There is a lot of activity in the housing industry, and particularly the financial side, with government and the private sector working to reduce foreclosure inventories, and to help underwater homeowners to refinance or modify their mortgages to avoid foreclosure. Some of the current news releases about how it's all working (or not working) include:
- Some have characterized the home loan modification effort as "broadly dysfunctional." One of the complaints the borrowers have is that their documents are lost after submission to lenders, delaying their application process while they try to recreate them. One initiative, LoanPort, a site that allows borrowers to upload digital versions of their documents, is hoped to be one solution to the problem. But, some analysts see it as a good idea, but too small to have any appreciable effect on the loan modification problems.
- According to a letter just released to lenders by the FHA, effective immediately, borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement “to take advantage of declining market conditions” or to purchase another property at a reduced price. There are some possible exceptions, but it's generally a "burn me once, not twice" reaction to borrowers who have exited one mortgage with a short sale, and now want a new FHA loan for another home purchase.
- Though most of us aren't in this group, those with mortgages over $1 million are now defaulting at 3 times the rate of those with lesser loan balances. Many are just walking away from homes that they can't sell for enough to pay off their mortgages.
The good news is that the combination of a number of programs is beginning to reveal some light at the end of the mortgage crisis tunnel.