US Home Loan Advocates was featured in a recent Los Angeles Times article, titled: Get Ahead Of The Slow Moving Loan Mod Train, where our President, David Bartels, was interviewed about the challenges homeowners face when they are seeking payment relief and are not currently in default.

The key to eligibility is your “front end” debt-to-income ratio. The total of your principal, interest, taxes, insurance and homeowners association dues must be greater than 31% of your gross household income.

If it is, you should be eligible for a loan modification. But you’ll have to call your lender or servicer — the company that collects the payments on behalf of the loan’s owner — to determine if it is participating in the White House program. Supposedly, servicers handling some 80% of all mortgages are taking part.

If you are eligible, it is possible to obtain a loan modification even if you are still current on your house payments. But if you are not eligible for the Making Home Affordable Program — that is, your income is too high — you still may be eligible for a more traditional solution, such as forbearance for a few months until you get back on your feet.

Unfortunately, said David Bartels, president of U.S. Home Loan Advocates, a Westlake Village company that offers mortgage-modification services, your lender-servicer probably won’t deal with you until you are in default or in imminent danger of defaulting. Default is different from delinquent. You are not in default until you miss three consecutive payments.

Under the Obama plan, your loan’s interest rate will be reduced in 0.125% increments until your payment reaches the 31% debt-to-income target. If the rate drops to 2% and you still haven’t hit the target, the term of your loan will be increased in 10-month increments until the goal is met. If the term reaches 480 months and still no success, the servicer will start reducing your principal.

But Bartels cautions that lenders will consider other factors apart from your housing debt-to-income ratio. Also on the table will be your total debt to income, cash flow and the equity you have in your property at its current value. All of these things “must line up and meet the bank’s requirements to obtain a modification,” he says.

The article also explains the importance of having all of your hardship paperwork organized and properly packaged when submitting a request for a loan modification.

Since there is a big misconception between a trial modification vs a successful loan workout, it is important that distressed homeowners arm themselves with the correct loan modification information before presenting a scenario to a bank.

“Getting a loan modified has nothing to do with being a good negotiator,” says Bartels, whose company, unlike many of those that have been chastised by the Federal Trade Commission, charges no upfront fees. “The bank is going to make a decision based on the math. If the bank will make more money by modifying versus foreclosing, it will modify it.”

via: MarketWatch.com
By Lew Sichelman

____________

Winning the trial, losing your house

Trying to prevent foreclosure while waiting for a permanent loan modification

WASHINGTON (MarketWatch) — Question: I have also made trial payments under the Making Home Affordable program. But my house truly was in foreclosure and I spoke with an attorney. Your advice in your column is wrong. They can foreclose, they will foreclose, and they are foreclosing on thousands of people who have made their trial payments every month! See previous Realty Q&A.

There is nothing written into this program that provides any penalty for lenders if they do not modify a loan. They very clearly state that you are not actually approved for the program, and stipulate that the magical approval (or denial) will happen at some unspecified future time.

My story is not unique. I was able to stop foreclosure (only days before the trustee sale) temporarily by filing a complaint with my state attorney general. However, I still have not received a permanent modification and my lender continues to claim paperwork that I have provided is missing.

The bottom line is that paying trial payments in anticipation of a modification does not guarantee anything and foreclosure is the most likely outcome.

Answer: I only report what I am told, which is that a trial modification under the Making Home Affordable program is supposed to suspend foreclosure and credit reporting activities by the lender.

“The program is designed to give borrowers needed relief while the lender reviews eligibility for final approval,” says David Bartels of US Home Loan Advocates, a Thousands Oaks, Calif., firm which works with lenders on behalf of borrowers solely on a contingency basis, with no upfront fees. “If you were in a trial modification and making your trial payments on time, foreclosure activity should not have occurred.”

Bartels and others on the firing line every day understand your frustration, especially when it comes to so-called “lost” paperwork — forms and verifications supplied by you and thousands of borrowers have mysteriously disappeared.

“Unfortunately, lost paperwork has become routine for the lenders as they struggle to keep up with millions of pages of documents,” he said.

As a result, collections activities of all kinds often continue, even as a loss-mitigation solution is pending. But this is the case not because the bank wants to keep you hanging until it can ultimately foreclose, but rather because papers are misplaced, sent to the wrong person or mistakenly tossed into the circular file.

Like some others, Bartels complains that the way the Making Home Affordable program is set up, with the government “compensating” lenders for up to 95% of their losses on foreclosed homes, makes it more profitable in many cases for lenders to foreclose as opposed to modify. And that, he believes, accounts for a large percentage of people being turned down when they ask to have their mortgages reworked.

However, the loan-mod expert maintains that once you have been preapproved for a Making Home Affordable modification any collection or foreclosure activity should cease and should not resume until and unless you default on the trial payments or the lender determines you are not eligible for a permanent modification.

Q: I hope you can help me. I have been trying to get my loan modified. My mortgage was originally held by a Seattle savings and loan, but it was sold to a bank which has now apparently sold it to another bank. I have provided all of the information requested each time; yet, in the last correspondence from Bank A just before the transfer to Bank B, I was told I didn’t qualify because my income was too low, my credit score was not good enough (duh), and that I had too much equity in my home.

I asked the bank how much I would need to make and asked that they recognize that I lost my job, which hurt my credit when I couldn’t pay my bills, including my mortgage. I also asked on what basis they valued my house since no one has appraised it in a long time. There was no answer.

Now, Bank B is in the picture and a local attorney working on its behalf has informed me that they are proceeding with the foreclosure. I have been in my home for over 27 years, have two nine-year old girls and my in-laws living with me and had perfect credit until I became unemployed. I used all my resources to carry the mortgage as long as I could, including my 401(k).

I have a new job and hopefully it will provide a reasonable income on which to base a modification, but the bank won’t provide guidelines and we just live in fear without being able to know how to satisfy them. What should I do?

A: I know you are frustrated. Everyone is. But the key to your situation appears mainly to be that you have too much equity in your property. Aside from the fact that your income may not be enough to afford even a modified payment, or your credit score is such that you won’t qualify, the real crux of the matter seems to be that foreclosing would not result in a loss to the lender, so the better option — for the lender, at least — is simply to foreclose and be done with you.

I base my assumption on the fact that you have been paying on your home for nearly 30 years, so you probably have built up tons of equity. That may not be the case if you refinanced to the hilt within the last four or five years or so. But based on what you wrote, I just don’t know about that.

My advice now is to try to refinance the property, which may be a long shot. You just started a new job, which may work against you unless it is in the same field your were working in before you lost your job. Your lousy credit score is a negative, too, and you may not make enough to support a loan large enough to pay off the your current mortgage.

But unless you qualify for a loan mod, which doesn’t seem to be the case, your only other choices are to sell and move before you are kicked out or refinance.

Nationally syndicated columnist Lew Sichelman has been covering the housing market for more than 35 years. Because of the volume of mail he receives, he cannot answer individual questions, nor can all questions be answered in this space. Email lsichelman@aol.com

Via: Reuters.com

WESTLAKE VILLAGE, Calif.–(Business Wire)–

US Home Loan Advocates, Inc. (USHLA), the only loan modification company in California endorsed nationwide by the National Association of Mortgage Brokers (NAMB), reports business has doubled since the passage of Senate Bill 94.

US Home Loan Advocates never charged fees upfront and the passage of SB 94 reinforces their legitimate business model.

USHLA staff consists of seasoned industry professionals with lender experience and a complete understanding of the new lending guidelines.

“Our industry experience and knowledge allows us to educate our clients and effectively communicate with lenders,” states David Bartels, president of US Home Loan Advocates.

As foreclosures continue to grow in California, banks do not have the support to accommodate the demand. The result is a slow response to the consumer, which can narrow their options for a successful modification process.

USHLA expertise affords homeowners the opportunity to modify their mortgage before and during foreclosure.

Many of USHLA`s clients successfully serviced were previously turned down by their banks. USHLA experts provide every compliant option available to homeowners.

“Consumers do not have to be late on their mortgage to qualify for a modification,” explains David Bartels. “Our options provide an unbiased solution.”

____________

About US Home Loan Advocates, Inc. (USHLA) US Home Loan Advocates is a leading loan modification company headquartered in Westlake, Village, California. Our mission is to provide homeowners with an unbiased, compliant loan modification.

The National Association of Mortgage Brokers (NAMB) recognizes our commitment to consumer education and outstanding service. USHLA is comprised of industry experts and advocates of consumer lending dedicated to providing every client with the best solution for their individual need.

Policy makers are torn between banning loan modification companies and attorneys from charging up-front fees, or just issuing state grants to help unemployed homeowners pay their mortgages.

While the Obama administration boasts that 500,000 homeowners have entered into trial loan modifications a month ahead of the targeted deadline, the foreclosure threat is still a growing plague that continues to spread throughout the nation.

via:  CNNMoney.com

NEW YORK (CNNMoney.com) — Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report issued Thursday.

“They were the worst three months of all time,” said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes.

During that time, 937,840 homes received a foreclosure letter — whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

Nevada continued to be the worst-hit state with one filing for every 23 households. But even tranquil Vermont, where the foreclosure crisis has barely brushed the housing market, saw foreclosure filings jump nearly 170% compared with the third quarter of 2008. Still, that resulted in just one filing for every 5,023 households in the state — the best record in the country.

The RealtyTrac report also unveiled the results for September, and it found that there was slight relief from foreclosure filings. Last month, notices totaled 343,638, down 4% compared with August. Unfortunately, that total accounts for 87,821 homes that were repossessed by lenders.

That deluge contributed significantly to the quarter’s record 237,052 repossessions, a 21% jump from the previous three months. So far this year lenders have taken back 623,852 homes.

“REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan-modification efforts and high volumes of distressed properties,” James Saccacio, RealtyTrac’s CEO, said in a statement.

Most disturbing is that all foreclosures — not just repossessions — are rampant despite efforts to corral them. Not only has the Obama administration’s Making Home Affordable foreclosure prevention program taken a bite out of REOs but lenders themselves have scaled back repossessions over the past few months to give the program time to work.

And in some low-price markets, lenders simply aren’t following through on foreclosures, according to Jim Rokakis, treasurer for Cuyahoga County, Ohio, which includes Cleveland.

“They’ll even set the date for the sheriff’s sale, but they don’t file the final papers,” he said. “They hold it in abeyance and let the residents stay in the house.”

In ever more frequent cases, delinquent borrowers want out of the mortgage worse than the lenders. There are no firm statistics for it, but many industry watchers claim the percentage of REOs caused by borrowers voluntarily walking away from their homes is skyrocketing.

A study of the trend by the Chicago Booth School of Business and the Kellogg School of Management determined that when home price declines drop home values 10% below the mortgage balances, people start to give up their homes. When “negative equity” approaches 50%, 17% of households default, even when they can still afford their mortgage payments.

The foreclosure crisis may not diminish anytime soon. “The fastest growing area is in the 180 days late-plus category, the most seriously delinquent borrowers,” Sharga said. “It’s going to be a lingering problem.”

Plus, the RealtyTrac statistics may understate the depth of the foreclosure mess because lender and government actions have delayed many filings. As a result, some delinquencies have not been counted on the foreclosure tallies. That means the crisis may not end quickly.

And because there are so many delinquent borrowers, Sharga predicts the banks will be slow to take back their properties and put the repossessed homes back on the market.

“It’s hard to envision [the banks] putting millions on properties up for sale and cratering prices,” he said. “Recovery will be slow and gradual. I don’t see home prices getting much better until 2013.”

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California Loan modification companies and attorneys that charge up front fees will have to change their business model as of Monday.

via The Sacramento Bee | Oct. 13,2009

Loan modification firms that promise to help struggling borrowers get their mortgages rewritten have been banned immediately from asking for cash upfront.

Attorneys, too, who specialize in loan modifications are no longer allowed to ask consumers for payment before they perform services. The ban expires on Jan. 1, 2013.

The abrupt change in California law comes after Gov. Arnold Schwarzenegger Sunday signed Senate Bill 94, by Sen. Ron Calderon, D-Montebello. As an urgency measure, the bill takes effect immediately.

Calderon, in an interview Monday, called the signing “a very big victory.”

In a positive step to clean up the loan modification industry, Governor Schwarzenegger’s action follows massive numbers of complaints to the state Department of Real Estate from consumers who said they paid up to $4,000 upfront to firms that often abandoned them.

Loan-modification firms have made relentless pitches to borrowers through radio and television ads, postcards and telephone calls. Many desperate people have turned to them, often coughing up a few thousand dollars for help that didn’t come.

“This is a huge problem, and the signing of this (bill) will help,” said Tom Pool, spokesman for the California Department of Real Estate. He said the department has 1,300 complaints on file and has issued 400 cease and desist orders against loan modification firms. The law banning advance fees aplies to firms in California or elsewhere that solicit clients in California.

The new law also specifies that loan modification firms must tell potential clients they can get the same services for free from government-approved nonprofit mortgage counselors. The firms cannot receive payment until they have performed all services promised in a contract with the borrower. Borrowers must pay the loan modification firm for services provided, even if the firm can’t get the loan modified.

Lawmakers passed the ban on upfront fees with a two-thirds vote, backed by a coalition that included the California Association of Realtors, cities hard hit by foreclosures, organized labor and consumer groups.

The ban on advance fees was made temporary in recognition that many firms follow the rules, said Pool. It also recognizes that the loan meltdown will eventually end.

“We didn’t want to put a permanent ban on legitimate business during a temporary crisis,” he said.

To the Members of the California State Assembly:

I am returning Assembly Bill 764 without my signature.

Although I support the prohibition of individuals charging advance fees for mortgage loan modifications, I do not agree with the provision of this bill that will only allow fees to be collected if a modification is successful.

This could adversely affect legitimate businesses that provide loan modification services. As such, I am signing SB 94 that accomplishes this prohibition against advance fees without unnecessarily harming legitimate companies.

For these reasons, I am unable to sign this bill.

Sincerely,

Arnold Schwarzenegger

Related Articles:

• Gov. Schwarzenegger Does Right Thing: Signs SB 94 And Vetoes SB AB764
• CA SB 94 on Lawyers & Loan Modifications Passes Assembly… 62-10
• 500,000 Loan Modifications – Oct 2009 Report

Article Bullets:

• 500,000 trial loan modifications completed under the Making Home Affordable program

• As of Sept. 1, the report says, only 1,711 homeowners have completed the three month trial period and been approved

• In mid May, Treasury announced that more than 55,000 homeowners had begun trial modifications

• Overall, servicers had started trial modifications for only about 487,000 homeowners, about 16 percent of those eligible

• 1 in 8 homeowners in default or foreclosure

• 10-12 million more foreclosures expected in near future

• HAMP was designed around the housing crisis 6 months ago, and doesn’t take into account conditions that impact foreclosures today – unemployment

via propublica.org

Every month, the Treasury Department gives an update on its $50 billion mortgage modification program. We’ve posted the latest breakdown of how the largest servicers are doing.

Treasury used the occasion of the report’s release yesterday to trumpet a “milestone”: More than 500,000 homeowners have begun a trial modification under the program. This was a goal set by the administration itself back in July, and, as we observed at the time, there was little doubt they’d meet it.

But it’s an accomplishment rife with caveats, as a report released this morning by the bailout’s Congressional Oversight Panel makes clear. The plan’s success will ultimately depend on how many of these modifications actually prevent foreclosures, the report stresses, and the number of trial modifications doesn’t answer that question.

Under the program, homeowners approved for a modification undergo a three-month trial. If they succeed in making their adjusted payments throughout, then the modification becomes permanent. If they don’t, then they’re back to square one. As of Sept. 1, the report says, only 1,711 homeowners had run that gantlet.

It’s unclear why the number is so low. In mid May, Treasury announced that more than 55,000 homeowners had begun trial modifications. The report stresses that the number is “preliminary” and says the low number may in part be because mortgage servicers are slow in assembling the final documentation or getting the data to Treasury. But another possibility may be that borrowers are re-defaulting in large numbers. The panel is “hopeful” that’s not the case, the report says, but adds that if the number of permanent modifications doesn’t rise fast, the program “will come nowhere close to keeping up with foreclosures.”

Of course, the program’s first six months has been chiefly marked by homeowners’ frustration in even getting to the trial stage. Treasury’s results show that servicers’ performance hasn’t accelerated over the past three months: each month, servicers have begun about 125,000 trial modifications.

As you can see from our breakdown by servicer, Bank of America, the biggest participant in the program, continues to lag behind others in its pace. As of Sept. 30, it had started trial modifications for about 11 percent of customers eligible for the program. Overall, servicers had started trial modifications for only about 487,000 homeowners, about 16 percent of those eligible.

Last month, NPR broadcast a report from Bank of America’s home retention department. During the visit, a reporter looking over the shoulder of a company employee thought she had incorrectly rejected a customer from the Making Home Affordable program. The employee stuck to her position, but when NPR inquired with her supervisors, they realized that the reporter was correct and offered the homeowner a modification.

The company said it would have caught the mistake eventually. Another homeowner who had been repeatedly denied a modification on the phone was also offered one after NPR questioned the company about the basis for that denial.

Last month, we wrote about Ian and Megan Bearce of Glendale, Calif., who had been asking Bank of America for a loan modification for months They finally got one on Sept. 8, but Megan says they began making progress only after ProPublica got involved and Bank of America plucked them out of the obscurity of the home retention department.

“From the sounds of it, several people have been told of our case, and we’re a priority,” she said on Sept. 1. She said it was “quite a difference” from the long hold times, missing faxes, delayed deadlines and unreturned phone calls they had endured before.

____________________

On Oct. 9, 2009, the Treasury Department released data showing how the largest mortgage servicers participating in the administration’s $75 billion foreclosure prevention program have been performing. You can see that breakdown below.

To give an indication of each servicer’s performance as a percentage of its loans eligible for modification, the Treasury listed the number of eligible loans that are more than 60 days delinquent. While that number is useful to compare servicers, it underestimates the total number of loans that are eligible for the program. Treasury only released data for servicers with over 1,000 eligible loans.

The “incentive cap” listed is the amount of money allotted to each participating servicer based on its estimate of how many loans are eligible for the program, but some of that money will also go to lenders and borrowers.

click on images to enlarge

CLICK HERE TO DOWNLOAD PDF DOCUMENTS

Related Articles:

• Chris Adams, McClatchy Newspapers, Gets It! Servicers Suck!
• Congressional Oversight Panel – Foreclosure Mitigation Report
• S.1731 – Preserving Homes and Communities Act of 2009 – Will Issue Grants To Unemployed Homeowners
• When Walking Away From Your Home Becomes A Business Decision

October 9, 2009
For Immediate Release

WASHINGTON, D.C. – The Congressional Oversight Panel today released its October oversight report, “An Assessment of Foreclosure Mitigation Efforts after Six Months.”

Treasury’s Strategy is ‘Inadequate’ to Address Coming Wave of Foreclosures; For Many Homeowners, Foreclosure Will Be Delayed, Not Avoided.

The Panel expresses concern about the limited scope and scale of the Making Home Affordable program and questions whether Treasury’s strategy will lead to permanent mortgage modifications for many homeowners.

Rising unemployment, weak home prices, and impending mortgage rate resets still threaten to cast millions of Americans out of their homes, with devastating effects on families, local communities, and the broader economy. One in eight mortgages is currently in foreclosure or default, and this crisis is estimated to produce 10 to 12 million foreclosures.

While Treasury is still in the early stages of implementing its centerpiece foreclosure mitigation program, called the Home Affordable Modification Program (HAMP), the Panel has three concerns with the current approach.

The Panel found, “It increasingly appears that HAMP is targeted at the housing crisis as it existed six months ago, rather than as it exists right now.” The program is limited to certain mortgage configurations.

Many of the coming foreclosures are likely to be payment option adjustable rate mortgage and interest-only loan resets, many of which exceed HAMP eligibility limits. Treasury’s strategy also makes no provision for foreclosures due to unemployment, which now appear to be one of the biggest drivers of foreclosure.

Foreclosures continue every day as Treasury ramps up the program, with foreclosure starts outpacing new HAMP trial modifications at a rate of more than two to one. Some homeowners who would have qualified for modifications may have lost their homes before the program could reach them.

Even once the program is fully operational, Treasury’s own projections indicate, in the best case, fewer than half of the predicted foreclosures would be avoided.

The Panel found, “The result for many homeowners could be that foreclosure is delayed, not avoided.”

HAMP modifications are often not permanent: For many homeowners, payments will rise after five years, and although the program is still in its early stages, only a very small proportion of trial modifications have converted into longer term modifications.

The Panel is also concerned about homeowners who face negative equity or are “underwater” – that is, the value of the loan exceeds the value of their home. For many borrowers, HAMP modifications increase negative equity, a factor that appears to be associated with increased rates of re-default.

The full report can be found at cop.senate.gov. The Panel held a field hearing in Philadelphia with senior executives of Treasury, Fannie Mae, Freddie Mac, representatives for major financial institutions and housing advocates to inform the findings of this report. Testimony from the hearing can be found on the Panel’s website.

The Congressional Oversight Panel was created to oversee the expenditure of the Troubled Asset Relief Program (TARP) funds authorized by Congress in the Emergency Economic Stabilization Act of 2008 (EESA) and to provide recommendations on regulatory reform. The Panel members are: former Securities and Exchange Commissioner Paul S. Atkins, Congressman Jeb Hensarling (R-TX), Richard H. Neiman, Superintendent of Banks for the State of New York, Damon Silvers, Associate General Counsel of the AFL-CIO and Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard Law School.

According to the FHFA’s second quarter Foreclosure Prevention Report, loan modifications under the Making Home Affordable Program (HAMP) more than tripled from June to August – 66,200 to 202,200.

Report Summary:

Washington, DC – The Federal Housing Finance Agency released its second quarter Foreclosure Prevention Report, which shows that trial loan modifications under the Administration’s Home Affordable Modification Program (HAMP) announced in March are rising steadily.

This development explains why completed loan modifications have slowed. The data was released by Edward DeMarco, Acting Director of the Federal Housing Finance Agency, as part of the report for the second quarter of 2009, which now includes cumulative data from HAMP.

The FHFA report details the actions Fannie Mae and Freddie Mac have taken to prevent foreclosures and keep people in their homes.

For the first time the report includes trial modification volumes from the HAMP announced in March 2009.

“Fannie Mae and Freddie Mac are working with borrowers and servicers to implement the HAMP and lower mortgage payments to keep people in their homes,” said Acting Director DeMarco.

The report shows that of the Enterprises’ 30 million residential mortgages:

• Trial loan modifications under HAMP more than tripled from June to August, from 66,200 to 202,200.

• Completed actions to prevent foreclosure declined by 25 percent to approximately 58,200 during the second quarter as HAMP trial loan modifications replaced traditional loan modifications and repayment plans in process. Completed loan modifications decreased by 13 percent over the prior quarter to 32,300.

• Fifty-four percent of loan modifications completed in the second quarter resulted in borrowers’ payments decreasing by 20 percent or more, compared with only 8 percent one year earlier.

• Short sales increased by 45 percent during the second quarter to 11,700 as the pipeline of serious delinquent loans increased and Freddie Mac increased the delegated authority of servicers to implement short sales.

• As short sales increased and loan modifications declined, completed home retention actions – actions that result in a borrower keeping his or her home –accounted for 82 percent of all foreclosure prevention actions completed during the second quarter, down from 90 percent in the first quarter.

• Mortgage delinquencies continued to increase during the quarter as higher levels of unemployment contributed to new delinquencies. Foreclosure moratoria associated with HAMP have also contributed to the increase in delinquencies as fewer seriously delinquent loans are transitioning to foreclosure.

• Although the Enterprises’ mortgage delinquencies continued to increase during the second quarter of 2009, the rate of delinquency is consistently lower than the industry average. As of June 30, 2009, the percentage of Enterprises’ mortgage loans that were at least two payments past due (60 plus days delinquent) was 3.5 percent, compared with 4.7 percent for VA loans, 7.8 percent for FHA loans and 8.0 percent for the industry average.

“We expect the number of completed loan modifications to increase as homeowners complete the HAMP trial period,” said DeMarco.

“Fannie Mae’s and Freddie Mac’s efforts with servicers and homeowners are critical to preventing unnecessary foreclosures and to keeping people in their homes.”

###

The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets

Related Articles

Mortgage News Daily: Delinquencies Still On The Rise, GSEs Reducing Portfolio Risk

Fannie Mae and Freddic Mac’s portfolios increased by a net of 58,000 loans or 0.2 percent during Q2 of 2009 as they took in new loans through purchases and issuances at a greater rate than they liquidated loans.  Curently, the two GSEs have a total of 30.4 million loans under service.

Mortgage delinquencies in their portfolios are continuing to increase:

• 30 days delinquent increased by 11 percent during the second quarter to 682,000

• 30-59 days late rose 20 basis points to 2.2 percent of all loans.

• 60 days or greater – another 27,000 loans became 60 or more days delinquent.  This is an increase of 21 percent, and there are now 1.3 million 60+ day delinquent loans in the portfolios.

Nearly 50 percent of delinquent borrowers cited loss or curtailment of employment as the reason for their problems, compared to 43 percent during the first quarter.

The number of aging delinquencies increased in part because fewer loans transitioned to foreclosure as usually happens around the 90 day delinquency point.

Instead, foreclosure activity is suspended for those borrowers requesting HAMP modifications.  Also those loans in the required 90 day trial modification period continue to be reported as delinquent until the trial period is completed.

Servicers are also stretched thin trying work through the backlog of delinquent loans requesting HAMP intervention.

HAMP has not yet been in operation long enough to judge its effectiveness.  The first loans to enter the program have only recently emerged from the 90-day trial period so there are no meaningful figures on the trial completion rate or any number on the overall success of the program.  With continuing economic weakness and increasing unemployment HAMP and other foreclosure avoidance programs have a tough row to hoe.

___________

Seeking Alpha: FHFA Restructuring: Agency Blowing Smoke

The FHFA is blowing smoke at us. Their default rate looks good by comparison because they are not recognizing losses.  They are just rolling them forward.

They have done $70billion already and now that they have it figured out they will continue the process. How much of the 5% annualized rate should go on top of their stated numbers? Over time, more than half . The Agency default rate is understated in the report as a result.

Most of the restructured loans are from seriously delinquent borrowers. Those in payment default by 90 days. When these loans are restructured they go off of the Delinquent list.

Therefore the more the Agencies restructure, the lower their delinquency rate looks.

Mr. DeMarco said this about his ability to restructure dead mortgages:

With HARP, these barriers have been addressed. Fannie Mae and Freddie Mac today will refinance mortgages they currently hold, even up to a current loan-to-value of 125 percent.

The ‘barriers’ he is referring to are prudent lending standards. Recent data shows that one half of these loans will re-default. If real estate prices do not make a significant recovery, the very high re-default rate will continue.

___________

Los Angeles bank foreclosures continue to defy local, state and federal government prevention efforts. Recent market data showed that 73 percent of the total homes on the market for sale are foreclosure houses.

The figures showed that out of the 17,000 properties on the market for sale, over 12,500 were distressed properties. Industry experts said that these figures only showed that the Home Affordable Modification Program (HAMP) of the federal government worked only as a stop gap, delaying what is inevitable.

The federal program is designed to help homeowners who are struggling to pay their monthly mortgage. It aims to reduce monthly loan payments for as many as 4 million borrowers nationwide by modifying loans to make them affordable but industry analysts said that the program only postponed foreclosures, prompting them to predict another flood of Los Angeles bank foreclosures in the coming months.

In August, cancellation of repossession sales declined by almost 7.5 percent to 9,976 compared with July figures. Industry analysts pointed out that there was no sign that foreclosures delayed under HAMP were canceled after a 3-month trial period.

The federal program involves a trial period of 3 months during which repossession activity is postponed to give a chance to homeowners to fulfill the reduced payment agreed upon under the loan modification program.

Market data showed that the number of impending foreclosures that were postponed upon request of lenders increased twice since the program was launched. Last month, the number of foreclosure properties scheduled for sale totaled 131,300, higher than the 64,177 posted by the end of February 2006.

According to industry analysts, if the federal program succeeds, the cancellation rate of foreclosures would be dramatic. However, if the program fails, the number of foreclosure sales would increase.

Industry analysts said that the current housing market is still in a limbo. Many government programs designed to prevent foreclosures have yet to prove their mettle. In the county of Los Angeles, the number of homeowners who are behind on their mortgage payments remains at a high percentage of 10, with one in every 10 in default by 90 days or more.

___________

News Source:  BankForeclosuresSale.com

It hasn’t taken long for Peter Schiff, who recently announced he’s running against Chris Dodd and others for his Connecticut Senate seat, to attack Dodd over his recent proposal to create a super regulatory agency by combining four existing regulatory agencies into one.

The four agencies Dodd would want to make into one include the Federal Reserve, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation and the Comptroller of the Currency.

Dodd’s point of view is that the reason there was a economic crisis last year was in a large part because banks were allowed to choose which of the above four agencies they wanted to regulate them. He also asserts these agencies weakened regulations so the banks would choose them as their regulator of choice.

Schiff responded to the proposal of Dodd in a press release, saying this:

“Existing regulators had all the powers they needed, and more, and they failed miserably to foresee and prevent this crisis. Chris Dodd is now asking us to put all our eggs in one basket and trust a ’super regulatory agency.’ He should know better than to centralize power in the hands of Washington bureaucrats – it’s precisely the arrangement that caused our current problems. I think most Connecticut voters know that we need fewer czars in Washington, not more. As long as Fannie and Freddie and Congress are meddling with the economy, changing the structure of the regulators is basically rearranging deck chairs on the Titanic.

“Dodd’s proposal takes regulatory authority away from one unaccountable institution and gives it to another even bigger one. This will not solve our problems.”

Dodd wants to see his plan become law by the end of 2009, but it’s highly unlikely it will, if it’s even brought to a vote.

As far as other problems Dodd faces in the election is his financial credibility, as he asserted almost up to the time the housing market fell apart that it was foundationally healthy and strong, while Schiff rightly predicted the economic and housing crisis we’re still going through.

No matter, Schiff is right in what he says concerning the creation of an agency that would be more powerful than even the Federal Reserve is at this time;  it would recreate and exacerbate the problems, not deal with them.

It doesn’t make sense to respond to the need of reining in the Federal Reserve by merging it with other agencies under a much larger power umbrella, and think that’s going to take care of the situation. This is extraordinary shortsightedness by Dodd, who is only looking at it from the point of view of regulatory agencies fighting to see who gets to regulate who, while abandoning or compromising their regulatory responsibilities.

He mentions nothing of the Federal Reserve, other than simply reducing their power while creating an even larger regulatory power. We need less of that and not more, and Schiff is right in opposing this for that reason alone. The Federal Reserve at its current level of power is completely out of control, picture what a super regulatory agency would be like and do if actually created.

It is very interesting to see some truly interesting and knowledgeable political candidates like Rand Paul and Peter Schiff not only enter politics, but have some really good ideas, economic understanding and ideas to effect some real changes the American economy and markets need. It’ll be a hoot to see them covered from their insights and comments while their detractors helplessly and haplessly attempt to undermine them. How about three Dr. No’s in the House and Senate? Sounds good to me.

Source:  American Banking News

Peter Schiff formally announced that he is running for the U.S. Senate in Connecticut:

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