Foreclosure filings in August increased 27 percent compared to the same month a year ago, a significantly slower pace than in previous months, according to data released Thursday.
Nationwide, 303,800 homes received at least one foreclosure-related notice in August, up 12 percent from July, RealtyTrac Inc. said. That means one in every 416 U.S. households received a foreclosure filing last month.
Illinois ranked ninth in the nation in foreclosure filings in August, with one filing for every 483 households, according to RealtyTrac. That's up 20.7% from July and 72.9% from August 2007.
August's nationwide increase was smaller than the two prior months. June and July both had year-over year increases in foreclosure filings of 50 percent or more. Still, the total number of foreclosure filings is still the highest since RealtyTrac began issuing its report in January 2005.
Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 90,893 properties were repossessed by lenders nationwide last month — up more than half from 43,141 in August 2007, the company said.
The top three states in foreclosure rates were Nevada, California and Arizona, in that order, RealtyTrac said. Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana rounded out the top 10, though Michigan, Georgia, Ohio and Colorado all reported rate decreases year-over-year.
Weak sales, sinking home values, tighter home loan lending practices and a slowing U.S. economy hamstrung by high fuel prices has left some homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan.
Banks and mortgage investors are also holding a glut of foreclosed properties and are slashing prices to get them off the books. more...
Friday
Mortgage Bailout Is Greeted With Relief, Fresh Questions
Investors cheered the U.S. government's seizure of the nation's two troubled mortgage giants, with stock markets rallying in the U.S. and abroad and mortgage rates falling. But obstacles remain if the Treasury's takeover of Fannie Mae and Freddie Mac is to succeed.
Meanwhile, new details emerged of the pressures that led up to Treasury's plan to take the reins of the troubled companies. In the weeks before the government's intervention, nervous foreign finance officials barraged Treasury Secretary Henry Paulson and Federal Reserve officials to find out what was happening with the mortgage giants, according to people familiar with the matter.Among those expressing concern were Asian investors, including the Chinese, say two people familiar with the matter. Foreign banks' concerns were among the factors that helped prompt the government's move on Sunday to take over Fannie and Freddie, these people say.
Monday's performance of short-term financial indicators -- from mortgage rates to stock prices -- suggests the Bush administration's seizure of Fannie and Freddie might work. At the same time, Treasury and its banking advisers were bombarded with questions about their big gamble. Many in the market warned that it will do little to salve the deeper wounds in the American economy and financial markets.
Wild swings in the Dow Jones Industrial Average betrayed this tension. The blue-chip index soared 347 points in the opening minutes of trading, then fell back 253 points from that peak by lunchtime before rising another 197 points. The Dow industrials finished the day at 11510.74, up 289.78.
Sweeping Intervention
Mr. Paulson's weekend announcement represented one of the most sweeping interventions in financial markets since the Depression, essentially putting the government in charge of helping finance American mortgages. Fannie and Freddie are vital cogs in the housing market, backing three-quarters of all mortgages being made in the U.S. now that bruised Wall Street banks have withdrawn from that market. They hold or back more than $5 trillion in mortgage debt. But as the housing market cratered, investors grew nervous about the companies' capital positions and their ability to weather the storm.
Under the takeover, the government replaced the companies' chief executives and shifted management control to their regulator, the Federal Housing Finance Agency, or FHFA. The government pledged to provide as much as $200 billion to help both firms ride through their expected mortgage-related losses. Mr. Paulson outlined his desire to see both companies begin to reduce the size of their mortgage portfolios beginning in 2010.
The challenges that remain are formidable, ranging from whether Wall Street banks can step into the housing-finance void that the two firms will eventually leave behind, to whether Congress can put aside years of bitter fighting to craft a future for the two mortgage giants it initially created.
If Treasury's intervention is working, mortgage rates should fall. Fannie and Freddie could begin backing more mortgages, at least temporarily. The two companies might loosen their very stringent underwriting rules. And housing demand should get a marginal boost, putting a dent in the nation's glut of unsold homes by enticing potential buyers who have been sitting on the fence because of higher interest rates.
The Treasury will be watching closely to see if the companies need a cash infusion. Under the plan announced Sunday, Treasury can make a capital injection if it determines that the companies' assets have fallen below their liabilities. Most market watchers expect that to happen eventually.
Credit markets reacted positively to the move, as spreads -- the difference between the yields on ultrasafe U.S. Treasury bonds and corporate and mortgage debt -- narrowed. As expected, spreads fell dramatically Monday on Fannie and Freddie's own bonds, as well as on those backed by pools of loans that conform to Fannie and Freddie's standards....more
Meanwhile, new details emerged of the pressures that led up to Treasury's plan to take the reins of the troubled companies. In the weeks before the government's intervention, nervous foreign finance officials barraged Treasury Secretary Henry Paulson and Federal Reserve officials to find out what was happening with the mortgage giants, according to people familiar with the matter.Among those expressing concern were Asian investors, including the Chinese, say two people familiar with the matter. Foreign banks' concerns were among the factors that helped prompt the government's move on Sunday to take over Fannie and Freddie, these people say.
Monday's performance of short-term financial indicators -- from mortgage rates to stock prices -- suggests the Bush administration's seizure of Fannie and Freddie might work. At the same time, Treasury and its banking advisers were bombarded with questions about their big gamble. Many in the market warned that it will do little to salve the deeper wounds in the American economy and financial markets.
Wild swings in the Dow Jones Industrial Average betrayed this tension. The blue-chip index soared 347 points in the opening minutes of trading, then fell back 253 points from that peak by lunchtime before rising another 197 points. The Dow industrials finished the day at 11510.74, up 289.78.
Sweeping Intervention
Mr. Paulson's weekend announcement represented one of the most sweeping interventions in financial markets since the Depression, essentially putting the government in charge of helping finance American mortgages. Fannie and Freddie are vital cogs in the housing market, backing three-quarters of all mortgages being made in the U.S. now that bruised Wall Street banks have withdrawn from that market. They hold or back more than $5 trillion in mortgage debt. But as the housing market cratered, investors grew nervous about the companies' capital positions and their ability to weather the storm.
Under the takeover, the government replaced the companies' chief executives and shifted management control to their regulator, the Federal Housing Finance Agency, or FHFA. The government pledged to provide as much as $200 billion to help both firms ride through their expected mortgage-related losses. Mr. Paulson outlined his desire to see both companies begin to reduce the size of their mortgage portfolios beginning in 2010.
The challenges that remain are formidable, ranging from whether Wall Street banks can step into the housing-finance void that the two firms will eventually leave behind, to whether Congress can put aside years of bitter fighting to craft a future for the two mortgage giants it initially created.
If Treasury's intervention is working, mortgage rates should fall. Fannie and Freddie could begin backing more mortgages, at least temporarily. The two companies might loosen their very stringent underwriting rules. And housing demand should get a marginal boost, putting a dent in the nation's glut of unsold homes by enticing potential buyers who have been sitting on the fence because of higher interest rates.
The Treasury will be watching closely to see if the companies need a cash infusion. Under the plan announced Sunday, Treasury can make a capital injection if it determines that the companies' assets have fallen below their liabilities. Most market watchers expect that to happen eventually.
Credit markets reacted positively to the move, as spreads -- the difference between the yields on ultrasafe U.S. Treasury bonds and corporate and mortgage debt -- narrowed. As expected, spreads fell dramatically Monday on Fannie and Freddie's own bonds, as well as on those backed by pools of loans that conform to Fannie and Freddie's standards....more
Government Bails Out Fannie Mae and Freddie Mac
closely following the government bailout of Fannie Mae and Freddie Mac. In taking over the two mortgage giants, the U.S. government is taking responsibility for the two firms, which provide funding for around three-quarters of new home mortgages.
James Hagerty, Ruth Simon and Damian Paletta examine the takeover and how it enables the Treasury to acquire $1 billion of preferred shares in each company and has pledged to provide as much as $200 billion to help the two companies deal with heavy losses on their mortgage defaults. All of this action could mean a greater burden placed on American taxpayers.
The bailout has also led to activity on the stock market this morning as investors hope the government’s actions will help bring the Wall Street credit crisis to an end, as Peter McKay reports. He adds that dangers do remain for stock investors, including the spread of job losses and slowing growth overseas, as well as the low prices of homes in the U.S. combined with high unsold inventory.
Heidi Moore examines the winners and losers of the bailout on the Deal Journal blog. Among the winners, she writes, are homeowners, Hank Paulson and Republicans, while lobbyists, Congress and management make the list of losers.
Presidential candidates Barack Obama and John McCain have both agreed that it is certainly time for government action on Fannie Mae and Freddie Mac, as Moore writes in a separate piece. Both candidates agree that the two mortgage companies are not properly structured. Obama expressed that he had “no sympathy” for the now-ousted CEOs of Fannie and Freddie, while McCain said he would “[make] them go away” if he is elected....more
James Hagerty, Ruth Simon and Damian Paletta examine the takeover and how it enables the Treasury to acquire $1 billion of preferred shares in each company and has pledged to provide as much as $200 billion to help the two companies deal with heavy losses on their mortgage defaults. All of this action could mean a greater burden placed on American taxpayers.
The bailout has also led to activity on the stock market this morning as investors hope the government’s actions will help bring the Wall Street credit crisis to an end, as Peter McKay reports. He adds that dangers do remain for stock investors, including the spread of job losses and slowing growth overseas, as well as the low prices of homes in the U.S. combined with high unsold inventory.
Heidi Moore examines the winners and losers of the bailout on the Deal Journal blog. Among the winners, she writes, are homeowners, Hank Paulson and Republicans, while lobbyists, Congress and management make the list of losers.
Presidential candidates Barack Obama and John McCain have both agreed that it is certainly time for government action on Fannie Mae and Freddie Mac, as Moore writes in a separate piece. Both candidates agree that the two mortgage companies are not properly structured. Obama expressed that he had “no sympathy” for the now-ousted CEOs of Fannie and Freddie, while McCain said he would “[make] them go away” if he is elected....more
Ban on Down-Payment Aid Is Fought...
Members of Congress are making a last-ditch effort to head off an Oct. 1 ban on the use of seller-assisted down payments on federally insured mortgages with a compromise measure designed to win over skeptical federal housing officials.
The proposed bill would resurrect the programs, which Congress, with the backing of the Department of Housing and Urban Development, axed earlier this year. The compromise measure would limit their use to borrowers with higher credit scores. In exchange, HUD would be able to institute risk-based pricing for federally insured mortgages, allowing the agency to charge higher premiums for less-creditworthy borrowers.
Supporters of the measure face an uphill battle, with just weeks before the Oct. 1 deadline and with Congress focused on other matters in the weeks before an election recess. Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee, said that HUD has appeared receptive to the proposal, but a HUD spokesman said the agency had "deep reservations about the legislation in its current form."
Under the programs, a third party, usually a nonprofit, provides a down payment to the buyer and is reimbursed by the seller, often a home builder. That allows buyers to qualify for a mortgage backed by the Federal Housing Administration, which requires a down payment of at least 3% -- which will increase to 3.5% on Oct. 1.
The programs had largely filled the void left by the subprime-mortgage market that all but vanished in 2007. Federal officials renewed an effort to end seller-funded assistance earlier this year, arguing that borrowers were two to three times as likely to default on their loans if they received their down payment from a nonprofit. Other critics say that builders simply increase the price of a new home by the price of the down payment....more
The proposed bill would resurrect the programs, which Congress, with the backing of the Department of Housing and Urban Development, axed earlier this year. The compromise measure would limit their use to borrowers with higher credit scores. In exchange, HUD would be able to institute risk-based pricing for federally insured mortgages, allowing the agency to charge higher premiums for less-creditworthy borrowers.
Supporters of the measure face an uphill battle, with just weeks before the Oct. 1 deadline and with Congress focused on other matters in the weeks before an election recess. Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee, said that HUD has appeared receptive to the proposal, but a HUD spokesman said the agency had "deep reservations about the legislation in its current form."
Under the programs, a third party, usually a nonprofit, provides a down payment to the buyer and is reimbursed by the seller, often a home builder. That allows buyers to qualify for a mortgage backed by the Federal Housing Administration, which requires a down payment of at least 3% -- which will increase to 3.5% on Oct. 1.
The programs had largely filled the void left by the subprime-mortgage market that all but vanished in 2007. Federal officials renewed an effort to end seller-funded assistance earlier this year, arguing that borrowers were two to three times as likely to default on their loans if they received their down payment from a nonprofit. Other critics say that builders simply increase the price of a new home by the price of the down payment....more
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