According to Bloomberg, a 6% increase in foreclosure notices in 2Q 2012 signals a housing rebound. They quote Anthony B. Sanders, economics professor at George Mason University in Fairfax, Virginia, as saying “you have to get to the point where the market can heal itself and foreclosures and price adjustments are the only way that can happen.” They also note that delinquencies are falling and there are fewer home seizures, and that new inventory from the foreclosures that do occur may drive a drop in prices. Read more.
Construction and manufacturing sectors lost 5,500 jobs from February 2009 to February 2010, according to Texas Workforce Commission statistics reported in the Austin American-Statesman. The leisure and hospitality sector gained 5,000 jobs over the same period. The statewide unemployment rate was 8.2 percent last month, holding steady, a sign that the labor market has bottomed out. Austin and Texas are starting to feel some of the economic pain of the recession.
Meanwhile the Obama Administration is revising its plan to prevent foreclosures. Borrowers will get help in three ways: Jobless homeowners can get a three- to six-month break on their mortgage payments. Banks will get financial incentives to reduce mortgage balances for underwater borrowers. And lenders can offer refinanced loans backed by the Federal Housing Administration to these borrowers.
There’s a specific program for unemployed homeowners:
Borrowers will have three to six months in which they’ll have to spend no more than 31 percent of their monthly income on their mortgages. If you do find a job during that time, you will be evaluated for a loan modification that could permanently reduce your payments.
The story links to the National Foreclosure Mitigation Counseling Program.
If you are struggling to make your monthly mortgage payments you should contact a HUD-approved housing counseling agency for free advice and help working with your mortgage servicer. Trained professionals are available to help you explore loan modification or refinance options, including those offered through the Making Home Affordable program.
That site has a foreclosure counselor lookup.
If you’re in danger of foreclosure, one possible remedy is a short sale, where the mortgage lender agrees to accept less than is owed. These are complex transactions, but new measures that go into effect next April might make them easier. Meanwhile it remains a slow process, and lenders prefer loan modifications to short sales. [Link]
The new guidelines “focus on a range of elements in the short sale process. They suggest,
for instance, that lenders offer second-lien holders up to $3,000 of
the short sale proceeds, with Treasury reimbursing lenders up to $1,000
for doing so.”
Under the guidelines, homeowners who are considering a short sale
are encouraged to speak with their lenders early in the process about
an acceptable sales price for the house, rather than simply contacting
a lender when a buyer has made an offer.
And owners who complete a short sale will receive $1,500 from the federal government for relocation costs.
In general, home buyers “have a negative view of buying foreclosures,” but an article at CBS Moneywatch.com says real estate investors, trade-up buyers and renters have a strong interest in buying foreclosures, so they’re still a big part of the housing market.
The article provides an interesting set of statistics. For example, 24% of homeowners express some interest in trading up to a larger home, and 88% of those would consider a foreclosure. Also 57% of people who are currently renting would consider buying a distressed property, and the figures are even higher among younger renters.
(If you’re interested in foreclosure statistics and news, RealtyTrac has a “Foreclosure News Report.” You can subscribe here.)
Are you concerned that you might be facing foreclosure? PMI Mortgage Insurance Company, one of the largest private mortgage insurers in the U.S., has created a web site that answers your quesetions about alternatives to foreclosure.
Here’s a video on workout programs:
If you’re in trouble with your mortgage, ask for help, but not necessarily from your loan servicer. Questionable practices by loan servicers are being investigated. Allegedly mortgage servicing companies have been known to file false or inaccurate claims, assess unreasonable fees, or fail to account properly for loan payments after a bankruptcy has been discharged. Excess fees and unnecessary charges are evidently the rule. Chapter 13 involves court oversight, but servicing companies often don’t apply their fees until the bankruptcy is discharged, thereby avoiding legal oversight. A study mentioned in the Austin American-Statesman today (via the New York Times) found that almost $6 million was charged over and above the loan debts borrowers reported in the survey.
In 96 percent of the claims … studied, the borrower and the lender disagreed on the amount of the mortgage debt. In about a quarter of the cases, borrowers thought they owed more than the creditors claimed, but in about 70 percent, the creditors asserted that the debt owed was greater than the amounts specified by borrowers.