Fannie Mae & Freddie Mac Suspend Foreclosures During the Holiday Season
******************************************************************************************************
Mortgage Modification Program Will Not Prevent Enough Foreclosures
WASHINGTON – Dec. 18, 2009 – A federal program that has cut mortgage payments for more than 500,000 homeowners since spring is falling well short of what’s needed to fix the nation’s foreclosure crisis, warns a congressional panel’s report out today.
“We’re concerned that not enough foreclosures will be prevented,” said Elizabeth Warren, who chairs the Congressional Oversight Panel for the $700 billion financial bailout program approved last year.
The panel’s report says the government’s mortgage modification program has three key problems:
*The kinds of mortgages that will make up growing numbers of foreclosures exceed the program’s eligibility requirements.
*With a goal of modifying only 25,000 to 30,000 loans a week, fewer than half of the predicted foreclosures would be avoided. One in eight homes are currently in foreclosure or default and 250,000 additional foreclosures are initiated monthly.
*Many modifications so far are still in a three-month trial period. As of Sept. 1, only 1,711 homeowners had received permanent modifications under the federal program. And after five years, many will see higher payments.
“The result for many homeowners could be that foreclosure is delayed, not avoided,” the report says.
Warren noted that the foreclosure problem has moved beyond subprime mortgages and that rising unemployment will cause more foreclosures.
The government’s program “appears to be targeted at the housing crisis as it existed six months ago rather than as it exists today,” she says.
Her panel’s cautionary report follows a more positive assessment Thursday by administration officials.
Under the federal program, the pace of trial modifications now exceeds the weekly pace of completed foreclosures, said Housing and Urban Development Secretary Shaun Donovan.
That means there are more families getting modifications through the federal program each month than families losing their homes to foreclosure, officials say.
“The fact we now have a pace of trial modifications that exceeds the pace of weekly foreclosures is a very important milestone,” Donovan said. “We believe we’ve reached an important turning point.”
Administration officials acknowledge that the start of a housing turnaround could still sour.
“We’re still living with the risk that housing is going to be a source of weakness in the economy,” says Treasury Secretary Timothy Geithner.
Courtesy Florida Association of Realtors
*************************************************************************
People Less Likely to Purchase Foreclosures
– Dec. 17, 2009 – Foreclosures are loosing their appeal. The percentage of homebuyers that would be willing to purchase a foreclosure has dropped from 55% in May to 43% in November.
The survey, released Tuesday by real estate Web companies Trulia.com and RealtyTrac, could portend more difficult times for the housing market, particularly because most economists expect foreclosures to peak nationally next year.
A lack of interest in purchasing bank-owned properties not only would mean that foreclosed individual homes sit vacant longer but also would affect the broader housing market by bringing down median housing prices in neighborhoods beset with foreclosures.
Rick Sharga, senior vice president of RealtyTrac, an online marketplace of foreclosure listings, said the decrease in buyer enthusiasm for foreclosures should be expected. “Some of the early enthusiasm of something new has waned,” he said, but added, “People that are interested are very serious about this.”
RealtyTrac predicts that by year’s end, 3.2 million households nationally will have received a foreclosure notice in 2009. Next year, the number of filings, which include notices of default, sheriff’s sale or bank repossession, could approach 4 million, Sharga said.
“Follow the unemployment numbers” to determine where foreclosures will rise next year, Sharga said. Last week, RealtyTrac said November foreclosure filings in the Chicago area rose 107 percent over a year ago. Illinois’ unemployment rate stands at 11 percent.
Moody’s Economy.com previously has predicted an additional 4.6 million foreclosures nationally in 2010.
“There are really two sides to this story, the positive and the bleak,” said Pete Flint, chief executive of Trulia.com. The positive side is that buyers have grown more realistic about their expectations of what a foreclosed property will cost to purchase and renovate, he said.
The Harris survey included 2,203 adults.
Courtesy Florida Association of Realtors