Obama Administration Releases June Housing Scorecard

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WASHINGTON, DC – July 4, 2011 – (RealEstateRama) — The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the June edition of the Obama Administration’s Housing Scorecard– a comprehensive report on the nation’s housing market. The latest housing data offer continued mixed signals as home prices turned slightly upward, though showed continued strain from foreclosures and distressed homes. As more homeowners secure mortgage relief, fewer borrowers entered the foreclosure pipeline in June. The full report is available online at www.hud.gov/scorecard.

“The housing data in this month’s Scorecard paint a mixed picture of the housing market, despite growing evidence of progress in the broader economy,” said HUD Assistant Secretary Raphael Bostic. “Last month we saw a slight uptick in home prices and a continued decline in mortgage defaults as our foreclosure prevention programs reach more borrowers upstream in the process. But we have much more work to do to reach the many households who still face trouble and to help the market recover. That is why this Administration continues to push for effective implementation of our recovery programs as we continue to help homeowners through this crisis.”

“The Administration remains committed to reaching homeowners who are still struggling so that our country can fully recover from an unprecedented housing crisis,” said Treasury Assistant Secretary for Financial Stability Tim Massad. “The Administration’s programs continue to benefit tens of thousands of additional homeowners every month, while keeping the pressure on mortgage servicers to offer more sustainable assistance to prevent avoidable foreclosures.”

The June Housing Scorecard features key data on the health of the housing market and the impact of the Administration’s foreclosure prevention programs, including:

· Fewer homeowners are falling into foreclosure as the Administration continues to push servicers to provide more effective assistance to troubled borrowers. In May, 4.3 percent of mortgages were at least 30 days late – a significant decline from the peak of 5.9 percent seen in 2010. Moreover, seriously delinquent mortgages – those at least 90 days late or in foreclosure – dropped by 22 percent from a high of 1.9 million recorded last year. As new delinquencies decrease across the nation, the number of new homeowners seeking assistance through the Administration’s programs may also decrease.

· The Administration’s recovery efforts have helped millions of families deal with the worst economic crisis since the Great Depression. Nearly 5 million modification arrangements were started between April 2009 and the end of April 2011. While some homeowners may have received help from more than one program, the total number of agreements offered continues to more than double the number of foreclosure completions for the same period (2.1 million). In May, more than 32,000 additional homeowners received a permanent modification through the Administration’s Home Affordable Modification Program (HAMP); more than 730,000 homeowners across the country have received a HAMP permanent modification to date, reducing their mortgage burden by over $6.8 billion. Even as new delinquencies begin to fall, eligible homeowners entering HAMP have a high likelihood of securing a permanent modification and realizing long-term success – the rate of modifications moving from trial to permanent is up to 71 percent, and the average time to convert from a trial to permanent modification is down to 3 1/2 months. View the May HAMP Servicer Performance Report

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1 COMMENT

  1. RE: July 4th Treasury and HUD announcement of the Housing Scorecard for June, stating “more than 730,000 homeowners across the country have received a HAMP permanent modification to date, reducing their mortgage burden by over $6.8 billion” Sounds rosy but this figure is misleading… if instead of temporary reduced payments you calculate mortgage burden as the total amount owed on a mortgaged loan, the mortgage burden is being *increased* under HAMP. HAMP mortgage mods are creating loans that are even more underwater, some even ending with balloon payments at the end.

    After the economy began to sour in the early 2000’s and people were already experiencing the loss of jobs, equity and savings, some entered into loans with the promise that they could refinance when their incomes recovered or their scores were higher. However, when the economy finally tanked on Bush’s watch, it wasn’t just home values that plummeted but also average middle-class household income as good jobs were lost and replaced with part-time or under-employment.

    Once again we have a situation where the finance industry (and the the Obama administration) says that the situation is temporary, so it’s OK that people are accepting loans that are 120% over fair market value (FMV). The problem is that it is not OK: we are deferring a problem that is going to lead retirees into homelessness when they can’t afford to payoff bloated mortgages that took all of their equity through principal *increases*. HAMP included a option for principal reduction to be used in cases when loan amounts are higher than the FMV, but in our research we have been unable to find a single HAMP modification that employed a principal reduction. We know of one case where a HAMP modification offer was 160% of FMV. We have to ask why HAMP didn’t make principal reduction a requirement instead of an option, especially since the ‘cramdown’ bill was killed in Congress in April of 2009.

    There are also current loan performance figures showing that modified loans are already failing… is it any surprise that homeowners are engaging in a well-known and accepted corporate strategy of effective breach (AKA strategic default), now that it’s clear that property values won’t be increasing for a long, long time?

    A more enlightened administration would appreciate that in the long-term, creating loans that are below current FMVs would not only help homeowners stay in their homes, but also help investors with creation of stable cash flows and the real estate market through putting real estate values on solid footing. Meanwhile, in the absence of a real solution to the current problem, the portfolio of millions of delinquent loans that haven’t been foreclosed upon creates continuing uncertainty for the housing market, causing continued softness in property values, excess inventory of vacant or unsold homes and a depressed construction industry.

    Of course. what prevents a valuation fix from happening is the counter-intuitive reward system set up for mortgage loan servicers, who get paid fees based on the size of loans they are servicing, not on the actual cash flows. Some of the largest financial institutions like JP Morgan Chase own some of the largest servicers like EMC, who strangely are doing very well in spite of the ‘mortgage crisis’. It’s said that there are five lobbyists for every person in Congress. Pat those lobbyists on the back, Treasury – they’re doing a GREAT job!

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