Obama’s help for Homeowners; nothing but another propaganda myth…

Foreclosures down slightly, but no signs of stabilization yet for homeowners.

Anyone hoping for a housing bottom will likely be discouraged by the RealtyTrac’s foreclosure report this morning. U.S. foreclosure filings topped 300,000 for the third straight month in May and are expected to hit a record 1.8 million by the end of the first half of the year. The number of filings fell 6 percent from last month,

“but as foreclosures continue to mount there are clear signs that the banks aren’t buying into President Obama’s mortgage rescue plan.” (Let’s rephrase that comment to read: Obama isn’t insisting the Banks we Bailed out give homeowners ALL the help they need to keep their homes.)

When President Obama announced the program earlier this year with great fanfare, he promised to save the homes of 9 million people, but based on the steady flow of new foreclosure filings, the banks are not cooperating. Once the cramdown provision — which would have given bankruptcy courts the ability to reduce the principal of mortgages underwater —

“was killed by the Senate, there were no teeth in the Obama plan.”

Living at ground zero of the toxic assets (my area, Orlando/Kissimmee, was eighth on the metropolitan area foreclosure list this month), the evidence is in front of me that foreclosures continue to mount. Real estate sales people tell how foreclosed homes that sold for $200,000 or more just a couple of years ago are now being sold for less than $80,000 by the banks.

If banks are willing to take that much of a loss after the expense of foreclosure, wouldn’t some adjustment in the value of the home to avoid foreclosure be more cost effective? But so far banks have resisted any type of loan program that requires them to adjust the principal amount of the mortgage.

Job losses and falling property values continue to delay the housing recovery as more homeowners are unable to pay their mortgages or sell their homes. Unemployment is now up to 9.4 percent and many expect it could still climb higher.

The mortgage crisis, which at first impacted primarily subprime loans, is now hitting prime borrowers. About 29 percent of loans that entered the foreclosure process were prime, fixed-rate mortgages, according to the Mortgage Bankers Association. Homes in some stage of foreclosure totaled 3.85 percent of all loans in the first quarter, up from 2.47 percent a year earlier.

“The numbers are getting bigger and that’s what is bothering me,” Patrick Newport, an economist at IHS Global Insight told Bloomberg. “You have banks holding these toxic loans, which means bank balance sheets are in even worse shape with the increase in delinquencies.”

Nevada, California and Florida continued to outpace the rest of the country in foreclosure filings. Nevada had the highest foreclosure rate, one in every 64 households, which is more than six times the national average. California was second at one in 144 households followed by Florida at one in 148 households. Arizona was fourth with one in 158 households and Utah was fifth with one filing per 316 households. The areas with the biggest jump in number of foreclosure filings were Michigan, Washington and New York.

The city with the highest foreclosure rate was Las Vegas, with one in every 54 households getting a notice, which is up 78 percent from a year ago. California has six cities among the top 10, and Florida has three.

Lita Epstein has written more than 25 books including The 250 Questions You Should Ask to Avoid Foreclosure.
Link

A typical homeowner’s plight reflecting the recidivism of Obama’s lofty rhetoric failing to translate into reality.“I just laughed,” Ms. Ulery said. “It was a really good deal for them.”

“These (Banks) are the same people you couldn’t trust before.”

MESA, Ariz. — She had seen the advertisements for the new government program offering relief. She had heard President Obama promise that help was on the way for homeowners like her, people who had lost jobs and could no longer make their mortgage payments.

But when Eileen Ulery called her mortgage company — Countrywide, now part of Bank of America — the bank did not offer to alter her mortgage. Rather, the bank tried to sell her a new loan with a slightly lower monthly payment while asking her to pay $13,000 toward the principal and a fresh $5,000 in fees.

Her problem was that she did not yet present a big enough problem to merit aid.

Yes, she was teetering toward delinquency. She was among millions of homeowners rapidly sliding toward danger for whom the Obama administration had devised an aid program — some already in foreclosure proceedings, others headed that way as they ran out of means to make their payments. But unlike those in imminent peril of losing their homes, Ms. Ulery had never missed a payment.

“I don’t know who this bailout is helping,” she said. “We’ve given these banks all this money and they’re not doing what they say they’re doing. Something’s not working right. They keep saying they’re doing all this, but we don’t see it down here at this level.”

More than three months after the Obama administration outlined a new program aimed at rescuing millions of distressed homeowners by compensating banks that modify mortgages, Ms. Ulery’s experience illustrates the mixture of confusion, frustration and limited assistance that now reigns.

Through many months of wrangling over the fate of the financial system, with hundreds of billions of taxpayer dollars dispensed on bailouts, distressed homeowners have waited for their own rescue amid talk that it was finally on the way. Modifications of so-called subprime and Alt-A mortgages — those made to people with tarnished credit — actually fell by 11 percent in May from April, according to research by Alan M. White at Valparaiso University School of Law.

A Treasury spokeswoman, Jenni Engebretsen, confirmed that homeowners like Ms. Ulery — current on their mortgages yet grappling with a hardship like unemployment — were eligible for loan modifications under the program. She said mortgage servicers had offered to modify more than 100,000 loans since the department announced the program.

But how many loans have been modified? Ms. Engebretsen declined to say, noting that the Treasury was working with mortgage companies to “fine-tune reporting systems.”  (If you believe that- the Brooklyn Bridge is still up For Sale..)

A spokesman for Bank of America Home Loans, Rick Simon, confirmed that the bank offered Ms. Ulery refinancing and not loan modification. The bank is now focusing on modifications only for those borrowers “who are already in severe threat of foreclosure,” he said.

“We’re still putting the systems in place to handle people who are current on their loans,” Mr. Simon said, declining to say how many loans Bank of America had modified. “It’s still very, very early in the program.”

Ms. Ulery, 63, is the face of the latest wave of troubled American homeowners, a surge of people in financial danger not because of reckless gambling on real estate, but because of lost income.

Far from being one of those who used easy-money loans to speculate on homes proliferating across the desert soil of greater Phoenix, she has lived in the same modest, stucco-sided condo in suburban Mesa for a dozen years. She bought the two-bedroom home in 1997 for $77,500.

For two decades, she worked as an executive assistant at nearby Arizona State University, bringing home more than $1,000 every other week — enough to pay the bills.

Round-faced, wry and given to staccato bursts of laughter, Ms. Ulery regularly visits yard sales, seeking out plates and patchwork quilts for her collections. She takes pleasure in her two grandchildren and her beagle. She enjoys an occasional glass of wine, favoring a $6 merlot that comes in a screw-top bottle.

“I’m not an extravagant-type person,” she said. “I see these big houses all around, and they’re beautiful, but I’m comfortable in my little condo.”

Like tens of millions of other American homeowners, she added to her mortgage balance as the value of her condo swelled, at one point exceeding $200,000. She refinanced to pay off some credit cards and settle into a 30-year, fixed-rate loan. Later, she took out a home equity line of credit to buy a new Hyundai. She refinanced again in 2007, borrowing $20,000, mostly for a new roof.

page 2 of her story

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Filed under Bank Bail Outs, Obamanation, mortgage meltdown

Tags: Bailouts, banks, foreclosures, homeowners