate 300 basis points and many short-term rates have followed that path.  As such, there is a chance that your reset may be a lot lower than you think.   Bankrate also has various calculators (or here) to help you find out if it makes sense to refinance.

Foreclosure Rate Doubled in Q1 relative to Last Year

Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year, RealtyTrac said.  The latest tally also represents an increase of 23 percent from the fourth quarter of last year. RealtyTrac monitors default notices, auction sale notices and bank repossessions. All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states. The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity.

"What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again," said Rick Sharga, RealtyTrac's vice president of marketing. However, the unavailability of loans for people without perfect credit and a significant down payment is slowing the process, he said. "It's a cycle that's going to be difficult to break, and we're certainly not at the breaking point just yet," Sharga added.

500,000 Loan Workouts in Q1

Statistics released Monday by Hope Now, a Bush administration-organized effort to help at-risk borrowers, show that nearly 503,000 borrowers received some form of loan workout in the first quarter. The Hope Now group says 1.38 million homeowners have received loan workouts since July 2007. Of those, 29 percent were permanent modifications.

Nonetheless, 70% of homeowners who are two months behind on their mortgages still aren't getting help.  Of those borrowers receiving help, only one in three completed a workout within 45 days, the State Foreclosure Prevention Working Group found in its survey of mortgage servicers.

The Hope Now group statistics also showed that sales of foreclosed properties continue to rise. More than 205,000 foreclosed homes were sold the January-March period, up from more than 151,000 in the fourth quarter of 2007 and 135,000 in the third quarter.

Members of Hope Now include Bank of America Corp., Citigroup Inc., Washington Mutual Inc. and Wells Fargo & Co.

Vacant Homes for Sale Sets Record in Q1

Census Bureau has reported that the % of vacant homes for sale was a record 2.9% of U.S. homes -- excluding rental properties -- compared to 2.8% in Q4.  It was the highest quarterly number since the data began in 1956.  The homeownership rate remained at 67.8% on the quarter, which remains down from the all-time high of 69.2% set in 2004.

A lot of these sales are likely foreclosed homes/REOs.  Overall, the data again highlight the amount households that got in over their heads, which is now in the process of being unwound.  This is not anywhere close to turning around, and instead, we would not be surprised to see the data get much worse before it gets better.

If you are beginning to struggle to make a payment, we strongly urge you to contact your servicer now to try to arrange some kind of work-out.  The earlier in the process you call, the better you chance you have to work something out and save your house.

BofA to workout $40 bln in loans over next 2 yrs

Forbes is reporting that the Bank of America Corp. said Monday after it completes its acquisition of Countrywide Financial Corp. it will modify or workout at least $40 billion in mortgage loans over the next two years to help customers avoid foreclosure. Bank of America aims to keep about 265,000 customers from avoiding foreclosure through the plan. Tenants living in properties facing foreclosure will be able to remain in their homes for 60 days after the completion of foreclosure proceedings, and will get $2,000 to defray moving expenses if they voluntarily leave.

Predatory Loan Laws Lacking at State Level

The Sunday NYT has a great article on how many of the federal predatory loan regulations that are in place do not covered by state-chartered institutions -- essentially leaving a critical gap for protecting consumers.

State Foreclosure Working Group Data

Here is the April 2008 report providing "Analysis of Subprime Mortgage Servicing Performance."  This comprehensive report has a slew of information on loan performance.  The first report was released in February.  This second report suggests no meaningful improvement in foreclosure prevention outcomes.  Specifically:

1) 7 out of 10 seriously delinquent borrowers are still not on track for any loss mitigation outcome.

2) Data suggests that loss mitigation departments are severely strained in managing current workload.

3) For those homeowners receiving loss mitigation assistance, more are receiving loan modifications.

Freddie Mac's Primary Mortgage Survey

For the week-ending April 24:

* the 30-year fixed-rate mortgage (FRM) averaged 6.03% compared to  5.88% last week. The year-ago level was 6.16%.

* The 15-year FRM averaged 5.62% compared to 5.40% last week and a year-ago level of 5.87%.

* Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.68% compared to 5.48% last week and a year-ago level of 5.88%.

When in the market for a new loan, you should compare you APR to these to make sure you are getting a good deal.

Democrats Considering Plan to Boost Government-Backed Loans

Homeowners staggering under mounting mortgage debt and facing foreclosure could get cheaper, government-backed loans under Democrats' housing rescue plan.

But first, lenders would have to agree to wipe out part of their debt. And the borrowers would have to show they could afford the new mortgage. They also would have to agree to share any future profits on the home with the government.

The plan would be a massive expansion of the Federal Housing Administration, the Depression-era mortgage insurer. FHA would take on $300 billion in new loans for as many as 1 million distressed homeowners.

It's unclear if current mortgage servicers would go for such a deal, and how many individuals would qualify.  But, this is another attempt to thaw-out the secondary mortgage market, by having the government guarantee more loans, while at the same time lower the cost for many financially-strapped households.

Freddie Mac to Buy New $729,500 Conforming Loans

Freddie Mac has announced it is prepared to commit up to $15 bln to help stimulate the market for the newly-introduced "jumbo comforming" loans. 

A conforming loan previously had to be below $427,500 to qualify as a conforming loan, and benefit from the securitization process with Freddie Mac or Fannie Mae.  But, regulators have temporarily (for 2008) boosted that the conforming loan limit to $729,500 to help ease the pain in 71 high-cost markets.  But, despite this being in place for a month now, there has not been a lot of interest from investors for these products.  As such, Freddie Mac is indicating they will now buy these securities for their own portfolio.

Freddie Mac is partnering with four lenders -- Chase , WaMu, Wells Fargo, and Citi -- which have all signed fixed-price arrangements, to help develop the market.  If shopping around for a refinance or new loan, these firms could be offering the best rate, given that the difference between conforming and jumbo rates can easily be 50-100 basis points right now.