Some of the major banks seem to think so. J.P. Morgan Chase, for one, is adding almost 2,000 new loan originators, geared specifically for the home loans market. Do they know something we don’t know? Many housing experts are predicting that the market will continue to struggle for a while, but heavy hitters like Chase don’t just add staff willy-nilly. You can bet they’re thinking things are going to get better, and probably sooner rather than later.

So what are they seeing that we aren’t? Our guess is that a company that has been in business as long as Chase has knows that these kinds of things go in cycles. Sure, things have been rough for a while. Very rough. But they have been rough before. While there’s no way to prognosticate flawlessly where the housing market will begin its upswing, we’re guessing Chase thinks it’s pretty soon.

At the very least, they want to be prepared when the low cost of housing and increasingly attractive interest rates begin to drive the housing market forward and upward again. Which it will do eventually. Given time, in a capitalist system, it always does.

So what does that mean to Joe Consumer? Well, it depends on your situation, but if your credit is good enough to land a decent interest rate, it might mean that it’s time to go shopping for a house. You’re not likely to find the prices this low again in your lifetime, and due to government pressure (to say nothing of profit), the banks are eager to lend money and get the market rolling again.

That’s not to say that you should just go out and enter into a 30 year commitment lightly. But, if you want a house anyway, it might be the ideal time.

Photo via Emery_Way

But lest we continue on this gloomy tone indefinitely, recent evidence has shown that the number of foreclosures has stabilized, and may even be declining. Maybe even more important is the finding that fewer and fewer of the foreclosures are related to high risk loans. Rather, the recent trend has been towards high income families who have undergone a significant change, such as loss of a job.

Home loans are, slowly but surely, showing the first signs of a comeback. While it would be way too optimistic to say we are out of the woods as a country, it might just possibly be within the bounds of reason to say that we are starting to see the dim light at the end of the tunnel.

While banks are still a little skittish about making loans in high risk situations, several government programs have come into effect that may make it possible for you to obtain a home loan, even if your credit is somewhat less than perfect. And if your credit score is good, there’s never been a better time to buy a home.

While it might seem distasteful to some to buy a house that has been foreclosed on, keep this in mind. Not taking a great deal on a house does not help those who, for whatever reason, were not able to keep up the payments on the house. And repossessed property often sells for a fraction of the price of similar properties. So, as much as we all hate to see anyone go through the misfortune of losing their home, there can be winners in these situations as well.

In short, if your credit is good and you don’t already own a home, what are you waiting for? And even if your score isn’t the best in the world, it might still be worth a try to see if lenders can help you.

Photo via Penningtron

Today, they seem to be scarce. Where have they gone? Are zero down home loans a thing of the past?

Yes and no. While it is true that banks and mortgage lenders are a lot more hesitant to offer mortgages to borrowers with poor credit, nothing down, no discernable income, and no demonstrable way to pay for the home loan, it is simply not true that zero down home loans are completely unattainable.

Harder to come by, but not gone

Make no mistake. To qualify for a zero down mortgage these days, you have to fall under a set of special circumstances. If you have a very good credit score, you may qualify for such a loan. Or, if you have served honorably in the United States military, you certainly qualify for a zero down loan through the Veteran’s Administration (VA). Additionally, there are a number of government programs available to help people buy homes, especially in areas that are either out very rural areas, or in the inner cities.

The almighty credit score

Keep a good eye on your credit score. If your credit is not good enough to qualify for a zero down home loan, and you didn’t serve in the armed forces, there are still things you can do. If nothing else, bide your time, work on paying your bills off (thus improving your credit score) and putting some money aside for a down payment. Even if you do end up being eligible for and opting for a zero down home loan, having a nest egg stored up is always a good idea before buying a home.

Will they disappear altogether?

There’s no way the average person can accurately guess what the housing market will do. Even experts in the field disagree. But, it stands to reason that as the market stabilizes, buyers with little or no money for a down payment will soon be able to negotiate a mortgage with their bank or lending institution again.

Photo via basheertome

What it was

One of the decisions that the government made in order to help the struggling housing market after the crash and subsequent economic disaster was to offer a tax credit to new home buyers. The credit was available to home buyers with a maximum income level that varied a little bit during the term of the program.

The program was designed to help folks who hadn’t owned a home in at least 3 years to buy one. Buyers could get a tax credit of 10 percent of the home’s purchase price, up to a maximum of $8,000. That means if you bought a home for $65,000, you could get $6,500 in tax credits. A home that had a price of $150,000 would give you $8,000 in tax credits.

The program added a tax credit for existing homeowners for a while, too. That credit was smaller, with a maximum of $6,500. Both programs ended at the end of April, 2010.

Did it work?

New home sales in March 2010 rose 27 percent, which was the highest level in nearly five decades. The annual rate of home sales was beyond even the most optimistic predictions. Home sales jumped in every region in the country.

Much of that has had to do with the tax credit. Economists believe the credit did its job, and the program was allowed to expire rather than being renewed.

You might still qualify

There are some exceptions to the expiration. If you’re serving in the Armed Forces or working for the U.S. Government outside of the U.S., you can claim the credit into 2011. For all groups, however, you have to meet the qualifications and enter into a contract by April 30, 2011. You need to close by June 30, 2011.

Experts don’t believe the program will be re-introduced anytime soon. Hopefully, this is good news and shows that perhaps the housing market is well on its way to making a full and complete recovery.

Photo via zaphodsotherhead

Lawmakers in California are currently working on a number of proposals that are aimed at the tens of thousands of California residents who are looking at foreclosure or who have already lost their house. It’s estimated that just under 90,000 Californians are currently facing foreclosure, and that half a million default notices were sent out in 2009.

There are currently three bills before the California legislature that are aimed at these folks. Two of the bills are designed to help borrowers be able to get reductions in their regular monthly home loan payments before they go into default.

The third bill is designed to help folks that lost a home to foreclosure avoid paying large tax bills. Specifically, that bill would make it so that the tax code in California matches up with federal law. It would make it so that homeowners don’t have to pay the taxes when their debt is forgiven after their home is foreclosed or after a short sale.

As it stands today, when a bank accepts less for a home that what it’s worth, the difference between those two figures counts as income for the former homeowner. This can create a severe financial hardship for people who are already struggling to make ends meet.

Whether or not these bills will pass the legislature remains to be seen. Even if they do, there is the possibility of a veto. California Governor Arnold Schwarzenegger vetoed another housing bill in March, due to a provision in that bill that would have increased certain tax penalties. The current bills don’t have those tax penalties, so it would seem that a veto is unlikely.

No, this Arizona man didn’t bare it all. Instead, he did what a lot of folks do when their home loan is being foreclosed: he stripped his home of anything and everything of any estimable value.

I’m not talking about regular possessions. The man had every right, of course, to take his couch, his TV, and his collection of 1920s-era magazine advertisements for ladies’ undergarments. That is, assuming he actually owned some of those items.

No, this man removed things like the bathroom sinks, the water heater, air conditioning units, doors, cabinets and even the garage door opener.

This practice, also known as “stripping,” isn’t all that uncommon. Sometimes, when a bank forecloses on someone’s property, they’ll even go so far as to remove a furnace or even pipes and wiring from the home.

Stripping (of this kind, anyways) is also highly illegal. The fixtures in a house are considered part of the house itself. Even if you’ve installed, let’s say, a new faucet in your kitchen, it’s now part of the house. You could, of course, go buy a cheap faucet, remove your expensive one and replace it with the cheap one. In most cases, that’s not going to be worth the time and trouble involved, however.

These stripping crimes often go unreported. The Arizona man was caught when a neighbor noticed the man taking items from the home. The man had actually hired or brought several people to help him move things from the home.

It’s worth noting, too, that in this case the stripping took place after the home had already been foreclosed. It wasn’t in danger of foreclosure or about to be foreclosed, it was already through the process.

Photo via pinguino

The mortgages are 4.99 percent, 30-year fixed rate loans. They’ll be funded from the proceeds of a bond sale.

The Loan Program

The loan is a 30 year, fixed rate fully amortizing first mortgage loan. There are no origination points on FHA, VA or RD loans. There is a 0.5 percent origination fee on conventional loans.

Closing costs and down payment assistance is available in the form of a $5,000 second mortgage. This mortgage is a 30 year deferred, zero percent loan. It may be used for your down payment or closing costs. It’s never forgiven and is due at the end of 30 years. It will be due sooner if the property is sold, refinanced, rented or ceases to be the borrower’s principle residence.

The loan is good for any single family attached or detached condo, townhome or PUD anywhere in Hillsborough County and some surrounding areas. The purchase price of the home may not exceed $258,690.

How to Qualify

The following potential buyers qualify:

• First time buyers, meaning they have not had an ownership interest in a home for the past three years
• A two person household income of $63,831
• A three or more household income of $73,406

Note: In addition to this assistance in buying a home in Hillsborough County, you can also take advantage of the current federal $8,000 tax credit (if you qualify). Talk to your lender about the particulars.

For more information visit: www.hillsboroughcountyhfa.org.

Photo via Evil Erin

Essentially, the number of homes owned by the government is rising. In November 2009, for example, around 40 percent of all purchases of pre-owned homes were done so with loans that were guaranteed by the FHA. This is a dangerous number when combined with the trends in foreclosures.

As of the end of September, for example, there were 72,000 plus homes for sale by Fannie Mae that had been foreclosed. This comes after a total of more than 98,000 homes that Fannie Mae acquired during the first three quarters of that year. While Fannie has sold many homes, it still has a large number for sale.

The numbers for Freddie Mac are similar. The foreclosure inventory has risen nearly 50 percent, up to over 41,000 units as of September.

The default rate for homes guaranteed by Fannie Mae has been rising, too. Currently, it’s at about five percent. This means that one out of every 20 loans guaranteed by Fannie Mae is going into default. Those are staggering numbers.

Ultimately, these numbers reflect a growing pool of homes owned by the Federal government.

The goal, of course, is to get these homes into the hands of buyers. If the economy turns around, more and more of these government-owned foreclosed homes will go back into the market. In the meantime, however, more and more home loans fail and the holdings of the government grow.

Still, Fannie and Freddie are taking steps to try to speed up sales of foreclosed homes owned by the government. For example, they can now accept purchase offers on repossessed homes without having to notify the loan servicer. This helps to get rid of repossessed homes in a much quicker fashion, and to help buyers into those homes.

Photo via jimbowen0306

As of now, loan servicers are no longer able to cancel a Make Home Affordable trial modification that is scheduled to expire prior to January 31 for any reason, other than that the property doesn’t qualify. This means that borrowers who missed trial modification payments or who did not turn in the required documentation can’t be dropped from the program. The servicers are required to notify the borrower in writing of what’s missing, and the borrowers have another 30 days to comply.

This directive comes as recent reports show that the vast majority of people that enter the trial modification program – over 80 percent by some estimates – aren’t following through with the entire process, and are winding up in redefault.

Part of the administration’s Mortgage Modification Conversion Drive, this instruction was designed to help borrowers whose trial period expired at the end of the year. The administration has blamed both borrowers and home loan servicers for the problems, as servicers have severely struggled to get the necessary documentation to make the changes to the home loans permanent.

This followed a move by the administration in October to try to loosen the requirements for documentation. In October, they allowed an extra two months for an initial set of trial modifications to be completed, beyond the original three months.

The raw statistics for the home loans modification program aren’t encouraging. Servicers have made permanent only 31,382 modifications by the end of November. It’s estimated that 4 million mortgages in the United States are eligible for the program. There are an estimated total of 728,000 home loans stuck somewhere or another in the modification process, with many set to expire on December 31. The administration hopes to see as many as 350,000 of those become permanent.

The good news is that home loan servicers seem to have made some progress. Servicers have added extra staff to not only process the home loan modifications, but to handle the process of getting the required documentation from home loan borrowers in order to keep the process moving along.

Photo via monkeywing

This represents action on the part of national banks and thrift servicers to implement over 680,000 home loan modifications. These modifications help to prevent foreclosure, and represent a significant degree of progress.

The report wasn’t all good news, however. Overall, the amount of mortgages in the servicing portfolio that were current dropped again, which represents the sixth consecutive quarterly drop. Currently, only 87 percent of mortgages in the servicing portfolio were current and performing. Approximately 3.2 percent, or over one million mortgages, were in foreclosure. Another 6.2 percent of the home loans were in a state of serious delinquency. Prime mortgages, which represent the biggest home loan category, were up nearly 20 percent from the second quarter. Today, prime mortgage delinquencies were at twice the levels of the same quarter in 2008.

The other problem with these numbers is that the rate of re-default seems to be staying pretty high overall. While the most recent home retention actions have had much lower re-default rates that actions taken previously in the year, the rates are still way too high. Around half of the loans modified find themselves under re-default within just six months of the modification. The report defines “re-default,” as being 60 or more days past due or in foreclosure.

Overall, home loan servicers implemented a whopping 274,000 trial plans. These trial plans were set up under the Home Affordable Modification Program. In addition to these trial plans, over 400,000 other actions involving home retention were done by servicers. This includes things like payment plans, trial plans and loan modifications. These actions don’t require any incentive from the federal government and are handled purely by the loan servicers themselves.

The vast majority of home loan modifications served to reduce monthly payments on the home loan, both in terms of interest and principal.

This is also a trend in the right direction. Home loan servicers implemented around double the number of actions as they did new foreclosures. For every two home loans that were lost in a foreclosure sale, home loan servicers made home retention actions for nine other families.

You can download the complete report from the OCC web site at www.occ.gov or the OTS website www.ots.gov.

Photo via respres