Good Time to Buy Vacation Property

For buyers who can afford it, right now is a great time to pick up a second home in a vacation paradise at a bargain price.

Since there are fewer people with money to spend on this kind of a luxury item, sales as well as prices are down in many prime areas. Buyers with the desire and the wherewithal can get a really good deal.

BusinessWeek and Zillow.com took a look at the second-home markets where prices dropped between the fourth quarter of 2007 and fourth quarter of 2008.

Here is a sampling of places where vacation homes are on sale:
● Scottsdale, Ariz.: 27 percent
● Mystic, Conn.: 17.2 percent
● Napa, Calif.: 21 percent
● Marco Island, Fla.: 27 percent
● Las Vegas: 26.8 percent
● Point Pleasant Beach, N.J.: 15.6 percent
● Sunriver, Ore.: 15.7 percent
● Chesapeake Beach, Md.: 2.9 percent
● Lake George, N.Y.: 4.2 percent
● Newport, R.I.: 2 percent

Source: BusinessWeek.com, Prashant Gopal (04/29/2009)

Where to Get Foreclosure Help

With all the dubious assistance programs and out-right scams preying on home owners facing foreclosure, it can be difficult to find legitimate help.

Here’s a list of programs that are either operated by the U.S. government or have its seal of approval:

To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.

Visit NeighborWorks America’s Web site at www.nw.org/network/home.asp

Go to this Web site for information on federal mortgage modification and refinancing programs: www.makinghomeaffordable.gov

The Controller of the Currency’s consumer information site for banking-related questions is www.helpwithmybank.gov

OCC Customer Assistance Group and consumer assistance site: www.occ.gov/customer.htm

Federal Trade Commission: www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm

Federal Reserve Board: www.federalreserve.gov/pubs/foreclosurescamtips/default.htm

NeighborWorks America: http://www.nw.org

HOPE NOW: www.hopenow.com

Source: Controller of the Currency (04/21/2009)

FICO launches mortgage relief site

Borrowers can explore refi, loan mod, counseling options

By Inman News, Friday, April 17, 2009.

A new Web site that's a partnership between FICO and two nonprofits promises to help distressed homeowners determine if they're eligible for loan modifications or loan refinancings under the Obama administration's Making Home Affordable program.

The site, Mortgage Relief Online, also promises to help borrowers who aren't eligible for the Making Home Affordable program by referring them to a consumer credit counseling agency employing HUD-certified counselors.

Mortgage Relief Online is a partnership between myFICO, the Homeownership Preservation Foundation, and Money Management International. In a press release, FICO -- formerly known as Fair Isaac Corp. -- said the Web site will leverage consumer traffic to myFICO.com, the Web site of FICO's consumer division, myFICO.

The Web site is part of FICO's larger "Mortgage Recovery Initiative," which also includes tools for lenders and loan servicers. FICO's Mortgage Risk Analyzer, for example, identifies mortgage loan holders who are likely to default or need assistance before they become delinquent. Integration with the new Mortagage Relief Online Web site is an efficient way to handle large volumes of loan remediation requests, FICO said.

FICO also offers a Mortgage Response Analyzer, which helps servicers design outreach campaigns to attain the highest borrower response and conversion rates, and a Mortgage Portfolio Optimization application, which uses sophisticated rules to help lenders determine the most appropriate loan product to offer at-risk customers while preserving loan portfolio value, the company said.

The Obama administration hopes the Making Home Affordable program will help 7 million to 9 million homeowners negotiate loan modifications with lenders or refinance loans. A government-sponsored, dedicated Web site for the Making Home Affordable program also offers online tools to help borrowers determine eligibility for the program.

The HOPE NOW coalition of loan servicers offers online tools at HopeNow.com, and a toll-free hotline, (888) 995-4673, that provides referrals to housing counselors.

Fannie Mae and Freddie Mac offer online tools to help borrowers determine if the companies own their loan, a prerequisite for Making Home Affordable refinancings.

California Home Prices Looking Steady

Median home prices in California slipped less than a half percent in March compared to February, a sign that the state’s troubled housing market is stabilizing, according to MDA Data Quick, which tracks housing prices.

The firm said the market was similarly stable in January and February.

"History suggests that these are the kinds of signs you see when a market is approaching stabilization in terms of pricing," Data Quick spokesman Andrew Lesage says. "Are we at the bottom? That's not clear."

Source: The Associated Press, Jacob Edelman (04/16/2009)

Obama Urges Americans to Refinance

President Obama urged Americans to take advance of the administration’s new program, which allows homeowners whose loans are underwater to refinance.

Obama, who spoke Thursday at a White House event, pointed to historically low interest rates and estimated that if 7 million to 9 million homeowners refinance, they will save $1,600 to $2,000 a year.

"That is money in their pocket," Obama said. "We are at a time where people can really take advantage of this, and what we want to do is to send a message that if you are having problems with your mortgage – and even if you're not, and you just want to save some money – you can go to makinghomeaffordable.gov."

Source: The Wall Street Journal, John D. McKinnon (04/09/2009)

California Association Offers Mortgage Protection

To make home buyers less skittish about purchasing a home amid concerns about job security, the California Association of REALTORS® has created a Housing Affordability Fund to provide mortgage protection.

The fund will pay buyers' mortgages for six months, up to $1,500 per month, if they become unemployed.

Eligible buyers are salaried employees who have not owned a home during the last three years, are buying properties in California between April 2 and the end of the year, and are working with a real estate pro on their transaction.

Funded by donations from REALTORS® and REALTOR® associations statewide, the program also offers $750 per month for six months to eligible co-buyers, along with a $10,000 death benefit and accidental disability coverage.

Source: American Banker, Kate Berry (04/06/09)

Officials Crack Down on Loan Modification Scams

The government is cracking down on scammers who take advantage of desperate homeowners facing foreclosure.

Federal and state officials are trying to put an end to fraudulent companies that charge borrowers up-front fees of $1,000 to $3,000 to modify their loans. For the most part, the modifications never happen.

"These are predatory schemes designed to rob Americans of their savings and potentially their homes," says Treasury Secretary Timothy Geithner. "We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.

"The Federal Trade Commission says 71 companies ran suspicious advertisements and complaints should filed at the Federal Loan Modification Law Center and Bailout.hud-gov.us, both based in California, and Clearwater, Fla.-based Home Assure LLC.

Not every loan modification business is a fraud, but "swimming around in those waters are a lot of sharks," says Jim Carr, chief operating officer at the National Community Reinvestment Coalition.

Source: The Associated Press, Alan Zibel and Christopher S. Rugaber (04/06/2009)

Mortgage Defaults Soar in 2008

The share of home owners with mortgages who are paying them on time fell below 90 percent to 89.95 percent at the end of 2008, according to a study released Friday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

The report reflects the performance of about two-thirds of all U.S. mortgages.

Delinquent subprime loans reached 16.4 percent, while delinquent Alt-A loans reached 9.10 percent. About 2.4 percent of all prime loans were seriously delinquent.

The report concluded that cutting mortgage payments by at least 10 percent helps. Re-default rates were at 26 percent after nine months when payments were cut by at least 10 percent, compared with 50 percent or more when the payment stayed the same or were trimmed by less than 10 percent.

"The continuing decline in credit quality underscores the need for mortgage servicers to increase their efforts to modify home mortgages," says OTS Acting Director John E. Bowman.

Source: The Wall Street Journal, Jessica Holzer and Ruth Simon (04/03/2009)

How to really help troubled homeowners

Tying mortgage modification to affordability lowers redefault rate, federal study finds. Regulators press banks to keep in mind borrowers' ability to pay.

By Tami Luhby, CNNMoney.com senior writer
Last Updated: April 3, 2009: 1:10 PM ET

NEW YORK (CNNMoney.com) -- It may seem obvious: Increasing how much troubled borrowers pay on their mortgage leads to redefaults. But that didn't stop America's banks.

Until the end of last year, the majority of loan modifications either increased homeowners' monthly payments or left them unchanged. Not surprisingly, more than half of those borrowers fell behind again within six months.

Loan servicers, the companies that collect mortgage payments and work with borrowers in default, have gotten the message.

A government report released Friday found that about half of modifications made in the fourth quarter decreased payments.

And reducing payments leads to fewer redefaults. Only 23% of borrowers whose monthly tabs were lowered by more than 10% in the third quarter had fallen behind in their payments within six months, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

This compares with 46% of borrowers whose payments rose by more than 10% and 51% whose payments were unchanged.

"In stressful economic times, modifications that increase monthly payments or keep them the same are likely to run the risk of unacceptably high redefault rates," said Comptroller of the Currency John Dugan.

There are two main reasons for the disconnect between what seems like common sense and servicers' early response.

When the mortgage meltdown first started in 2007, servicers approached loan modifications in the typical way -- tacking on missed payments and penalties to the principal, which increased the monthly tab.

Also, servicers were constrained by contracts with investors who bought mortgage-backed securities, said Joseph Evers, deputy comptroller for large banks.

As foreclosures soared, however, servicers and investors grew more open to lowering payments, as long as it was more cost effective than foreclosing on the home.

"This crisis is more severe," Evers said. "The traditional approach of loss mitigation may not be the right approach in this environment."

Focusing on redefaults

The regulators created a stir in December when they reported that more than 50% of modified mortgages were delinquent six months later. Modification advocates -- including Federal Deposit Insurance Corp. Chair Sheila Bair -- blasted the study for not detailing the how the mortgages were modified.

The Obama administration, financial institutions and housing counselors are counting on loan modifications to pull the nation out of the mortgage crisis. They are at the center of the president's housing plan, which he announced in February.

The program subsidizes interest rate reductions so that borrowers' payments are no more than 31% of their gross monthly income. Many large servicers -- as well as mortgage financiers Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) -- have implemented initiatives in recent months that tie modifications to affordability.

But modifications' effectiveness in reducing foreclosures in the long run remains to be seen. That's why redefault rates are being so closely monitored.

In reviewing banks' fourth-quarter modification efforts, the regulators asked about the types of modifications being done. They found that by year's end institutions were doing many more modifications that lowered payments, rather than leaving them unchanged or raising them.

Some 50.7% of modifications in the fourth quarter decreased payments, compared to 35.7% in the first quarter.

Overall, however, redefault rates are rising. Some 43% of loans modified in the third quarter were at least 60 days delinquent after five months, compared with 37.6% of second-quarter adjustments and 31.4% of first-quarter efforts.

Regulators to banks: remember affordability

The report has spurred regulators to push financial institutions to take affordability into account when doing modifications.

"We have gone back to each of the servicers and directed them to review their modification polices to ensure they are designed to produce sustainable mortgages," Dugan said.

Some servicers, however, are still complaining about the constraints placed on them by investors' contracts.

"That's something they'll have to work through with their investors," Evers said.

The study also raised new concerns about how soon the housing market would recover. The percentage of seriously delinquent prime loans -- held by borrowers with the strongest credit backgrounds -- grew to a record 2.4% at the end of the fourth quarter. This is up from 1.11% at the end of the first quarter.

Regulators are monitoring these figures, since the prime mortgages are considered the lowest risk and account for two-thirds of all loans in the study.

"We watch that very carefully because to the extent we see problems there, it affects a much wider swath of mortgages outstanding in the United States," Dugan said of prime mortgages. "Historically, that's the highest we've ever seen prime mortgages."

First Published: April 3, 2009: 7:00 AM ET

Lowering Mortgage Rates May Have Risks

The Federal Reserve has so far spent about $250 billion on low-interest mortgages acquired from lenders by Fannie Mae and Freddie Mac.

The purchases, which could eventually top $1 trillion, are one part of the financial buyout many people understand and support. This spending has driven mortgage rates to record lows, encouraged people to buy houses, and helped many people refinance out of lousy mortgages.

It all looks good on paper, but some economists are warning others about some risks. Here are a few of their concerns:

• The Fed is creating new money to pay for this, which will eventually encourage inflation.
• When the Fed stops buying, rates will increase quickly and substantially.
• Not too many investors are interested in the low-yielding mortgages, so it is likely taxpayers will have to foot the bill.

Source: The Wall Street Journal, Peter Eavis (04/02/2009)