More Florida Home Mortgages Permanently Modified

The number of homeowners able to fight off foreclosure with permanent changes to their mortgages has jumped in the past three months, a new report shows.  Through the end of June, about 7,800 mortgage holders have secured permanent loan modifications in Metro Orlando since early last year—a 65 percent increase compared with three months earlier.  Meanwhile, the number of delinquent homeowners with only temporary loan modifications has been cut in half.  Those with permanent deals had a median of about $500 a month cut from their monthly payments, according to the report, which was issued this week by the U.S. Department of Housing and Urban Development and the Department of Treasury.

Two parts of Florida—the four-county Orlando metro area and the giant Miami-Fort Lauderdale-West Palm Beach metro area—were among those nationwide with the most mortgage modifications, both temporary and permanent, in the latest report.  Orlando had 15,130 as of June 30, while Miami-Fort Lauderdale-West Palm Beach had 35,261.

The tradeoffs homeowners are willing to make to get smaller monthly mortgage payments appear to be shifting.  All of the homeowners admitted to the federal Home Affordable Modification Program have benefitted from lower interest rates, but now a greater proportion are also agreeing to make payments for an extra decade.  As of the end of June, 56 percent of the borrowers with mortgage modifications agreed to extend the terms of their notes, usually from 30 years to 40 years.  Just three months earlier, when the federal government last reported on the program, only 39 percent were agreeing to longer terms.  Pushing up the number of years on a mortgage is typically a last resort, after an interest-rate reduction.  “The government isn’t terribly fond of extending the loan term, because they want people to build equity,” said Tim Mattingly, president of United Mortgage Partners.

Lenders have nudged little in terms of writing off principal as customers struggle to make payments on houses now worth less than the mortgage.  Lenders reduced the principal on about 29 percent of the nation’s modified loans through June 30, only a one-percentage-point increase from the March 31 report.  Some lenders continued to lag the industry as a whole in getting delinquent homeowners into permanently modified loans. Bank of America, which became the behemoth of mortgage holders after acquiring Countrywide Financial in 2008, had converted only about 15 percent of its borrowers who were at least two months behind on their payments, according to the June report. In comparison, the conversion rate for lenders overall was about 23 percent, the report said.

Foreclosure Avoidance Counseling

HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure. As part of President Obama's comprehensive Homeowner Affordability and Stability Plan (HASP), you may be eligible for a special Making Home Affordable loan modification or refinance, to reduce your monthly payments and help you keep your home.

If you need help understanding the Making Home Affordable programs, you can use this search tool to find a counseling agency in your area that will provide you with free foreclosure prevention services. If you are eligible for the loan modification or refinance program, the counselor will work with you to compile an intake package for your servicer.

Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services.

Please select a state from the list below and click the “Go to this page” link, or select a state from the map below. This will take you to a page with additional search criteria to help you find a conveniently located housing counseling agency.

Is The Housing Market Stabilizing ???

Everybody is charting job growth and foreclosures. While many analysts say job creation is the primary driver of home sales, the hole that’s been dug by bad loans is too deep to be offset by a modest rise in future employment.

The reality is more foreclosures than ever are scheduled for 2010. What can be done about it?

A decade of cheap money and incredibly flexible loan programs offered by many lenders sparked overbuilding by developers, a flip-and-run mindset for speculators and unrealistic expectations for first-time homebuyers blinded by the low payments of a short-term loan.

According to Edward Pinto, a consultant to the mortgage-finance industry and former chief credit officer at Fannie Mae, the over-stimulus provided by Fannie, Freddie, FHA and the Community Reinvestment Act created the housing boom that went bust. The response to the bust has been to provide yet more stimuli which are serving to delay the market-clearing process, or allowing the traditional housing forces to return to the scene.

Just what are traditional housing forces? In a nutshell, it means skin in the game: Make certain that those who can truly qualify to buy a home are also able to produce a down payment and an income that will allow the repayment of the mortgage, taxes, insurance and monthly essentials.

“All we are doing is kicking the can down the street,” Pinto said. “The loan modification programs that were designed to help people stay in their homes have been abject failures.”

Basically, Pinto believes that the extra cash the government is tossing into the housing market is simply adding fuel to the fire by depressing prices while foreclosures continue to flood the market.

He and others would halt all housing stimulus funds and take the following steps to curtail foreclosures:

1. Separate those borrowers who are going to qualify at a lesser mortgage amount from those who will not qualify even at a lesser amount. For those who cannot qualify, lenders assist with rental subsidies for a period, in exchange for leaving the home in good condition. Lenders also accept deeds in lieu of foreclosure, where the borrower deeds the property back to the lender and avoids the foreclosure process.

2. Banks then chop down the loan amount and reduce mortgage principal amount to at least 90 percent loan-to-value. Affordable rates and terms are negotiated.

3. If the borrower accepts the reduced amount, he or she becomes personally responsible for the mortgage. The bank would have a “full recourse” loan, enabling it to seek the borrower’s other assets in the event of default. As of now, most foreclosures are non-judicial, meaning the borrower risks nothing but the equity in the house in the event of foreclosure.

The result: Qualified borrowers remain in homes; homes cost less; more genuine buyers surface because the “bottom” has been reached.

The lending craziness of the 1990s and 2000s was not present in any other decade. Sixty years ago, the average home price in the U.S. was about $5,000 and the average debt against it was about $2,500. In the early 1950s, the prevailing loan-to-value was 58 percent; many of the loans made between 2004 and 2006 had an LTV of 97 to 100 percent. Some lenders, blinded by the 10-year run-up in home appreciation, were making 125 percent loans.

In 1975, there were no adjustable-rate mortgages, 80-20 combo loans or equity lines of credit. The minimum down payment was 20 percent, unless a homebuyer wanted to pay for mortgage insurance which protects the lender if the borrower defaults. The only way a borrower could get a 3 percent down payment loan was through FHA. As a result, foreclosure rates were low.

It’s time to let the market correct itself. That means skin in the game for buyers.

South Florida pending home sales on the rise

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Pending home sales in South Florida increased in February amid a glut of cheap homes and condos. National sales slipped due to weather woes.

Data Continues To Show Slow Steps Towards A Housing Recovery.

Did you know that........

 There is a federal program that could provide a rebate for purchasing energy-saving appliances?

Existing home sales surged a whopping 44 percent from a year ago, the highest annual gain since NAR started tracking the data in 1999.

The number of first-time home buyers is now at its highest level on record dating back to 1981? In November, the accounted for 51 percent of all home sales.

The supply of home sales and continuing shrinkage in inventory has helped stabalize home prices. November recorded the smallest year-over-year decline in home prices.

The governmnet has called on banks to increase lending, particularly for small business.