NEW YORK (CNNMoney.com) -- Pressure is mounting on loan servicers and investors to reduce troubled homeowners' loan balances... but the two largest owners of mortgages aren't getting the message.

Fannie Mae and Freddie Mac, which are controlled by the federal government, do not lower the principal on the loans they back, instead opting for interest rate reductions and term extensions when modifying loans.

But their stance is out of synch with the Obama administration, which is seeking to expand the use of principal writedowns. In late March, it announced servicers will be required to consider lowering balances in loan modifications.

And just who would tell Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) to start allowing principal reductions? The Obama administration.

Asked whether they will implement balance reductions, the companies and their regulator declined to comment. The Treasury Department also declined to comment.

What's holding them back is the companies' mandate to conserve their assets and limit their need for taxpayer-funded cash infusions, experts said. If Fannie and Freddie lower homeowners' loan balances, they are locking in losses because they have to write down the value of those mortgages. Essentially, that means using tax dollars to pay people's mortgages.

The housing crisis has already wreaked havoc on the pair's balance sheets. Between them, they have received $127 billion -- and recently requested another $19 billion -- from the Treasury Department since they were placed into conservatorship in September 2008, at the height of the financial crisis.

Housing experts, however, say it's time for Fannie and Freddie to start reducing principal. Treasury and the companies have already set aside $75 billion for foreclosure prevention, which can be spent on interest-rate reductions or principal write downs.

"Treasury has to bite the bullet and get Fannie and Freddie to participate," said Alan White, a law professor at Valparaiso University. "It's all Treasury money one way or the other."

Though servicers are loathe to lower loan balances, a growing chorus of experts and advocates say it's the best way to stem the foreclosure crisis. Homeowners are more likely to walk away if they owe far more than the home is worth, regardless of whether the monthly payment is affordable. Nearly one in four borrowers in the U.S. are currently underwater.

"Principal reduction in the long run will lower the risk of redefault," said Vishwanath Tirupattur, a Morgan Stanley managing director and co-author of the firm's monthly report on the U.S. housing market. "It's the right thing to do."

Meanwhile, a growing number of loans backed by Fannie and Freddie are falling into default. Their delinquency rates are rising even faster than those of subprime mortgages as the weak economy takes its toll on more credit-worthy homeowners. Fannie's default rate jumped to 5.47% at the end of March, up from 3.15% a year earlier, while Freddie's rose to 4.13%, up from 2.41%.

On top of that, the redefault rates on their modified loans are far worse than on those held by banks, according to federal regulators.

Some 59.5% of Fannie's loans and 57.3% of Freddie's loans were in default a year after modification, compared to 40% of bank-portfolio mortgages, according to a joint report from the Office of Thrift Supervision and Office of the Comptroller of the Currency. This is part because banks are reducing the principal on their own loans, experts said.

So, advocates argue, lowering loan balances now can actually save the companies -- and taxpayers -- money later.

"It can be a financial benefit to Fannie Mae and Freddie Mac and the taxpayer," said Edward Pinto, who was chief credit officer for Fannie in the late 1980s.

What might force the companies' hand is another Obama administration foreclosure prevention plan called the Hardest Hit Fund, which has charged 10 states to come up with innovative ways to help the unemployed and underwater.

Four states have proposed using their share of the $2.1 billion fund to pay off up to $50,000 of underwater homeowners' balances, but only if loan servicers and investors -- including Fannie and Freddie -- agree to match the writedowns. State officials are currently in negotiations with the pair.

"We remain optimistic that we can get a commitment from Fannie, Freddie and the banks to contribute to this strategy," said David Westcott, director of homeownership programs for the Florida Housing Finance Corp., which is spearheading the state's proposal. 

NEW YORK (CNNMoney.com) -- It's prime time for house hunters. Nearly anyone with a decent job and a good credit score can afford to buy in their home towns.

More than 72% of American families making the nation's median income of $63,800 a year, could afford to buy a home during the first three months of 2010, according to a report from the National Association of Home Builders (NAHB) and Wells Fargo (WF).

The national median home price for the quarter was $175,000.

"Homeownership continues its more than year-long trend of remaining within reach of more households than it has for almost two decades," said NAHB chairman Bob Jones. "With interest rates still hovering at low levels, companies starting to hire new employees and the economy beginning to rebound, this should encourage more home buyers to enter the market and help further stabilize housing and the economy."

The NAHB judges a home to be affordable if a family making the metro area's median income could devote no more than 28% of their take-home pay toward housing costs.

Many of the old industrial outposts of the Northeast and Midwest are among the most affordable places to live. Indianapolis, where the median home price sold during the first quarter was only $96,000, had led the list of most affordable large cities for five consecutive years. This time it shared the lead with the gritty industrial enclave of Youngstown, Ohio. Nearly 95% of all homes sold in both metro areas were affordable to households earning the local median income.

Dayton, Ohio, Syracuse, N.Y., and Grand Rapids, Mich., finish off the list of the five most affordable major metro areas.

The opposite end of the affordability spectrum is dominated by more glamorous bi-coastal venues, with New York being the least affordable metro area in the nation; fewer than 21% of homes are affordable for median earning households there. San Francisco, Honolulu, Santa Ana and Los Angeles followed Gotham. 

Courtesy of Reuters 5/27/10

U.S. mortgage rates continued their downward trek in the past week, edging closer to a record low set in early December, according to a survey released on Thursday by Freddie Mac, the second-largest U.S. mortgage finance company.

Lower interest rates on mortgages should buoy home loan refinancing activity, putting more cash into consumers' hands to funnel into the U.S. economy. It also makes homes more affordable during the most important period, the spring selling season.

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.78 percent for the week ended May 27, down from the previous week's 4.84 percent, according to the survey.

That is below the year-ago level of 4.91 percent and also the lowest the rate has been since the week ended Dec. 3, 2009 when it hit a record low of 4.71 percent. Freddie Mac started the survey in 1971.

"These low rates will help to elevate home-buyer affordability and soften the effects of the sunset of the home-buyer tax credit," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.

Coutesy of The Real Estate Channel

According to the California Association of Realtors (C.A.R.), home sales decreased 8.1 percent in April in California compared with the same period a year ago, while the median price of an existing home rose 21 percent.

Quick Facts:

• Existing, single-family home sales decreased 8.1 percent in April to a seasonally adjusted rate of 483,830 units on an annualized basis compared with April 2009.
• The statewide median price of an existing single-family home increased 21 percent in April to $306,230, compared with April 2009.
• C.A.R.'s Unsold Inventory Index rose to 5.1 months in April compared with five months in April 2009.

"It's likely that the state tax credit that went into effect May 1 created an incentive for many buyers to postpone closing escrow so they could take advantage of both the state and federal tax credits that were available," said C.A.R. President Steve Goddard.  "We should see the pace of closed sales edge up in May and June as these tax-incentivized transactions close.

"Sales dipped below the 500,000-unit level for the first time in 19 months also because of supply issues - the demand for attractive foreclosed properties well exceeds the number of properties on the market," he said.  "At the same time, mortgage interest rates continue to hover near their historic lows, and many buyers are out in force to take advantage of the combination of low interest rates and affordably priced homes. It's an ideal time for many families to purchase their first home even though they may face stiff competition."

Closed escrow sales of existing, single-family detached homes in California totaled 483,830 in April at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local Realtor associations statewide. Statewide home resale activity decreased 8.1 percent from the revised 526,720 sales pace recorded in April 2009. Sales in April 2010 decreased 6.4 percent compared with the previous month.

The statewide sales figure represents what the total number of homes sold during 2010 would be if sales maintained the April pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during April 2010 was $306,230, a 21 percent increase from the revised $253,110 median for April 2009, C.A.R. reported. The April 2010 median price increased 1.5 percent compared with March's $301,790 median price.

"The strong demand for distressed properties continued unabated last month, and overall, inventory remains constrained in most segments of the market," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  "Listings in April increased compared with a month earlier, typical for this time of year, as more sellers entered the market. At the $300,000 and below price point, the number of homes for sale is at a 3.3-month supply, well below the historical average of seven months."

Highlights of C.A.R.'s resale housing figures for April 2010:

• C.A.R.'s Unsold Inventory Index for existing, single-family detached homes in April 2010 was 5.1 months, compared with five months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
• Thirty-year fixed-mortgage interest rates averaged 5.10 percent during April 2010, compared with 4.81 percent in April 2009, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.16 percent in April 2010, compared with 4.82 percent in April 2009.
• The median number of days it took to sell a single-family home was 39.4 days in April 2010, compared with 48.1 days (revised) for the same period a year ago.
• Statewide, the 10 cities with the highest median home prices in California during April 2010 were: Manhattan Beach, $1,572,500; Saratoga, $1,440,000; Los Altos, $1,428,750; Mill Valley, $1,200,000; Laguna Beach, $1,162,500; Cupertino, $1,120,000; Newport Beach, $1,037,500; Los Gatos, $1,034,000; Calabasas, $925,000; and Santa Monica, $870,000.
• Statewide, the cities with the greatest median home price increases in April 2010 compared with the same period a year ago were: Richmond, 63.2 percent; Pittsburg, 56.7 percent; Tulare, 37 percent; San Bernardino, 37 percent; Cupertino, 35.7 percent; Monterey Park, 33.9 percent; Tustin, 31.6 percent; Highland, 29.2 percent; Manteca, 28.1 percent; Lancaster, 27.6 percent; and Seaside, 26.9 percent.

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Updated 4/21/10

SAVE UP TO $20,500 --- 114 Flindell Way , Folsom, CA 95630 - MLS# 10000877 .  4 bedrooms, 3 bathrooms, 2,315 square feet. Built in 1992.  Very nice 4 bedroom/3 bathroom in Folsom offering: wood flooring, separate family room, 3 car garage, 2 sinks and 2 garbage disposals and more!   For current pricing, additional details, multiple photos, to schedule a showing, maps and more, click here. 

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- See all the real estate and homes available for sale in Folsom, CA - All MLS Listings.
- Be the first to see new listings! Sign up to automatically receive Folsom, CA MLS listings via email. 
- Need to sell your home? Want to know what your home is worth? Click here.

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- See all of the Bank Owned Homes in Folsom, CA in one place. Updated daily!
- See all the real estate and homes available for sale in Folsom, CA - All MLS Listings.
- Be the first to see new listings! Sign up to automatically receive Folsom, CA MLS listings via email. 
- Need to sell your home? Want to know what your home is worth? Click here.

Visit Brokers Incorporated and meet your new Realtor.  Brokers Incorporated Residential Real Estate - Locally owned and operated - Based out of Folsom, CA - CA DRE Lic# 01520335.

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- See all of the Bank Owned Homes in Folsom, CA in one place. Updated daily!
- See all the real estate and homes available for sale in Folsom, CA - All MLS Listings.
- Be the first to see new listings! Sign up to automatically receive Folsom, CA MLS listings via email. 
- Need to sell your home? Want to know what your home is worth? Click here.

Visit Brokers Incorporated and meet your new Realtor.  Brokers Incorporated Residential Real Estate - Locally owned and operated - Based out of Folsom, CA - CA DRE Lic# 01520335.

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Take advantage of the "Helping Home Buyers Save Program" and get up to $2,500 cash back to help you pay your closing costs when you buy your next home.  To take advantage of this offer, call Aaron Cullen: 916.850.0484.

See all of the Bank Owned Homes in Folsom, CA in one place. Updated daily!
See all the real estate and homes available for sale in Folsom, CA - All MLS Listings.
Be the first to see new listings! Sign up to automatically receive Folsom, CA MLS listings via email. 
Need to sell your home? Want to know what your home is worth? Click here.

Visit Brokers Incorporated and meet your new Realtor.  Brokers Incorporated Residential Real Estate - Locally owned and operated - Based out of Folsom, CA - CA DRE Lic# 01520335.

Brokers Incorporated: Outstanding service and exceptional value!  Providing home buyers and sellers with leading edge assistance with navigating today's residential real estate markets.  Foreclosure , REO , short sale , distressed home sale & purchase , resale assistance is awaiting your call!

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Take advantage of the "Helping Home Buyers Save Program" and get up to $2,500 cash back to help you pay your closing costs when you buy your next home.  To take advantage of this offer, call Aaron Cullen: 916.850.0484.

See all of the Bank Owned Homes in Folsom, CA in one place. Updated daily!
See all the real estate and homes available for sale in Folsom, CA - All MLS Listings.
Be the first to see new listings! Sign up to automatically receive Folsom, CA MLS listings via email. 
Need to sell your home? Want to know what your home is worth? Click here.

Visit Brokers Incorporated and meet your new Realtor.  Brokers Incorporated Residential Real Estate - Locally owned and operated - Based out of Folsom, CA - CA DRE Lic# 01520335.

Brokers Incorporated: Outstanding service and exceptional value!  Providing home buyers and sellers with leading edge assistance with navigating today's residential real estate markets.  Foreclosure , REO , short sale , distressed home sale & purchase , resale assistance is awaiting your call!

---> ONLY 9 more days before the Federal Tax Credits expire!  Updated 04/21/10