Despite an 18% decrease in foreclosure activity from March, Nevada continued to post the nation’s highest state foreclosure rate in April, with one in every 68 housing units receiving a filing. This was driven by a 44% drop in bank repossessions from March. A 37% month-over-month increase in foreclosure activity boosted Florida’s foreclosure rate to the second highest. The increase in Florida was due to a spike in default notices and auction notices, but REOs were down 7%. Home foreclosure activity in California decreased 10% from March, while it was up 42% from April 2008. The 10 states with the most filings in April accounted for more than 75% of the national total. California documented the highest total (96,560), followed by Florida (64,588), Nevada (16,266) and Arizona (16,245).

1. How big is the foreclosure problem? Foreclosure filings were reported on more than 2.3 million American properties last year, according to RealtyTrac. That’s one for every 54 housing units and an 81 % jump from 2007. In a recent address, President Obama said nearly six million American homes are either in–or at risk of–foreclosure. And on Thursday, the Mortgage Bankers Association reported that more than 11 % of mortgages outstanding were either past due or in foreclosure during the fourth quarter of 2008.That’s a record high.

2. Who qualifies for Obama’s housing plan? The $75 billion goes toward reducing mortgage payments for as many as four million “at-risk” homeowners. The program is only available for owner-occupied, principal residences with mortgages that originated before Jan. 1, 2009. To qualify, the borrower’s monthly mortgage payments must exceed 31 % of their gross monthly income. In addition, they must also have undergone some type of financial hardship—such as a loss of income—that puts them at risk of default. While you don’t need to be delinquent on your mortgage to qualify, borrowers who are comfortably making their mortgage payments won’t be eligible.

3. I don’t qualify. How does this help me? Many Americans who purchased homes they could reasonably afford and made their payments on time are understandably upset at seeing neighbors who made reckless decisions bailed out on their dime. But the Obama administration argues that keeping people in their homes is in the best interest of all homeowners, since foreclosures–which can blight communities and nurture crime–can drive down property values for everyone. “One study in Chicago found that a foreclosed home reduces the price of nearby homes by as much as 9 %,” the president recently said. Although he considers the 9 % figure too high, Richard Moody, the chief economist at Mission Residential, says Obama’s argument is sound. “If you were to go sell your house, the first thing the realtor is going to do when they try to figure out a listing price is to look at [comparable homes in your neighborhood],” Moody says. “And if you’ve got all these depressed property values, that is going to definitely harm the sales value of your home.” As such, if Obama’s housing plan succeeds in reducing foreclosures for troubled borrowers–and that’s a huge if–it may help to bolster the values of other homes as well.

4. What incentive do I have to keep paying my mortgage? A home foreclosure is an ugly stain on a credit report, and it can remain there for as long as seven years. “It’s right up there with a bankruptcy,” says Gail Cunningham, the spokeswoman for the National Foundation for Credit Counseling. With banks tightening their lending standards in the face of higher delinquencies, it’s a particularly bad time to ruin your credit. If you have a home foreclosure on your credit report, you’re likely to have a difficult time getting any type of new credit these days–from a credit card to a new mortgage.

5. I’m not in trouble now, but how can I protect myself from the threat of foreclosure? Factors that can lead to foreclosure include unemployment, exploding-rate mortgages, and reckless discretionary spending. Although homeowners may have less control over their employment situation, by addressing these other factors, they can put themselves in a better position to avoid foreclosure should they suffer job loss. Julia Rodgers, a mortgage advisor with the National Community Reinvestment Coalition, says homeowners should make sure they have sufficient savings set aside to pay their mortgage in the event of the unexpected. “Fallback savings is critical,” Rodgers says. “At least have three months of your mortgage payments saved.” In setting aside such savings, families should institute a household budget and review their online bank statements regularly to ensure they aren’t spending wastefully. “A lot of my clients have $300 to $400 in bank fees alone,” Rodgers says. “In this climate, we have to be extremely aware of where our money is going.”

Consumers with adjustable-rate mortgages should see if they are eligible to refinance into a fixed-rate home loan, while those who already have fixed-rate loans should see if they can refinance into a lower rate. In doing so, consumers should first obtain their credit report and see if their mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, Rodgers says. Those with Fannie or Freddie loans may be eligible to refinance into a lower rate through a second component of Obama’s housing plan. “If you can, refinance,” says Susan Wachter, a professor of real estate at the University of Pennsylvania’s Wharton School. “The rates are low.” Thirty-year fixed-mortgage rates averaged an attractive 5.15 % for the week ending March 5, according to Freddie Mac.

6. Is there a silver lining in this mess? It’s nearly impossible to spot any sort of silver lining in the current housing mess. But if there’s anything good to come out of this, it’s the hope that homeowners, lenders, regulators, and policymakers will learn from their mistakes and ensure that mortgages going forward will be properly underwritten and affordable. By overlooking the lessons of the crisis, we risk going through this devastating cycle again in the future. Read the original article written By Luke Mullins at http://www.usnews.com/articles/business/real-estate/2009/03/06/i-pay-my-mortgage-whats-in-the-housing-bailout-for-me.html

1. Because the couple is delinquent and wants a loan modification, they must provide two recent pay stubs and the latest income tax filing, an affadavit of hardship, and detail debts and fixed living expenses, such as credit cards, car loans, student loans and alimony.

2. The bank or servicer compares monthly mortgage payments with monthly income before taxes. If the couple’s monthly debts exceed 55 % of income, they must get counseling by a federally approved housing counselor to get the modification.

3. From there, the federally set sequence of loan modifications starts with the goal of lowering the monthly mortgage payment to 38 % of income before taxes.

4. The interest rate is reduced to as low as 2%. Past-due charges are factored in and late fees waived.

5. If the goal is still out of reach, the loan period can be extended up to forty years.

6. If the 38 % is still unmet, part of the principal must be tacked on to the end of the mortgage and paid off when the house is sold or the mortgage period ends.

7. Finally, the mortgage lender or servicer could decide to reduce the mortgage principal to reach the 38 % target.

8. The federal rescue initiative also offers incentives to go down to 31 % by splitting the 7 % difference with the lender and servicer.

9. The couple is put on a three- month trial, and if payments are on time, the changes are fixed for five years.

10. In year six, the interest rate increases no more than 1 % annually, but there’s a cap - it can’t be more than the market interest rate on the day the modifications were finalized.

11. Mortgage lenders and servicers get financial incentives for modifying and keeping loans on track, but borrowers get $83.33 for each on-time monthly payment, up to $5,000 over five years. The money goes directly to the servicer to reduce the principal balance.

The increase in delinquencies and foreclosure actions in the state came as no surprise to Joe Cox, a community organizer for housing advocate group Maryland ACORN. “Mortgage servicers or lenders have been avoiding meaningful loan modification at every step of the way,” Cox said yesterday.

Banks have said they are taking steps such as Citigroup’s plan, announced earlier this week, to lower mortgage payments for some borrowers to an average $500 a month for three months if they lost their job. But ACORN contends banks are just offering short-term solutions, such as tacking a missed mortgage payment to the end of the loan, that do little to help borrowers. Many borrowers come to ACORN fearing they will fall behind on payments but say their lender won’t consider modifying the loan unless they become delinquent, Cox said. The group says it wants to see loan modifications such as lowering the interest rate or monthly payments by extending the term of the loan. “The message people are getting is ‘Don’t try to work this out ahead of time. Wait until you have a problem,’” Cox said.

The Refinance Index decreased 19.1% to 3618.0 from 4472.9 the previous week and the seasonally adjusted Purchase Index decreased 2.6% to 250.5 from 257.3 one week earlier. The Conventional Purchase Index decreased 4.4% while the Government Purchase Index (largely FHA) increased 0.8%. The four week moving average for the seasonally adjusted Market Index is up 0.4%. The four week moving average is down 4.2% for the seasonally adjusted Purchase Index, while this average is up 1.7% for the Refinance Index. The refinance share of mortgage activity decreased to 69.7% of total applications from 74.2% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 1.9% from 1.7% of total applications from the previous week.

In a final report titled “State of Distress: The Mortgage Foreclosure Crisis within Florida’s Condominium and Homeowner Association Population,” two-thirds (65.3%) of respondents living in communities hit by mortgage foreclosures said lender foreclosures are “causing a revenue shortfall that is placing a burden on the association’s finances.” As a result, 37.9% said the foreclosure-related revenue crunch for Florida condos and HOAs has resulted in “postponements of major capital investments in upkeep or repair” of buildings and other property.

And, when asked if the Florida Legislature, which is set to reconvene in regular session on March 3rd in Tallahassee, “should increase the liability of first-mortgage holders for unpaid assessments,” a resounding 90.3% responded “Yes,” that the Legislature should act “in order to decrease the financial burden of unpaid assessments on community associations.” Conducted online for the second year in a row under the auspices of the Community Association Leadership Lobby, or CALL (www.callbp.com), the Florida community association mortgage foreclosure survey elicited responses from 1,589 property owners between Jan. 15-Feb. 1 on a range of questions related to the mortgage foreclosure crisis in their communities. Three quarters of survey respondents were in a position as elected members of their community’s Board of Directors to have in-depth information and insight into the financial pressures caused by foreclosures.

According to CALL co-Executive Directors David Muller and Yeline Goin, the survey results are a sober reminder that mortgage foreclosures are having an alarming multiplier impact on the stability of common ownership residential communities across the state. “In community after community, unpaid assessments from foreclosed properties have undercut maintenance, repairs and safety, while generating higher assessments for the entire community that threaten to push more owners into default and mortgage foreclosure,” said David Muller, Sarasota-based CALL co-Executive Director and a shareholder and community association attorney with Becker & Poliakoff. “These survey results are an urgent wake-up call for State Legislators to act immediately to transfer the burden of unpaid assessments from foreclosed properties away from these communities and onto the lender-owners of the individual properties in foreclosure in order to avert widespread fiscal failure in condos and HOAs across the State,” said Yeline Goin, Tallahassee-based co-Executive Director of CALL and a community association attorney with Becker & Poliakoff. Among the key findings of the survey detailed in the “State of Distress” report are:

– More than half of all respondents (53%) reported higher rates of
vacant units in their communities than 12 months ago as a result of
mortgage foreclosures; of those who reported higher vacancy rates, 15%
reported that 10% or more of the units/homes in their communities are now
currently vacant due to mortgage foreclosures and 68.9% reported mortgage-
related vacancy rates in their community from 1-9% at present;

– Fully 57% of respondents statewide say that getting mortgage lenders
who have been slow to foreclose on units/homes to pay outstanding monthly
maintenance fees to the associations has proven difficult;

– More than half of respondents statewide (52.8%) report that as a
result of revenue shortfalls their association is taking steps to reduce
expenses, with increased monthly assessment fees the most commonly reported
way that associations are protecting their finances;

– Two-thirds of respondents (66.6%) to a question about the impact of
foreclosures on property values in the communities said they foresee
further property value declines in 2009, with Southeast Florida respondents
the most pessimistic (71%) on the property value outlook; and,

– A super-majority of respondents (73.6%) forecast no improvement in the
mortgage foreclosure outlook in their communities during the next 12
months, estimating the number of foreclosures will either stay the same or
increase above the number of foreclosures this past year.

Read the complete loss mitigation article > Loan Modifications Determining Eligibility with FDIC
http://blog.homeforeclosureadvisors.com/2008/12/01/loan-modifications-determining-eligibility-with-fdic/

Frank blamed the housing crisis lack of foreclosure modification on President Bush as well, saying there was ample legal authority for the administration to take action. “I don’t think you need legislation,” Frank said. “There is plenty of legal authority to do loan modifications that could stem foreclosures. — Paulson and Bush won’t use it. There is no need to legislate that.”

Banks and builders will be able to report losses on properties back four years instead of two, as is the case now. In addition, these parties will be able to take a $7,000 tax break when they buy foreclosure properties. Since it is usually foreclosing banks that purchase homes at county sheriff sales, they may be able to take literally thousands of tax breaks just by foreclosing even faster on homeowners. The builders, on the other hand, will be able to keep putting up homes no one can afford in areas no one wants to live in. Providing subsidies to builders to keep constructing or repairing properties only puts more houses on the market for sale, driving down home prices even further but allowing the homebuilding companies to stay in business at the expense of other members of the general public.

Not surprisingly, the $7,000 tax credit for purchasing foreclosed properties lasts only for the next 12 months, at which time it will expire if not extended. The largest purchasers of foreclosure homes in the next year will be the largest lenders, who are experiencing the fallout of lending to people who could not afford their mortgage payments. Twelve months of foreclosures could potentially create hundreds of billions of dollars in tax credits for buyers, most of which will help banks offset losses on these loans. With the banks now writing down their valueless mortgages by tens of billions of dollars, it will be a welcome relief to offset those losses with hundreds of tax breaks they receive by stealing homes from property owners.

It should be little wonder why the Foreclosure Prevention Act has met with so much criticism. The market will find ways to help homeowners save their homes or leave them, but giving more tax breaks to the banks and builders that profited most from the real estate bubble, just to make sure they do not feel the same level of pain as the homeowners, will only lead to more unintended consequences. Homeowners who know their banks are receiving hundreds of billions of dollars in direct subsidies and hundreds more in tax credits may be far less willing to give up their home peacefully. It is repeated government interventions on the side of big business at the expense of the public that helps foster the animosity that leads to properties being stripped of copper pipes, appliances, and other valuable fixtures.

It can be very hard to blame the homeowners for taking some psychological and physical revenge against the banks who not only steal their homes, but also benefit most from the foreclosure crisis. And all of this is paid for by the people who are losing their homes in record numbers throughout the country.

The Foreclosure Fish website has been created to provide homeowners in danger of losing their houses with foreclosure solutions and resources they can use to save their homes on their own. The site describes various methods that may be used to save a home, such as foreclosure refinance loans, mortgage modification, short sales, bankruptcy, and more. Visit the site to read more articles about how foreclosure works and how the process may be avoided before it is too late: Foreclosurefish.com Article Source: http://EzineArticles.com/?expert=Nick_Adama