Turns out that mortgage delinquencies among the top 100 banks have been increasing and are nearing 12%, As illustrated in the chart below:

Mortgage Delinquencies up significantly in 2012.

The chart shows graphically that delinquencies have been rising consistently over the last half of 2012, but the specific numbers included in the data set reveal some very interesting facts that are fundamental to the health of the housing market and any hope of a true recovery.

The data set goes back to January 1st, 1991. You may recall if you’ve been in the real estate industry for a while, that 1991 wasn’t exactly a rosy year either. The real estate market had just weathered it’s first major storm since the great depression. Interest rates were still hovering in the 9% range. We’d had a recession then too.

On January 1, 1991, the delinquency rate was a whopping 2.98%. By January of 1992, it had “peaked” at 3.32% before it finally began to go down and stay down. By April of 2003, it was well below 2% and stayed there until it finally broke above 4% for the first time, in January of 2008. It had only been climbing incrementally for the four previous quarters.

As 2008 went on, delinquencies finally reached 7.76% in the last quarter of 2008. When the Obama administration took office in 2009, the delinquency rate was 8.73 percent. An all time high at the time. After reaching a new all time high of 12.66% in 2010, delinquencies fell back to a “low” of 11.66% in 2011. They are at 11.98% as of the third quarter of 2012. This is the latest figure available as of this writing.

As for what kind of numbers this translates into, if my research is correct, we are talking about approximately 30 million mortgages. 12% of 30 million equates to about 3,600,000 borrowers in danger of foreclosure at the present time. This is only the top 100 banks. This number does not include delinquencies held by the GSEs.

The chart below shows in graphic detail how far from normal the housing market really is:

Historical View Of Delinquency Rates Since 1991.

This can hardly be called a recovery, when you consider where “normal” once was. A continuation of a delinquency rate that is more than five times the historical average, after 4 years, indicates that we do have systemic problems in the greater economy. And these numbers do NOT include those of the FHA, whose own delinquency rate was 16.48% as of December 2012, according to the American Enterprise Institute. Housing itself cannot drive a housing market recovery. Job growth and increasing earnings are big factors.

These fundamentals will continue to work to the favor of real estate investors and buyers with cash. Investors will continue to find a steady stream of foreclosures and shadow inventory out there. There is a shift underway, in favor of renting over buying, and a lower household formation rate will continue for the time being. “Recovery” is probably not the right word. “Transition” might be the appropriate word to describe what is happening. It’s not your father’s housing market anymore.
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Donna S. Robinson is a real estate investor, author and investing coach located in Atlanta, GA. Follow her on twitter at donnaconsults, Facebook.com/RealtyBizConsulting and watch her videos on youtube. Her latest book, Basics of Real Estate Investing, is now available for Kindle on Amazon.com

© dacasdo – Fotolia.com

Some form of compensation for the homeowners was expected, but what surprised many was the speed at which the Fed came to this decision – previously, officials were going through complaints on a case-by-case basis, a lengthy and time consuming process that would have taken many months to complete. While the agreement announced last week probably means that lenders get away with paying less, the Fed says that the advantage is that borrowers will receive the financial assistance they need “in a more timely manner”.

As part of the agreement, lenders will hand out more than $3.3 billion in cash to those homeowners that were wrongly foreclosed upon, with another $5.2 billion set aside for other forms of assistance, such as forgiveness of deficiency judgments and loan modifications. The amount of compensation due to each former homeowner will vary depending on their individual circumstances, but officials said that payouts will range from a few hundred dollars to more than $100,000 in some cases.

Opening a Can of Worms

Several observers have said that with any luck the payout will have brought an end to this long running issue, but these people are seriously mistaken. In all likelihood, all the lenders have achieved is to give themselves an even bigger headache, for the small matter of dividing up the payouts so that everyone entitled to compensation receives a fair amount will be no walk in the park.

One of the most controversial issues, and something that is absolutely likely to cause arguments later on down the line, is that dozens of affected homeowners that may or may not receive adequate compensation from the deal, have been denied the right to an “independent foreclosure review”, as is stated in the FAQ section of the review.

The problem here is that in order for such a review to be independent, both the lenders and the federal regulators representing the homeowners should have been given the chance to nominate a neutral third party to carry out this review – sadly, it seems that the lenders themselves actually chose these reviewers.

As ProPublica explains in this article:

“Federal regulators designed the program to work like this: Each of the banks would hire an ‘independent consultant’ (approved by the regulator) to conduct reviews of the bank’s foreclosure cases. The bank was supposed to foot the bill, but the consultant, not the bank, was supposed to decide which of the bank’s customers deserved compensation and how much.”

Clearly then, the consultants chosen to do the job cannot be seen as ‘impartial’ reviewers, and so their fairness in deciding who is entitled to how much compensation will inevitably come into question. In fact, the awards will be paid out according to the stipulations of the agreement, which would appear to be arbitrary at best, and will likely be anything but fair. For an example of this ‘arbitrariness’, consider the actual rules for eligibility, which state that only those foreclosed upon between 2009 and 2010 can be considered for compensation – irrespective of the fact that millions were foreclosed upon before 2009.

Like It or Lump It

Perhaps even worse than this arbitrary decision making is the fact that homeowners will have no rights to appeal the independent review process. The FAQ page states:

“The decision of the review is considered final and there is no further recourse within the Independent Foreclosure Review process. The Independent Foreclosure Review will not have an impact on any other options homeowners may pursue related to the foreclosure process of their mortgage loan.”

The Neighborhood Assistance Corporation of America was quick to jump on the agreement, pointing out these deficiencies and underlining my own concerns that homeowners will not be properly compensated.

It pointed out that more than 65,000 cases had been submitted to the review process so far, and that these reviews were turning up even more evidence that huge numbers of homeowners were wrongly foreclosed upon, without being informed that they could apply for loan modification. Furthermore, it states that the $8.5 billion is simply an insufficient amount to adequately compensate concerned homeowners, and slams the $5.2 billion earmarked for ‘other assistance’, saying “this will do little in assisting homeowners stay in their homes since it is not dedicated to principal reduction.”

Who Gets What?

At the end of the day, lenders are left with an even more pressing headache – which former homeowners are entitled to compensation and which aren’t? How do these people go about filing a claim? And what about those who are not ‘entitled’ to any of this compensation, because their homes were foreclosed upon outside of the Fed’s extremely narrow window?

There remain many other unanswered questions too, such as why the arbitrary $8.5 billion figure (which is surely inadequate), and why was the Neighborhood Assistance Corporation of America not allowed to take part in the settlement making? Is there any avenue of appeal for homeowners that miss out?

Until these questions are answered adequately, this problem won’t be going away anytime soon…

US Federal Reserve – courtesy Wikipedia

Last month Bankrate released their most recent forecast on mortgage rates, which outlined the Federal Reserve’s continued vestment in mortgage backed securities. The moves, aimed at reducing the burden of unemployment on the economy, also has positive effects for those interested in buying homes, as well as those interested in refinancing for gain. Barring a slowed economy for whatever reason, very low interest rates are here to stay for the near future.

We spoke earlier today with McBride (below right) about the Fed, the so called fiscal cliff (the effects of the Budget Control Act of 2011), and the overall economy. McBride offered this with regard to the generalities of Bankrate’s position:

“2013 will be favorable to home buyers and refinancers alike, with 30-year fixed mortgage rates staying between 3.5% and 4% for much of the year owing to the slow growth economy, high unemployment, and active Federal Reserve.”

A “go to” analyst who has appeared on hundreds of financial broadcasts including NBC “Nightly News,” CBS “Evening News,” and ABC’s “World News Tonight,” Greg McBride provides not only in-depth commentary, but practical advice for consumers.

According to many experts, interest rate stability and the overall economy depends greatly on how well Congress deals with the potential negatives that can arise via the “fiscal cliff” harbinger. On top of these concerns, I spoke with the Bankrate analyst about overall economic issues, for one, consumer confidence and spending. Even despite these continual low interest rates, the seeming inability of the administration and lawmakers to instill confidence seems at the core of America’s economic conundrum.

Regardless of actions by the Fed, which McBride pointed out at simply re-instituted past policies, investor and consumer confidences have to be shored up. In short, the biggest reason for the lukewarm economic recovery resides in infirmities from the problem solvers themselves, namely our own lack of confidence in decision-makers in Washington. Be that as it may, Bankrate and other analytics companies understand the public’s purse strings (corporate too) remain very tight. But in ending our conversation this afternoon, McBride pointedly suggested those with the wherewithal to buy a home, needn’t hurry to closing, he say’s these rates are with us for a while (6 months out).

Even as I write this, various financial reporting entities are announcing both concern and tentative actions being considered by the FOMC where this bond buying actions are concerned. The minutes of the meetings back in December can be read here, and the video below of the press conference with FOMC Chairman Ben S. Bernanke, offer more insight into what Bankrate and McBride partially project from.

Meanwhile, from the BBC to the Wall Street Cheat Sheet reports suggest these same FOMC board members have concerns that spending upwards of $85 billion dollars a month buying these bonds may kindle an inflationary fire America and the world does not need. A last note, McBride actually commented on the basic physics of the economic situation in our conversation, the point of our discussion being how action on the part of the Fed or other regulators always leading to a counterpoint elsewhere. The take away here should probably be, the Fed using “same old” tactics, will not likely affect a big fiscal change.

We’ll keep you updated.

Image by Ondrej Kloucek via Flickr.com

That ought to be enough to just buy the fiscal cliff, put a fence around the edges, and turn it into a public park. It won’t get rid of the cliff, but we will be able to get close enough to actually see the bottom and marvel at how big and deep it looks in person.

For the average individual, this plan is pretty much the same as taking out multiple credit cards, using them to pay your bills and calling it prosperity. Never mind that this whole mind boggling process is destroying the purchasing power and incomes of ordinary americans, causing food and household prices to rise, and there is absolutely no oversight or approval from the congress or any other governmental authority.

A policy of open ended QE3 and now essentially a “QE4″ for treasuries, is raising plenty of concern from folks who really understand what kind of economic problems this program could, and probably will lead to.

Here are Rob Chrisman’s comments, as taken from his piece on Mortgage News Daily: (bold type added for emphasis)

“The Fed caught the market’s attention yesterday,…and we are reminded that one branch of the government is issuing securities while another branch is buying them. What’s wrong with this picture? The Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January, …The buying announced today will be in addition to $40 billion a month of mortgage-debt purchases (don’t forget that the $40 billion is over and above prepay reinvestments)…

“Success consists of going from failure to failure without loss of enthusiasm.“… “In many areas housing is mostly improving based on the Fed purchasing Freddie and Fannie (and some Ginnie) MBS. What happens when it stops?“…When the Fed stops buying securities, the laws of supply and demand dictate that prices will drop and rates will go up – plain and simple.“

No worries, we’ll just turn the cliff into a park! © freshidea – Fotolia.com

Richmond Federal Reserve President Jeffrey Lacker has gone public with his belief that Bernanke is interfering in fiscal policy.

Finally, Dallas Federal Reserve President Richard Fisher has compared the Fed’s actions to a famous Eagles song, saying that this buying program may be tougher to get out of than “Hotel California”.

Bernanke is planning a fiscal cliff “overlook” sort of like they have at the edge of the grand canyon. Only this park will have a stunning view of an enormous canyon of debt with a river of dollars flowing at the bottom, digging it deeper and deeper. Oh, and there will be your choice of donkeys or elephants which you can ride all the way to the bottom.

 
Donna S. Robinson is a real estate investor, author and residential investment analyst. Follow her on twitter at donnaconsults. Her latest book, Basics Of Real Estate Investing is now available on Amazon.

© Stephen VanHorn – Fotolia.com

But this year, I find myself wondering whether I should plan to take some educational courses in 2013 or just go ahead and kill myself. I’m torn between being totally positive about our country and our spirit of determination versus a constant series of dooms day scenarios.

The talk shows on the financial and news channels parade an endless variety of “experts”, “strategists” and politicians who can be counted on to argue constantly about whether we are experiencing the growing pains of the worlds brightest and most successful nation or this is actually a real crisis so severe that we all need to dig a hole and crawl in it.

I’m weary of the endless arguments that never bear any fruit. It’s just a jumble of information and opinions. Very little actual truth or clear, unbiased, documented facts. But it’s great for TV ratings and government program creation when everyone is up in arms over something – anything.

From my perspective, it is pretty clear that this whole entire mess has been gradually created by Federal entities over many decades of our existence. From the original income tax, created to pay for the civil war, to the birth of the Fed in 1913, social security, medicare, medicaid, fiat money, wars, deficit spending, pet programs created with “government money”, along with the resulting special interests that were created to take advantage of various opportunities to get “government money”.

It seems to me that the collective federal government authorities and their cronies on Wall Street and the Federal Reserve are clearly responsible for this, if we are, in fact, standing at a fiscal cliff. On the other hand, if we’re not, it wouldn’t be the first crisis we’ve averted. These things are getting to be old hat. So either we really are in serious financial trouble, as half the experts say, or times are getting better and better so don’t worry, be happy, as the other half of the experts say.

Or perhaps politicians and wall street have figured out that crises are a great way to justify funneling public money into programs contrived to benefit fellow cronies and supporters. After all, the fix for every single crisis has been more money, more money and more money. Everyone has a crisis that needs more money in order to fix it. I suppose if we just let Ben Bernanke actually drop more money from helicopters, we can eventually fix every single problem we have.

How is it that the same organization that spent years creating the collective mess, the organization that created the very deadline we are facing, are going to somehow fix this entire problem over some eggnog at a Christmas – er – holiday party? I think we’ve lost our collective minds if we remotely believe that a meaningful solution is going to happen before new years day. But so what? Everyone has apparently forgotten that we’ve still got to get through the “gateway to the next epoch” on December 21, 2012. The media and the government seem to have totally overlooked the Mayan calendar crisis. Heck, we may not even have to worry about the fiscal cliff.

I’m not happy about the fact that I can’t be happy. I am generally happy but all these crises are bringing me down. It’s a bummer. But I think that come January of 2013, the sky may not fall, even if the stock market does. Does anyone remember Y2K? I spent 3 months filling-in the hole I had dug to hide in before we went over the digital cliff. The nation spent years getting ready for that one, and nothing happened. Nothing. Half the experts I polled agreed that there was never a real Y2K crisis to begin with, and the other half of experts from the tech sector said the cliff was averted by the billion-zillion dollars we spent to reprogram or replace our old computers. Doomsday narrowly avoided once again.

Here’s my suggestion to those who are “working tirelessly” to get this done: The federal government already uses accounting methods that are illegal in the private sector, to come up with numbers and budget projections that are designed to disguise or cover up reality. There’s no real accuracy in any federal method of accounting, estimating the size of our deficit or the real inflation rate or anything else that actually requires a real number.

So, just make something up. That’s all you have time to do. With 4 weeks left in the year, and only about 10 actual working days in there somewhere, all you can do is whip up a few spreadsheets and cryptic regulations with more of the standard government planning and accounting that always makes things look OK, even if it is total nonsense. So, in a nutshell, just fix it. You’ve been making up numbers and regulations for a very long time already. Just make up a few more and get a press release out on pressrelease.com or twitter – We know you aren’t capable of actually fixing the problem anyway, because you’ve all been creating one crisis after another for years now. Don’t expect me to spend my new years eve hiding in a bunker watching cable news. Enough already.

The bottom line is that if this is a real crisis, you’ve already blown numerous opportunities to work it out. You’ve already spent millions on commissions, planning sessions and studies, with absolutely nothing to show for it. The taxpayers have no reason to expect you to suddenly come up with a real solution now.

Or, when disaster is averted on new years eve with yet another grand, new plan that calls for lots more money, it may be more proof that this latest crisis and most others have been created by the “powers-that-be” in order to facilitate more power, along with more money for you and your buddies.

Any way you slice it, expecting the feds to fix any crisis that they’ve created themselves is like expecting that the arsonist who started the fire can be counted on to put it out, and that the folks who gave him the matches will be happy about it.
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Donna S. Robinson is a real estate investor, author and residential market analyst located in Atlanta, GA. Follow her on twitter at donnaconsults. Her latest book, Basics Of Real Estate Investing is now available on Amazon.

Image by osipovva via flickr.com

Private investment has fled the secondary market and mortgage backed securities, leaving the government and the Federal Reserve to fill in the massive sink hole left behind.

If I were an editorial cartoonist, I’d be drawing a picture of Fed Chairman Ben Bernanke, clinging with his left hand, to a house about to slide into a sink hole, while frantically throwing boulder-sized chunks of dollars into the enormous hole with his right hand. Unfortunately this would not be a funny cartoon because this is an economic hole that is way too deep for one man to fill, even if that one man happens to be the operator of the largest printing press in the world.

The Fed Chairman and the administration continue what has become an endless game of printing money to keep the mortgage market doing “business as usual”, and driving the Fed balance sheet to unprecedented levels in the process. All of this effort has resulted in “good news” for housing, but at a cost that will come due at some point in the near future, unless we see a sudden, unexpected economic boom that can reverse the current trend of systemic unemployment and eroding incomes.

Those who make their living inside the housing industry cling to every scrap of “good news” about the housing market, preferring to believe that things are getting better, just as they chose to believe in 2006 that home prices could never go bust. It makes folks feel better when they can ignore or deny a truth that they simply don’t want to face. Those folks won’t like this article a bit, and most probably won’t be tweeting this one. But ignoring the messenger won’t make the message go away.

Even in the face of the lowest mortgage rates in 50 years, home prices would still be trending downward if not for the large quantity of purchases being made by newly created, Wall Street funded investment companies who are buying up foreclosures in record numbers, by borrowing hundreds of millions from banks who are then selling foreclosed properties back to the investors. These same investors are also buying up new homes, and other available inventory. Some 35% of all home sales at present are associated with investment activity. I’d bet that’s it’s more like 40% or even more. Current tracking data does a poor job of identifying who the buyers really are, and how the property will be used.

The banks have not only attempted to avoid the reality of falling asset values by keeping shadow inventory off the market for years now, they’re funding a new system of investment buying that has been helping increase home sales numbers and prices of late. The same banks that are foreclosing on home owners are also lending millions of dollars to the big companies who are buying up these foreclosures. It’s a circular strategy that forecloses, then funds the buyers who’ll buy them. It is increasing prices slightly, which is what the banks want. But the resulting shift from owners to non-owners will have an impact on the housing market and related industries for decades to come.

FHA delinquencies are approaching an unprecedented 20% of all FHA insured loans. This is going to lead to major problems with the Federal Housing Administration. A bailout is likely if FHA is to continue to exist. Government insured mortgages account for about 90% of today’s mortgage market. Since 2008 FHA has virtually facilitated home mortgage loans, as few private lenders would make low down payment loans without the taxpayer-backed assurance that FHA provides. It’s like a house built on stilts waiting for an inevitable earthquake.

And as if all this were not enough proof of housing’s monumental struggle, home sales are highly dependent on the Federal Reserve to continue to manipulate interest rates to keep them low. Essentially the Fed is buying up most of the mortgage backed securities in order to force mortgage rates down and provide “new” sources of funding for mortgage loans. The question is how long can the “all-powerful” Fed keep these rates down? It’s virtually impossible that they will stay low indefinitely, given the need to sell more U.S. treasuries to help pay for massive federal deficits. We are at the point where we are now monetizing the budget deficits.

Essentially QE3 is the largest counterfeiting operation in the history of the world, as stated on Rob Chrisman’s website. I have to agree. Essentially one agency is printing the money that is being used to purchase securities from another. It’s all a big shell game, done under the auspices of trying to bolster employment.

But the phony employment story is understandable, because if Bernanke actually came out and admitted the real reason for doing this – that without it mortgage rates would skyrocket – well, that would not sound so good. And the housing industry “powers-that-be” would have a tough time spinning that into good news for the mainstream media to report.

The president of the Richmond Fed, Jeffery Lacker objected to QE3 strongly. Lacker’s contention is that an open-ended QE3 will have a very negative long term impact on the economy. He’s right, but no one is listening to him. As usual, the industry does not want to hear about the problems with the underlying fundamentals.

It’s been my experience that the only way to prepare for a disaster is to be willing to recognize that a disaster is possible. And the 2008 “melt-down” would be nothing compared to a scenario in which the Fed is no longer able to control interest rates. And with the yearly interest payments on the Federal debt now at an estimated one-half trillion per YEAR, it’s anyone’s guess how long the so-called housing recovery will last, since it’s built on a foundation of phony economic activity.
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Donna S. Robinson is a real estate investor, author and residential market analyst located in Atlanta, GA. Follow her on twitter at donnaconsults. Her latest book, Basics Of Real Estate Investing is now available on Amazon.

Image courtesy Ricardo Carreon via flickr

The plan is to purchase $40 BILLION per month in Mortgage Backed Securities “until such time as unemployment reaches an acceptable level”. But Bernanke’s statement omitted any direct benchmark as to what an “acceptable” unemployment number would be. And, the big question that few in the main stream media have asked is “How in heck will purchasing MBS’s have a direct impact on unemployment?” But I suppose the answer is that as long as you protect the big banks from collapsing under the weight of mortgage assets that are worth less than one-half of their face value, you are essentially protecting the economy from further job losses. This post from John Wu helps explain what Bernanke is really doing.

Everyone at the Fed is well aware of how unpopular another trillion dollar banking bailout would be if the public actually KNEW that the taxpayers were about to pony up another 2 or 3 trillion dollars to help the banks out, not to mention politically unpopular in a big election year.

So, Bernanke is doing this for “the man on the street” to help grow more jobs and reduce unemployment. It’s the one angle that the public will tolerate, and besides most people have no idea what Mortgage Backed Securities are, and how buying them actually impacts the economy.

We’ve had QE1, QE2, and Operation Twist since November of 2008, growing the FED balance sheet by TRILLIONS of dollars. Yet unemployment is still above 8% “Officially”, while private analysts using real numbers (not government accounting gimmicks), placed the unemployment level for August 2012 at 22.8%.

Housing is still in the tank. Mortgage credit is still very difficult to obtain, and home sales have improved only marginally. At present mortgage rates are around their lowest level since 1956, yet this has failed to jump-start the housing market. It’s very difficult to see how buying trillions more in MBS’s will result in a different outcome than we’ve already seen.

No, the real strategy here is to cover up a second bailout of banks and the bad assets they are holding. When Bernanke says “prices are not rising”, or “Inflation remains low” he’s not referring to YOUR food prices or YOUR inflation rate, he’s referring to the value of bank owned mortgage’s or Mortgage Backed Securities. In his world, inflation is non-existent and deflation is the real problem. If you live atop the banking and finance pyramid, as Bernanke does, you see the problem in a totally different light.

Bernanke obviously believes that saving “main-street” means funneling money to the big banks for as long as necessary. And that’s exactly what an open-ended QE3 is really about. It’s a very dangerous position Bernanke is taking. The market fundamentals that are keeping home values low and delinquency rates high are like a tidal wave which Bernanke seems to believe he can hold back with a large bucket of sand.

In fact, Reggie Middleton, of BoomBustBlog.com has called Bernanke out on this and says that Bernanke is “lying through his teeth“. The general media just accepts it as if it were a normal occurrence. Middleton further points out that if Bernanke were interested in reducing unemployment, he could purchase SBA bonds and funnel the money directly into loans for small business, and hit the unemployment problem directly at the business level.

Instead Bernanke has chosen to force interest rates even lower, continue to prop up the banks, and buy MBS’s for as long as it’s needed. The direct beneficiary of this policy is the big banks who will be unloading their mortgages at what will likely be a much better price than they’d get if they were forced to sell them on the open market.

So the same game of hiding toxic assets, that began with the 2008 crisis is continuing today – pump up the banks and hope that the housing market and broader economy begins to recover before the dollar totally collapses.
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Donna S. Robinson is a real estate market analyst, investor, author and speaker in Atlanta, GA Follow her on twitter at donnaconsults and read her blog at her website: RealtyBizConsulting.com

Been foreclosed on? You might just be entitled to some compo © HitToon.com – Fotolia.com

There are 3 primary qualifying criteria to obtain a free review of your case by the Federal Reserve:

1. The property must have been your primary residence.

2. The foreclosure action took place between January 1 2009 and December 31, 2010.

3. Your mortgage servicer appears on the list of servicers whose activities have been targeted by the Federal Reserve for review. For the complete list click here.

The list is too lengthy to show them all here, but it includes a number of major mortgage players. Among those targeted for review are Countrywide, Bank of America, Wells Fargo Bank NA, Suntrust Mortgage, GMAC Mortgage, CitiFinancial, and many more.

If you meet the three primary criteria, and you would like to file a request for review of your case, you can go to IndependentForeclosureReview.com to request the review forms and get more information on how the process will work. Even if your foreclosure was not completed you may be eligible for financial compensation if your case shows that you were financially harmed by the foreclosure filed against you.

If it is found that your foreclosure was initiated through the use of “robo-signing” tactics, the documents do not indicate that your mortgage servicer had the legal right to initiate a foreclosure action against you, or you believe that the foreclosure action was wrongly filed, and the documents indicate this, you may be eligible for financial compensation. There is a framework for determining what the general compensation might be, though no specific dollar amounts are listed on the website. Still, foreclosure is a traumatic experience, especially when it was not warranted, so at least you’ve got a chance to prove your case if you went through a foreclosure filing during the specified time frame.

One handy tip: The online filing process is quick and easy. But if possible, scan any related loan or modification documents ahead of time, and have them ready to upload before you begin filling out your application. There will be a place to upload any documents before you complete your application. The documents need to be ready to upload or you will have to do this step and start the application again. The application is short, but has to be completed in one sitting, as there is no way to save what you’ve done while you search for your paper documents.

Before you begin your application, I recommend scanning all needed foreclosure and/or loan modification documents into a pdf file, and saving them to your computer. Then you can simply upload them with the application. The entire application can then be completed online in less than 10 minutes.

Anyone who experienced a foreclosure filing or a related loan modification during this period is encouraged to file for a review. The review process is detailed and may take several months, but this is a rare opportunity to have the financial authorities take a second look at your case. Uploading any needed loan documents to help support your case may help shorten the wait time.

If you were not affected, but you know someone who was, please share this information with them. The original deadline was July 31. It has been extended to allow extra time for those who may not have been aware that they were eligible to file.

For many borrowers, having a down payment isn't enough © Scanrail - Fotolia.com

The report was compiled by the Federal Reserve, following a survey of major lenders in the US, and found that banks were much less likely to grant a mortgage to borrowers than they were back in 2006, before the market crashed, reported the New York Times.

Looking at the example of a borrower with a FICO credit score of 620 and a 10% down payment, the report found that the majority of banks were unlikely to issue a mortgage to any individual in this situation.

For borrowers with a FICO score of 680, the report states that moderate net fraction of banks were less likely now than in 2006 to issue a mortgage, irrespective of any down payment.

Furthermore, the report states that even borrowers with a FICO score of 720 could struggle to get accepted for a loan, as, compared to 2006, “a modest net fraction of banks were less likely to originate loans to borrowers with a FICO score of 720 and a 10 percent down payment.”

However, survey respondents did indicate that the likelihood of a loan being issued in the case of a 720 FICO score would increase if the borrower was able to put up a deposit of 20% or more.

The report underlines the general perception that while mortgages continue to be offered at record low rates, numerous home buyers cannot get accepted for one, and even those who do find they cannot qualify for the lowest rates.

In its analysis of the report, the New York Times explained that borrowers with a FICO score of 720 would likely receive a loan at 3.70% interest, for a standard $300,000 fixed rate mortgage over 30-years. Meanwhile, a borrower with a FICO score of 620 would likely be offered a 5.07% mortgage interest rate, which amounts to an extra $242 a month on their mortgage repayment.

Renters? Cover your assets.

© dedMazay - Fotolia.com

Banks have done a less than stellar job at handling foreclosures and REO sales. The National Mortgage Settlement says so. Now they get a landlording job? Whew!

To help manage the mountain of distressed properties and supply the market with what could be more affordable housing, the Federal Reserve issued an updated policy statement to guide banks in renting out foreclosed properties they hold.

In a six-page, April 5 policy statement, the Fed said banks must typically make efforts to actively market and sell real estate owned (REO) properties, but given the tight housing and credit markets “banking organizations my rent residential properties (within statutory and regulatory holding-period limits) without having to demonstrate continuous active marketing of the property.”

The move is not unlike other federal agencies’ efforts to turn foreclosed properties into revenue generators.

The Federal Housing Finance Agency (FHFA), in conjunction with the U.S. Department of the Treasury and U.S. Department of Housing and Urban Development (HUD), has announced a”Real Estate Owned (REO) Initiative (ROI)” to unload an estimated 200,000 REOs held by Fannie Mae, Freddie Mac (GSEs or “Government Sponsored Enterprises”) and the Federal Housing Administration (FHA).

In the “Federal Reserve Policy Statement on Rental of Residential Other Real Estate Owned Properties” the Fed instructed banks to follow these and other guidelines:

• Use an operational framework to evaluate overall costs, benefits and risks of renting while taking into account property conditions, local market conditions for rental and owner-occupied housing, and the REO holder’s capacity to “safely and soundly” engage in rental activity.

• Consider clear and credible approaches for the ultimate disposition of the rental property, including seller-assisted financing and rent-to-own arrangements for tenants.

The Bank of America recently announced a pilot plan to allow homeowners at risk of foreclosure to hand over deeds and sign leases that will let them rent the houses back from the bank at a market rate.

• Banks that rent must do so in compliance with all applicable federal, state, and local laws and regulations, including: landlord-tenant laws; landlord licensing or registration requirements; property maintenance standards; eviction protections (such as under the Protecting Tenants at Foreclosure Act); protections under the Servicemembers Civil Relief Act; and anti-discrimination laws, including provisions of the Fair Housing Act and the Americans with Disabilities Act.

After a recent fair housing study the National Fair Housing Alliance, on April 10, filed discrimination charges over banks’ handling of foreclosed properties.

• Banks must also determine if rental activities are permitted under applicable laws and review homeowner and condominium association bylaws and local zoning laws for prohibitions against property rental. Third-party property managers should come with bank oversight to be sure they comply with these federal, state, and local laws.

• Banks with large inventories of what become rental properties should have a documented rental strategy, including formal policies and procedures for rental activities, and a documented, operational framework, down to the individual property level.

Policies and procedures should describe how the bank complies with local building codes; has adequate property insurance coverage; handles property taxes and other related obligations; and makes certain expenditures on improvements are appropriate for the property and the neighborhood.

The Fed said policies and procedures should also address risk management issues related to renting residential REO properties, including credit risk associated with tenants’ potential failure to make timely rent payments; vacancies, liability and the need for legal action against tenants for delinquency, including eviction.

Again, good luck with all that.