One of the issues surrounding foreclosure prevention programs offered by the government is the fact that these programs are voluntary for mortgage lenders. Which means many mortgage lenders just aren’t participating — or they’re making things difficult. As a result, the Obama Administration is increasing the pressure on mortgage lenders.

The Administration plans to require loan servicers to report on how they plan to reach a decision on loan modification applications they receive. Communication with borrowers will also be scrutinized. Failure to comply could mean sanctions and/or penalties. Also, the Obama Administration is working to provide more information to borrowers so that they better understand the loan modification process, especially as it relates to permanent modifications. CNN Money reports on complaints from borrowers:

A growing number of borrowers are complaining that they are stuck in trial modifications. Some 650,000 homeowners are currently in this preliminary phase, but only a small fraction have received permanent assistance. …

Borrowers that qualify for long-term modifications can keep making the lower payments for five years. At that point, the interest rate will be set at the rate at the time of the adjustment, currently about 5%.

Loan servicers, however, say they are having trouble getting the necessary documents from borrowers, while homeowners maintain that their financial institutions are repeatedly losing the paperwork.

You can see where things are getting out of hand. But will pressure from the president help streamline the process?

There is a lot of clever advertising out there. I love this Sony commercial featuring Peyton Manning and Justin Timberlake. It made me laugh as I watched football with my husband and our Thanksgiving guests yesterday. Forget Dubai for a minute, and Black Friday, and enjoy.

Happy Friday!

Hope you are enjoying your Thanksgiving. I am glad to be blessed, and I have much to be thankful for.

I hope you can find joy in your life as well.

Happy Thanksgiving from LoanShak!

We have heard that the recession has come to a technical end. But many have been waiting for other aspects of the economy, such as jobs, to catch up. While the jobs market has a long way to go, there are signs of stability appearing. And one of them is the rather large drop in initial unemployment claims this week.

Advance data for the jobs report has been released, and it appears as thought jobless claims have fallen well below the expected 500,000 mark to 466,000. While this still indicates that jobs are being lost, the pace is slowing, and there are some hopes that the situation could ease considerably by the middle of next year.

In addition to that news, it also appears that personal spending rose in October. This is another indication that people are starting to feel a little more comfortable with the situation. However, once the holiday season is over, it will be interesting to see whether or not the current feelings of optimism remain.

For the second quarter in a row, home prices have risen. The Case-Shiller index was released this morning, and showed that home prices rose in the 3rd quarter. This could be good news for those whose homes are underwater, as the improving home prices would help alleviate the issues concerned with negative equity.

However, there is still a ways to go, in spite of the improvement seen. MarketWatch reports on the state of the housing market right now:

“We have seen broad improvement in home prices for most of the past six months,” says David M. Blitzer, chairman of the index committee at Standard & Poor’s, in a statement.

“However, the gains in the most recent month are more modest than during the seasonally strong summer months. Fewer cities saw month to month improvements in September than in August in both seasonally adjusted and unadjusted figures.”

There are hopes that the extended first time home buyer tax credit will help spur more home buying — and help home prices on the road to recovery.

Housing starts may have slowed in October, but the news isn’t all bad on the housing market front. Indeed, existing home sales are heading higher, surging in October to levels not seen since February 2007 — before the mortgage market collapse began. CNN Money reports on existing home sales in October:

The National Association of Realtors reported that existing home sales rose 10.1% last month to a seasonally adjusted annual rate of 6.1 million units, up from the downwardly revised rate of 5.54 million in September.

The sales beat forecasts of 5.7 million annual units, according to a consensus estimate of analysts compiled by Briefing.com, and were 23.5% above the 4.94 million-unit pace of 12 months ago.

Clearly, there are home buyers out there who are interested in finding great deals on distressed homes and homes in foreclosure. Additionally, these great deals receive even greater weight with the extension of the first time home buyer tax credit.

Even though I don’t use American Express, I really enjoyed this commercial with the smiley faces. I thought it was clever, the way that they took ordinary objects and made them look sad or happy.

Happy Friday!

Over the next decade, the U.S. government is expected to build up right around $9 trillion in debt. But is all of that $9 trillion spending for a variety of programs? Actually, no. CNN Money reports that $4.8 trillion of that debt –  more than half — will actually be due to interest. More than half our debt over the next decade will build up because we are paying for the privilege of borrowing money. We won’t see additional services or benefits. We’ll be paying to keep things going.

This is a rather large reminder about the power of interest. Indeed, Albert Einstein is credited with calling compound interest the most powerful force in the universe. While there is no way to determine the authenticity of this statement, it nevertheless rings true. It still rings true even if you are talking about simple interest. Whether you are getting a home mortgage, using a credit card or buying a car, interest adds to the total cost you will end up paying.

And it is vital to remember that interest doesn’t net you any advantages beyond allowing you to borrow in the first place. So, even though you may have to borrow for some things, it is in your best interest to get the best possible interest rate, and to get as short a term as you can manage, so that you pay less in interest overall.

Today, the numbers for October housing starts came in, and it appears as though things slowed down in a major way during October. The fact that there was such a slowdown in October only reinforces the idea that recent progress made by the housing market was largely due to the first time home buyer tax credit. The news is that, with the extension of the credit (perhaps it’s time to buy a home), there are expectations that things will pick up again.

However, Wall Street isn’t feeling as sanguine about the whole thing. Since it is clear that recent progress was due to government help, there are concerns that the economy is not doing as well as hoped. As a result, it is little surprise that stocks are down this morning. Some are evening wondering if a double-dip recession is on the way.

If that is the case, and the housing market sees another fall, the buyer’s market may continue.

One of the things you have to be wary of when shopping for a home is to avoid getting too much house. Indeed, one of the problems behind the mortgage market meltdown was that too many people were getting more house than they needed or could afford. Get Rich Slowly points out that our average family size has gone down in the past decade, but the sizes of our homes has increased dramatically. Do we really need that much space? And the mortgage to go with it?

As mortgage applications rise, and as families look to take advantage of a great deal, it is a good idea to stop and reflect. Think about whether or not you can really afford the mortgage you are getting (are the mortgage payments less than 30% of your income?), and then consider whether or not something a little smaller might be in order. Think about your future goals and needs. If you plan to have two or three more children, maybe you need a bigger house to grow into. But for many of us, a bigger house just means more room for stuff we don’t really need anyway.

In the end, you should be brutally honest with yourself. Getting a big house just because you can is not always the best reason. Instead, look at your finances and your lifestyle. Maybe that home is just too much house.