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Connecticut Passes Sweeping Mortgage Aid Bill

While housing-related legislation remains stalled and hotly debated on Capitol Hill, Connecticut’s House of Representatives on Monday joined a growing list of states enacting their own more local legislation targeting the ongoing housing mess, passing a wide-ranging bill that lawmakers in the state say will help struggling homeowners.

Under the bill’s various terms, the CFHA will receive $70 million for refinancing troubled mortgages, and would see the statutory limit on uninsured mortgages that CHFA can hold raised from $1.0 billion to $1.5 billion. The bill also creates a right for borrowers to appeal to the Banking Commissioner for a six-month moratorium on foreclosures, and establishes a program that allows the CHFA to buy foreclosed property and use it for affordable housing.

For homeowners having trouble making payments, we urge you to search your state for any regulatory changes that could help.

Zillow: Half 2006 Mortgages Underwater

Real estate information website Zillow.com reported that home prices had their worst quarterly performance in a decade and half the homes purchased in 2006 now have a mortgage more than they are worth.  This is more bad news for banks and homeowners.

Congress Approves $300 bln Mortgage Bill

U.S. House Committee approved $300 bln distressed mortgage bill earlier which would help assist over 2 mln homeowners facing foreclosure risk. Not only will the funds be provided, but the FHA will be given new authority to back the loans, according to the House Financial Services Committee that has been carefully sculpting the legislation. The bill will go for a full House vote next week, as the Senate version is drafted.

FDIC Plans Mortgage Help

Under a plan devised by the Federal Deposit Insurance Corp., homeowners could receive federal loans to pay down up to 20 percent of their principal.The program hinges on the willingness of mortgage servicers and investors to agree to restructure troubled loans and pay financing costs.

The loans in the FDIC program would be restricted to borrowers who live in their homes, and would only cover loans made between 2003 and June 2007 that were unaffordable when the borrower first signed the loan. (What "unaffordable" is, is not really clear).  Borrowers would not have to repay the federal loan for five years, at which point the cost of the loan would be amortized over the remaining life of the mortgage.

The FDIC will fund the plan with a $50 billion Treasury public debt offering, which the agency said would be enough to pay for modifications for approximately 1 million loans.

MICA Reports Defaults Drop in March

The Mortgage Insurance Co. of America (MICA) reported that "cures" -- borrowers once headed for foreclosure but no back on track -- rose to 55,585.  This was a 5.5% gain from February and a 42.6% jump from January, when defaults rose to a record high.

Defaults on privately insured U.S. mortgages still remain high with 58,131 insured borrowers at least 60 days late on payments. That’s up from 42,362 – 37.2 percent% – from a year ago, but down from February figures.

The March figures marked the first time in four straight months that there had been fewer than 60,000 defaults, according to MICA.

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.