U.S. Home Foreclosures Hit Record High

(CBS/AP) Home foreclosures shot up to an all-time high in the third quarter, fresh evidence of the problems afflicting distressed homeowners amid the housing meltdown.

The Mortgage Bankers Association in its quarterly snapshot of the mortgage market released Thursday said that the percentage of all mortgages nationwide that started the foreclosure process jumped to a record high of 0.78 percent during the July-to-September period. That surpassed the previous high of 0.65 percent set in the prior quarter.

More homeowners also fell behind on their monthly payments.

The delinquency rate for all mortgages climbed to 5.59 percent in the third quarter. That was up from 5.12 percent in the second quarter and was the highest since 1986, the association said. Payments are considered delinquent if they are 30 or more days past due.

Homeowners with spotty credit who have subprime adjustable-rate loans were especially hard hit. Foreclosures and late payments for these borrowers also reached all-time highs in the third quarter.

The percentage of subprime adjustable-rate mortgages that entered the foreclosure process soared to a record of 4.72 percent in the third quarter. That was up from 3.84 percent in the second quarter. Late payments jumped to a record high of 18.81 in the third quarter, up from 16.95 percent in the second quarter.

The association's survey covers more than 45 million home loans nationwide.

The new figures came as President Bush, accused by Democrats and other critics of not doing enough to help stem the mortgage crisis, was set to unveil a plan Thursday that would allow some homeowners with certain subprime home loans to freeze their interest rate for five years. The plan aims to prevent some distressed borrowers from losing their homes. It also is intended to ease the danger facing the economy from a wave of foreclosures - something that would further aggravate problems in the housing market.

According to White House press secretary Dana Perino, not all subprime mortgage holders will qualify for the program. The government estimates about a million will get help, according to CBS News White House correspondent Mark Knoller.

Perino says no taxpayer dollars are being spent as part of the program.

Homeowners with spotty credit histories or low incomes who took out higher-risk subprime adjustable-rate mortgages have suffered the most distress as the housing market went from boom to bust.

Initially low interest rates that reset to much higher rates have clobbered these borrowers. Analysts estimate that nearly 2 million adjustable-rate subprime mortgages will reset to higher rates this year and next.

Doug Duncan, the association's chief economist, said in an interview with The Associated Press that foreclosures and late payments are likely to stay high or get worse in the coming quarters.

The mortgage meltdown has hit financial companies with billions of dollars in losses from bad subprime mortgage investments. Some lenders have been forced out of businesses. The situation has elevated the odds of the country falling into a recession. It has roiled Wall Street and has offered lots of fodder for Democrats and Republicans to blame each other for the mess.

Against this backdrop, the Federal Reserve next week is expected to slice a key interest rate for a third time this year to bolster the economy.

"

Real Estate Designers offers totally innovative solutions for your software
development, Internet programming,

real estate web design and hosting needs. Our service includes domain name
registration and real estate web design. Real Estate Designers provides the
complete solution including design, application development and marketing.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

"

source: cbsnews.com

Got Equity?

(CBS/AP) As homeowners struggling to meet mortgage payments listened to President Bush's plan to help some stave off foreclosure and remain in their houses, the Federal Reserve came out with a report containing a new riveting statistic.

The nation's central bank says the amount of equity that U.S. homeowners hold in their homes slipped in the third quarter to the lowest level on record, just above 50 percent.

In its quarterly U.S. Flow of Funds Accounts, the central bank reported that homeowners' percentage of equity dipped to 50.4 percent from 51.1 percent from the previous quarter. On average, housing is Americans' single largest asset.

Economists expect this figure, equal to the percentage of a home's market value minus mortgage-related debt, to tumble even further as falling home prices eat into equity. It could easily drop below 50 percent by the end of next year, some experts say, marking the first time homeowners will owe more than they own since the Fed started recording the data in 1945.

Home equity has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing - practices which can in turn push borrowers closer to the risk of foreclosure.

Home foreclosures shot up to an all-time high in the third quarter, weighing in at 0.78 percent, while the delinquency rate for all mortgages climbed to 5.59 percent - the highest rate in 21 years.

The degree to which Americans own their homes is considered to be a matter of concern because a decline in equity could slow retail spending as homeowners stop tapping into their home equity to fund purchases and bills.

Fast Facts

To stave off a possible recession, the Fed has sliced a key interest rate two times so far this year. A third rate reduction is expected when policymakers meet next week.
Consumer confidence is near a two-year low, attributed to housing problems, a credit crunch, high energy prices and turbulence on Wall Street.

The RBC Cash Index, released Thursday, shows consumer confidence clocking in at 65.9 in early December. That hovered close to a reading of 64 in November, which marked the worst showing since the devastation wrought by the Gulf Coast hurricanes in 2005.

"There's a great deal of angst out there," said economist Ken Mayland, president of ClearView Economics. "There is a great deal of fear and foreboding."

Over the past year, consumers' confidence has deteriorated sharply, reflecting the toll of the problems facing the economy. Last December, confidence stood at a solid 86.9. The index is based on the results of the international polling firm Ipsos.

Overall consumer sentiment remains at very low levels, said T.J. Marta, fixed income strategist at RBC Capital Markets. "Gasoline and oil prices are starting to slip but remain elevated. The stock market continues to struggle to make new highs. The housing situation remains dire."

The Federal Reserve is watching closely the way that consumers - a major force shaping overall economic activity - behave in terms of their spending and investing. The big worry among economists is that they will cut back sharply, throwing the economy into a recession.

Analysts say the odds of this happening have grown but economists, Fed officials and the Bush administration are still hopeful that such a situation can be avoided.

To stave off a possible recession, the Fed has sliced a key interest rate two times so far this year. A third rate reduction is expected when policymakers meet next week.

"

Real Estate Designers offers totally innovative solutions for your software
development, Internet programming,

real estate web design and hosting needs. Our service includes domain name
registration and real estate web design. Real Estate Designers provides the
complete solution including design, application development and marketing.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

"

source: cbsnews.com

Real Estate Group Lifts 2008 Outlook

(AP) Bucking conventional wisdom, a trade group for real-estate agents on Monday said the battered housing market is on the verge of stabilizing and inched-up its outlook for 2007 and 2008 home sales.

The revised monthly forecast from the National Association of Realtors, which followed nine straight months of downward revisions, calls for U.S. existing home sales to fall 12.5 percent this year to 5.67 million, the lowest level since 2002. Last month, the association predicted 5.66 million existing homes would be sold this year, down from 6.48 million last year.

The Realtors' group also forecast sales will rise slightly in 2008 to 5.7 million, up from last month's prediction of 5.69 million.

Numerous other economists, however, are far less optimistic than the trade group. They predict weak sales and falling prices through next year and beyond and emphasize that those problems could worsen if the economy sinks into a recession.

Patrick Newport, an economist at Global Insight, forecasts that home sales will drop from 5.66 million this year to 4.7 million in 2008, 1 million fewer home sales than the real estate group's forecast.

"With the economy and job growth slowing...it is hard to believe that we have hit bottom," Newport said in a note to clients Monday. "Our view is that prices need to drop further, and that housing activity will hit bottom about the middle of 2008."

Joel Naroff, chief economist for Commerce Bank, said the United States is 12 to 18 months away from a "normal housing market" in which sales are growing and prices are rising or stable. Furthermore, he said the trade group's 0.2 percent revision to its sales forecast should be taken with a grain of salt, given the difficulty of projecting with any certainty.

Nevertheless, the Realtors group's chief economist, Lawrence Yun, gave a positive outlook for job growth and the replacement of subprime lenders to borrowers with weak credit with government-backed loans as reasons for the improved outlook.

"Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases," Yun said at a press briefing. "Mortgage availability is improving."

Despite over-exaggerated negative coverage on the housing conditions, many local markets are actually seeing price increases.
Lawrence Yun, National Association of Realtors
While Yun acknowledged that housing prices soared relative to buyers' availability to afford homes in places like Miami and San Diego, he said housing "remains affordable in vast parts of the country," particularly in the Midwest.

The trade group also said its index that forecasts near-term home sales inched upward in October. The trade group's seasonally adjusted index of pending sales for existing homes rose 0.6 percent to 87.2 from an upwardly revised September index of 86.7, but was down 18.4 percent from a year ago, the third-largest year-over year decline on record.

The Realtors group also forecast the median price for U.S. existing homes -- the point at which half sold for more and half for less -- will sink by 1.9 percent to $217,600 this year and rise 0.3 percent next year to $218,300.

If median prices fall this year, it will be the first price decline in the nearly 40 years that the trade group has tracked that data.

Other ways to measure national housing prices, such as the S&P/Case-Shiller index, have already shown price declines.

In addition, a government index of national home prices marked a quarterly decline for the first time in 13 years in the third quarter.

Home prices dipped 0.4 percent nationwide in the July-September period, compared with the previous quarter, the Office of Federal Housing Enterprise Oversight said last month, citing weakening prices in much of the country.

Compared with the third quarter of 2006, U.S home prices posted an increase of 1.8 percent, but it was the smallest year-over-year increase since 1995, according to the agency, which oversees the big mortgage-finance companies Fannie Mae and Freddie Mac.

"

Real Estate Designers offers totally innovative solutions for your software
development, Internet programming,

real estate web design and hosting needs. Our service includes domain name
registration and real estate web design. Real Estate Designers provides the
complete solution including design, application development and marketing.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

"

source: cbsnews.com

Cracking Down On Subprime Mortgage Fraud

The terms of the loans may have been unusual. But for many of the immigrants who signed up for them, they were simply a way to afford the $300,000 and $400,000 new homes along streets with names like Rancho Encantado and a litany of saints.

"They had relatives that had bought houses. They went to the barbecue and they were seeing people enjoying this environment and people they trusted were doing it," says Aly Vizcarra, area head of the National Association of Hispanic Real Estate Professionals. "So they jumped in and got these exotic loans, and the thought process was: 'These values are going to keep going up. Once our payments change, we can sell it or refinance it.'"

Nor was that risk well understood across barriers of language and culture. For example, the propensity of Latinos to cosign on loans for relatives and even friends now snares some who would otherwise be on solid footing, says Eduardo Morales, a loan counselor with El Concilio, a nonprofit Spanish-speakers community center in Modesto.

Now, many here wonder if fraud is one of the roots of the housing bust here.

While the exotic mortgages - known as subprime loans - did offer many immigrants and low-wage earners a ladder up into the middle class, loan counselors in Modesto estimate that anywhere from 40 to 60 percent of people they help are victims of loan fraud.

Modesto is now aggressively cracking down on the problem. The local district attorney received 56 complaints last year; by June of this year, the number already stood at 42.

Nationally, mortgage fraud is one of the fastest growing white-collar crimes in the United States, the Federal Bureau of Investigation says. The number of pending FBI mortgage-fraud cases has nearly tripled since fiscal year 2003. The number of reports it received of suspicious activity related to mortgage fraud is up nearly sevenfold in the same period, totaling some $813 million.

"It's affecting every single class of homes: affordable homes, middle-price homes, upper-end homes, condos," says Ralph Roberts, a realtor and coauthor of "Protect Yourself from Real Estate and Mortgage Fraud." He estimates that in some markets, 40 to 50 percent of all transactions contain some element of fraud - a major driver, he believes, for the current housing bust.

Here in Modesto, the fraud runs the gamut of bogus appraisals, phony loan applications, forged titles, and foreclosure "consultants" taking advantage of desperate people, says Deputy District Attorney Marlisa Ferreira. "Sometimes, we are seeing with the Hispanic community that the salient points [in loan documents] aren't being translated."

The result is abandoned homes, leaving Modesto and other cities in the Central Valley boarding up homes and drafting other defensive measures against blight.

For all of Stanislaus County, the strain on government services has started to show. Housing counseling agencies were already short-staffed before the foreclosure wave, says Ana Rocha, an official in the county planning office. Code enforcement officers, fire departments, and the sheriff's office have gotten involved, particularly with blight issues. The district attorney's office now has three people assigned to loan-fraud cases.

"What we often see with mortgage fraud is that it's not an isolated incident," says Laurie Maggiano, a senior official with the Federal Housing Administration in Washington, Often, con men will target an entire group in a community, she adds. Generally speaking, people with limited experience in the home-buying process are the most easily victimized.


"

Real Estate Designers offers totally innovative solutions for your software
development, Internet programming,

real estate web design and hosting needs. Our service includes domain name
registration and real estate web design. Real Estate Designers provides the
complete solution including design, application development and marketing.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

"

source: cbsnews.com

Ohio Leads The Fight To Stop Foreclosures

Sylvia Figueroa's house is right out of a Norman Rockwell painting: the basketball rim on the garage door, an American flag flying from the front porch, looking out on the tree-lined street.

But she came dangerously close to losing her home to foreclosure when she fell $6,000 behind on her mortgage after her divorce. Before the bank could dispossess Figueroa and her two children, she went to the Neighborhood Housing Services of Greater Cleveland, which cobbled together state and county funds that will allow her to bring her mortgage up to date. "I was surprised," she says, grinning. "I thought I was going to be denied."

"We have a responsibility to deal with this unfolding crisis and we are looking for ways to do that," says Ohio Gov. Ted Strickland (D) in an interview.

However, the Ohio experience also shows the limits of what can be done. When Governor Strickland tried to get mortgage-service companies to sign a voluntary compact committing themselves, among other things, to giving a six-month notice before resetting mortgage rates, the companies refused. They say some elements of the compact probably violate Ohio truth-in-lending laws, credit-reporting laws, and a recently passed predatory lending legislation. Now the governor says he will seek to make the changes through regulations or legislation.

"We are not just going to sit back and let this unfold without doing everything in our power to ameliorate the pain and suffering," he says.

The scope of the work is daunting. While foreclosures are a national problem, they are three times the national rate in Ohio. Last year, the state found that foreclosures in 12 of the 13 largest Ohio counties increased by 25 percent over 2005 as an estimated 80,000 homes were foreclosed. The foreclosure wave is likely to grow because in the next year, $14 billion in subprime loans will reset.

Ohio's crisis was brought on by an economic downturn, fraud, and predatory loans. "It was the Wild West of lending," says Jim Rokakis, treasurer of Cuyahoga County, pulling out a chart detailing how one mortgage company, Argent, now a subsidiary of Citigroup, loaned $300 million more than the 8,000 properties were worth. "Maybe 40 percent of them or more are in foreclosure," he adds. "But, we've moved on to the next phase."

"

Real Estate Designers offers totally innovative solutions for your software
development, Internet programming,

real estate web design and hosting needs. Our service includes domain name
registration and real estate web design. Real Estate Designers provides the
complete solution including design, application development and marketing.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

"

source: cbsnews.com