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Earlier this week, the Treasury Department released its monthly progress report on the government’s Home Affordable Modification Program (HAMP). Included in the Treasury’s latest installment is a new section detailing the performance of loans permanently modified through the HAMP initiative.

In commentary published Wednesday, analysts at the research firm Barclays Capital took issue with the Treasury’s calculations of redefault rates, primarily because the numbers appear to be cooked to imply greater success since cancelled modifications – both trial and permanent – are not factored into the equation. This same point was brought up by a number of DSNews.com readers who also perused the data with a discerning eye.

“We find that the data as reported in this table are misleading and fail to capture the full magnitude of redefaults from these modifications,” Barclays said.

According to Treasury’s assessments, the redefault rate (90 or more days past due) for homeowners in permanent modifications for at least six months is 1.7 percent. The report states that fewer than 6 percent of the permanently modified loans at the six-month mark are 60 days past due.

Treasury’s table outlining the performance status of modified loans, on page 3 of the HAMP progress report, shows loans that are 60-plus and 90-plus days delinquent at the end of 3,6, and 9 months by quarter of modification. The report also states that 8,628 loans have been cancelled from the permanent HAMP modification stage due to the borrower’s failure to fulfil payment obligations. Digging farther into the delinquency buckets, Barclays estimates that 8,205 permanently modified loans have fallen behind on the payments by at least 60 days.

“We believe that the total number of loans that have gone bad after the permanent mod stage is probably closer to the 60-plus loans estimated above, plus the cancelled permanent modifications, which more than doubles the absolute number from 8,205 to 16,833 bad loans,” Barclays’ analysts wrote. “The report does not contain enough information to allow us to calculate true redefault rates by quarter of modification, but we would expect them to exceed the level reported” by the Treasury, Barclays said.

The research firm also says it can be argued that to measure redefault rates more accurately and make them comparable with pre-HAMP redefault rates, the Treasury should include trial cancellations related to non-payments.

According to Barclays, adding back in trial failures and redefaults on other alternative mods offered to HAMP applicants could increase the redefault rates by 25-30 percentage points.

Barclays says the reporting of mod performance in the HAMP scorecard takes the tradeoff of mod rates vs. redefault rates to an extreme. Removing 90-plus permanent mods from the delinquency calculation and basing the calculation only on successful modifications makes the redefault rates look too low, the research firm explained.

The analysts at Barclays say their opinion is that the data presented by Treasury continue down the same path by taking deeply delinquent borrowers out of the performance calculation and showing lower delinquency rates as a result.

“Given the nature of reporting available for most HAMP mods in loan performance, where only permanent mods are reported, we find that a more consistent approach is to use mod rates based on permanent mods and redefaults from permanent mods,” Barclays wrote.

“On that definition, we believe that our base case expectation of about 60 percent lifetime redefaults on HAMP are still adequate,” the analysts wrote, although they noted that overall redefaults from HAMP “will be better than from prior mods.”

A recent study by Fitch Ratings makes projections along those same lines. The agency is expecting HAMP-modified loans to redefault at a rate of 55 to 75 percent.

By: Carrie Bay

http://www.dsnews.com/articles/barclays-argues-treasury-report-on-hamp-redefaults-is-misleading-2010-07-21

 FHA loans are a popular and affordable option for first time homebuyers. FHA does not originate loans but rather insures lending institutions against defaulting home borrowers. FHA loans offer potential homebuyers low interest rates, low down payments, and flexible qualifying requirements. Plus, these loans are not difficult to obtain. The FHA even offers homebuyers the opportunity to purchase foreclosures and short sales that are in dire need of repair.

The Federal Housing Administration was established in 1934, in the heart of the Great Depression. During that time, unemployment peaked nationwide; residential and commercial construction was either stagnant or declining; loans were very difficult to obtain; and homeownership was a near impossibility with only 4 in 10 Americans owning a home of their own. In an effort to offset these dismal circumstances, the government founded the Federal Housing Administration. It is the only government agency that is completely self-sustaining, in other words taxpayers need not contribute a penny. The FHA helped by qualifying homebuyers for lending institutions and insuring those institutions against any loss in principal should a homebuyer default on his or her loan. Since its inception, the FHA continues to help families realize the American dream of homeownership.

The FHA has certain requirements a potential homebuyer must meet in order to qualify for an FHA loan. First, the FHA requires a history of at least two years of steady employment, preferably with the same employer. It also requires that income over the previous two years has either remained constant or increased. Second, the FHA takes into account the home borrower’s credit history and overall credit score. The credit history should not contain more than two thirty-day late payments in the previous two years. A credit score of 620 or higher is also required. Third, any bankruptcies should be at least two years old, provided the home borrower has had perfect credit since the bankruptcy discharge, and any foreclosures must be at least three years old with perfect credit since. Finally, although the amount of income earned is of little consequence, the new mortgage payment cannot exceed 30% of the home borrower’s total gross income, which is income earned before taxes.

These qualifications help the Federal Housing Administration determine if a potential homebuyer is a good risk for the lending institution. The FHA charges home borrowers one half a percentage point for insurance on their property. This insurance allows the approved lending institution to offer the FHA loan to the home borrowers at a lower interest rate than it would have otherwise. Case in point: while most conventional financing require a minimum down payment of 20% of the purchase price of the property, an FHA loan requires as little as 3.5% on a down payment. That is a $16,500 difference on a home purchased for $100,000. Not only can a potential homebuyer qualify with a less than perfect credit score, but the Federal Housing Administration is also open to different sources of credit for those borrowers who have yet to establish a credit history. Such alternative sources of credit include utility bills and cell phone bills. The FHA could help potential homebuyers by contributing up to 6% in closing costs. It allows co-signers and guarantors who do not have to reside in the home, such as out-of-state in-laws, to sign on the loan.

Moreover, FHA loans are not limited to conventional home purchases. FHA offers loans to home borrowers who would like to purchase a foreclosure or short sale that require potentially extensive repairs and improvements. The FHA 203(k) loan allows home borrowers to finance repairs that are necessary in order to meet inhabitability standards. Due to the increased availability of foreclosure, short sale, and bank-owned properties, many of which are targets of vandalism, rodent infestations, and out of control vegetation, the FHA 203(k) is gaining in popularity. The qualification process for this special loan is the same as that of other FHA insured loans, as aforementioned. If a potential homebuyer is interested in a FHA 203(k), first he or she should obtain a preapproval from an FHA-approved lending institution. After a home borrower is preapproved for a maximum loan amount and has located a property that requires renovation, then the home-improvement costs are added to the “as-is” appraised value of the property, which cannot exceed the maximum loan amount as stated in the preapproval letter. A licensed, professional contractor must provide the potential homebuyers invoiced estimates for any repairs and improvements on the property. The FHA 203(k) allows homebuyers to purchase a fixer-upper and complete necessary repairs before they move into their new home.

FHA loans provide first time homebuyers the opportunity to realize the American dream of homeownership. First-time homebuyers also have the opportunity to purchase a foreclosure, short sale, or bank-owned property, which are not only widespread in today’s economy, but also require improvements to deem livable.

Although FHA loans offer the most incentives for first-time homebuyers, they are not limited to first timers. If a homebuyer can afford the monthly payments and meet the other requirements as outlined above, then FHA loans are also viable option for 5^th time homebuyers. The Federal Housing Administration offers many good opportunities for home purchases; the key is knowing how to take advantage of them.

Posted By: Vanessa Rodriguez

http://www.freerateupdate.com/fha-loans/what-does-fha-have-to-offer-more-than-you-think-5874

Fannie Mae and Freddie Mac are beginning to initiate foreclosures at a faster pace.

According to a new study from Lender Processing Services (LPS), GSE foreclosure starts have been accelerating and are currently at all-time highs. From May to June, foreclosures initiated by Fannie and Freddie jumped 21 percent.

The GSEs’ prime borrowers are performing the worst. Foreclosure rates among the agencies’ prime loans have soared nearly 400 percent since January 2008, with a notable hastening tracked over the last two months, LPS reports. That increase is second only to the swell seen in non-agency “jumbo” mortgages, for more than $729,750.

LPS says the recent momentum in GSE foreclosure starts coincides with Home Affordable Modification Program (HAMP) cancellations, with most of the volume concentrated in the very late stages of delinquency (six-plus months).

The latest HAMP statistics from the Treasury showed an extremely elevated number of cancellations from trial plans, as many borrowers who received temporary modifications have not been able to verify their income or have missed trial payments.

As of the end of June, 520,814 HAMP trials had been cancelled – more than have been converted to permanent status. In addition, 8,823 permanent modifications have been cancelled under the federal program.

In contrast, LPS says foreclosure starts have remained relatively stable over the last several months for the rest of the industry. The company puts the overall foreclosure rate as of the end of June at 3.65 percent, but notes that foreclosure inventories are still elevated.

According to LPS’ market data, total foreclosure starts for 2010 are at 1,456,000. That stat is lower than 1,682,000 for the same period in 2009, but up from 1,245,000 in the first half of 2008.

By: Carrie Bay

http://www.dsnews.com/articles/lps-data-shows-gse-foreclosure-starts-are-accelerating-2010-07-27

  A smaller percentage of U.S. homeowners were saddled with "underwater mortgages" in the second quarter as more homes entered the foreclosure process even as price declines slowed, real estate Web site Zillow.com said on Monday.  

 Fewer homeowners with so-called underwater mortgages, where the amount owed on the mortgage exceeds the home's value, is nevertheless a positive for the housing market as it could portend fewer defaults and foreclosures down the road.  

 The percentage of American single-family homes with mortgages in negative equity fell to 21.5 percent in the second quarter from 23.3 percent in the first quarter and 23 percent a year ago, according to the Zillow Real Estate Market Reports.  

 These underwater mortgages are one of the biggest banes of homeowners since negative equity makes many of them unqualified for home loan refinancing and prevents some from selling.  

It is too soon to say for sure, but this could be the first indication that the national home foreclosure rate is going to start slowing down.  Another quarter of improvement will give us a better indication if this is an actual trend.  

New Buyer Tax Credit:   http://www.southfloridahomesolutions.com/Blog/New-6500-Home-Buyer-Tax-Credit-Approved-2011 

 Have An Awesome Thursday!  

"Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen."
Winston Churchill

Your action for today is to make a communication that you are uncomfortable in making.

Have an extraordinary day!

200,000 Loan @ 5%  =  NEW (MMI) Is going to only hurt the Buyer/Consumer ONLY!
Now - 94.00 , After Seprt.7 152.00 , Future 261.00 a month! = 167.00 more per month. How does this help anyone but the Congress/FHA?

  A smaller percentage of U.S. homeowners were saddled with "underwater mortgages" in the second quarter as more homes entered the foreclosure process even as price declines slowed, real estate Web site Zillow.com  said on Monday.  

 Have An Awesome Thursday!  

Obstacles can't stop you. Problems can't stop you. Most of all, other people can't stop you. Only you can stop you."

  Have an extraordinary day! 

Author, Jeffrey Gitomer