We are the Only HOPE for homeowners!

Excerpts from the AP news service on Foreclosures:  12-11-08

 

Despite the trillions of dollars in federal money advanced or committed to shore up the nation's financial system, efforts by lenders and government agencies have failed to halt the relentless rise in foreclosures. Relatively little has been spent directly to help head off home foreclosures, in part because of opposition from some lawmakers and Bush administration officials who fear rewarding bad decisions by borrowers.

After this fall’s $700 billion rescue package and recent debate about the auto industry bailout, Congress also faces pressure to move more aggressively and spend taxpayer funds to try to break the financial and legal logjam that threatens to send millions more homeowners into foreclosure next year.

“I do think we’re going to come to a point early next year when it becomes obvious that the foreclosure problem is so severe that we’re going to have to take a shot a something like this,” said Moody’s Economy.com chief economist Mark Zandi.

Workouts that don't work
Efforts to reverse the rise in foreclosures began in earnest in October 2007, when the White House unveiled the HOPE NOW Alliance, a voluntary industry effort to help homeowners work out unaffordable loans. Since July 2007, lenders working with the HOPE NOW Alliance have reworked some 2.7 million mortgages, according to the group’s data. Roughly 1.7 million of those involved repayment plans, which typically increase the monthly mortgage bill to make up for missed payments.

Many homeowners find the new payment even harder to keep up with, a big reason the “redefault” rate, the number of loan workouts that later fail, is rising. More than half of all homeowners who had their loans modified in the first half of the year are already in default again, according to the Comptroller of the Currency.

A second option is to lower the monthly payment by stretching out the term of the loan, resetting interest payments to current market rates or forgiving some of the principal. Since July 2007, just under a million mortgages were modified to change the terms of the loan, according to HOPE NOW data.

“Within the world of workouts, we are seeing a lot of repayment plans and not a lot of modifications,” said Adam Levitin, a Georgetown University law professor who recently wrote a paper on the problems servicers are As a result, the foreclosure rate continues to rise. Though hundreds of thousands of homeowners have been helped, millions more have lost their homes. Without aggressive new efforts, another 3.6 million homeowners will likely lose their homes over the next two years, according to Moody’s Economy.com.

That number is expected to swell as homeowners with so-called ‘pay option’ adjustable-rate mortgages see their monthly payments begin rising by an average 63 percent, according to a recent research report by Fitch Ratings. That wave of resets is not expected to crest until 2010 and could double the delinquency rate unless aggressive prevention measures are taken, the report said.

“The impact of the option-ARM defaults is already under way," said William Longbrake, the retired vice chairman of Washington Mutual, a failed bank that was one of the biggest originators of pay-option ARMs. "Already the option-ARM defaults are rising quite rapidly.” modifying loans.

WASHINGTON - Government efforts to provide easier credit to consumers and jump-start flagging home sales could push mortgage rates "well below 4 percent," a federal regulator said Wednesday.

James Lockhart, whose agency oversees government-controlled mortgage giants Fannie Mae and Freddie Mac, made the comments at a meeting of Women in Housing & Finance, an industry group. He did not say how long it would take to achieve such a drop and has declined to provide a firm target for mortgage ratesTreasury Department officials have been considering a program to lower mortgage rates, which would not apply to refinanced loans. Real estate agents and builders have been lobbying intensely in Washington for government efforts to spur home sales amid a severe decline in the U.S. housing market.

But lower mortgage rates also could prevent housing prices from dropping as much as they otherwise would. That would mute their effect on the overall economy.

Meanwhile, demand for new housing has plummeted as the financial crisis intensified this fall. Total sales in 20 major U.S. markets analyzed in a Deutsche Bank report plunged 65 percent in October from the same month last year.

Cancellations of new home purchases in those markets rose to 29 percent in October, the highest since the credit crisis started in August 2007, Deutsche Bank analyst Nishu Sood wrote in the report published Wednesday.

Nearly half of all new home transactions were canceled in Las Vegas in October, while more than 40 percent were canceled in Phoenix, San Diego and Denver, according to the report.

To summarize; we have not seen the bottom yet........ There are many more foreclosures to come, and interest rates have been, and should continue to drop. As the article states, we could see 4%. 

The Government has created this problem in the first place, and now they are borrowing money, putting us into a deep, deep hole in order to supposedly fix it. The same idiots that got us into it, are in charge of the solution?? 

As entrepreneurs, now is the time to help as many people as possible in our Short Sale businesses, and of course to make a huge amount of $$$ too!! No not as greedy investors, but as a matter of survival if the S*%@t hits the fan like I suspect it will in the years to come as the economy continues to unravel........