US foreclosure rise 15%

http://www.straitstimes.com/Breaking...ry_403852.html

July 16, 2009

US foreclosure rise 15%


WASHINGTON - THE number of Americans on the verge of losing their homes soared by nearly 15 per cent in the first half of the year as more people lost their jobs and were unable to pay their monthly mortgage bills.

The mushrooming foreclosure crisis affected more than 1.5 million homes in the first six months of the year, according to a report released on Thursday by foreclosure listing service RealtyTrac Inc.

The data show that, despite the Obama administration's plan to encourage the lending industry to prevent foreclosures by handing out US$50 billion (S$72.7 billion) in subsidies, America's housing woes continue to spread. Experts don't expect foreclosures to peak until the middle of next year.

Foreclosure filings rose more than 33 per cent in June compared with the same month last year and were up nearly 5 per cent from May, RealtyTrac said.

'Despite all the efforts to date, we clearly haven't got a handle on how to address the situation,' said Mr Rick Sharga, RealtyTrac's senior vice president for marketing.

More than 336,000 households received at least one foreclosure-related notice in June, according to the foreclosure listing firm's report. That works out to one in every 380 US homes.

It was the fourth-straight month in which more than 300,000 households receiving a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes. Banks repossessed more than 79,000 homes in June, up from about 65,000 a month earlier.

On a state-by-state basis, Nevada had the nation's highest foreclosure rate in the first half of the year, with more than 6 percent of all households receiving a filing. Arizona was No 2, followed by Florida, California and Utah. Rounding out the top 10 were Georgia, Michigan, Illinois, Idaho and Colorado.

The Obama administration in March launched a US$50 billion plan to give the lending industry financial incentives to modify mortgages to lower payments, but it's off to a slow start.

As of early July, about 130,000 borrowers were enrolled in three-month trial modifications under the plan, and 25 mortgage companies have signed up to receive potential payments of up to US$18.6 billion, according to the Treasury Department. But analysts and housing counselors say it isn't having much of an impact. 'The plan isn't going well, at least not yet,' said Mr Mark Zandi, chief economist at Moody's Economy.com. 'It's a creative plan with lots of incentives, but it's very complex.' -- AP


BoA modifying 80,000 home loans

IN TESTIMONY prepared for delivery at a Senate hearing on Thursday, Bank of America executive Allen Jones said the company has about 80,000 loan modifications in the works under the new government guidelines, including some that aren't in the three-month trial phase yet.

'We have achieved this level of success by devoting substantial resources to this effort,' Mr Jones said, noting that the company has more than 7,000 employees handling calls and working on modifications. Industry experts, however, say the response from most mortgage companies has been lackluster.

'They've been slow to make sure they understand it and put all the processes and people in place,' said Mr Joel Lewis, vice president of financial services at Convergys Corp, which runs call centers for the financial industry and other companies.

A week ago, Treasury Secretary Timothy Geithner and Housing Secretary Shaun Donovan sought to ramp up pressure on the industry, saying in a letter to participating mortgage companies that the industry needs to 'devote substantially more resources to this program for it to fully succeed.' They also summoned mortgage executives to a July 28 meeting with top government officials.

Though the program was launched months ago, few companies are upgrading their computer systems to process loans rapidly, said Mr Bill Kelvie, chairman of Overture Technologies in Bethesda, Maryland.

'They need to automate the process, and they need better technology, and they need to do this quickly,' he said. -- AP

http://www.straitstimes.com/Money/St...ry_404264.html

July 17, 2009 Friday

1.5m homes in US face foreclosure

Housing woes continue to spread as more people become jobless


WASHINGTON: The number of Americans on the verge of losing their homes soared to a record in the first half of this year as more lost their jobs and were unable to pay their monthly mortgage bills.

More than 1.5 million properties received a default or auction notice or were seized by banks in the period, according to a report released yesterday by foreclosure listing service RealtyTrac.

The number of properties drawing such filings jumped 9 per cent from the second half of 2008 and almost 15 per cent from the first half of last year.

Despite the Obama administration's plan to encourage the lending industry to prevent foreclosures by handing out US$50 billion (S$73 billion) in subsidies, US housing woes continue to spread.

Experts do not expect foreclosures to peak until the middle of next year.

As many as 3.2 million households will get a foreclosure filing by the end of the year, said RealtyTrac's senior vice-president Rick Sharga.

Payment-option adjustable rate mortgages will contribute to higher defaults, he added. The option allows borrowers to pay less than the interest they owe each month, tacking on the difference to their total debt and creating the potential for bigger bills in the future.

About three-quarters of those loans will adjust to require higher payments next year and in 2011, with the peak coming in August 2011 when about 54,000 loans recast, according to data from First American CoreLogic.

Last month, as home prices continued to fall, foreclosure filings rose 5 per cent from May and 33 per cent from a year earlier. June's foreclosure activity was the third-highest on record, and the fourth straight month of filings on more than 300,000 properties.

At the Federal Reserve's June meeting, central bankers were less certain than they were in April over how the US economy will emerge from the recession.

Policymakers have differing assessments of how quickly credit markets will heal, and how effective a US$787 billion fiscal stimulus and US$1 trillion expansion of the Fed's balance sheet will be, according to the Federal Open Market Committee minutes released on Wednesday.

The range of unemployment forecasts for next year widened in June to between 8.5 per cent and 10.6 per cent, a 2.1 percentage point gap, from between 8 per cent and 9.6 per cent in April.

The range of projections for 2010 growth showed a gap of 3.2 percentage points, up from a 2.5 percentage point divide in April. The lowest forecast suggests the economy will grow just 0.8 per cent from this year's fourth quarter to the final quarter of 2010; the highest projects 4 per cent growth.

'The wide array of estimates...suggests that we really don't know how this economy is going to unfold in the coming months, let alone two years from now,' said Mr Richard Yamarone, head of economic research for Argus Research Corp.

ASSOCIATED PRESS, BLOOMBERG, REUTERS