Huff Post: Why Home Affordable Modification Program [HAMP] is a failure.

Why Home Affordable Modification Program [HAMP] is a failure.

SB 458 : Amendment of Section 580e Antideficiency Judgement

What Kind of Properties Qualify for Protection under the amendment to C.C.P 580e under SB 458:
This deficiency judgment prohibition applies to a broad category of 1 to 4 residential units with exceptions noted below.  It applies to:
•Cash-Out Refinanced loans
•Non-Owner Occupied Homes
•Second Homes
•Vacation Homes
Are There Exceptions to C.C.P. section 580e? (SB 458):
Section 580e does not apply in the following circumstances:

• Where debtor is a corporation, limited  liability company, limited partnership, or political subdivision of the state.   C.C.P.  580e( d)(1).
• Where debtor engages in fraud in the sale or waste of the property  C.C.P. 580e( c).
• A lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.    C.C.P. 580e(d)(2).
• For other exceptions that may apply to your specific factual scenario, speak to a lawyer.

The Truth About Mortgage Modifications

The Truth About Mortgage Modifications

While mortgage modifcations can be an ideal solution for homeowners who qualify, it

is important to understand the current trends concerning mortgage modification success

rates. According to the most recent MHA report, only 12% of eligible homeowners have

started a modification. The provider of this report understands that to increase this statistic,

more homeowners need to find out if they are eligible and apply.



Also, a mortgage modification is primarily for those who can almost make their payments

each month, but not quite. If you or someone you know is one of the many homeowners

facing certain financial hardships—such as unemployment, forced relocation or divorce—you are less likely

to qualify. The current re-default rate on mortgage modifi cations is 50–60%. Find out the facts, apply for a

solution, but have a contingency plan. It is important to explore all of your options, and an educated real

estate agent can help.



HAVING A PLAN
Setting goals and keeping updated records will streamline your process to success and

recovery. It will also save you time, hassle and distress when making plans for your

financial future.



If a mortgage modification isn’t an option for you, a short sale might be. It’s understandable

if you’ve never heard of a short sale or don’t know what one entails, but imperative that

your agent is educated and experienced in this area.



Solutions are out there to ease your financial strain. Be sure to take advantage of all the options

available. You can take back control of your financial future. Get all the facts regarding your situation, let a


qualified agent help you formulate a plan, and get back on the right track.

Foreclosures Forecast to Hit 15 Million Homeowners By Kevin Chiu The foreclosure crisis has produced an overpowering series of affects across the U.S., destroying businesses, taking away livelihoods, tossing millions of homeowners out of their homes and pressuring home prices in the over-whelming majority of neighborhoods lower. The crisis, first forecast by Housing Predictor almost five years ago as the first real estate research firm to forecast the mess, has had a devastating impact on the nation’s economy and sent 45 million Americans into unemployment. An estimated 7.6-million residential properties have been foreclosed since the crisis started, with another 7.4-million foreclosures forecast through 2016. Banks, mortgage companies, state and federal loss mitigation programs and moratoriums delayed foreclosures in 2009 through early 2011 before formal foreclosures were sped up. Attorney generals representing 47 states with the U.S. Justice Department are still negotiating with the nation’s six biggest banks to work out an agreement on foreclosures that were mishandled in the robo-signing scandal. Bank servicing employees admitted to making at least hundreds of thousands of forgeries on foreclosure documents. Foreclosures were first concentrated in poorer neighborhoods made up of mainly subprime mortgage borrowers, but it didn’t take long for the crisis to spread to the mainstream of conventional mortgages, increasing our foreclosure forecast. As the foreclosure crisis broadens to include more areas of the country, all sorts of homeowners are falling into its trap from a wide array of incomes, races and cultures. This epidemic like the mortgages that produced it doesn’t discriminate based on race, creed, income, national origin or background. Foreclosure reports from data firms vary, but roughly two-thirds of current foreclosures are confined to the ten hardest hit states, which include California, Florida, Nevada, Arizona, Ohio, Alabama, Georgia and Illinois. But as the crisis drags on, Housing Predictor forecasts the concentration of foreclosed homes will expand to include more states as economic hard time’s impact more areas of the country. Almost one-in-three homeowners are without any home equity or are on the brink of being underwater on their homes. For millions the dream of home ownership has turned into an American nightmare. Job losses and especially high unemployment in the majority of the country are hurting the housing market. The Obama administration has implemented a series of programs to aid the market. Mortgage modifications, which are the only real step towards a healthier housing market have been completed for nearly 5-million homeowners, 80% of which have been by banks and mortgage companies not associated with government programs. The battle to resolve the crisis and produce a foreclosure forecast that is more positive for the U.S. is likely to be delayed for years as politicians, divided by party lines and backed by special interests fail to do their jobs for the electorate as elected. A new mortgage finance system would go a long way in bettering economic conditions. Congress has become so overly concerned about destroying the other party that the entire nation is suffering as members of the House and Senate pick-up record pay-days from special interests, including bankers and Wall Street to run their campaigns. Things have to change before the housing mess can possibly be straightened out. Published October 6, 2011

LPS: Foreclosure starts up 20% in August.

LPS: Foreclosure starts up 20% in August
by JASON PHILYAW



Tuesday, October 4th, 2011, 9:20 am


Foreclosure starts rose 20% in August from the prior month to the highest level of the year and mortgages facing foreclosure are delinquent an average of 611 days, the highest level yet.

Lender Processing Services' (LPS: 13.225 +0.88%) mortgage monitor report for August showed foreclosure starts fell more than 12% from a year earlier, and the national delinquency rate is 8.13%, which is 2.5% lower than the prior month.

In late August, the Federal Deposit Insurance Corp. said the combined delinquency rate on mortgages held by major banks dropped to 6.68% in the second quarter, the lowest level since the third quarter of 2009.

First-time delinquencies accounted for nearly one-quarter of new delinquencies in August, according to LPS. And 23% of the nearly 46 million loans that were current at the end of August are at risk of foreclosure due to negative equity.

LPS said more mortgages moved back into delinquent status from foreclosure in August than ever before, "suggesting that process reviews and potential loss mitigation activity are continuing."

The company said the average delinquency process in non-judicial states is about six months shorter than judicial states, where backlogs remain extremely high. LPS said loans delinquent more than 90 days declined to 2008 levels in August.

Florida, Mississippi, Nevada, New Jersey and Illinois had the highest percentage of loans in delinquency or foreclosure. The states with the lowest rates of non-current loans were Montana, Wyoming, Alaska, South Dakota and North Dakota.



Source: Housingwire.com

Adjustable Rate Mortagage Reset Schedule Graph.

The above graph is the graph from Credit Suisse that has many people nervous (especially in the financial sector) and squirming in their chairs.  It displays the 2nd wave of adjustable rate mortgage (ARM) resets coming straight at us this year and next year.  California is particularly vunerable since almost 60 % of this type of loan were sold for new purchase and refinance.

The reason behind the popularity was that people did not need the fixed 30 year mortgage since people moved or refinanced every 3 to 5 years so many homeowners traded the secure mortgages for low teaser rate yet dangerous offers  "to cash out their equity".

Not only ARM was popular but the option ARM was also widely embraced by homeowners because it allowed the  borrowers to pay less than the interest payment thus accruing negative equity.  These are the loans that are almost impossible to modify or become impractical since payment can't be reduced. From the graph, one can easily tell the higher proportion of option ARM loan that is about to be rest.  Only after the end of 2012 the reset declines.

The first wave of ARMs adjusted in 2007. This year 2011 is the year that large amounts of loan known 5/1 will be reset.Close to $ 500 Billion in Option ARMs is scheduled for reset.  The exact date might not be accurate as banks try to modify some of the loans by postponing thru forebearance and beacuse home do not foreclose overnight. On average ,a foreclosure takes more than 12 months.

According to latest survey, there are more than 11.1 Million homeonwers (some source says is close to 15 M) with a mortgage that is negative in equity (underwater), meaning their house is worth less than the loan balance. They cannot sell, they cannot refinance, and there seem to be no solution.

The significance of this impending reset is that the additional homes with ARMs scheduled for foreclosure and the additional shadow inventories(estimated at 2 Million units) will further depress home values.  It is estaimated that for every 5 % decline in home values, an extra 300,000 homeowners will be negative in quity or upside down.

If the homeowners can't cure the default by paying the balance the bank will eventually foreclose on their properties. It is important for homeowners to work with properly trained agents to assist them with the short sale.

No Plan for Principal Reductions at Fannie Mae

No plan for principal reductions at Fannie Mae
by JACOB GAFFNEY


Friday, September 30th, 2011, 4:16 pm


The number of Americans struggling to make their mortgage payments is at traditional highs, while properties remain at high levels of negative equity.

Popular strategies for helping distressed borrowers include mortgage modification and refinancing, to name a few. But at the largest mortgage player in the nation, Fannie Mae, there is one option that the government-sponsored enterprise has no plans to use.

Michael Williams, the CEO of Fannie Mae, tells HousingWire magazine that the firm will not ask mortgage servicers to reduce the principal on distressed loans.

"We do not do principal reduction," Williams said. "When we look at the toolset that we bring to the table, we really look at the interest rate, term and then forbearance of principal but not forgiveness of principal."

Williams joins the CEO of Freddie Mac, Charles "Ed" Haldeman in the resolve to pursue loss mitigation strategies, such as mortgage modifications. Both men disclosed this information in separate interviews with HousingWire magazine.


In April, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to align guidelines for servicing delinquent mortgages.

Both CEOs refer to foreclosure as an option of last resort, something that is ultimately in the best interest of the American taxpayer, they say.

"We have found that majority of the borrowers that we are dealing with have a challenge in meeting their monthly payment," Williams said in reference to actions at Fannie Mae, "so what we want to do is put them in a modification that really gets them to a point where they can afford the payment."

Williams outlines his strategy in greater detail in the October issue of HousingWire magazine.