Foreclosure

If it becomes law, a Senate bill could increase the number of homeowners who refinance under the Home Affordable Refinance Program by up to 13 million. That's the consensus reached by professors with Columbia University Business School, which released the study on Thursday. The study sketched the likely effects of a bill recently co-sponsored by Sens. Barbara Boxer and Robert Menendez. Researchers said that new HARP modifications could lead to roughly $35 billion in savings for homeowners, a number that could help stem the rate of foreclosure activity nationally.

Under federal policy, those who are behind on their taxes are ineligible for FHA mortgage insurance unless they repay their debt or are in a valid repayment agreement with the IRS. However, the Government Accountability Office (GAO) found that FHA insured over $1.44 billion in mortgages for 6,327 borrowers who had a total of $77.6 million in federal tax debt. The watchdog group explained that the borrowers benefited from the 2009 American Recovery and Reinvestment Act, which includes a provision that increased mortgage insurance loan limits and provided an estimated $12 billion in Recovery Act First-Time Homebuyer Credits (FTHBCs) to 1.7 million individuals.

A reverse mortgage is a type of home loan that lets older homeowners access the equity they have built up on their homes and defer loan payment until they sell the home, move out, or pass away. The original purpose of reverse mortgages was to allow these homeowners to convert home equity into an income stream or line or credit to use in retirement. Reverse mortgages require no monthly mortgage payments, but borrowers must still pay property taxes and homeowner's insurance. The CFPB released a report that showed nearly 10 percent of reverse mortgage borrowers are at risk of foreclosure because they failed to pay those costs.

The US economy grew at an annual rate of 1.9 percent in the first quarter, the Bureau of Economic Analysis reported Thursday in its third estimate of economic performance in the first quarter. The BEA report was consistent with market expectations but emphasized a moribund economy.

First time claims for unemployment insurance fell to 387,000 for the week ended June 23, from the prior week's 392,000, (revised from the originally reported 387,000) the Labor Department reported Thursday. Economists had expected the report would show 386,000 initial claims.

The Foreclosure Reduction Act and the Due Process Rights Act were approved by the Joint Conference Committee in a 4-1 vote, sending them up to an expected vote in both the Assembly and Senate next week. The Foreclosure Reduction Act restricts the process of ""dual-tracked foreclosures,"" in which lenders work with homeowners on trial loan modifications while at the same time continuing the foreclosure process. The Due Process Rights Act guarantees a reliable contact for struggling homeowners to discuss their loans with and imposes civil penalties on robosigning.

While still elevated compared to historic levels, severely delinquent balances among first mortgages are on the decline, according to Equifax's May National Consumer Credit Trends Report. The May 2012 total of delinquent balances represented $450 billion, a 37 percent decline from the peak of more than $700 billion in January 2010. The biggest drop was seen in severely delinquent (90-plus days) non-agency first mortgage loans, which fell 45 percent to $320 billion in May from its peak of $580 billion in January 2010.

When hearing about the different narratives on the housing crisis, oftentimes the private sector is largely blamed. During an event hosted by The American Enterprise Institute (AEI) Wednesday, a recently published book was discussed which highlights a different perspective on the story of the housing market crash. Oonagh McDonald, a UK-based academic, wrote the book titled ""Fannie Mae and Freddie Mac: Turning the American Dream Into A Nightmare"" and asserts that the failures in the housing industry started with 'affordable housing ideology,' and was worsened by policy makers and the GSEs.

The OCC Mortgage Metrics Report for the First Quarter of 2012 showed that percentages of mortgages between 30-59 days delinquent and mortgages between 60-89 days delinquent both fell to their lowest levels since the OCC began publishing mortgage performance reports in Q1 2008. The percentage of mortgages that were current and performing increased to 88.9 percent, the highest level seen in three years. Also, of the more than 2.5 million loans modified by servicers from 2008-2011, 50.7 percent were either current or had been paid off by the end of 2012's first quarter.

In Pro Teck Valuation Services' June Home Value Forecast report, Phoenix was used as an example to argue the point that some of the hardest hit markets have ""overshot on the downside."" The real estate valuation company looked at two traditional appraisal methods for determining property values: replacement cost and income capitalization. Based on these two factors, Pro Teck concluded that home prices in certain markets are selling at prices which are actually way below their replacement costs and the rental yields.