Huffington Post investigative report on HAMP: 'It's not working'

Last week, Gaius did a post on the Home Affordable Modification Program (HAMP), based on coverage from Chris Hayes. He described it as "painful."

Housing foreclosures have been one of the biggest problems facing many Americans in the wake of the economic crisis. The Obama administration's HAMP was supposed to be a solution. But, there's more painful coverage today. According to an extensive report by Huffington Post's Shahien Nasiripour and Arthur Delaney, it's not working:

President Barack Obama's signature plan to combat the housing crisis has fallen short of its goals -- rather than significantly and permanently reducing home foreclosures, it is only delaying them.

The administration unveiled its Making Home Affordable plan in February 2009. Obama vowed in front of an audience gathered at Dobson High School in Mesa, Ariz., that MHA's signature effort, the Home Affordable Modification Program, would "enable as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure."

The $75 billion initiative -- $50 billion from the bank bailout, $25 billion from government-owned mortgage giants Fannie Mae and Freddie Mac -- was designed to induce lenders, servicers and investors to modify distressed mortgages through a series of cash incentives.

It's not working.

This was supposed to be a signature program for Team Obama. Read the full report. It's worth it. And, this quote isn't what anyone would have expected from HAMP:

"They told us we were a great candidate, so we went for it," [Bea Garwood] says. "And as a result we're losing our home."

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Foreclosures hit record high

So who will the Republicans blame for this? It's asking too much for them to accept that this is a result of their poor policies. Their friends in the financial industry have either walked away with cash in their pockets or they continue to live a very exclusive lifestyle on the backs of everyone else. LA Times:

The number of U.S. homes taken back by banks through foreclosure hit a record high in the second quarter, even as lenders delayed more homes from entering the process through short sales and loan modification efforts, according to data to be released Thursday.

This growing supply of lender-owned properties could set back the nation's housing recovery but probably won't sink it completely if the nation's employment situation doesn't deteriorate further and the economy begins to pick up steam, experts said. Sales of homes have faltered nationally in recent months with the expiration of government tax incentives for buyers.

U.S. bank repossessions increased 38% in the second quarter from the same period a year earlier for a record total of 269,952, according to Irvine research firm RealtyTrac. That was also a jump of 5% from the previous quarter. If that pace continues through the year, the number of homes taken by banks is likely to top 1 million by the end of 2010, said Rick Sharga, RealtyTrac senior vice president.

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Mortgage defaults dominated by rich

There go the McMansion subdivisions. What a tragic loss for society.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

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31% of home sales were on foreclosed homes in first quarter

The good news is that it's only 30 points higher than the pre-recession number.

Foreclosure homes accounted for 31 percent of all residential sales in the first quarter of 2010, with the average sales price of properties that sold while in some stage of foreclosure nearly 27 percent below homes that were not in the process, Irvine, California-based RealtyTrac said.

"In a normal market, only 1 to 2 percent of home sales are foreclosures, so this is certainly a significant level," Rick Sharga, senior vice president at RealtyTrac, said in an interview.

Total U.S. foreclosure sales in 2009 were up more than 1,100 percent from 2006 and more than 2,500 percent from 2005. Foreclosure sales accounted for 29 percent of all sales in 2009, up from 23 percent in 2008 and a mere 6 percent in 2007, the real estate data company said.

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Bank of America tries to take away yet another house

Documents? We don't need no stinkin' documents. Seize the house! Who cares that the problem has happened once or twice or more? Bank of America is above the law. They are the law.

Nancy Willmes paid cash for her Tuolumne home in 2001. So she was quite surprised when Bank of America send her a notice of default on the property in February.

"I honestly felt like Bank of America was trying to steal my property," Willmes said.

She contacted Bank of America to try to find out why the bank believed it could foreclose on property she had purchased outright.

Willmes has chain-of-ownership records, which show Bank of America had sold the property to Fannie Mae years earlier. Fannie Mae foreclosed on the previous owner, and Willmes purchased the property with cash from Fannie Mae.

But Willmes said Bank of America did not care about the documentation.

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Foreclosure rates highest in five years

Another reminder that the economic problems are not yet over. Just because Wall Street is putting up flashy numbers does not mean it's the same for the rest. Why exactly are the Republicans being so easy on Wall Street? Can they ever stand up for average Americans? Is it really asking too much to support the non-boardroom types? Of course it is. The bankers and corporate executives who don't want any limitations bought their members of Congress and by gosh, they will get whatever they want.

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.

"We're right now on pace to see more than 1 million bank repossessions this year," said Rick Sharga, a RealtyTrac senior vice president.

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Report: housing foreclosures heading up again

And apparently the problem could get worse again, very quickly. CNBC:

Yes, banks are ramping up loan modifications and ramping up short sales and ramping up deeds in lieu of foreclosure, but the plain fact is that as the systems are oiled, the loans are moving through faster, and the pig in the python is showing its face.

We won't get the numbers until next week, but sources tell me they will likely be a new monthly record.

Tens of thousands of loans have been hitting the "notice of trustee sale" bin, and that means they are coming to foreclosure.

The actual foreclosure numbers have been down recently because of all the modification efforts, but as we see more loans not qualifying for modifications and more loans defaulting on modifications, the foreclosure numbers rise.

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Insurance companies not paying on bad mortgage insurance

What a business model. Sign contracts to deliver a service and then balk when asked to follow through. Sure the rescission rates are at record highs but that sounds like a personal problem for the insurers who signed the deals with the banks. These two industries deserve each other. Well, as long as everyone else isn't funding their fiasco, that is.

Mortgage insurers are rescinding (denying) claims, claiming themselves that the loans were fraudulent and misrepresented to them.

"The broker dealers, Bear Stearns, Countrywide even ResCap that was part of GM at the time, they used underwriting standards that were a little bit looser than what we see with the normal conforming market," says Chris Whalen of Institutional Risk Analytics. "In those cases, the default rates are in double digits and there's a lot more claims for what we call rescission or really putting back the loan to the originator by the insurer and saying, 'Hey, this loan wasn't kosher, and I shouldn't have insured it in the first place.'"

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Some good news on the foreclosure front

It's nowhere close to the end but an improvement is an improvement. On the downside there are quite a few who are at least one payment behind.

The drop means the number of people losing their homes will start to fall. But some pain from the crisis is sure to persist. Because millions of people are already in foreclosure, deeply discounted houses will put pressure on home prices for years.

"Housing is on a path to recovery," said Mike Larson, a real estate analyst with Weiss Research. "It's going to be a very long, gradual process."

In high-foreclosure cities like Las Vegas, Phoenix and Miami, homes have lost roughly half their values from their peaks. But a report Friday from the Mortgage Bankers Association showed Nevada, Arizona and Florida had some of the biggest declines in new delinquencies.

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Bank of America seizes wrong house, again

Having this happen once is bad. Twice and it starts to look like a trend. How many other times has this happened? The full details of the bank seizure are horrifying. When you read the story it shows how much authority the banks have in these situations. Shouldn't the burden of proof be on them before they damage property and lose personal belongings?

Charlie and Maria Cardoso are among the millions of Americans who have experienced the misery and embarrassment that come with home foreclosure.

Just one problem: The Massachusetts couple paid for their future retirement home in Spring Hill with cash in 2005, five years before agents for Bank of America seized the house, removed belongings and changed the locks on the doors, according to a lawsuit the couple have filed in federal court.

Early last month, Charlie Cardoso had to drive to Florida to get his home back, the complaint filed in Massachusetts on Jan. 20 states.

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Housing recovery to take a decade?

I guess quick recoveries are only for the bankers who created the crisis. Washington Post:

Even as the housing market shows signs of improvement, including in new data released Tuesday, economists warn that it could take up to a decade for many homeowners to regain equity in their homes, while some people in the hardest-hit regions of the country may not see a recovery during their lifetime.

Home prices have fallen 30 percent since reaching their peak in 2006, and many economists think they will take another tumble this year as more foreclosures pile on the market. The pace of recovery will vary throughout the country, with homes in the most battered markets taking the longest to regain value. Meanwhile, millions of homeowners who are "underwater" -- owing more on their mortgages than their homes are worth -- face years of negative equity that puts them at a higher risk of foreclosure.

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China's property bubble

Where have we seen this? Lax lending standards, get-rich-quick house selling, cheap credit, prices doubling within a few years and a firm belief that the good times will never end. The "experts" are confirming that it will last for years and are citing pent up demand for housing, which sounds reasonable enough. Sloppy lending on a large scale tends not to work out very well though, so that may complicate the "everything is fine" theory. Whether the export market will continue to sustain the high numbers is also in question and that too has led to the delicate balance that is working, for now.

For investors, many of the usual bubble warning signs are flashing. Fueled by low interest rates, prices in Shanghai and Beijing doubled in less than four years, then doubled again. Most Chinese home buyers expect that today's high prices will climb even higher tomorrow, so they are stretching to pay prices at the edge of their means or beyond. Brokers say it is common for buyers to falsely inflate income statements for bank loans.

Some economists and bankers fear that they have read this script before. In Japan at the end of the 1980s and in the United States in 2008, residential real estate bubbles ended in big crashes, battered banks and slow recoveries. With China acting as a key engine of global growth, a bursting of the Chinese real estate bubble could be a pop heard round the world.

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Housing sales surge as buyers try to get last minute home credit

Every bit of news helps, but if it's just a one-time surge to get the credit, then it may indicate much of a change in the market.

At the same time, the Wall Street Journal shows just how bad the rest of the market really is.

The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery....

Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American.

This is a problem when you sell your house. If the value is less than the mortgage, then you don't make enough on the sale to actually pay off your mortgage. Read More......

Housing data suggests bumpy times ahead

Some are suggesting the housing data is pointing towards a double dip recession. As the tax credit disappears, so may the housing market.

Construction of homes unexpectedly plunged last month to its lowest point since April, the Commerce Department said Wednesday. The weak figures show that builders fear there aren't enough buyers to soak up the glut of unsold homes already on the market — a supply magnified by record-high foreclosures.

They also illustrate how much the fledgling recovery depends on government aid. Builders held back in part because of uncertainty in October about whether Congress would extend a tax credit for homebuyers. Earlier this month, lawmakers renewed the credit and extended it to more buyers.

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Another record high for mortgage delinquencies

The good news is that the pace is at least slowing. The fact that another record high has been hit is obviously troubling news.

The good news is that the pace at which people fell behind on their mortgages slowed during the summer for the third quarter in a row. The bad news is the overall delinquency rate hit another record.

For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That's up 58 percent, from 3.96 percent, a year ago.

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Moody's: California, Florida housing recovery by 2030

Nevada and Arizona are not looking very good either. For buyers it may be OK news provided they're not in a rush to sell for a few decades. Definitely not good news for the previously high flying states. Read More......

Mortgage delinquencies increasing

Not that it's much of a surprise, but still not very good news. As unemployment goes up, so goes the mortgage problems. As a first step we at least need to see an end to the bleeding. As the government plan for boosting housing (the $8000 checks for new home buyers) wears off, we could see the pain returning to the housing market.

Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.

August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed.

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Moody's: decade or more for house prices to recover

Ouch. Again, is there ever going to be any justice or will the US let Wall Street completely get away with this? Why such meek action to date? People deserve a hell of a lot better than this yet the foot-draggers in Washington barely notice. Some of the greatest destroyers of wealth like Charles Prince, Angelo Mozilo and Stanley O'Neal all walked away from the wreckage with tens of millions in their pockets.

Moody's Investors Service threw cold water on optimistic projections of a V-shaped recovery in the battered U.S. housing market, predicting it could take more than 10 years to get back to boom-level prices.

"For many reasons, the rebound will be disproportionately small compared to the decline," Moody's said this week in its latest outlook on the residential market. "It will take more than a decade to completely recover from the 40% peak-to-trough decline in national home prices."

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Foreclosures jump in August

Even with the recent good (or at least stable) news about real estate, the increasing foreclosure rates are problematic. Unemployment will continue to increase and stay high into 2010 and that is sure to bring another round of difficulties for this sector.

Home foreclosures in August jumped 18 percent from a year ago, but decreased 0.47 from the previous month, according to a new report by RealtyTrac, an online marketplace for foreclosure properties.

In all, 358,471 properties in the United States received foreclosure fillings in August, just slightly below July's record level of 360,149 properties.

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Prime borrowers increasingly defaulting on mortgages

The subprime problem was bad enough but now the banks are facing problems from traditionally prime borrowers who are struggling to keep up now that unemployment is increasing and staying high. (The banks are also facing commercial real estate issues.) Chances of a double-dip recession look much higher when prime customers are becoming part of the problem.

The rate of mortgage delinquency among prime borrowers is accelerating and could mean that banks will soon be suffering more losses from the usually safe customers than from their less-reliable ones, the report said.

The number of subprime borrowers falling down on their mortgage repayments reached 25 percent in the first quarter, but has now leveled off, with only slight increases in the second quarter, the Journal said.

Prime loans make up 80 percent of US banks’ exposure to mortgages and credit cards, and so could quickly overtake subprime borrowers in causing the biggest financial headache as the recession bites, the report added.

"The subprime pain is in the rearview mirror," Sanjiv Das, head of Citigroup's mortgage business, told the Journal.

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