Filings fell 6% from April, the first month-on-month decrease since January, but the decline would have been bigger had it not been for the jump in bank repossessions in states like Michigan, Washington and New York.

RealtyTrac Chief Executive James J. Saccacio expects such seizures to keep rising “in the coming months as foreclosure delays and moratoria implemented by various state laws come to an end.”

The 321,480 filings, which also include default notices and scheduled auctions, was the third-highest month on record and equated to one in every 398 U.S. housing units. It has been above 300,000 for three straight months.

Nevada continued to post the highest foreclosure rate, with one in every 64 homes getting a filing. California was second with one in 144 units, while Florida was next at one in 148. Those states have been among the hardest hit by the housing downturn, with prices slumping as much as 50% in some areas from their peaks in mid-2006.

In metropolitan areas with at least 200,000 people, Las Vegas has the highest filing rate at one in 54 housing units. Its rate was up 78% from a year earlier. Areas in California and Florida made up the rest of the top 10, with Stockton, Calif., coming in second at one in 68.

DOW JONES NEWSWIRES
-By Kerry E. Grace, Dow Jones Newswires

Measured monthly, the average price fell 0.1 percent from March, the Federal Housing Finance Agency in Washington said today. The number was projected to drop 0.4 percent in April, according to the median forecast of 15 economists in a Bloomberg survey.

The housing slump has reduced the median price of an existing home 26 percent from the July 2006 peak, pushing affordability to near record levels. Prospective buyers are now being constrained by rising mortgage rates, the highest unemployment since 1983 and concern the housing rebound will be anemic.

While U.S. builders increased housing starts by 17 percent in May to an annual rate of 532,000, a May 26 report from S&P/Case-Shiller showed home prices in 20 U.S. metropolitan areas fell 18.7 percent in March from the same month last year.

All signs point to further declines. Yale University Professor Robert Shiller, co-founder of the S&P/Case-Shiller index, said earlier this month that prices will continue to fall, contributing to a prolonged recession.

Deutsche Bank AG analysts last week said that U.S. home prices may fall another 14 percent before reaching a bottom as an increase in the jobless rate offsets lower prices. The worse declined may hit the New York and Orange County, California, metropolitan areas, analysts led by Karen Weaver said.

Refinancing

Buyers and those seeking to refinance are also being sidelined as the 30-year fixed loan rate has risen this month to 5.74 percent, the highest since November, according to data from Bankrate.com.

The Federal Reserve is trying to keep rates low and spark a housing recovery by purchasing as much as $1.25 trillion in mortgage-backed securities to free up funding for home loans.

Home-loan rates fell to a record low twice in April helped by the Fed’s buying. Mortgage rates started climbing in May along with Treasury yields on investor concern that a greater supply of government debt being sold to fund federal spending will fuel inflation.

The average 30-year mortgage rate was 5.38 percent last week, down from 5.59 percent a week earlier, according to McLean, Virginia-based mortgage buyer Freddie Mac.

President Barack Obama has pledged to spend $275 billion to help keep as many as 9 million Americans in their homes. The government is also offering a tax break of as much as $8,000 for first-time homebuyers and incentives to lenders to modify delinquent home-loans.

Falling Behind

Those efforts may not be able to keep up with the rising number of Americans falling behind on their mortgages. U.S. foreclosure filings are forecast to hit a record 1.8 million in the first half of this year, according to RealtyTrac Inc., the Irvine, California-based seller of default data. Filings surpassed 300,000 for the third straight month in May, RealtyTrac said on June 11.

By Brian Louis and Kathleen M. Howley

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLU_yVWfAiFE

They’re out there waiting to steal distressed homeowners’ money while claiming to help them avoid foreclosure.

Arizona Attorney General Terry Goddard has seen a 30 to 35 percent increase this year in complaints about those offering to help with loan modifications or other foreclosure-prevention techniques. For the first time, bogus loan modifications rank among the agency’s top 15 most common scams.

“We believe, unfortunately, there are an awful lot that aren’t reported to our office, so it’s still an imperfect measure because we can only count the ones that actually are called or written in to the AG’s office,” Goddard said.The most common form of loan modification scam involves people promising distressed homeowners a lower mortgage interest rate, through either a reduction in principal or a reduction in monthly payment, Goddard said.

“They do little or nothing about it, and they take an advance fee,” he said. “So the homeowner is in worse shape than before and the person who’s committing the crime walks away with their money, and sometimes it’s a substantial amount of money.”

Last month, Glendale resident Bobby John Herrera was sentenced to five years in prison as the result of a mortgage loan assistance scam that victimized 47 Valley homeowners, including many in the East Valley, according to Goddard.

“He guaranteed his victims that he was going to reduce their (mortgage interest rate),” Goddard said. “We proved that he didn’t do a thing to help his victims and he charged them $1,235 each time, which in many cases was the last money they had and could have gone toward trying to get their mortgage straightened out. Hopefully that word ‘guarantee’ is something that warns many people that there’s something being promised that can’t be delivered.”

Larry Bush, regional spokesman for the U.S. Department of Housing and Urban Development, said his agency is well aware of the growing prevalence of these scams.

“We are concerned because homeowners are vulnerable,” he said. “We are seeing far too many cases of people being taken advantage of, and losing thousands of dollars and then not getting any help. If it sounds too good to be true, it is, and if they contacted you instead of you contacting them, be very wary.”

Legitimate, local housing counselors are available to help distressed homeowners free of charge, Bush said.

“If they are in trouble, they should explain that there’s an urgency to it, like they have a foreclosure notice … and they can often be given an appointment out of sequence in order to meet their urgent need,” Bush said. “Housing counseling agencies have the ability to call the lender on their behalf and discuss the loan with them if you authorize them to do that.”

Goddard recommends that homeowners who are facing foreclosure seek assistance directly from their mortgage lender or servicer, or government-certified housing counselor.

“The best thing you can do if you’re in trouble with your mortgage or you’re behind and need help is to talk to your lender,” he said. “There’s a misconception that you have to have an advocate, that you have to have somebody else approach the lender on your behalf, and that’s just not true. I know a lot of people have gone to these scam artists because they believed that they needed an advocate.”

HUD recommends troubled homeowners do seek the help of local housing counselors because they can help clear the confusion that can result from dealing directly with lenders, Bush said.

“Sometimes the lender will have sold the loan to someone else and they don’t have the authorization to make the modification,” he said.

Legitimate help is available:

A list of local, HUD-approved housing counseling agencies is available at www.hud.gov. Click on “buying” on the left, and then on “find a housing counselor” under Counseling and Education on the right.

At www.makinghomeaffordable.gov, distressed homeowners can find out if they qualify for loan modification programs. It also includes a list of local, HUD-approved housing counseling agencies.

http://www.eastvalleytribune.com/story/140761

After the largest growth in homeownership in history during the last 15 years, blacks and Latinos are now suffering their largest loss in wealth in modern history. And that erosion of wealth could lead to a second collapse in the national economy within a year.

This was the core message of a white paper released yesterday by the William C. Velasquez Institute. The report describes how this lost wealth– more than $200 billion during the last three years — could impede the economic recovery of the entire country if it is not addressed.

“What we found was, quite frankly,much more dramatic than any of us thought it would be,” said Albert Jacquez, a principal with Strategic Solutions Washington, who co-authored the study, “most importantly for the future –in the next year, 10 years, even 15 years as it relates to the emerging new class of potential homebuyers.”

Latinos and African Americans were 230 percent and 270 percent respectively more likely to get subprime loans. Nine million home foreclosures are predicted in the next two years and are expected to fall disproportionately on new black and Latino homebuyers, particularly in states like California, Texas, Florida and Arizona.

Baby boomers will soon be net home sellers, not homebuyers, said Jacquez. The demographics show the new homeowners will be Latinos, blacks and Asians. But without reforms, Jacquez said, they may not be in a financial position to take advantage of this opportunity.

“The secret is that we are by no means out of the foreclosure crisis,” said Dr. Raul Hinojosa, an instructor at UCLA and co-author of the paper. “All of the policies at the state and federal level are a fraction of what’s needed.”

The Obama administration has not done enough to address this crisis, Hinojosa said. The administration’s relief only affects 100,000 families, which he called “a drop in the bucket.” “The problem is that if you have a regulatory reform when your foundation is still crumbling,” he said, “it is really not going to make a difference.”

The report, “The End of the American Dream for Blacks and Latinos: How the Home Mortgage Crisis is Destroying Black and Latino Wealth, Jeopardizing America’s Future Prosperity and How to Fix It,” proposes policies to modify mortgage terms to help homeowners avoid foreclosures, provide a homebuyer’s tax credit that can be applied to down payments on new homes, and make available sustainable mortgages and refinancing for a new generation of homebuyers.

During the Great Depression, Hinojosa noted, homeownership was very low. Through programs created by the government in the 1930s, an entire generation of working-class people were able to buy homes. “The problem is 98 percent of those products went to white families,” Hinojosa said. “Blacks and Latinos were kept out.” What has to happen now, he said, is to create a new pathway for working-class and emerging middle-class families.

Researchers say the cost of doing nothing could be profound. “If we do not stop the impending mountain of foreclosures which are coming down the pike,” said Hinojosa, “we could really arrest the progress that the United States has had over the last 50 years in maintaining itself as a middle-class country.”

http://news.ncmonline.com/news/view_article.html?article_id=44dcc523f79d7b101774a7f5b93d8f51

Sales look like they could rebound soon, but you can’t say the same for prices.
By Janet Morrissey, contributor
June 19, 2009: 4:23 AM ET

NEW YORK (Fortune) — Sales in the decimated housing market may finally be bottoming, but don’t expect home prices to stop dropping before mid-2010 at the earliest, analysts and economists say.

Indeed, prices in the battered housing market could get a lot worse before they get better as an avalanche of specialized adjustable rate mortgages, known as option ARMs and Alt-A mortgages, are slated to reset over the next 18 to 24 months, and rising unemployment causes a surge in the number of prime mortgages going into default. All of this is expected to trigger another round of foreclosures and cause home prices to tumble at least another 20% before the market rebounds, according to market analysts and economists.

Market bulls believe home prices could bottom in the second half of 2010, but the bears warn it could be 2013 before they finally trough. And once prices do reach a low, it could be years before they significantly rebound.

“This is clearly the worst housing crisis since the Depression,” says John Burns, president of John Burns Real Estate Consulting. Losses from the housing meltdown totaled $3.6 trillion at the end of 2008, and will likely approach $5 trillion by the time the crisis ends, predicts Lawrence Yun, chief economist with the National Association of Realtors.

Nevertheless, there have been signs in recent months that the industry may be stabilizing — at least when it comes to sales. Consumer confidence in May shot up to its highest level in eight months, housing starts jumped more than 17% in May from the previous month, and most importantly, a recent report by the National Association of Realtors shows sales of existing homes climbed 2.9% in April.

“We are at or near bottom in terms of sales,” says Yun. “We are seeing strong buying activity, particularly in those boom and bust markets, where prices have declined significantly. Buyers are coming in and fighting over properties — there is multiple bidding in California and Florida.”

“Sales are the first indicator” of a bottom, concurs Elliot Eisenberg, a senior economist with the National Association of Home Builders. “Even though there’s more pain to come in certain markets and the prices may go down further and there’s more defaults ahead,” sales are going up, he says.

Bob Curran, managing director at Fitch Ratings, is a lot more cautious, noting that one month of gains doesn’t make a trend — existing home sales are still off 3.5% from a year ago. “You’d want to see a string of months — ideally three months — to say with confidence that a bottom has been reached,” he says.

Buying off the bottom
Much of the recent sales increase is related to distressed homes, as a stampede of homebuyers snap up properties in foreclosure or through short sales on the cheap. “Foreclosure sales have picked up pretty dramatically in the past four months,” says Alex Barron, a senior research analyst at Agency Trading Group Inc.

Yun estimates about 50% of current sales involve distressed properties, and he expects this trend to continue as foreclosures soar in the months ahead. About 2 million properties were in foreclosure in 2008, and he expects this number to climb to 2.5 million this year.

The foreclosure floodgates are expected to swing wider in the second half of the year as rates reset on option ARMs, and high unemployment triggers defaults on prime mortgages. Many of the option ARMS issued over the past few years were in markets that saw the biggest run-up in home prices and are now seeing the biggest corrections.

At the end of the first quarter, one out of eight U.S. households with a mortgage was either late on its monthly loan payment or in the foreclosure process, according to the Mortgage Bankers Association. Jay Brinkmann, chief economist with the MBA, says defaults among prime mortgages accounted for 50% of the increase in foreclosures in the last quarter.

The pending flood of foreclosures could mean buying opportunities for bargain hunters — as long as they’re prepared to hang onto the house for a number of years. “If you’re a renter who just missed this cycle and didn’t get in, right now is a great time to buy if your issue is the monthly mortgage payment,” says Burns.

Although prices may fall further, low mortgage rates and President Obama’s $8,000 first-time homebuyer tax credit make current prices attractive, especially in heavily-beaten down areas, such as California, Arizona, Nevada and California. “I think there are great deals out there,” says UBS analyst David Goldberg. “But you have to have a long-term time horizon.”

Some speculate that the pending surge in foreclosures and recent uptick in mortgage rates could push fence-sitting homebuyers, worried about rising rates, to jump into the market. Also, some home seekers may rush to score a bargain before the Obama Administration’s $8,000 credit for first-time homebuyers expires at year end. The tax credit has already helped to boost sales, especially in states, such as California, which are offering their own tax credit in addition to the federal one, says Curran.

Sales vs. prices
While sales may be increasing, home prices are a different story, in part because of rising interest rates and surging unemployment. The average rate on a 30-year fixed rate mortgage climbed to 5.59% last week — its highest since Dec. 11 — but retreated slightly to 5.38% this week, according to Freddie Mac. The nation’s unemployment rate spiked to its loftiest level in more than a quarter of a century in May at 9.4%. Burns is predicting the jobless rate will hit 12% by 2011.

National home prices plunged 19.1% in the first quarter, according to the Standard & Poor’s/Case-Shiller National Home Price index — the biggest quarterly decline in the index’s 21-year history. Home prices are off 32% on average from their peak in mid-2006. Average prices have not been this low since the fourth quarter of 2002, the Case-Shiller report says.

“We’re about two-thirds of the way through the pricing correction on a percentage basis,” says Joshua Shapiro, chief U.S. economist with MFR Inc., an economic consulting and analysis firm. He expects prices to slide at least another 20% over the next 18 months.

“There’s still pain to come in parts of Florida, California and Michigan, where there’s still a tremendous amount of oversupply,” says Eisenberg. “Prices will have to come down further and it will take a while to burn off the excess inventory that’s floating around there.”

Brinkmann expects to see prices start to rebound in 2011. While a bottom may be reached within the next year, it will be many months, and possibly years, before prices significantly come back. “I think that once prices bottom out, they’re going to stay flat for several years,” says Burns.