12 August 2010

Home Mortgage Foreclosure Aid grows by $3 Billion

USA Today

The Obama administration will direct an additional $3 billion in assistance to homeowners facing foreclosure due to lost income, an effort to help some of the more than 14 million Americans counted as unemployed.

The assistance plan announced Wednesday will provide:

•$2 billion more for existing programs. Money under the government's Hardest Hit Fund will go to Housing Finance Agency programs in 17 states and the District of Columbia that aid homeowners struggling to pay their mortgages because of unemployment. Those states and the district all had unemployment rates at or above the national average the past 12 months.

Each state will use the funds to temporarily help people pay their mortgages while they seek jobs, seek additional employment or receive job training.

States may provide various kinds of help, including mortgage modifications, assistance with short sales (when a home is sold, with the lender's blessing, for less than is owed) or pay financial institutions incentives to write down a portion of a borrower's principal balance.

The Hardest Hit Fund provided $2.1 billion to the state programs in two earlier rounds of funding.

•$1 billion for a new federal emergency loan program. The Department of Housing and Urban Development will provide help, for up to 24 months, to homeowners at risk of foreclosure because their income has been substantially cut due to involuntary unemployment, underemployment or a medical condition.

The loans would be distributed through state agencies or non-profits in states or cities that have high unemployment; those areas are still to be determined.

Eligible borrowers could receive up to $50,000 in emergency loans.

To qualify, homeowners would have to be at least three months delinquent in their payments and show a reasonable likelihood of being able to resume repayment of their mortgages and related housing expenses within two years.

Wednesday's announcement comes as new data on foreclosures and home sales paint a mixed picture of the housing market.

RealtyTrac says in a report out today that lenders repossessed 92,858 properties in July, the second-highest monthly total since RealtyTrac began tracking foreclosure activity in April 2005 and behind only May's record of 93,777. Bank repossessions were up 6% from a year ago.

But overall foreclosure filings — which also include notices of default and scheduled auctions — fell almost 10% from a year ago. They were up nearly 4% in July from June, according to RealtyTrac.

"The banks are processing loans that have been in foreclosure for a long time," says RealtyTrac's Rick Sharga.

Separately, the National Association of Realtors reported Wednesday that existing-home sales rose and prices strengthened in the second quarter, both propelled by the government's home-buying tax credit that expired April 30.

The national median existing single-family price was $176,900 in the second quarter, up about 2% from $174,200 in the same period of 2009.

Sales of existing homes rose 9% to a seasonally adjusted annual rate of 5.61 million in the second quarter from 5.14 million in the first quarter. They were 17% higher than in 2009's second quarter.

"The third quarter will be measurably lower," says Lawrence Yun, chief economist at NAR. "The fourth quarter is a big question mark."

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