Foreclosure

Data released this week by federal regulators show that 14 percent of all mortgages were non-performing at the end of 2009 and more than half of the loans modified in the first quarter of 2009 were delinquent again by the end of the year. With the continued deterioration in loan performance, the regulators says lenders' have stepped up home retention actions, but the report notes that servicers expect a larger number of mortgages to slip into foreclosure in the coming months as prevention options are exhausted.

Utah's first full-service real estate foreclosure center was opened this month in Taylorsville by RCI Realty, a real estate firm based in Cottonwood Heights. The new center has a team of experts trained in all fields to educate homeowners and investors about buying and selling foreclosed properties, and interested individuals have free access to attorneys who can guide them through the legal maze that often accompanies these processes.

The number of foreclosures started by lenders in Massachusetts during the month of February increased 13.2 percent from the prior month but was down 7.5 percent from a year ago, according to the Warren Group, a Boston-based real estate research firm. The company noted that in the last six months, the pace of foreclosure petitions has been considerably lower than in the early part of 2008.

The administration unveiled major expansions to its foreclosure prevention plan Friday. The new policies include principal write-downs for underwater mortgages, an FHA negative equity refinancing program, temporary assistance for unemployed homeowners, and larger incentives for short sales and deeds-in-lieu. Treasury officials say the new program enhancements will better align efforts to meet President Obama's goal of helping 3 to 4 million borrowers save their homes.

The Obama administration plans to announce a major new housing initiative Friday involving principal write-downs for underwater borrowers and temporary assistance for unemployed homeowners, according to sources. It's expected that principal reduction will become a central consideration in Home Affordable Modification Program (HAMP) evaluations, with additional incentives going to servicers who trim mortgage debt for those who owe more than their home is worth. The plan will also require lenders to temporarily reduce monthly mortgage payments for those borrowers who have lost their jobs.

Texas claimed the biggest increase in foreclosures during the month of February with a rise of 35.3 percent, according to new data published by ForeclosureListings.com. Posting the second largest increase was Michigan, where foreclosures jumped 17.54 percent during the month. California came in at No. 3, followed by Florida. The report did note some signs of improvement, with foreclosures actually declining in such states as Georgia and Arkansas.

The administration's foreclosure prevention plan has come under heavy fire lately, with critics taking aim at everything from the program's slow conversion rates to servicers' lack of response to borrower and counselor requests. To counter all the flying bullets, a Treasury official told lawmakers Thursday that the administration is instituting new consumer protections into the program, including requiring servicers to evaluate all borrowers who've missed at least two payments and prohibiting foreclosure proceedings until it's determined borrowers are HAMP-ineligible.

California Attorney General Edmund G. Brown Jr. forced two foreclosure rescue firms to close their doors this week and secured a court judgment that prohibits the three principal individuals involved from ever again working in the real estate industry. Brown also recovered more than $1 million in restitution for victims he says were left with ""false hope"" after paying upfront fees for loan modification services that were never delivered.

The Home Affordable Modification Program (HAMP) will fall far short of the administration's promise to prevent foreclosure for 3 to 4 million homeowners, according to one federal watchdog. Neil Barofsky, special inspector general for the Troubled Asset Relief Program, says HAMP's disappointing results have raised questions about the program's effectiveness. He's determined that Treasury has set targets that aren't ""meaningful"" and that HAMP is ""particularly vulnerable to re-defaults.""

Homeowners in Washington are suing Bank of America, alleging the nation's largest lender is intentionally thwarting borrowers' requests to make loan modifications that would prevent homes from being foreclosed. As of the end of February, Bank of America had permanently modified nearly 21,000 mortgages under the Home Affordable Modification Program. Attorneys for the plaintiffs in the suit say BofA has made an affirmative decision to slow the loan modification process for reasons that are solely in the bank's financial interest.