One of the holdups on getting a loan modification is if the loan is securitized. For details please see . A second snag is the can only help borrowers who meet the following conditions. The loan sits with the GSEs The owner haven’t been more than 30-days late on the mortgage payment in the last 12 months The first mortgage does not exceed 125% of the current market value of your home A third problem is getting reluctant second lien holders (e.g home equity lenders) to cooperate in a modification. Second lien holders are typically wiped in a modification. Bankruptcy Escape Hatch To overcome these obstacles, some seek bankruptcy. Please consider . More than two years into Oregon's historic residential real estate crash, an unusual opportunity presents itself to struggling homeowners. An increasing number of Oregonians qualify to use a rarely utilized bankruptcy court maneuver to reduce, or even eliminate, their second-mortgage or home-equity debt. To be eligible, homeowners must owe more on their first mortgage than their house is worth. That's an increasingly large segment of the population. Recent studies indicate that 20 to 25 percent of Americans are "underwater" on their home mortgages. The strategy works like this: Homeowners must first file Chapter 13 bankruptcy and file a motion asserting their home's value has diminished to the point that it's worth less than they owe on the first mortgage. If the motion prevails and the lender doesn't challenge, the court will then cancel the lien the second-mortgage lender holds on the home. The lender's secured debt is converted to unsecured debt, which most often is eliminated in full in the bankruptcy process. And the strategy raises issues of morality, for lack of a better word. Many of these homeowners took out second mortgages to buy ski boats, trendy kitchen upgrades and other luxury purchases. Should they get off without repaying the loans? Oregon has at least six banks on the edge of...

NEW YORK (Reuters) - For most Americans, the U.S. housing market collapsed about four years ago. For three real estate heavyweights, it's just getting started.

NEW YORK, Dec 21 (Reuters) – The biggest changes to home loan disclosures since the 1970s are around the corner and many in the industry are warning that misunderstandings will create a logjam of confusion just as housing tries to recover. A complete overhaul of the “good faith estimate” — a standard disclosure document sent to borrowers — under the Real Estate Settlement Procedures Act, known as RESPA, will take effect on Jan. 1, potentially disrupting home sale closings. The new procedures developed by the U.S. Department of Housing and Urban Development come after years of attempts to improve transparency on costs associated with closing a loan, including broker fees, and prevent the kind of surprising jumps in payments that made the housing crisis worse. While the thrust of the rules is understood, there is widespread trepidation about how to put them into practice. Changes that expand a one-page form to three have been the subject of countless hours of debate for banker and broker groups that question the benefits to consumers. Disputes aside, the rules must now be implemented. Much of the industry is still trying to understand what must be disclosed — and how and when. Bob Rice, president of First Secure Financial in San Bernardino, California, was astounded by what he heard at a brokers’ meeting last week. “The confusion and misunderstandings over RESPA is worse than I thought,” said Rice, who sought more education. “Of the 20 or so in attendance, each had a different interpretation of at least one item.” The new estimate details and defines loan terms and costs, versus undefined line items in the old one. It specifies rate, whether the rate can change, and encourages the borrower to shop around. WANTED: MORE PRECISION For the first time, good faith estimates must match, with few exceptions, costs on closing statements. This means more work and liability for lenders since inputs of lawyers, title companies and brokers increase chances for error. Lenders are looking...

The use of fiscal rules has been generally associated with improved fiscal performance and more successful fiscal consolidations, although the current financial crisis has strained fiscal rules, says a new study by the IMF’s Fiscal Affairs Department.

Yesterday I that the Fed's favorite house price index showed prices fell in October. However most people follow the Case-Shiller index, and the October Case-Shiller house price index will not be released until next Tuesday. Although Case-Shiller is an average of three months, I think that index will probably show a price decline too. The following graph shows the LoanPerformance index (with and without foreclosures) and the Case-Shiller Composite 20 index in real terms (all adjusted with CPI less Shelter). Click on graph for larger image in new window. It is interesting to look at the sharp decline in the index with foreclosures at the end of 2008 - this was what housing economist Tom Lawler described as "destickification" in the high foreclosure areas. Notice the LoanPerformance price index without foreclosures (in red) is now at the lowest level since September 2002 in real terms (inflation adjusted). This isn't like 2005 when prices were way out of the normal range by most measures - and it is possible that total prices have bottomed (although I think prices will fall further), but prices ex-foreclosures probably still have a ways to go - even with all the government programs aimed at supporting house prices.

December 22, 2009 TG-459 Treasury Surpasses $4 Billion Milestone in Recovery Act Funds to Create Jobs, Provide Affordable Housing To Date, 50 State Housing Authorities Receive Funds Under 1602 Program WASHINGTON – As part of the Obama Administration's effort to strengthen communities and ease pressures on the housing market, the U.S. Department of the Treasury today announced that the American Recovery and Reinvestment Act (Recovery Act) has now provided more than $4 billion in funding to spur the development of affordable housing around the country. To date, 50 state and territorial housing authorities have received payments in lieu of tax credits to stimulate the construction and completion of affordable housing projects, including awards in this round made to Arizona, Delaware, Georgia, Hawaii, Indiana, Michigan, Minnesota, New Mexico, Ohio, Pennsylvania, and Utah with Texas being a first time recipient. "The Recovery Act has created innovative partnerships between federal and state governments to provide a much needed boost to local economies," said Treasury Deputy Secretary Neal Wolin. "By uniting with state housing authorities, Treasury has made available more than $4 billion to jump start housing development in communities around the country. That investment has already resulted in hundreds of new construction jobs and new housing units for families in need of affordable alternatives." In May 2009, the Treasury Department launched an innovative program under section 1602 of the Recovery Act to provide payments in lieu of tax credits to state housing agencies to jump start the development or renovation of qualified affordable housing for families across the country. Upon receiving notice of these allocations, state housing authorities manage a competitive process to disburse funds to qualified developers. This is an ongoing program open to additional state applications. The following is a complete list of funds awarded to states under the...

Here is a little more positive data ... Click on map for larger image. Here is a map of the three month change in the Philly Fed state coincident indicators. Twenty five states are showing declining three month activity. The index increased in 20 states, and was unchanged in 5. Here is the Philadelphia Fed state coincident index for November. In the past month, the indexes increased in 26 states, decreased in 16, and remained unchanged in eight (Colorado, Idaho, Indiana, Louisiana, New Jersey, Oklahoma, Oregon, and Utah) for a one-month diffusion index of 20. Over the past three months, the indexes increased in 20 states, decreased in 25, and remained unchanged in five (California, Iowa, New Mexico, Pennsylvania, and Rhode Island) for a three-month diffusion index of -10. The second graph is of the monthly Philly Fed data of the number of states with one month increasing activity. Based on this indicator, most of the U.S. was in recession from about December 2007 through October 2009 - although the graph shows the recession ending in July 2009 (based on other data). Note: this graph includes states with minor increases (the Philly Fed lists as unchanged). A majority of states were showing increasing activity in November for the first time since the beginning of the recession.

submits: Originally uploaded by

: Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.2 percent in the third quarter of 2009 ... GDP was revised down from the advance estimated of 3.5% to the preliminary estimate of 2.8%, and now to 2.2%. Personal consumption expenditures (PCE) were revised down to 2.8% from 2.9%. And investment in nonresidential structures was revised down to -18.4% from -15.1% (aka falling off a cliff).

One question nagging investors is how housing will hold up absent government intervention next year. But housing's recovery is shaky even with government props, as data this week will likely show. Tuesday is expected to kick off with strong numbers, when the National Association of Realtors reports home resales for November. Economists estimate that existing homes sold at an annualized rate of 6.3 million units, the fastest since February 2007 and up 39% from last November. The rebound in existing-home sales has been driven mainly by the government's tax credit for first-time home buyers. The credit was extended in November, but the bulk of credit-driven sales may have jammed into the September-to-November stretch, when the extension was in doubt. The NAR and many economists expect a drop in sales in the next month or two.

A by the Federal Reserve Bank of New York offers some empirical support to the view among senior Federal Reserve officials that they do have the technical means to raise interest rates when needed, despite some naysayers who caution there is too much money in the system to do so effectively. The Fed has pumped $1 trillion into the banking system in the past year, which in theory means all of that cash floating around in the financial system puts downward pressure on bank lending rates, interfering with the Fed’s ability to raise rates as the economy improves to fend off inflation. But there is a way around it: The Fed can pay banks interest on bank reserves of unused cash. That puts the Fed in a position to bid up rates if and when it chooses to, even if there’s a lot of cash in the financial system. The New York Fed paper argues that the Fed could get its target fed funds rate to 2% or higher even if there were $800 billion of extra cash in the banking system. Right now, the effective fed funds rate is a little under one-quarter of a percentage point. Although the recession almost certainly has ended, Fed officials have said they intend to keep it there for an extended period because the economy is still weak and inflation low.

The banking industry's debate over new financial rules is intensifying as the White House meets with community bankers Tuesday.

The success rate for financially troubled homeowners who have had their mortgages restructured is starting to improve.

The strain of recession is using up money in state unemployment funds faster than contributions from payroll taxes are coming --

There is no immediate sign that any big western government is about to renege on any deals. But the dramas around Greece and Dubai have been a ‘wake-up’ call