Foreclosure

Across the board, loan performance improved for February, and foreclosure starts were down compared to the month before in January, according to a report from LPS Applied Analytics. Despite the decrease in foreclosure starts, foreclosure inventory still remains near historic highs, while delinquency rates are at their lowest level since August 2008. Foreclosure starts were down 15.2 percent compared to the previous month, reversing the increase seen during January. Foreclosure inventory was at 4.13 percent in February, a 0.5 percent monthly decrease, but still remains high. In December 2005, foreclosure inventory was at 0.48 percent.

Homeowners who have had mortgage debt forgiven after a foreclosure, modification, or short sale may be able to exclude the canceled debt from their taxable income if they meet specific criteria. According to Gil Charney, principal analyst at The Tax Institute at H&R Block, the specific criteria to have forgiven debt excluded are the debt must have been incurred to buy, build or substantially improve the residence, called ""acquisition debt, and the property must be the taxpayer's primary residence.

HOPE NOW, a private sector alliance of mortgage servicers, investors, mortgage insurers, and non-profit counselors, estimated 45,000 homeowners received permanent, non-HAMP loan modifications from mortgage servicers during February 2012, down from 56,000, or 20 percent, compared to the month before in January. While modifications were down, foreclosure sales and foreclosure starts also declined on a month-over-month basis, with 69,000 foreclosure sales and 167,000 foreclosure starts in February, compared to 79,000 sales, a 12 percent drop, and 200,000 starts, a 17 percent drop, in January.

The city of Los Angeles, California, is putting its Neighborhood Stabilization Program (NSP) funds to work with the launch of a new initiative to create jobs rehabilitating foreclosed properties in communities impacted by the housing crisis. The new ""Bridges to Business Success"" program is a public-private initiative providing small minority business owners with procurement training and contract opportunities to create and retain jobs. Los Angeles has been awarded $143 million in NSP funds.

For 2011, investment purchases increased significantly, according to data from the National Association of Realtors, and with more individual investors absorbing REO properties, the organization thinks it is time to limit bulk REO sales to large institutions. Investment-home sales increased 64.5 percent last year to 1.23 million, NAR reports. In a letter to federal regulators, NAR urged policymakers and lenders to focus on expanding the availability of financing for qualified homebuyers and investors to reduce the number of REOs on the market.

With numbers from a CoreLogic report revealing 22.8 percent of borrowers are underwater, principal reduction has been eyed as a key solution to keep borrowers in their homes. The Center for American Progress has released a report detailing solutions to the ""moral hazard"" issue. One is to make principal reduction a one-time program open to borrowers already delinquent; another is to open the program only to current borrowers who are at-risk of default; and the third is ""shared appreciation"" modifications.

Still in developing stages, HelpMeRent.com is an online rental directory that specializes in connecting renters to rental property listings nationwide. The website is advocating for the conversion of foreclosed homes as rental properties and is helping to do so through its online services.

In 2011, consumers with at least one open bankcard, auto loan, and mortgage are more likely to try and stay current on their car payment then keep up with their monthly house payment or credit card bills, according to a TransUnion study. Consumers have also been more likely to pay for their credit cards before their mortgages for four consecutive years, according to the study. The TransUnion analysis looked at a sample of approximately 4 million consumers in each quarter of 2011 and found that 39.1 percent were delinquent on a mortgage while current on their auto loans and credit cards.

The number of completed foreclosures in February 2012 was down on a monthly basis and slightly on a year-over-year comparison, but overall, foreclosure inventory has decreased compared to a year ago, according to CoreLogic's National Foreclosure report for February. In February 2012, 65,000 completed foreclosures were reported, compared to 66,000 in February 2011, and 71,000 in January 2012. The number of completed foreclosures over 12 months ending in February was 862,000. From the start of the financial crisis in September 2008, CoreLogic estimates 3.4 million completed foreclosures.

First time claims for unemployment insurance fell 5,000 to 359,000 for the week ended March 24, the Labor Department reported Thursday. However, the previous week's report and all data reports back to 2007 - were revised to show a jump for the week ended March 17 to 364,000 instead of the originally reported 348,000.