Archive for May, 2011

President Obama has made a public call for mortgage lenders and servicers to provide struggling homeowners with longer-term modifications and principal reductions when it fits the situation.

Referring to the American taxpayers’ bailout of the banking system, which the president described as probably the most unpopular thing the government has ever done,

Obama said, “[W]e were there for you when you got into trouble, then you’ve got to be there for the American people when they’re having a tough time.”

President Obama held a town hall meeting at the Newseum in Washington D.C. Thursday which was broadcast on CBS’ “The Early Show.” The president took a question from a woman in the audience who explained that her mortgage modification expires in January of

2012, and even with good credit, she can’t refinance the house because she owes more than it’s worth.

“[W]e want to see if we can get longer-term loan modifications. And in some cases, principle reduction, which will be good for the person who owns the home, but it’ll also be good for the banks over the long term,” President Obama said.

Under the government’s Home Affordable Modification Program (HAMP), borrowers receive reduced payments for a period of five years. Some proprietary programs from banks provide a shorter timeframe for modified payments.

“[Y]ou know what,” Obama said, “speaking to the banks…you’re going to be better off if somebody’s still paying on their mortgage than if they get foreclosed on and you end up not only having to go through all those legal processes, but you also end up…selling the home at a fire sale price.”

Obama acknowledged that “some banks have been better than others” at providing sustainable solutions to ensure borrowers can stay in their homes. “But we’ve got more work to do,” he said.

Obama noted that his administration is working with lenders to expand loan modification programs to reach more people.

“[W]e’re going to be talking to the banks. And I mean, on a regular basis,” he said.

The president described the housing market as one of the “biggest headwinds on the economy right now.”

Foreclosure activity in the U.S. has fallen to its lowest level in 40 months, according to RealtyTrac.

The company’s foreclosure market report for April shows that filings – including default notices, scheduled auctions and bank repossessions — were reported on 219,258 properties last month.

That figure represents a 9 percent decline compared to March and is down 34 percent from a year earlier.

It marks the seventh straight month that RealtyTrac has recorded a decline in foreclosures, but the company says it doesn’t necessarily mean we’ve turned the corner.

“This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery,” said James Saccacio, RealtyTrac’s CEO.

“The first delay occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent into foreclosure but are waiting longer to allow for loan modifications, short sales, and possibly other disposition alternatives,” Saccacio explained. 

He says data from the Mortgage Bankers Association shows that about 3.7 million properties are in this limbo stage of between serious delinquency and foreclosure.

“The second delay,” Saccacio continued, “occurs after foreclosure has started, when lenders are taking much longer than they were just a few years ago to complete the foreclosure process.”

As evidence of this extended timeline, RealtyTrac’s study found that nationwide, completed foreclosures in the first quarter of 2011 took an average of 400 days from the initial default notice to REO. That’s up from 340 days in the first quarter of 2010 and more than double the average 151 days it took to foreclose in the first quarter of 2007.

The foreclosure process is taking much longer in some states.

 The full foreclosure process in Florida took an average of 619 days in the first quarter, up from 470 days in the first quarter of 2010 and nearly four times the average of 169 days it took in the first quarter of 2007.

A total of 19,649 Florida properties received a foreclosure filing in April, the second highest state total despite a 59 percent decrease from April 2010.