Short Sales in Port St Lucie Traditions

Traditions in Port St Lucie Prime with Foreclosures and Short Sales

Searching for a home in Traditions in Port St Lucie, Florida?  There are plenty of homes available in Traditions. Please call us at 1 800 778-8335 today for short sale and/or foreclosure information.

Port St Lucie Real Estate

Port St Lucie Real Estate by Sharon Kelly

Please call Sharon direct for the best pricing in St Lucie County on Foreclosed Properties, REO’s, and all Port St Lucie Real Estate.

If you have questions or need help please call Sharon at (772) 971 - 6747.

Port St Lucie 3.5 Million in Federal Aid for Foreclosures

Port St Lucie gets a some relief as news is released today to help the foreclosure market.

The Treasure Coast received more than $8 million in federal aid Wednesday to help neighborhoods hit hard by foreclosure.

The money is part of $1 billion allocated nationally by the U.S. Department of Housing and Urban Development, of which $208.4 million is for Florida.

This is the federal government’s third round of Neighborhood Stabilization funding. As with prior rounds, each government must decide if it will accept the money.

For Port St. Lucie, the $3.5 million announced Wednesday brings to $17 million the amount the city has received, the most of any Treasure Coast government.

“We’ve expended at this point almost $12 million, so this money couldn’t have come at a better time,”

said Tricia Swift-Pollard, community services director for Port St. Lucie. The city used the prior grant to purchase 140 homes and completed restoration of 48. “We have to sell some in order to continue the rehab,” Swift-Pollard said.

Don Cole, Martin County housing program manager, said the money would be expected to go towards the continued purchase and resale of foreclosed homes.

“We’re considering using it in the same model we did before with the rehab, purchase and resale,” Cole said.

The program had previously allowed the county to purchase five homes and the additional money could save 10 to 15 homes, Cole said.

Robin Miller, program director with the Indian River County Housing Authority, said the county will have to determine which criteria the federal government has set. “I know the criteria we’re under right now is we purchase foreclosed homes, we refurbish them and then we’ll be selling them,” Miller said.

Indian River County, which has used part of the $4.1 million it had previously received to acquire 16 foreclosed properties, also shares the money with the Treasure Coast Homeless Services Council, Miller said.

According to HUD, the money can be used to buy land and property, demolish or rehabilitate abandoned properties, and offer assistance to low- to moderate-income home buyers. In distributing the money, the Obama Administration looked at the number and percent of home foreclosures, percent of homes with sub prime mortgages, and the number and percent of homes with late loan payments.

The program began in July 2008, when former President George W. Bush authorized a $3.92 billion grant for states and local governments to buy and maintain homes being foreclosed.

Thanks to The Palm Beach Post

Homebuyer Tax Credit Update & Information

What you should know about the

Homebuyer Tax Credit

Special Rules for Members of the Military, the Foreign Service and the Intelligence Community

Recognizing their unique circumstances, Congress approved exceptions that give qualified members of the military, Foreign Service and intelligence communities an extra year to buy a home and claim the federal homebuyer tax credit. The exceptions apply to both the $8,000 tax credit for first-time homebuyers and the $6,500 tax credit for existing homeowners who purchase another home.

Extension of Tax Credit Rules

• The homebuyer tax credit extension is available for qualified purchases with a binding sales contract in place on or before April 30, 2011, and closed by June 30, 2011. Qualified service members (and if married, the service members’ spouses) who served on official extended duty outside the U.S. for 90 days or more at any time between Jan. 1, 2009, and April 30, 2010, are eligible.

• A person forced to return to the U.S. for medical reasons before completing an assignment of at least 90 days of qualified official extended duty outside the U.S. may also qualify for the one-year extension.

Exemption from Tax Credit Recapture Rules

Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture (repayment) of the tax credit. However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty assignments are exempt from the recapture rule.

Definitions: Qualified service member means a member of the uniformed services of the U.S military, a member of the U.S. Foreign Service or an employee of the intelligence community. Official extended duty means any period of extended duty outside the U.S. for at least 90 days during the period between Jan. 1, 2009, and April 30, 2010.

Note: Only one spouse must be overseas on official extended duty for the requisite amount of time for either spouse to be eligible for the 2011 extension to purchase a principal residence and claim the credit.

REO Specialist Port St Lucie

REO specialist Sharon Kelly-Brown gives great advice regarding reo and short sales in saint lucie county.

Please read this article below from stockmarketsreview.com
Short Sale Investing – Are the Banks Focusing More on Short Sales, Instead of Foreclosure?
Posted Wednesday, May 12, 2010 by admin
Filed under: Investing

Over the past 12-24 months, in specific sections of the country the banks have been completely bombarded with foreclosures, and now they have got no choice but to lower their prices so, the people who buy REO’s and know short sale investing, can make a great deal when buying a residence directly from the banks. Many of the banks are now concentrating on Short Sales, rather than foreclosure.

Certainly it depends on which section of America you reside in. Believe it or not, there are several areas of the country where home prices have not dropped that much, while other parts of the nation, like California, Nevada, Arizona and Florida, prices have collapsed. In the regions of the county where home values have fallen drastically, you are in position to produce a great deal when buying fromthe banks . In the parts of the country where prices have fallen just a little, you may be unable to make as good a deal, but you should still be able to obtain a home for around 15% or more below current market value.

As you may already know, in case you have obtained my courses, I am not really a fan of hiring realtors when selling or buying a home. That is because historically realtors sell homes at full retail value. In my experience that is just a bad business decision.

Buying at full retail, or anywhere in close proximity to full retail value for a home is just foolish, unless it is the home you have been dreaming about and it is the home you want to live in for the rest of your life, but that is not the norm, that is a rare exception to the rule these days.

We illustrate to buyers to think more like a real estate investor, and many real estate investors are not fans of using realtors. I have never used a realtor to buy or sell any previously lived in home. However, to purchase an REO, it just could be to your benefit to make use of a realtor. BUT do not just use any realtor, find THE realtor locally whose expertise is Short Sales or REO’s.

The reason for making use of a realtor for these two kinds of purchases is 2 fold. First, you are buying the home at a Big discount and it isthe banks who are paying the realtors commission. And second, the realtor just could be doing most of the negotiating with the banks for you, and I recognize a large number of you may love that you do not have to do it yourself.

That is one legitimate reason why I authored a program with regards to how to complete a Home Short Sale. If you decide to use a realtor, you should have significantly better understanding – Now you are going to know exactly what the realtor is doing so you can keep track of what is going on through the short sale process.

PSL Housing - Washington Only Delaying The Inevitable

Troubled Homeowners Can Get Free Advice On Short Sales and Pre Foreclosures from Sharon kelly of Port St Lucie. Call Sharon at  1 800 778 8335

Psl foreclosures help and advice.

Written by Bob Adelmann Mar 23rd.

Friday’s announcement of more intervention in the housing. mortgage market will result in a deeper, longer, and more painful delay in the inevitable decline in housing prices that are necessary to clear the market. According to the Obama administration, the “broad new initiatives” will help troubled homeowners to refinance their existing mortgages with more favorable affordable ones provided directly by the government. Part of the new program is “meant to temporarily reduce the payments of [those] borrowers who are unemployed [but are] seeking a job.” In addition, the enhancements include inducements to “encourage lenders to write down the value of loans [already] held by borrowers in modification programs.”

In simple English, HAMP (the Home Affordable Modification Program), announced with great fanfare and high expectations early on in the Obama administration, isn’t working, and so more of the same is required. The original intent of HAMP was to “better assist responsible homeowners who have been [negatively] affected by the economic crisis through no fault of their own … and to help more people who owe more on their mortgage than their home is worth.”

Despite claims from the Treasury Department that “more than four million homeowners have refinanced their mortgages to more affordable levels…[and] more than one million are saving … over $500 per month through the … program,” the program “continue[s] to see challenges.” And so, the new program enhancements “will provide more opportunities for lenders to restructure loans for some families.”

So far, HAMP’s list of attempts to prop up the mortgage market include:

• support for Fannie Mae and Freddie Mac so they can continue to offer below market interest rate loans;

• support for the mortgage market by buying more than $1.4 Trillion in existing toxic mortgages;

• providing additional federal funds for mortgages that the private lenders aren’t willing to provide because of excessive risk;

• pressuring lenders a “modification initiative” to reduce payments from borrowers to “affordable levels” so that they don’t walk away;

• expanding the guarantees on home loans from $625,000 per loan to $729,750 per loan;

• pressuring lenders to provide “expanded refinancing flexibilities,” particularly “for borrowers with negative equity”;

• another “initiative” to state and local housing finance agencies to “provide sustainable homeownership and rental resources for American families”;

• the First Time Homebuyer Tax Credit;

• providing $5 Billion “in support of affordable rental housing; and

• creating the Hardest Hit Fund for housing finance agencies to support homeowners in “neighborhoods hardest hit by concentrated foreclosures.”

So far, fewer than 200,000 people have been able to get permanent new loans out of the approximately seven million borrowers who are in trouble and behind on their payments. In the fourth quarter of 2009, the number of households at least 90 days past due on their mortgages grew by 270,000, and the number of foreclosures in the fourth quarter rose by 9 percent. And that number didn’t count nearly 40,000 owners who did a short sale on their home (where the lender agreed to accept less than what it was owed on the original mortgage).

The latest survey by Campbell/Inside Mortgage Finance showed that nearly half of all home purchases in February were “distressed properties” (involving homes that were acquired as part of either a foreclosure or a pre-foreclosure sale), an increase from 37 percent in November. That report stated,

Increased government efforts, including temporary foreclosure moratoriums and a push to qualify more financially troubled homeowners for mortgage modifications, temporarily reduced the number of distressed properties coming on the housing market in the fall and much of this past winter. But now a growing number of distressed properties appear to be hitting the housing market.

As more distressed properties have come onto the market, home prices are again showing signs of weakness. Average home prices for all four categories of properties–damaged REO, move-in ready REO, short sales, and non-distressed–declined from January to February in the latest survey.

All that HAMP did was to delay these foreclosures from coming onto the market in a timely manner until now. And with the expiration of the First Time Homebuyer Tax Credit of $8,000 at the end of April, that temporary acceleration of future sales into the present will cease.

In addition, more homeowners are opting for “strategic defaults.” The Los Angeles Times tells the story of Wynn Block. A 66-year-old retired psychologist, she purchased a two-bedroom home in 2006 for $385,000. The market value of her home today is “in the low-$200,000s.”  She said, “There was not a chance that house was ever going to be worth anywhere near what my mortgage was, “ so she elected to walk away.”

Credit bureau Experian and a consulting firm, Oliver Wyman, estimated in a study that nearly one out of every five homeowners who were seriously delinquent on the mortgages in the last quarter of 2008 walked away. Luigi Zingales at the University of Chicago estimated that 35 percent of defaults last December were “strategic defaults.” He added, “The fact that people are strategically defaulting…the risk that the number of people doing this might explode is significant.”

Gary North makes the excellent point that when someone walks away from a mortgage and the house is ultimately sold, the market price drags down the prices of the other homes in the neighborhood, thereby increasing the chances of other walkaways as well.

Finally, there is the “overhang” of potential resets of Alt-A and Option ARM mortgages in 2011 and 2012, which will add additional pressure on prices.

Mark Calabria, director of financial regulation at the Cato Institute, says “it was government, mostly Washington, which got us into this mess in the first place. Decades of subsidies for the housing industry have resulted in … leaving the nation with a massive inventory of vacant homes.” He points out that, “In a nation of 130 million homes, we have almost 19 million that are vacant.” And nearly seven million of those aren’t even on the market, waiting for the “market to turn” before being listed for sale. In any event, Calabria says, “Our housing markets are facing a problem of way too much [emphasis added] housing.” But Washington’s attempts to support the housing market is based on the belief “that getting construction going will reduce unemployment.”

Ultimately, home sales and consequently home construction will not be determined by expensive, wasteful, and interventionist policies, but “by family incomes and basic demographics.” Efforts such as HAMP and additional enhancements announced on Friday are simply “government pretending these fundamentals don’t matter.” He concludes that “when you’re in a hole, [the best thing to do is to] stop digging. In the case of housing, as a country, we built too much. The cure is to build less.” The only way for markets to clear, he says, is to allow supply and demand to even out, and for that to happen, prices must fall further.

All of these federal interventions are foolishness and expensive failed experiments based on false economic theories that will do nothing but extend the time, and the pain, until market prices fall enough to bring buyers back into the market. Politicians’ continued denial of reality through intervention will only delay the inevitable.

Florida Given Only Weeks to Plan 1.5 Billion Federal Foreclosure Funding

Five states including Florida rush plans for $1.5B in housing funds

PHOENIX—The five states hardest hit by the foreclosure crisis have been given only weeks to plan how to spend $1.5 billion in federal funding announced by the Obama administration last month.Guidelines issued under the U.S. Treasury Department’s Fund for Hardest Hit Housing Markets on March 5 gave housing finance agencies in California, Arizona, Florida, Nevada and Michigan just six weeks to come up with plans on how to spend their share of the money.

The rush could be problematic for the states, especially because Treasury is seeking “innovative” measures to help families facing foreclosure. But some experts have been urging the administration to try the approach, believing it will be helpful and that it can be done quickly.

“This is long overdue, allowing the use of more innovative techniques,” said Ken Rosen, a real estate professor at University of California at Berkeley’s Hass School of Business.

The guidelines give wide leeway to the state Housing Finance Agencies charged with doling out the money to design programs tailored to their region’s circumstance. The money can be spent, for example, to help families who can’t pay their mortgages because of job losses, unable to refinance because plunging home values have left them “underwater,” or to give relief from second mortgage payments.

California’s Housing Finance Agency, for example, is looking at areas of the state that have been hardest hit, like the Central Valley and Inland

Empire area southeast of Los Angeles, spokesman Ken Giebel said. The agency is getting the most cash, $700 million.It will have to start from scratch with plans on how to help unemployed homeowners, for instance, and how to get the money from the federal government to the state government to the actual underwriter.

“None of this stuff is in writing, it’s all up in the air right now,” Giebel said.

Rosen suggested allowing the value of a home that is worth less than the homeowner owed to be written off, replacing that amount with a second mortgage that wouldn’t have to be paid off unless the home rose enough in value.

The homeowner would then share in the profits, providing an incentive to stay in the home. He also said programs to allow the unemployed to forgo payments for a year, with those payments wrapped into a second mortgage, would be helpful.

“There’s a lot of innovative ideas and I’m hoping we have a lot of smart people in each state who know them; I know we do in California,” Rosen said. “So I think there’s plenty of time.”

Florida is getting the second-largest share at $418 million.

Cecka Rose Green, communications director for the Florida Housing Finance Corporation, said her agency is just starting to review the Treasury requirements, but has put a team together and is reviewing programs other agencies are using. They’re looking at plans that have helped in other states and will likely cherry-pick the best.

“I think we’re taking those important first steps but we’re not close to getting any details of a plan out,” she said Friday.

Michigan is getting $154.5 million, Nevada $103 million and Arizona $125 million.

Arizona’s housing agency is also just getting started on a proposal and hasn’t identified how it might spend the money.

“I know we have a compressed time frame, but we are still looking at a number of ideas and I don’t know what we’ll be focusing on yet,” said state Department of Housing spokeswoman Kristina Fretwell.

Like other states’ officials interviewed for this story, Fretwell said there was no doubt that Arizona would get an application in by the April 16 deadline. Treasury will then spend several weeks reviewing the proposals, with a goal of getting the first cash to homeowners by summer.

The Obama administration’s plans to aid homeowners who fall behind on their payments have been problematic. The biggest effort, the Making Home Affordable program, has helped only about 16 percent of the borrowers who signed up since its launch last year. Figures released by the Treasury Department on Friday showed that as of last month, about 170,000 homeowners had had their payments reduced permanently, of which nearly 77,000 were in the five hardest hit states. About 1.1 million have enrolled in the plan overall.

Not all academics who have studied the real estate crisis agree that spending more money trying to keep people in their homes is a smart idea.

“The solution we all know that has to be done—and this sounds harsh—the borrowers have to be allowed to move through foreclosure and the houses have to be put on the market so we can get to the bottom of this mess,” said Anthony Sanders, a real estate professor at George Mason University who has testified before Congress on the foreclosure crisis.

Sanders called the $1.5 billion both too little and too much—too little, because the housing crisis has hit so many homeowners that $1.5 billion is tiny compared to the need, and too much because it targets homeowners who really can’t afford to be in their home anyway.

He pointed to the more that 70 percent of homeowners who went back into default after government mortgage relief efforts.

He also criticized letting state housing finance agencies, which are designed to help low- and middle-income borrowers, decide how to spend the money.

“To think that state agencies, who are not very good at this, are going to come up with an innovation is just kind of wishful thinking.”

The new program announced by President Barack Obama in February is meant to get more help to states where housing prices have declined by at least 20 percent.

“The biggest reason and rationale for the timeline is the urgency of the issue,” Treasury spokeswoman Andrea Risotto said. “We want to try to get relief out to these homeowners as quickly as we can.”

Port St Lucie Houses Are Underwater

Over 50 percent of homes in our area are upside down. Have questions or need some advice on what to do with your home? Call Sharon Kelly Realty today at 1 -800 -778-8335 and she’ll help answer your concerns.

Courtesy Paul Ivice-  TCpalm

More than half of mortgaged residential properties in St. Lucie and Martin counties are “under water,” a recent report by a company that tracks home sales, price trends and foreclosures shows.

The report by California-based First American CoreLogic found that 56 percent, or 62,696, of all residential properties with a mortgage in the Port St. Lucie Metropolitan Statistical Area were in a negative equity position for the fourth quarter of 2009. That’s more than double the national rate of 24 percent.

The Port St. Lucie Metropolitan Statistical Area encompasses St. Lucie and Martin counties. First American did not report similar data for Indian River County.

Another 3 percent, or 3,345, in the two-county area had equity of less than 5 percent.

Negative equity, often referred to as “under water” or “upside down,” means a borrower owes more on the mortgage than the home is worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

First American CoreLogic also reported that more than one-fourth of home mortgages in St. Lucie County are at least 90 days delinquent.

The report found that 26.6 percent of residential mortgages were severely delinquent in St. Lucie County, the third-highest rate among Florida’s 48 most-populous counties. A year ago, 19.7 percent of St. Lucie County mortgages were more than 90 days past due.

Indian River County’s mortgage delinquency rate is 16.6 percent, up from 10.3 percent a year ago. In Martin County, the rate is 11.8 percent, up from 7.1 percent.

Foreclosure rates in January in the Treasure Coast were up compared with the same period last year, according to First American CoreLogic, which analyzes data from 47 million properties with a mortgage, or more than 85 percent of all mortgages in the U.S. The foreclosure rate is the percentage of loans in some stage of the foreclosure process, from 90-day delinquencies through properties sold at auction.

St. Lucie County had the highest rate among the three counties at 15.1 percent, up from 11.7 percent a year earlier. St. Lucie County’s rate was the fourth highest in the state behind Miami-Dade (18.1 percent), Osceola (17.8) and Hendry (15.3).

Indian River County’s rate was 9.7 percent, up from 6.5 percent a year ago. Martin County’s rate was 6.9 percent, up from 3.6 percent.

The national foreclosure rate for January was 3.2 percent.

“Negative equity is a significant drag on both the housing market and on economic growth. It is driving foreclosures and decreasing mobility for millions of homeowners,” said Mark Fleming, chief economist with First American CoreLogic. “Since we expect home prices to slightly increase during 2010, negative equity will remain the dominant issue in the housing and mortgage markets for some time to come.”

Negative equity continues to be concentrated in five states: Nevada, which had the highest percentage negative equity with 70 percent of all of its mortgage properties under water, followed by Arizona (51 percent), Florida (48 percent), Michigan (39 percent) and California (35 percent).

Among those five states, the average negative equity share was 42 percent, compared with 15 percent for the remaining states.

Last Quarter Decline in Late Mortage Payments May Be Positive For Foreclosure Market

Late payments on mortgage loans declined slightly during the fourth quarter of 2009 — compared to the previous quarter — representing the first quarter over quarter decrease since mid-2006. Some analysts believe that the drop in 30-day delinquencies may be a positive indicator that the mortgage market is starting to stabilize, and that the number of foreclosure actions may start to decline. See the following article from Money Morning for more on this.

It doesn’t have four letters, but “mortgage” has definitely been a dirty word in the financial world the past few years. That’s especially true when the word “mortgage” is paired up with such other terms as “subprime,” “delinquent,” and “foreclosures.”

Little wonder that mortgages - along with the derivative securities backed by them and the often-unseemly practices of the people pushing them - have gotten much of the blame for precipitating the economic meltdown from which the American economy is now struggling to recover.

There’s still plenty of woe in the mortgage world. But in recent months there have also been some signs that the real-estate-financing markets are at least regaining some semblance of stability, with foundations being poured for a rebuilding phase that might not be too far down the road.

So far, the most promising sign of this hoped-for mortgage-market rebound has been a late-February report from the Mortgage Bankers Association (MBA), the mortgage-lending industry’s leading trade group. The recently released report shows that delinquencies on existing first mortgages for residential properties with one to four living units - we’re talking about roughly 44.4 million loans - declined in the 2009 fourth quarter.

The MBA’s National Delinquency Survey found that late payments on these loans fell to a seasonally adjusted rate of 9.47% of all mortgage loans during the final three months of last year. That’s down from 9.64% at the end of the third quarter. But it was still well above the 7.88% level from the fourth quarter in 2008, the MBA reported.

Although the decline from the third to the fourth quarter of last year was small, it still represented the first quarter-over-quarter decrease in the number of loans potentially headed for foreclosure since mid-2006. Mid-2006 was when the rate of late payments began to rise. The rate began to increase steadily until early 2007, when a massive spike in subprime-mortgage defaults caused the late-payment rates to escalate to unprecedented levels.

The ensuing collapse of housing prices - particularly in overbuilt areas like California, Nevada and Florida - and the country’s subsequent plunge into recession, which pushed unemployment rates into double-digit territory, left an even-larger number of U.S. homeowners unable to meet their monthly obligations.

Peeling Back the Layers

MBA Chief Economist Jay Brinkmann said the positive nature of the figures was bolstered by a similar drop - from 3.79% to 3.63% - in the number of borrowers who had missed only one monthly payment. Brinkmann said that was significant for two reasons:

• First, this latest development counters the historical trend for the fourth quarter, when short-term mortgage delinquencies normally rise due to holiday spending, higher heating costs and other seasonal factors.
• Second, it means the rise in short-term delinquencies stopped short of the record levels set in 1985.

The drop in 30-day delinquencies is doubly important, Brinkmann added, because those late payments have historically been a leading indicator of foreclosure actions.

“With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink,” Brinkman said. “It also gives us growing confidence that the size of the problem now is about as bad as it will get.”

Of course, the size of the foreclosure problem remains at record levels nationwide - and is far worse in some of the hardest-hit areas.

Across the United States, the percentage of mortgages in some stage of the foreclosure process rose to 4.58% at the end of 2009, up from 4.47% in September and 3.30% at the end of 2009. In Florida, however, 20.4% of all mortgages are either 90 days or more past due - or are already in foreclosure. Nevada is a close second: A total of 19% of its loans are either three months or more in arrears, or are now in full-blown foreclosure. Even worse, the number of subprime mortgages in foreclosure nationwide stands at 15.58%, up from 15.35% in September.

However, even in the foreclosure category, the MBA found some positive signs in the fourth quarter.

The number of loans on which new foreclosure actions were started fell to 1.20%, down from 1.42% in September and up just 12 basis points from year-end 2008. Foreclosure starts on subprime loans also decreased slightly, dropping from 3.76% in the third quarter to 3.66% in the fourth quarter.

Not everyone agreed with the MBA’s somewhat upbeat view of the foreclosure numbers. A MarketWatch commentary on the delinquency report noted that a moratorium on foreclosures had been imposed by lenders and loan regulators in many areas of the country - a restriction that could be merely delaying new foreclosure actions rather than eliminating the need for them.

In his commentary, MarketWatch Assistant Managing Editor Steve Kerch noted that many mortgage lenders are already holding large inventories of foreclosed properties and might not want to add to the list until real-estate sales actually pick up from current levels.

Ineffective Assistance Programs?

Another factor at play was the Obama administration’s increased emphasis late last year on its Home Affordable Modification Program (HAMP), designed to help 3 million to 4 million borrowers restructure their mortgages to avoid foreclosure. That could have helped stall new fourth-quarter-foreclosure actions and undoubtedly contributed to the improved MBA numbers, although the actual impact of the HAMP program still isn’t clear.

The public-interest news organization, ProPublica, reports that only about 1.0 million homeowners have been put into the program since it started in April 2009. And only about 116,300 have received permanent loan modifications, while roughly 62,000 have already been dropped from the program for various reasons, such as failing to make their payments even after those payments were reduced.

The remainder of the 1 million participants are still in the so-called “trial period,” which was supposed to last a maximum of three months. However, ProPublica says 475,000 have been in trial periods for longer than three months, and 97,000 have been stuck in loan-modification limbo for more than six months, with almost 60,000 of those having mortgages handled by Chase Home Finance, a subsidiary of JPMorgan Chase & Co. (NYSE: JPM).

The lengthy trial periods could have a negative long-term impact on troubled homeowners, since the reduced payments result in an increased balance on their mortgages, hurting the credit scores of the affected borrowers and leaving them with fewer alternatives if the modification ultimately falls through.

The low success rate and slow progress of the loan-modification programs also means that actual foreclosure rates could still spike higher, especially given the fact that very few of the people in trouble with their mortgages because of unemployment have been able to find new jobs - and more are still losing them, as evidenced by the rise in new weekly claims for jobless benefits in eight of the first 10 reporting periods in 2010.

The jobs situation also helps explain why about 275,000 homeowners in loan-modification trial periods are already delinquent on their payments, according to the U.S. Treasury Department, which monitors HAMP.

The housing market itself has been adding to the confusion with respect to mortgages. After rising nicely during the final quarter of 2009 - thanks in large part to a pair of government homebuyer tax-credit programs - sales of existing U.S. homes unexpectedly dropped in January.

The National Association of Realtors (NAR) reported that sales in the first month of 2010 fell 7.2% to an annual rate of 5.05 million units, down sharply from the predicted rate of 5.50 million homes - though that still represented an increase of 11.5% from January 2009. December sales were also revised downward slightly - from an annualized pace of 5.45 million to a projected 5.44 million units.

The impact of the waning federal tax credits on January sales was reflected in another NAR report. Purchases by first-time homebuyers using the credit - which was subjected to income limits in November - fell by 3.0% in January. The tax credits are scheduled to expire at the end of April.

By contrast, the report said January purchases by investors who were looking to take advantage of foreclosure bargains rose by 2.0% from December to January.

That surge in investor buying was particularly evident in some of the nation’s harder-hit regions, such as the Las Vegas area, where the research firm MDA DataQuick reported that 43% of all January home purchases were made by investors or second-home buyers, who paid a median price of $101,000 for their homes, down from $109,836 in December and $125,000 in January 2009.

However, the impact of that buying on the Vegas mortgage market was less pronounced since MDA also told the Las Vegas Sun that a full 50% of January home purchases were all-cash deals, up from 39% in January 2009.

That situation prompted first-time homebuyer Chris Iuso - who’s pre-qualified for a loan and looking to purchase a Las Vegas foreclosure property for as much as $120,000 - to complain to a Wall Street Journal reporter that, in spite of Nevada’s No. 2 national ranking in mortgages in foreclosure, “there really isn’t much inventory (of foreclosed houses) to chase.”

Even worse, the bit of housing that is out there and available typically sells for cash on the barrel - putting it out of reach of the typical prospective homeowner. Iuso’s agent, Bryan Mitchell of Re/Max Associates, told The Journal that some bank-owned homes have attracted more than 20 offers within just a few days.

Of course, one reason cash is suddenly king in severely depressed markets is that lenders remain reluctant to make new real estate loans - for a variety of reasons. Those reasons include:

• Jobless rates, which remain stubbornly high, and which are actually still climbing in such geographic areas as Las Vegas.
• Low rates on fixed-rate loans - too low, in fact, for lenders to willingly take on the uncertainty of long-term loans.
• High exposure to increasingly delinquent commercial-property/commercial-real-estate (CRE) loans, which could be the focus of the next banking crisis.
• And still-declining property values, which could put even more homeowners “under water,” meaning they owe more on their loans than their houses are worth.

Still-falling average home prices were confirmed by the S&P/Case-Shiller U.S. National Home Price Index, which recorded a 2.5% decline in the fourth quarter of 2009 versus the fourth quarter of 2008. There is a bright spot, however: That’s a major improvement over the annualized rates reported in the first three quarters of 2009, when there were reported price drops of 19.0%, 14.7% and 8.7%, respectively speaking.

In the nation’s 20 leading metropolitan areas, which are surveyed monthly, the drop in average prices for December was 3.1%.

The One Place to Profit From the Mortgage Malaise

The continued decline in home prices was the major underlying reason the late-February report by real estate researcher FirstAmerican CoreLogic concluded that 11.3 million U.S. homeowners - nearly 25% of all residential-mortgage holders - owe more on their loans than their houses are worth. The report said that 620,000 new homeowners went under water in the fourth quarter, while another 2.3 million are living on the razor’s edge - with less than 5% equity in their homes.

What does this all add up to for investors? The mortgage markets may be stabilizing, but uncertainty remains far too high to generate many outstanding profit opportunities in this harried market sector.

But there may be one exception: The mortgage insurance market.

The mortgage market remains a turbulent one. Property values remain questionable in many markets. And because of a “jobless recovery” and shaky employment outlook, even a borrower with a pristine credit score may end up in a financial jackpot with the loss of paycheck that’s necessary to keep making mortgage payments. With such a dour outlook, you can bet that every lender will insist on mortgage insurance before making any new loan. That, coupled with even a modest decline in new delinquencies and foreclosures, could help out the insurers - and their stock prices.

Proof of that came late last month when Radian Group Inc. (NYSE: RDN) reported a smaller-than-expected quarterly loss - $1.12 versus a predicted $1.69 - based on a slowing in the rate of fresh delinquencies and increased liquidity to cover claims, a condition it expects to maintain through 2012.

Radian’s shares rose $1.25 each, or 14.59%, to $9.83 on the news, and eclipsed the $10 level this week. Other firms in the sector - most of which will be reporting earnings in the next couple of weeks - also rose in price on Radian’s coattails. Among the ones that could be worth a look, with closing prices from yesterday, are:

* The PMI Group Inc. (NYSE: PMI) - $2.80.
* MGIC Investment Corp. (NYSE: MTG) - $8.00.
* MBIA Inc. (NYSE: MBI) - $5.05.

But given all the uncertainty in the mortgage market right now, make sure to investigate these companies carefully before purchasing their shares.

This article has been republished from Money Morning.

Walking away from your mortgage - yeah or nay?

Walking away from your mortage may not be the best solution for you as a homeowner facing foreclosure

Sharon J Kelly can help you avoid the consequences of losing your home or walking away. This article sheds some light onour current crisis that we are facing.

If you listen to media coverage about the current housing and mortgage crisis, you are likely to hear tales about people who are walking away from their mortgages when they find themselves owing more on their homes than their homes are worth.

The stories range from people leaving their homes and simply mailing their keys to the bank, to those engaging in something called “buy and bail.” “Buy and bail” is a scheme where homeowners apply for mortgages claiming that the rental income on their current home will cover a new home’s mortgage payments. They then buy a second, often nicer, home and walk away from the first home and its existing mortgage, never renting it out as promised. They then allow the bank to take possession of their first home. The new mortgage is much cheaper since housing prices and interest rates are lower.

If walking away sounds easy, it’s not. These practices have hard consequences, including future credit problems, tax penalties and possible jail time, since some of these methods are considered mortgage fraud. Some banks have even begun suing the borrowers for personal assets.

But, these stories may represent the distinct minority of walk-aways. Some housing experts are claiming that true walk-aways are rare and in some communities, like the Twin Cities, nearly unheard of. Kurt Eggert, a professor of law at California’s Chapman University Law School and an expert on predatory lending,

said he thinks that mortgage bankers are trying to shift the blame for the foreclosure crisis to borrowers, with tales of cheating homeowners and innocent lenders.

“Lenders have an interest in painting themselves as responsible, even caring entities,” he said. “They want to cast blame for the sub-prime meltdown and make themselves seem like the victim of borrowers in order to fight off additional regulations.”

Eggert insists that the banks are trying to demonize people who can no longer afford their mortgages. “In the world of high finance, people who take loans to buy high-rise office buildings walk away from them all the time,” he said. “Why the double standard? Because the financial industry is trying to claim that they are the victims.”

In fact, many of the walk-aways are actually investor owned, not owner occupied. A report by Fitch Inc., a financial rating company, found that 66 percent of the delinquencies during 2006 and 2007 were sub-prime mortgages from “those engaged in mortgage fraud for the purpose of property speculation,” that is, investors who fraudulently bought homes not to live in, but to sell at a profit when housing prices rose.

In some states like Nevada, Arizona, Ohio and Florida, during the third quarter of 2007, non-owner-occupied foreclosures represented 22 percent of all loans made, according to the Mortgage Banker’s Association. But banks continue to treat residential real estate investors the same as they do the people who are living in their homes and who want to stay there.

Mark Ireland, supervising attorney for the Foreclosure Relief Law Project in St. Paul who works locally to help homeowners avert foreclosure, has questions about the common perception that homeowners don’t act in good
faith with their banks.

“I never talked to anyone who called me to say they just want to leave the lender high and dry,” he said. “What I do see are homeowners who are incredibly frustrated. They want to modify their payment or lower their interest rate—they just want to do something. They may not be able to make the full payments but they want to make things work.”

But, said Ireland, when they contact their lender, they get the runaround and eventually they give up and let the bank foreclose. “They just want to get on with their lives. But, this idea of the greedy homeowner who has no morals or ethics, I don’t see that at all.”

It would be a good business decision, Ireland claims, for banks to start to give a little on the principal owed when homes are worth much less than the mortgage. Currently though, even the giant mortgage corporations Fannie Mae and Freddie Mac both forbid their lenders to do this. (including properties of one to four units) rose to a seasonally adjusted rate of 9.64 percent, up from 6.99 percent from a year earlier. Of these, 33 percent were prime fixed-rate loans. The situation is not expected to change until employment figures improve.

Courtesy of Stephanie Fox

Call Sharon J Kelly today for help with your home! 1 800 778-8335

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