MBA lowered its home mortgage lending forecast for the year 2009 by 27 percent because of expected slowdown in home loan refinancing.

The bankers said they now expect only $2.034 trillion worth of home loans approved throughout 2009 for single- to four-family houses, a big drop from their $2.780 trillion forecast announced in March. In March, when mortgage rates kept falling, expectations were high among bankers and real estate professionals that large numbers of homebuyers will obtain loans and that homeowners will refinance under the federal repo property prevention program.

In 2008, loan originations reached $1.617 trillion, a significant drop from the total of $3.812 reached in 2003, the year a steep drop in mortgage rates led to record loan refinancing numbers.

In April and May, many homeowners were enticed to refinance their loans under the federal repo property prevention program because of record low mortgage rates – less than 5 percent – during these months.

Recently however, mortgage rates increased to around 5.25 to 5.5 percent for fixed-rate 30-year traditional mortgage loans for borrowers with excellent credit records. An increase in mortgage rates lowers the number of homeowners who could gain from loan refinancing.

In the meantime, the bankers observed that the volume of loan refinancing under President Obama’s repo property prevention program has slowed down due to the uptick in mortgage rates. The loan refinancing portion of the federal program was meant to help homeowners whose home loans were guaranteed by either Fannie Mae or Freddie Mac.

The bankers contend that while more loan refinancing applicants under the federal repo property prevention program could increase in the coming months as more helpful initiatives are launched by administration officials to step up the program, they could not find other factors that would increase home loan refinancing to the level they originally envisioned.

They added that the rise in mortgage rates is expected to discourage hesitant homebuyers to pursue home purchase plans while the drop in home prices would reduce the book value of home loans.

Last week, rates for fixed-rate 30-year conventional home loans increased to an average of 5.42 percent, an increase from the average 5.38 percent the previous week. Housing analysts are concerned that the rise in rates would discourage troubled homeowners to refinance under the federal government’s repo property prevention program.

Brookings Institute’s national study tracked various economic indicators in the country’s 100 biggest metropolitan areas.
According to the study, McAllen is the only city across the country that experience growth in the total value of services and goods during the first three months of this year, when recession was at its all-time low. The study tracked the performance of various economic indicators in 100 biggest metropolitan areas in the country.

The study showed that while there was no city that has not been affected by the economic downfall, recessional problems have been distributed unevenly across major cities in the country.

Brookings Institute researcher Howard Wile said that the effect of the economic recession in different areas suggests that they have different needs. He added that cities that have been severely affected by the recession need additional state funds.

The study monitored major cities? unemployment rate, employment, housing prices, gross metropolitan product, wages and the number of repo homes that remained on the market after the auction, to determine the area’s economic strength. Six cities in Texas made it to the top 20 metro areas that have positive economic performance.

Meanwhile , foreclosure home sales in McAllen fell below the previous year’s rate and the number of repossessed home filings continues unabated across the city’s real estate market. But the city’s overall performance is better off than others, indicating that the market is showing some signs of stabilizing.

The city outdid the national average in terms of economic indicator performance, except in unemployment which surged by 10.1 percent in January of this year, then started declining again until in May when it increased by 9.4 percent.

In May, job losses were reported mostly in production and manufacturing sectors while the city’s nonagricultural unemployment rate, inflation-adjusted sales in retail and inflation-adjusted wages continue to fall this year.

On the other hand, housing prices in McAllen increased by 2.3 percent in the first quarter of this year compared with last year. However, overall prices were still lower than their peak prices because of the flood of repossessed home in the area.

The analysts said that the Obama administration’s Making Home Affordable program was crafted to address the issue of subprime lending, which was considered the main cause of the first flood of foreclosures.

But most borrowers applying to get help under the government foreclosures program are being rejected because their reduced monthly income do not qualify them for loan modification schemes.

Michael van Zalingen, head of homeownership services at the nonprofit group Neighborhood Housing Services of Chicago, said that the government foreclosures program was designed around the subprime lending model and not the unemployment model.

Van Zalingen said that while the government foreclosures program gives cash incentives to lenders to lower monthly payments to 31 percent of borrowers’ monthly income, around 45 percent of over 900 borrowers his organization had counseled in two recent events do not have adequate income to make their monthly loan payments. Even if the borrowers’ mortgage rates were reduced to 2 percent and their loans were extended to longer terms, the reduced monthly payments would still get unpaid because the borrowers do not have the income to make the payments.

Van Zalingen also said that around 27 percent of homeowners who called the Hope Now hotline from April to June were unemployed, an increase from the 9.7 percent of callers in last year’s second quarter.

Federal officials running the government foreclosures program said they are currently evaluating the program and are considering ways to address the unemployment problem.

One of the schemes being considered is a forbearance scheme that would enable homeowners to defer monthly loan payments while they find jobs.

Federal officials also said they are considering giving additional incentives to lenders to work out forbearance schemes for unemployed borrowers who have good chances of re-employment.

Other suggestions being considered are provision of short-term loans for homeowners who have been laid off, provision of funds for missed monthly payments for a limited period of time and provision of some leeway to borrowers who are getting re-employed soon.

However, despite the unemployment problem, according to Obama administration officials, the government foreclosures program has been getting positive results. They said over 200,000 mortgage loans have been modified and that 20 mortgage servicers have been increasing their efforts in working out affordable payment schemes for borrowers.

There are already 337 foreclosures filed in Wichita County in the first six months of the year, an increase from the 267 foreclosures filed in last year?s first six months. Since 2007, when the first half had 201 foreclosures, the six-month foreclosure total has been increasing.

On a month-over-month basis, the number of foreclosure filings in Wichita County increased in each of the first six months of 2009.

At current foreclosure rate, more homes are set to get included in foreclosure auction listings in Wichita Falls compared to last year, which had a total of 571 foreclosed units. In 2007, there were 432 foreclosed properties, some of which were sold in foreclosure auction events.

Housing analysts in Texas said Wichita Falls and some other cities in the state largely escaped the sting of foreclosure auction events in 2008 and in the first months of 2009. But more foreclosure auction properties are expected in the coming months because of a significant number of company closures and laid-off workers in the past several months.

Gail Cunningham, public relations vice-president of the National Foundation for Credit Counseling, said the number of unemployment checks being given out to Texans has increased and that unemployed homeowners are having difficulties allotting their unemployment benefits to their monthly loan payments.

Cunningham also observed that some homeowners have chosen to make their credit card payments instead of their monthly home loan payments, rationalizing that they are going to see their houses getting to foreclosure auction lists anyway. These homeowners who have given up on their mortgages, according to Cunningham, were now more intent on maintaining their good credit card records to help them survive the recession.

Based on data from the NFCC, foreclosure-related problems have spread to all levels of income. Also, most families are spending around 45 percent of their monthly income in paying unsecured debt, which is more than twice the ideal unsecured debt level.

The Consumer Credit Counseling unit of Wichita Falls is offering help to homeowners worried about foreclosures in partnership with the Credit Counseling Service of Greater Dallas.

Hope Now counselor Jeanine Pickett said that determined homeowners can save their houses from foreclosure auction listings. However, she expressed sadness that some have sacrificed their homes rather than their lifestyle.

In Collinsville, community service officers find it time consuming keeping track of abandoned and vacant properties and their unkept yards. Since last year, vacant properties with foreclosure notices are becoming a common sight around the city.

Community service officer Sheri Verstraete said that many homeowners just abandoned their homes. However, she pointed out that it is still the homeowners? responsibility to maintain their properties despite leaving it due to foreclosures.

So far, Madison County experienced a drop in bank owned homes foreclosures in 2009. But many cities have reported an increase in the number of vacant and unsightly houses once warmer weather starts to set in, causing a drain on taxpayers? money and manpower.

Madison Mayor John Hamm said that some families just walk away from their foreclosed homes, adding that the city could not attempt to clean the vacant properties until a hearing officer or judge says so.

In Granite City, officials have hired an outside firm to spray bank owned homes foreclosures for bugs, cut grass and remove trash.

Meanwhile, officials in Caseyville decided to close off the 500-acre Forest Lake subdivision after only one unit was sold. The subdivision became a haven for theft, dumping and graffiti. According to Caseyville Trustee Kerry Davis, Forest Lake will remain closed and locked until such time that sales in the subdivision pick up.

On the other hand, Mitch Blair, Collinsville assistant community development director, said that municipalities are attempting and trying various strategies to address the problems brought about by the increase in the number of abandoned and vacant houses. He added that municipalities have decided to become proactive in handling foreclosure-related issues.

Some municipalities use files by St. Clair County to keep track of foreclosure properties. The courthouse helps municipalities track down who were the last taxpayers, lenders or mortgage holders. Once they have established the persons or entities responsible for the foreclosure homes, they will contact them to do some work on the said properties within 7 to 10 days. If nothing will be done, the municipalities will file a lien.

The lien will ensure that once bank owned homes foreclosures were sold, the municipalities will be able to recover the funds they spent for maintaining and taking care of the yards of foreclosed properties.

The free workshop features representatives from various organizations, including The Pro Bono Resource Center of Maryland, Maryland Department of Housing and Community Development, Civil Justice Inc. and Catholic Charities of the Archdiocese of Washington.

The workshop will provide homeowners with information and legal advice about their foreclosure problem and where to seek help to save their houses from REO property listing.

Director of social concerns at St. Peter Anne Marie Prangley explained that the church offered to host the event to help the state disseminate the information about various available programs offered for homeowners to help them handle their foreclosure-related problems.

According to Prangley, foreclosures may not be a big problem in Maryland, particularly in Olney county, but still, she had received calls from homeowners who were concerned about the issue. Maryland offers several programs that could help distressed homeowners facing the threat of REO property listing, including the availability of about 800 pro bono lawyers who are trained to handle housing options and foreclosure cases.

Prangley said that many distressed homeowners are hesitant in coming out about their problem, with some refusing to acknowledge the fact that they are on the brink of losing their properties to foreclosures. She pointed out that coming forward and acknowledging the problem are the only way that troubled homeowners could get and receive help.

Workshop participants are advised to bring with them all documents pertaining to their former and current mortgages, including settlement papers, loan applications, notices of foreclosures, lender statements, threats of foreclosure and a copy or copies of their monthly home budget.

The Olney area, compared with other Maryland areas such as Germantown, Silver Spring and Gaithersburg, has not been severely affected by foreclosure. Out of the 78 resale houses on the REO properties listing, 18 are either bank owned homes or short sales.

Meanwhile, out of the 54 properties under contract in Olney, about 22 are either bank owned properties or short sales.

The free workshop to help distressed homeowners save their homes from REO property listing will be held at St. Peters Catholic Church on June 27.

In Brown County, majority of mortgage loans were owned by investors since last year, with the trusts managed by major banks. The most number of bank foreclosure property is reported by Wells Fargo Bank.

According to data released by Green Bay Press-Gazette Review, 69 out of the total 498 foreclosure homes in 2008 were made by Wells Fargo. The national bank is followed by Deutsche Bank in terms of the most number of foreclosure properties, reporting 38 houses and 33 for US Bank.

However, industry experts pointed out that most likely, these banks did not initiate many loans that were foreclosed. For example, Deutsche Bank did not sign any mortgage documents with homebuyers who reside in Green Bay. The bank most likely held the loans as part of investors? trusts.

In the case of Wells Fargo, the bank did not also issue loans but held them in trusts for investors. This means that the bank legally hold the loans but did not underwrite or initiate them. This is because most major banks are in the trust business and not lending.

Jason Wenke of Wells Fargo said that its bank foreclosure property rate is about 1.77 percent of mortgage loans which is lower compared to the 2.3 percent national average.

Meanwhile, research data showed that community banks in Wisconsin only have a handful of bank foreclosure property. Furthermore, Community Bankers of Wisconsin said that 280 community banks in the state reported combined 5.3 percent foreclosures last year. Denmark State Bank and Nicolet Bank each had 5 repossessions in 2008, 7 for Associated Bank and four for Baylake Bank.

Community Bankers of Wisconsin Chief Executive Officer Daryll Lund said that the low number of foreclosure properties on community banks? inventory only showed that they have developed a good working relationship with their customers.

On the other hand, out-of-state bankers accounted for about 63.2 percent of the total bank foreclosure property in the state.

Foreclosure filings in Wells Fargo took a share of 10.7 percent, 9.9 percent in US Bank, 8.2 percent in Deutsche Bank, 7.3 percent in Countrywide and 5.4 percent in JP Morgan Chase Bank.

U.S. Representative Jim Costa of California claimed that drought-hit Los Banos did not receive media attention as much as those received by cities battered by other disasters because drought is not as television-friendly as hurricanes and tornadoes.

Another California lawmaker, Representative Dennis Cardoza, said that there is a California not touched by beaches and movie stars ? a place of blocks and blocks of abandoned foreclosed houses.

Cardoza and Costa testified in June before members of the House Financial Services Committee who are reviewing a draft legislation aimed at declaring regions hit by disasters as economic disaster zones. These zones would be given special funding for the rehabilitation of private and government repo houses, creation of jobs and management of community development projects.

Los Banos is a San Joaquin Valley city with a population of 36,000. Due to the three-year long drought, the jobless rate has long surpassed the 21 percent rate level and the pace of private and government repo activities have reached the staggering rate of one foreclosure for every five homes in the city.

Because of inadequate water delivery, acres and acres of farm fields have been left uncultivated.

Los Banos Mayor Tommy Jones was also called by the committee to appear before lawmakers. The lawmakers were bothered by the report of the city that one in five households has been foreclosed and that the unemployment rate has gone beyond 21 percent. The city previously submitted to the federal government a request for funding to increase the number of its police officers.

Mayor Jones said that the national lawmakers wanted to make sure that the city did not err in its report of the number of households losing their homes to private and government repo actions.

Massachusetts Democratic Representative Barney Frank, chairperson of the finance committee, said that the hearing represents the start of the committee?s response to the problems in the San Joaquin Valley, considered the country?s biggest agricultural region.

However, Texas Republican Representative Jeb Hensarling questioned whether revising the Community Development Block Grant program is the correct solution to the region?s problem.

In response, Representative Cardoza reiterated that Los Banos cannot survive without getting the same level of funding received by other cities from the government repo prevention program and other community development programs run by the federal government.

During the first year of the housing crisis, foreclosure inventories were overloaded with homes located in low-income neighborhoods as these where subprime borrowers lived.

But the persistence of the worldwide recession extended the arms of foreclosures into the enclaves of the rich, as stock markets, financial multinationals and non-housing industries also collapsed. Even executives who were well-ensconced in their positions were affected by layoffs.

Previously, gated neighborhoods and more affluent communities were thought to be immune from foreclosure actions because people who lived in these areas obtained prime loans and had higher-income occupations and businesses.

In May, there were nearly 1,000 foreclosure listing homes sold, an increase of over 9 percent from sales in April, but represented a 36.7 percent decrease from sales in May 2008. There were 3,059 default notices, a 9.3 percent decline from April and a 2.5 percent drop from May 2008.

In May, sales of foreclosure homes in several affluent areas reached record levels.

In the Carmel Valley area, where most homes are priced around $676,500, a total of 44 default notices were sent to homeowners in May, an increase from the 14 notices sent in May 2008.

In the affluent coastal community of Del Mar, sales of foreclosure homes totaled 54 units.

For many months, affluent homeowners use their resources to withstand the effects of the foreclosure crisis, but as the recession persisted and worsened, their investments and income-producing businesses faltered.

Real estate analysts contend that foreclosure listing prices of houses in affluent neighborhoods will increase the level of median home prices in San Diego, even if the higher-priced homes are sold at a discount because of their rising sales pace.

In the neighborhood of Kensington-Normal Heights, out of 43 homes sold in May, 29 units were foreclosure listing sales. The median price was $304,000 a 17 percent decline from the price in May 2008.

In Hillcrest-Mission Hills, where most homes are priced around $416,000, out of the 39 home sales in May, 21 were foreclosure listing sales.

Housing analysts said that the major factors for the rise in foreclosure listing sales in more affluent areas are the loss of high-income jobs, collapse of businesses and the difficulty of getting jumbo home loans.

The number of foreclosure homes sold through auctions in May increased to 2,180, an increase of 29 percent from April sales, but represented a drop of 39 percent compared to May 2008.

Housing analysts said the level of foreclosed home list sales is extremely low compared to numbers representing mortgages in default, houses with negative equity and properties already in foreclosure.

Because of the decrease in foreclosed home list units as seen in recent monthly year-over-year comparisons, some people in the housing industry believe that more mortgage lenders are participating in the Obama administration’s Making Home Affordable program.

While many homeowners complain that banks are not addressing their mediation requests and not modifying their loans, analysts cite data as evidence of the willingness of some lenders to work out affordable repayment schemes.

Nevertheless, since market data indicated that large numbers of trustee sale notices were posted in May, more foreclosed home list properties are expected to be auctioned off. In May, a total of 41,959 trustee sale notices were filed.

Another foreclosure study also reported that there were 10,784 home loan default notices, trustee sale notices and foreclosure notices filed in May, representing an increase of 17 percent from foreclosure filings in May 2008. Although the figure indicated a slight drop from filings in April, the May data included a large share of units which are already in bank-owned foreclosure inventories.

The Riverside-Bernardino metro area, which had one foreclosure filing for every 75 housing units, was also fourth in the nation in metro foreclosure rates.

Compared to other counties in California, Riverside County had the fourth highest ratio of foreclosed home sale per capita in May. According to foreclosure sales data, one foreclosed home for every 958 residents in Riverside was sold.

It was Merced County which topped the ratio chart, with one foreclosed home list unit sold for every 773 residents. Second and third in the chart were Stanislaus County, where one unit was sold for every 857 residents, and Yuba County, where one unit was sold for every 877 residents. The county with the lowest ratio was San Joaquin County, with one foreclosed home list unit sale for every 989 residents.