Federal Housing Authority-insured loans that were 90 days or more delinquent jumped to 558,944 in January – a 62.1 percent increase compared to a year ago, according to a Feb. 19 CNNMoney.com report. In comparison, the number of loans that were 30- or 60-days delinquent fell over the past year. The surge has some industry watchers worried that the agency may need a bailout.

According to mortgage consultant Allen Hardester, aggressive originators pushed loan qualification requirement limits for risky borrowers in order to secure FHA backing after the subprime lending market ended in 2007. “They took advantage of lax underwriting by FHA to interpret the guidelines broadly,” Hardester told CNNMoney.com. (more…)

At a Feb. 19 speech in Nevada, President Obama announced plans to allocate $1.5 billion to state finance agencies to develop new foreclosure prevention programs, according to a White House news release. The funds will be available to states where average home prices fell more than 20 percent from market peak. Obama was joined by Senate Majority Leader Harry Reid, D-Nev., whose state has been amongst the hardest hit.

“During these difficult economic times, we will work to help responsible homeowners stay in their homes and stabilize the housing market so home values can rise,” Obama said during the speech. “This program will allow housing finance agencies in the places hardest-hit by the housing crisis find innovative ways to help homeowners stay afloat, and empower local agencies that know these communities best.” (more…)

Existing-home sales fell in January but are above year-ago levels, according to the National Association of REALTORS®.

Existing-home sales — including single-family, townhomes, condominiums, and co-ops — dropped 7.2 percent to a seasonally adjusted annual rate of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5 percent above the 4.53 million-unit level in January 2009.

Lawrence Yun, NAR chief economist, said there is still some delay between shopping and closing that affected current sales. “Most of the completed deals in January were based on contracts in November and December. People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales,” he said. “Still, the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.” (more…)

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Investors breathed a sigh of relief Wednesday when Federal Reserve Chair Ben Bernanke told Congress that interest rates are likely to remain low for an extended period. The economy, he said, “still requires support for recovery.”

Investors see these low rates as a boon to a recovery of employment and business.

Bernanke’s announcement also took the edge off the news Wednesday that housing sales hit a new low in January.

“Even though nothing he said was particularly new, it was just enough to calm the ruffled feathers that were out there,” said Jim McDonald, chief investment strategist at Northern Trust in Chicago.

Source: The Associated Press, Tim Paradis (02/24/2010)

By Alan Zibel

WASHINGTON—The end of the foreclosure crisis is finally in sight. For the first time in almost three years, the number of homeowners falling behind on their loans is declining.

The drop means the number of people losing their homes will start to fall. But some pain from the crisis is sure to persist. Because millions of people are already in foreclosure, deeply discounted houses will put pressure on home prices for years. (more…)

NEW YORK (CNNMoney.com) — More bad news on the housing bust front: Nearly 25% of all mortgage borrowers were underwater, meaning they more on their loans than their homes are worth.

First American CoreLogic, the research firm that monitors housing equity, reported Tuesday that 11.3 million homeowners — or 24% of all homes with mortgages — were underwater as of the end of 2009. That’s up from 23% and 10.7 million borrowers three month earlier.

Nevada was the state with the worst record at 70% of all mortgaged properties underwater. That was followed by Arizona (51%), Florida (48%), Michigan (39%) and California (35%).

For many homeowners, being underwater, also know as negative equity, has few consequences. If they’re not planning to sell and can afford their monthly bills, they can wait out the downturn. (more…)

REO transactions still higher at 27.2%

BY INMAN NEWS, TUESDAY, FEBRUARY 23, 2010.

Inman News

Short sales jumped to 15.9 percent of home purchase transactions last month, according to a monthly survey by Washington, D.C.-based business research firm Campbell Surveys and mortgage industry publication Inside Mortgage Finance.

That’s the highest percentage of short sales since the survey first launched in July of last year, when short sales made up 12.5 percent of transactions. Before January, the peak had been 15.1 percent in October. That figure fell to 12.6 percent in November and rose to 13.7 percent in December.

Sales of damaged real estate owned (REO) properties and move-in ready REO properties made up 13.4 percent and 13.8 percent of January home purchase transactions, respectively.

In November, those numbers were 12.3 percent and 12.6 percent, respectively, and rose to 12.4 percent and 13.1 percent in December.

“Short-sales activity took a temporary dip in November around the expected expiration of the first-time homebuyer tax credit,” said Thomas Popik, the survey’s research director, in a release.

“Few first-time homebuyers wanted to take the chance that their short-sale transaction wouldn’t be approved by the Nov. 30 deadline. But now that the tax credit has been extended, we see first-time homebuyers once again snapping up attractively priced short sales.” (more…)

By Kimberly Castro , On Thursday February 18, 2010, 3:32 pm EST

It was supposed to be a momentous occasion for Brian, who was about to close on his first home. But after signing a thick stack of documents–and taking part in the ceremonious passing of the keys–something felt off for the then 26-year-old Montgomery County, Md., resident. There wasn’t even a chilled bottle of bubbly or a housewarming gift to punctuate this pivotal moment. “My Realtor told me that I can take him out for a steak,” recalls Brian, who prefers that only his first name be used to guard his privacy. “He made me feel like I owe him something, when he just got paid a $12,000 commission. It felt like a kick in the face.” (more…)

By Les Christie, staff writerFebruary 19, 2010: 10:09 AM ET

NEW YORK (CNNMoney.com) — The mortgage market may have begun to turn: Fewer borrowers fell behind on their payments during the last three months of 2009.

A seasonally adjusted 9.47% of all mortgage loans were late during the fourth quarter, down from 9.64% at the end of September, according to the National Delinquency Survey, which is produced by the Mortgage Bankers Association and is considered the bible of the industry.

This figure is significant because it shows a reduction — even if just slight — in the volume of loans heading toward the foreclosure process. This has not happened since 2006. (more…)