7.3 Million Mortgages Non Current

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7.3 million Mortgages Non-Current: LPS

More than 7.3 million mortgages in the US are non-current or in REO status through March 2010, according to the Lender Processing Services (LPS) Mortgage Monitor report. Data and analytics firm LPS reported the modest improvements in the amount of loans becoming current has been overshadowed by this large pool of non-current assets, which represent more than 12% of all active loans in the country. The volume of distressed mortgages is up 19.3% from a year ago. The amount of REO in the US as of March reached its highest levels since 2008, according to the data. Since the beginning of 2008, when LPS measured more than 675,000 REO, the volume has increased 62.2% to more than 1.09m properties.

The amount of delinquencies in March decreased 10.3% from February but remains 15.7% higher than levels measured a year ago. The foreclosure rate in March also dropped 3.27% from the month before but increased 32.9% from last year. In addition, LPS reported a positive impact from the Home Affordable Modification Program (HAMP). The amount of early-state cures – meaning loans that are brought from 30-or 60-days delinquent to current status – increased, indicating a higher rate of self-cures.

Muted Sales from Home-Buying Tax Credit

The expiration of a federal tax credit for home buyers has spurred some consumers to hurry to ink deals, but the last-minute activity has been more muted than some brokers and builders anticipated. To qualify for the credits of up to $8,000, home buyers must sign purchase contracts by midnight Friday, and those purchases must be completed by June 30. Some sellers were preparing for a possible 11th-hour rush, but a few do say that business has surged as the deadline neared. So far, the credit has been most effective with first-time buyers not stuck with an existing home to sell. The end of the credit has stirred fears that the housing market, which has showed signs of stabilizing in much of the country over the past year, might face further steep price declines. Meanwhile, many of the same headwinds remain: Unemployment is high, and the foreclosure crisis continues to dump more distressed properties on the market.

Congress initially passed a $7,500 tax credit for first-time buyers two years ago, which had to be repaid over 15 years. Then, last spring, Congress extended the credit, expanded it to $8,000 and waived the repayment requirement. When that was set to expire Nov. 30, Congress extended it again and added a $6,500 tax credit for some repeat buyers. But, the credit won't be extended—for now, at least. The National Association of Home Builders has said it currently isn't lobbying for another round. Some forecasters expect foreclosure activity to put further pressure on prices and inflate inventories in troubled markets, but Lawrence Yun, chief economist with the NAR, said he is not worried about distressed homes, "We know that foreclosures will remain high" he said. "We've had this shadow inventory coming on, and it is being absorbed."

Economy grows

The Commerce Department says gross domestic product, the broadest measure of the nation's economic activity, rose at a 3.2% annual rate in the three months of this year - down from the 5.6% growth rate in the fourth quarter, and slightly below economists' forecasts for a 3.3% increase. In the fourth quarter, most of the growth was due to businesses no longer making the deep cuts in inventories that they had made early in 2009 when they were concerned about a sharp fall-off in demand. But the rise in consumer spending was fairly modest in the fourth quarter, increasing at only a 1.6% annual rate. This time inventories made only a modest contribution to growth but spending by households grew at a 3.6% annual rate, and accounted for the overwhelming majority of the improvement in the economy. Still, while there may be signs of greater strength, the report also detailed some of the headwinds facing the economy.

Investment in residential real estate fell nearly 11%, ending a two-quarter rebound in that battered sector and subtracting from overall growth. And commercial real estate investment dropped at a 14% rate, although that was a slower pace than in the fourth quarter. While federal government spending increased 1.4%, that was outweighed by a 3.8% spending cut by state and local governments dealing with budget crises.

Diana Olick - Geithner Slams Loan Servicers

"The servicers slam the Treasury and the Treasury slams the servicers and more and more homes move to foreclosure as the housing recovery spits and sputters. A few weeks ago members of the nation’s large banks told the committee overseeing the TARP that the Treasury's Home Affordable Modification Program was seeing pitiful results because it was so slow in coming. Today the Treasury Secretary Timothy Geithner fired back in testimony to the Senate Committee on Appropriations: "I want to be clear that we do not believe servicers are doing enough to help homeowners – not doing enough to help them navigate the difficult and often frightening process of avoiding foreclosure. We are troubled by reports that servicers have foreclosed on potentially eligible homeowners, or that they have steered these borrowers away from HAMP and into the bank's own modification program.” That they have lost documentation, or claimed to.

That they are not responding to the needs of responsible and increasingly desperate homeowners. The home buyer tax credit has expired. This was a program that helped people buy homes, plain and simple, and it served to stabilize home prices at least temporarily. I’m not saying I'm a huge fan of government intervention in the housing market. But I'm a bigger fan of getting the housing market back on its feet than I am of helping certain troubled borrowers get back on their feet, when we know, owing to their tenuous financial situations, that they will likely fall again.”

DSNews.com - Those Facing Foreclosure Can Stay On As Renters

Homeowners facing foreclosure get support through a bill that gives them the "right to rent." The bill would allow a family receiving a foreclosure notice to petition a judge to stay in their home as renters under a 5-year lease. The judge would appoint an independent appraiser to set fair market rental value, which would be allowed to rise with inflation. In a statement to the press, the bill proposers cited the latest market data from RealtyTrac, which showed that foreclosure activity nationwide rose by 19% in March, setting a new monthly record of 367,000 filings. RealtyTrac also found that for the first three months of 2010, foreclosures are up by 60% compared to 2009 and roughly 6 million mortgages are at least 60 days delinquent.

Along with Home Affordable Modification Program (HAMP), the nation’s mortgage problems, could see a solution with "the Right to Rent which can be a fair and sensible solution for struggling homeowners. Banks will still get reliable rental income, and families will be able to stay in their homes and significantly lower their monthly housing costs," said Rep. Raúl M. Grijalva, one of the proposers of the bill. To prevent use of the program by speculators, eligibility for the “right to rent” initiative would be limited to homes purchased at or below the median price for their metropolitan statistical area, and must have been the homeowner’s principal residence for no less than 2 years.

More Homeowners Consider Strategic Defaults

More homeowners are willing to walk away from their homes voluntarily, according to new research released by the University of Chicago and Northwestern University. About 31% of foreclosures in March were considered “strategic defaults,” in which homeowners walk away when the value of a mortgage exceeds the house value — even if they can afford the mortgage. That’s up from 22% in March 2009. “With more and more homeowners believing that lenders are failing to pursue those who default on their mortgages, there is a risk that a growing number of homeowners will walk away from their homes even if they can afford monthly payments,” said Paola Sapienza, a finance professor at Northwestern’s Kellogg School of Management.

The latest research was released late Thursday with the two universities’ Financial Trust Index, which tracks public trust in the financial system. Their survey showed that the likelihood of strategic default increased by 23% when homeowners learned that a neighbor with negative equity received a partial loan for forgiveness. It increased by 29% if homeowners could find alternate financing for a new home. “A key deterrent to strategic default is the fear of losing a good credit score,” Zingales said. About 74% of homeowners “believe it is very important to maintain good credit and this can be a factor in encouraging them not to walk away.”

Above Post Written by: Chris Mclaughlin with Short Sale Riches.com

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