High Default Rate Seen for Modified Mortgages
High Default Rate Seen for Modified Mortgages
June 16, 2010, Wall Street Journal
Fitch Ratings Ltd. forecasts that most borrowers who get lower mortgage payments under a federal government program will default within 12 months. Among those with loans that aren't backed by any federal agency, the re-default rate within a year is likely to be 65% to 75% under the Obama administration's Home Affordable Modification Program, or HAMP, according to a report to be released Wednesday by Fitch, a New York-based credit-rating firm. Almost all of those who got loan modifications have already defaulted once. Diane Pendley, a managing director at Fitch, said the failure rate was likely to be high largely because most of these borrowers were mired in credit-card debt, car loans and other obligations.
Home Construction Sinks, Building Permits Down
June 16, 2010, Associated Press
Home construction plunged last month to the lowest level since December and building permits also fell, the latest signs that the construction industry won't fuel the economic recovery. Builders are scaling back now that government incentives have expired. The Commerce Department said Wednesday that construction of new homes and apartments fell 10 percent in May to a seasonally adjusted annual rate of 593,000. April's figure was revised downward to 659,000. The results were driven by a 17 percent decline in the single-family market, which had benefited earlier in the year from federal tax credits of up to $8,000. It was the largest monthly drop in single-family construction since January 1991.
Lenders Go After Money Lost in Foreclosures
June 16, 2010, Washington Post
Over the past year, lenders have become much more aggressive in trying to recoup money lost in foreclosures and other distressed sales, creating more grief for people who thought their real estate headaches were far behind. In many localities — including Virginia, Maryland and the District — lenders have the right to pursue borrowers whose homes have sold at a loss to collect the difference between what the property sold for and what the borrower owed on it, also called a deficiency