Archives for category: forclosure

Foreclosure is not inevitable when you fall behind on your mortgage payments. There are options. But, you need to discuss these options with your lender (the company to which you make your mortgage payments) to determine the best solution for your situation.

Remember: the earlier you contact your lender, the more options you will have to avoid foreclosure.

Options to Keep You in Your Home

Your lender will work with you to determine if you are eligible for any of the following workout options. Keep in mind that your lender wants to help you; they do not want your home.

1. Refinance

Traditional Refinance

If you have an adjustable-rate mortgage that is adjusting or want to secure a lower interest rate than your current mortgage, refinancing may be able to reduce your monthly payments to a more sustainable level. If you have not missed any mortgage payments, refinancing can completely replace your current mortgage loan and provide you with new terms and a new monthly payment.

Refinancing may make sense if you:

  • Have enough equity in your home to qualify for a new loan.
  • Are current on your mortgage payments.
  • Have acceptable credit.
  • Want to secure a lower rate, longer term or a different type of loan.

Home Affordable Refinance Program

If you are current on your mortgage payments but unable to qualify for a traditional refinance, you may be able to refinance through the Home Affordable Refinance Program (HARP) , part of the federal Making Home Affordable Program.

HARP may make sense if you:

  • Have a loan that is owned by Freddie Mac or Fannie Mae. Visit our Loan Look-up tool to see if we own your loan.
  • Are current on your mortgage payments and have not been more than 30 days late within the last year.
  • Owe more than the home is worth, but your mortgage is less than or equal to 125 percent of the current market value of your home.
  • Have the financial ability to afford the new payments.

Use our interactive map to find a lender to determine your eligibility for HARP.

2. Forbearance

If you are facing a short-term financial hardship and need temporary assistance with your mortgage, your lender may offer you a “forbearance.” With this option, your lender is temporarily reducing or suspending your mortgage payments while you get back on your feet.

Forbearance may make sense if you:

  • Are facing a short-term financial hardship.
  • Think you may fall behind on your mortgage payments, or have already missed one or two payments.

Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments when your financial situation has stabilized.

3. Reinstatement

With a reinstatement, you may be able to make your loan current and avoid foreclosure if you have the funds to repay the missed payments on your mortgage and any associated fees and late charges (typically a lump sum payment on a specific date).

A reinstatement may make sense if you:

  • Are recovering from a short-term financial hardship.
  • Are behind on your mortgage and have received a notice of default.
  • Can demonstrate to your lender that you can repay your debts and afford your monthly mortgage payment.

Be aware that there may be late fees and other costs associated with a reinstatement plan.

Reinstatement is often combined with forbearance when you can show that funds from a bonus, tax refund, new employment or other source will become available at a specific time in the future.

4. Repayment Plan

If you are a few months behind on your mortgage due to a short-term financial setback, but are now financially secure, you may be eligible for a repayment plan. This option will enable you to make up your missed payments, and late fees, over a fixed amount of time by combining a portion of what is past due with your regular monthly payment. By the end of the repayment period you will have paid back the amount of your mortgage that was delinquent.

A repayment plan may make sense if you:

  • Have recovered from a short-term financial hardship that caused you to miss a few mortgage payments and receive a notice of default.
  • Can demonstrate to your lender that you have the funds to repay past-due amounts – along with any associated fees and late charges – and can afford your mortgage payments.

Repayment plans are often combined with forbearance when you can show that funds from a bonus, tax refund, new employment or other source will become available at a specific time in the future.

5. Modification

Traditional Modification

For homeowners who are several months behind on their mortgage – or expect to fall behind soon – a traditional modification of the mortgage terms may provide a solution. With a traditional modification, you and your mortgage company will have a written agreement that changes one or more of the original terms of your note (such as the interest rate or duration of loan) to make your payments more affordable and sustainable.

A modification may make sense if you:

Home Affordable Modification Program (HAMP)

If you’re behind in your mortgage payments, in the foreclosure process, or current on your payments but are about to default due to a recently experienced hardship, you may be able to modify your loan to a lower rate through the Home Affordable Modification Program (HAMP) , part of the federal Making Home Affordable Program.

HAMP may make sense if you:

  • Have a loan that is owned by Freddie Mac, Fannie Mae or a participating investor. Visit our Loan Look-up tool to see if we own your loan.
  • Took out your mortgage on or before January 1, 2009.
  • Currently live in the property as your primary residence.
  • Do not qualify for the federal Home Affordable Refinance Program (HARP) .
  • Are behind on your mortgage, or you are current but will be unable to afford your mortgage payments because of a documentable financial hardship.
  • Spend more than 31 percent of your pre-tax income on your mortgage payment (including principal, interest, taxes, insurance and homeowner’s association dues).

The numbers report for the home-building industry couldn’t have been more grim in February: New-home construction in the U.S. fell to a pace that would translate to about 250,000 homes for all of 2011, which would be the fewest built since the Commerce Department began keeping track in 1963.

If home building isn’t dead, there’s certainly time to think about what it would look like when it revives, perhaps from 2013 to 2015. That’s according to John McIlwain, a senior fellow at the Urban Land Institute in Washington, which studies trends in housing and development.

McIlwain regularly talks with builders and developers across the country. He expects that when home building once again is flourishing, the big master-planned subdivision that was the face of residential construction for so long won’t have disappeared, but it will look different and be restyled to appeal to a broader array of buyers, especially those who have little in common with the old notion of “a family equals two parents with two kids.”

He talked about what he sees ahead:

Is the big master-planned community dead?

It’s not dead, but it depends on where you are in this country. There are very, very few subdivisions being started, because, by and large, there’s no financing for land development. Prices have come down, but it’s pretty hard for developers to go out and borrow to buy land.

Some developers are taking new approaches to building out their existing communities. They’re selling sections of land to builders in smaller chunks. Instead of saying, “Why don’t you take 500 lots?” as they once did, they’re saying, “Take 50 lots and target them for one particular market, such as empty-nesters.”

To whom are they marketing these chunks?

These builders and developers are beginning to think more in terms of life cycle than in terms of first-time buyer or move-up buyer, etc.

One group is empty-nesters in their late 50s and early 60s who are going to continue to work. They don’t want a big home, but one that’s open and wired and has high ceilings, which helps to visually compensate for the smaller spaces.

Older baby boomers, 56 to 65, haven’t really started to come to grips with aging, but they will in the next five years. They’re going to want a one-story home or an elevator for a two-story.

And home buyers today are more diverse than they have been. Builders should consider marketing to single women, some with kids and some without. Or to two women, offering them two equal master bedrooms.

There’s going to be a need for multigenerational spaces that can accommodate grandparents, adult children and young grandchildren. This is going to be particularly in demand where there is heavy Latino and Asian buying.

What about the houses themselves? Do you buy into the notion that we’re over the McMansion phase and desirous of something compact?

I think you’re right to be skeptical of some kind of fundamental cultural shift for Americans. For post-World War II Americans, it was decades of “I want to express my success with bigger cars, bigger TVs and bigger homes.”

But the median size of new homes already is steady or dropping. Smaller lots already have become acceptable because people don’t have time to take care of them.

With younger adults who may be buying in a few years, longer-term, this generation isn’t going to be able to afford bigger, bigger, bigger. Financial conservatism is replacing the go-for-broke house. These buyers will be willing to trade the over-the-top features that used to be put in just for resale value in exchange for flexible, open spaces that are energy-efficient. And they do want to be able to work at home, with wired and wireless connectivity. (LA Times)

To Search for properties visit

Sales of U.S. previously owned homes rose in March as a mounting supply of properties in or near foreclosure lured investors.

Purchases increased 3.7 percent to a 5.1 million annual rate, exceeding the 5 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. All-cash deals accounted for 35 percent of transactions, the most on record, the group said.

Unemployment, falling property values and stricter loan rules may push the number of households losing their homes to a record level this year, a sign the market will take time to recover. Even with last month’s gains, housing may remain a weak component in the economic recovery that began in June 2009.

“We continue to just tread water along the bottom,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. “The housing market is fairly depressed. We think home prices will fall further.”

Stocks climbed as sales at companies from Intel Corp. to Yahoo! Inc. exceeded estimates and commodity producers gained. The Standard & Poor’s 500 Index rose 1.3 percent to 1,329.69 at 12:37 p.m. in New York.

Estimates for March existing home sales ranged from 4.59 million to 5.4 million, according to the median of 74 forecasts in the Bloomberg survey.

Paying Cash

The share of all-cash transactions is the highest since monthly tracking began in August 2008, Lawrence Yun, chief economist at the Realtors’ association, said at a news conference today in Washington. Yearly figures before 2008 showed the share at about 10 percent, Yun said.

Distressed properties, which include foreclosures and short sales, accounted for 40 percent of all deals last month, according to Yun. Purchases by investors climbed to 22 percent of transactions last month, up from 19 percent in February.

“This is part of the cleansing process that needs to occur,” Yun said, referring to distressed sales. “Home sales are strongest in the very-low price range” of less than $100,000, he said, reflecting the increase in demand by investors paying in cash.

Sales rose in three of four U.S. regions in March, led by an 8.2 percent gain in the South. The West fell 0.8 percent.

The median sales price fell 5.9 percent from March 2010 to $159,600 last month as less-expensive properties became a bigger share of the market. Sales of houses priced at $100,000 or less were up 9.6 percent from March 2010, compared with a 6.3 percent drop for the market as a whole, the report showed.

More Supply

The number of previously owned homes for sale climbed to 3.55 million. At the current sales pace, it would take 8.4 months to sell those houses compared with 8.5 at the end of the prior month. Supply in the eight months to nine months range is consistent with stable home prices, the group has said.

Federal Reserve officials, in a statement following their March 15 monetary policy meeting, said that while the “economic recovery is on a firmer footing,” residential real estate is still “depressed.” The central-bank committee is scheduled to next meet April 26-27 in Washington.

Home prices dropped in the 12 months to January by the most in more than a year, according to the S&P/Case-Shiller index of home values. In 20 cities, prices fell 3.1 percent, the biggest year-over-year decrease since December 2009, the group said March 29.


Some underlying home values are less than the mortgages on the properties. CoreLogic Inc. last month estimated that about 1.8 million homes were delinquent or in foreclosure, a so-called “shadow inventory” set to add to the 3.5 million existing homes already on the market.

Cheaper homes and distressed properties are making homebuilders pessimistic. Builders overall are not optimistic. The National Association of Home Builders’ confidence fell to 16 this month, according to the group’s gauge released this week. A reading under 50 means a majority of builders view conditions as poor.

KB Home, the Los Angeles-based homebuilder that targets first-time buyers, this month reported a bigger-than-expected loss for the quarter ended Feb. 28 as orders plunged.

“We do not anticipate a net profit for 2011,” Chief Executive Officer Jeffrey Mezger said during a conference call with analysts on April 5. “The economy is continuing to improve. Even so, this recovery has yet to include significant job growth and has not spilled over into housing.” (Bloomberg)

To search for properties visit:

Even as home seizures stall nationally with big banks facing a potential overhaul of the foreclosure system, California’s real estate agents want to see an alternative to foreclosure made simpler.

The short sale, in which a lender allows a borrower to sell their property for less than what is owed, remains doggedly difficult to do, the California Assn. of Realtors contends in an open letter published Thursday in seven major California newspapers, including the Los Angeles Times.

The real estate group is pushing for banks to approve more short sales and for regulators to streamline the process. The real estate agents argue that short sales are better for consumers and banks.

“We’re focusing the spotlight on short sales and calling on regulators, elected officials, nonprofits, business organizations, companies and individuals with a stake in California’s economic future to resolve this issue and others that get in the way of a recovery,” Beth L. Peerce, president of the Realtors group, wrote in the letter.

For a deeper look at some of the issues dogging short sales, take a look at this Times article on the subject published last year.


Mortgage rates changed little this week

Top Senate Republican blasts proposed foreclosure settlement

(LA Times)

Home sales are starting to tick up after the worst year in more than a decade!

But the momentum is coming from cash-rich investors who are scooping up foreclosed properties at bargain prices, not first-time homebuyers who are critical for a housing recovery.

The number of first-time buyers fell last month to the lowest percentage in nearly two years, while all-cash deals have doubled and now account for one-third of sales.

A record number of foreclosures have forced home prices down in most markets. The median sales price for a home fell last month to its lowest level in nearly nine years, according to the National Association of Realtors.

Lower prices would normally be good for first-time home buyers. But tighter lending standards have kept many from taking advantage of them. With fewer new buyers shopping, potential repeat buyers are hesitant to put their homes on the market and upgrade.

Cash-only investors are most interested in properties at risk of foreclosure. They can get those at bargain-basement prices.

Read more: