Failing Obama Mortgage Bailout Plan

Most Borrowers are still ending up in foreclosure even after loan modifications

WASHINGTON (AP) — The Obama administration’s flagship effort to help people in danger of losing their homes is falling flat.

More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes.

Last month alone,155,000 borrowers left the program — bringing the total to 436,000 who have dropped out since it began in March 2009.

Is The Housing Market Recession Over?

Experts say not by a long shot

The Housing-Market Recession Is Not Over

Why you shouldn’t be overly optimistic about real estate right now?

After years of hearing how home prices are plummeting and foreclosures are mounting, consumers want to feel hopeful about the housing market — but maybe they’re being too optimistic.

In a presentation to the National Association of Real Estate Editors in Austin, Texas, last week, Stan Humphries,’s chief economist, pointed to four myths he said consumers are latching on to as they try to make sense of recent housing statistics.

The four myths:

  1. The housing recession is over.
  2. After markets hit bottom, prices will rebound to boom levels.
  3. The worst of the foreclosure mess is behind us.
  4. The tax credits saved the housing market

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The housing slump is not over? How much further can we go?

A Double-Dip in the Housing Market?

Falling home prices stir fears of new bottom
Home prices fall 0.5 percent from February to March, raising fears of a new bottom

NEW YORK (AP) — The housing slump isn’t over.

Tax credits and historically low mortgage rates have failed to lift home prices so far this year. Prices fell 0.5 percent in March from February, according to the Standard & Poor’s/Case-Shiller 20-city index released Tuesday.

That marks six straight months of declines — a sign that the housing market is going in reverse.

“It looks a little like a double-dip already,” economist Robert Shiller said in an interview. “There is a very real possibility of some more decline.”

The co-creator of the Case-Shiller index, who predicted in 2005 that the housing bubble would burst, says he worries that home prices rose last year only because of the federal tax credits. That fear is shared by other economists. They note that weak job growth, tight credit and millions more foreclosures ahead will weigh on the home market.

All that is discouraging for homeowners who have seen the value of their largest asset deteriorate sharply over the past three years. Falling home prices tend to curtail consumer spending. And they make it harder for struggling borrowers to refinance into an affordable home loan.

Renting: The new American dream?

The American dream of home ownership has turned out to be the American nightmare for those who could never really afford a home in the first place.

Many borrowers are now in deep trouble as home prices have plummeted and the payments on bubble-era adjustable rate mortgages have shot up. Foreclosures are still continuing at an alarming pace.

If the so-called Great Recession has taught us anything, it’s that buying a house is not a divine right. It’s a privilege to be earned only after you’ve saved up a nice chunk of cash for a down payment and are in a healthy enough financial position to keep making those monthly mortgage payments.

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Foreclosure rates surge, biggest jump in 5 years

‘On pace to see more than 1 million bank repossessions this year’

LOS ANGELES – A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.

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Interest Rates Have Nowhere to Go but Up

On Sunday April 11, 2010, 1:00 pm EDT

Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.

That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent recession.

The shift is sure to come as a shock to consumers whose spending habits were shaped by a historic 30-year decline in the cost of borrowing.

“Americans have assumed the roller coaster goes one way,” said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.”

The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.

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Editor’s Note: If interest rates continue to go up this will continue to severely depress the real estate market. Either incomes will have to go up or homes will have to drop in value to compensate. We employ several strategies to buy properties without the worry of interest rates, lower home prices, and reduced equity. If you live in the Yelm Area Community including Rainier, Tenino, Bucoda, Roy, Mckenna, and Eatonville, then we may be able to help.

Chase Sued: Allegedly Told Homeowner To Stop Payments, Then Foreclosed

JPMorgan Chase told a California couple to quit making mortgage payments in order to qualify for a loan modification but then foreclosed on their Sacramento home, according to a lawsuit filed in federal court.

Faiz and Khadija Jahani called Chase in December 2008 because they were having trouble making their mortgage payments. According to the suit, they were told that they wouldn’t qualify for a modification without being delinquent and that they should stop making payments for three months.

At the beginning of June, the Jahanis claim that they were told they qualified for a modification that reduced their monthly payments. Three weeks later, they received a letter telling them the bank intended to foreclose. This confusing back-and-forth continued for months, with Chase repeatedly asking them to resend paperwork, according to the complaint filed in U.S. District Court, Eastern District of California/Sacramento Division, which was first reported by Courthouse News.

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Editor’s Note: In the course of helping homeowners in similar situations over the past 8 years we have found these circumstances to be common and true. Banks do tell their borrowers that in order to qualify for loan modification or some type of short sale, deed in lieu of foreclosure, etc, they must first be delinquent on their payments for at least 3 months. Isn’t it quite irresponsible of the banks to encourage a homeowner’s deliquency by telling them to stop making payments?

So now the bank tells you is that even if you are completely up-to-date on all of your payments you should instead miss 3 payments, effectively ruining your credit score for years. This act alone makes it virtually impossible to finance another home for several years. They also will give you the run around by “losing” your paperwork multiple times (by the way, this is a common practice among banks) and then ultimately start foreclosure proceedings. Even if you wanted to catch up the payments to save your home from foreclosure most people can’t at that point because of the added interest, penalties, and fees on top of the 3 missed payments.

What happens to many people is they end up losing their home, and with a lower credit score and no down payment they now have no ability to finance a new one. Even a rental is hard to find with bad credit.

Our suggestion is don’t do it. It is much better to sell your home via land contract or lease purchase then it is to foreclose and make it virtually impossible to buy a new one for years.

Housing Prices May Be Heading for a Double Dip

Anyone thinking housing prices have reached a bottom had better do some recalculating. Despite Tuesday’s Case Schiller report showing smaller declines in January, housing prices may already be in another free fall.

Falling prices again?

Newly revised numbers are pointing to the decline.

The Federal Housing Finance Agency’s (FHFA) adjusted figures show a housing price decline of 2 percent in December and 0.6 percent decline in January—reversing some regional price increases in 2009.

And more pricing dips are predicted.

“Case Schiller aside, we expect housing prices to fall another five percent in the coming months,” says Paul Dales, US economist at Toronto based Capital Economics. “We’ve actually seen some declines in areas of the country. That’s going to put a halt on any housing recovery.”

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Half of Commercial Mortgages to Be Underwater

By the end of 2010, about half of all commercial real estate mortgages will be underwater, said Elizabeth Warren, chairperson of the TARP Congressional Oversight Panel, in a wide-ranging interview on Monday.

“They are [mostly] concentrated in the mid-sized banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have these dangerous concentrations in commercial real estate lending.”

As a result, the economy will face another “very serious problem” that will have to be resolved over the next three years, she said, adding that things are unlikely to return to normalcy in 2010.

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Spring Outlook: Housing Sales Are Looking as Bleak as Ever

It’s going to be another bad spring for the US housing market—unless you’re a buyer.

With prices still falling and more distressed homes hitting the market, many experts are expecting the market to get even worse before it gets better.

“There’s been some increase in inventory lately, mostly from distressed sales,” says Walter Malony, spokesman for the National Association of Realtors. “Buyer’s are pretty much in the driver’s seat.”

Even the Obama administration’s new plan to help troubled homeowners, while praised by some economists, won’t help the market much right away.

The $14 billion program, announced Friday, will try to stem a rising tide of home foreclosures by giving lenders incentives to erase some mortgage debt and slash mortgage payments for the unemployed. But it will take months before there is any impact, experts say.

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