Are these programs really helping or does it delay the inevitable?  So far from what I am hearing, it seems we are only delaying the inevitable but only time will tell.

With that said, here is some terminology to get used to with links for help and the article I recently read from BankRate.com, thanks Sharyn.

HAFA – Home Affordable Foreclosure Alternatives Program

HAMP – Home Affordable Modification Program- Am I eligible for a Home Affordable Modification?

HARP – Home Affordable Refinance Program – Am I eligible for a Home Affordable Refinance?

Bankrate article

So how many foreclosures are actually out there?  It appears that nobody really knows but estimates seem to be between 500,000 – 1 million throughout the nation.

One reason why homeowners foreclose on their homes is because of ARM resets.  When an adjustable rate mortgage term expires or resets, homeowners can find themselves paying a lot more money monthly than expected.  This could place them out of their budget and into a hardship situation which can lead to not being able to fulfill their mortgage obligations moving them to a loan modification, short sale, foreclosure and more inventory overall.

Lucky for homeowner with these types of loans, ARMs have not risen so far because current overall rates have been low.  The problem is that the ARMs are tied into the FED rate and when the FED decides to raise the rate, ARMs will go up too.

This brings me to the article I read over a year ago. While we are still in our current crisis trying to inch our way out, we have a new set of ARM resets that will hit us this year which seems to be greater than our sub-prime issue of late, see the graph below.

IMF Resets

Are we really at the bottom or will it get worse?

Source: The Wall Street Journal, James R. Hagerty (03/19/2010)

Source: Los Angeles Times, E. Scott Reckard (03/20/2010)

Source:http://www.calculatedriskblog.com/2007/10/imf-mortgage-reset-chart.html

“Why should people’s credit be hurt even worse when they’re trying to do the right thing?” said Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group in New York.

And many homeowners are angry that a program designed to help carries such a penalty, said Kathy Conley, a housing counselor with GreenPath Inc., a nonprofit group in Farmington Hills, Mich.

“It’s a feeling of being duped,” she said.

To read more about this click here.

Lis Pendens – A written notice that a lawsuit has been filed which concerns the title to real property or some interest in that real property. The lis pendens (or notice of pending action) is filed with the clerk of the court, certified that it has been filed, and then recorded with the county recorder. This gives notice to the defendant who owns real estate that there is a claim on the property, and the recording informs the general public (and particularly anyone interested in buying or financing the property) that there is this potential claim against it.

Short Sale – Sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.

Foreclosure - The legal and professional proceeding in which a mortgagee, or other lien holder, usually a lender, obtains a court ordered termination of a mortgagor’s equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue homeowners’ association dues or assessments.

A penny here, a penny there all adds up over time.

For information on how to insulate your outlets and switches, head on over to re-nest.com

As long as people are still being laid off, we can expect mortgage defaults thus increases in short sales and foreclosures.  This will hurt home prices if this continues to happen.

Banks are holding a tremendous amount of properties that they will need to unload and according to my understanding, they are just dripping out the inventory not a full scale unload.  If that were to happen, it could drop the housing market further, which would not be a good thing.

Confirming my thoughts on the housing market, an excerpt from the CEO of Freddie Mac Charles Haldeman recently stated that we are at or near the bottom in our housing market.
“The big downside risk to all this is a large wave of homes now in foreclosure potentially hitting the market at prices that are destructive,” Haldeman said.

Source: Reuters News, Soyoung Kim (01/26/2010)