Actively seeking some success stories about the loan modification, they are few and far between.  Instead we read about how one part of a mortgage company is uninformed about what the other is doing.  Take for example the Franklin family of Airville, Pennsylvania.  They applied for and faithfully adhered to the loan modification program guidelines.  However, the day after Christmas they received a letter stating that foreclosure proceedings had begun.  This after their credit was ruined and they ended up owing more than their original amount after months of paperwork and red tape.

The Red Tape Chronicles of MSNBC reveals that the company said a mistake had been made, but the Franklin family does not believe it,

On a single day in early January, she [Debbie Franklin] says, one Chase representative told her that the loan modification plan had been denied, another said it was approved and a third told her the foreclosure had been “suspended.”

“I check my county auctions every Monday to make sure my house isn’t on there,” she said. “I don’t believe anything they say anymore.”

My advice to the Obama Administration is to focus on real mortgage relief rather than just rescuing the housing market.  There are people able to pay for mortgages but unable to refinance because homes are not worth as much as their mortgages. With a simple loan modification like reducing the interest rate, that $200 or $300 could be the difference between someone keeping or losing their home.

Through the last two years, market leaders have said “This is it! We’ve reached bottom!” but they always leave the caveat on the table that “we just don’t know how long the bottom will last - is it V shaped or more like a U?”

The latest report that foreclosure filings have slowed brings new cries of “This is it!” except now we hear the cries as whispers,

But nationwide April foreclosure filings — notice of default, scheduled auction and bank repossession — fell 9 percent from March and 2 percent from a year ago.

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This was the first year-over-year drop since RealtyTrac started tracking annual foreclosure rates in January 2006.

I’ve also heard that a new round of foreclosures are coming, but the newest round is not because of predatory loans, but because of the economy.  Where people lost jobs and consumer confidence dropped, people got in trouble.  In the longer view, with economic indications showing some strengthening (the unemployment rate dropped) so the housing recovery should follow.

What doesn’t kill us only makes us stronger!

Say your parents have a lot of money. They hire housekeepers, gardeners, even a pool boy.  But suddenly they can’t pay the salaries, they can’t pay their bills, they can’t pay for your new clothes - all because they are living on credit and this credit can’t be paid back.

It’s kind of the same thing happening in Greece.  The dominoes are falling and they’re taking a lot of others down with them.  From Longing for Home, John Vaala helps explain it,

The European Union on Monday made public its $1 trillion bailout of Greece and other potential defaults in nations such as Portugal, Spain, and Ireland saving, for now, the value of the Euro from deflating and igniting yet another worldwide monetary crisis.

What’s better is his link to this youtube video.

I rarely cross-reference articles that I write for different sites, but felt this information about alternatives to foreclosure would be helpful to all readers.  From banks.com, here’s just one option that is a possibility before a foreclosure becomes necessary.

Sell and Bring Cash to Closing – Sell the house, but take out another loan so you can bring cash to the closing. You may then just have to repay the smaller amount that you borrowed rather than taking a huge hit on your credit score.

Perhaps it’s not a great choice for a lot of people, but it would save your credit score.  Read the entire article here.

Can you afford the little dog house or the big one?

Photo by cogdogblog via flickr creative commons.

When people lose their homes, the dark times in their lives can eventually be overcome.  By hard work, attention to bills, and saving when possible, a good credit score can be rebuilt.  However, what people are only now realizing is a bad credit score doesn’t just prevent you from buying a home.  Now low scores can prevent affordable purchases, dictate that you’ll live somewhere bad, and even stop you from getting a job.

Let’s say you need a car to get back and forth to work.  A low score doesn’t necessarily mean you CAN’T buy one, it means that you’ll pay out the nose on your higher interest rate.

A low credit score and foreclosure will also be found if you’re renting an apartment or house.  Savvy landlords check your payment history because they don’t want to become another statistic on your list of nonpayments.

What’s even worse - in my opinion - is that now employers check those scores, too.  MSNBC.com reports that bad credit can become a barrier to finding a job,

There are no hard numbers on how often poor credit reports thwart someone’s effort to find a new job. Many applicants will never know; employers aren’t required to explain why a candidate was turned down for a job.

But a recent survey by the Society of Human Resource Management found that many employers use credit checks to screen job candidates. Of the roughly 350 employers who responded, 60 percent said they checked credit histories for some or all job applicants. That’s up from 43 percent in 2004 and just 25 percent in 1998.

A friend of mine just lost out on a job because of her credit score.  She has worked for me in the past so I know from personal experience that she is smart, dedicated, and relentless in getting the job done.  I’m sorry she won’t have the chance to prove this to the other would-be employer.

Last night, President Barack Obama delivered the first State of the Union Address of his presidency. The centerpiece of the speech was the emphasis on job creation. Acknowledging that the economy still needs help, the President laid out plans designed to help encourage more jobs. In addition to highlighting some of the projects in the pipeline, he also pointed out that he plans to offer tax breaks to companies that hire more workers. Employment is a big deal, since it affects many other aspects of the economy.

Employment wasn’t the only focus of the State of the Union last night; President Obama also accepted responsibility for some of the mistakes he made his first year. He also reminded us that fixing two wars and a financial catastrophe is not something that can be done in only one year.

Other plans Obama offered included thoughts on developing alternative energy technology, education reform, health care reform and financial reform. It’s an ambitious list, but the President is in it for the long haul — however long the American people let him stay in for.

The housing market continues to struggle as home prices fall and mortgage applications drop. The Market Composite Index, which measures the volume of mortgage applications each week, dropped this past week. One of the biggest reasons is the fact that the refinancing portion of the index dropped.

Apparently, even though mortgage rates are low, people are reluctant to refinance their homes. This is causing mortgage applications to drop. Perhaps some are waiting to see if mortgage interest rates will drop back below 5%, since mortgage rates rose last week. Another issue is that home values have not been rising, and do get the 80% loan to value ration that many mortgage lenders are asking for is difficult.

Those with mortgages serviced by Fannie Mae or Freddie Mac, though, can take advantage of a refinance program from the government that allows a 125% LTV.

Ever since the financial crisis, Fannie Mae and Freddie Mac have been wards of the federal government, under direct control. This happened when the companies appeared to be on the verge of collapse, and ready to take down a large portion of the mortgage market. With the two GSEs accounting for about 70% of loan originations due to FHA loans, a collapse would have been devastating. Fannie and Freddie are the biggest mortgage lenders in the country, between originations and servicing.

But Barney Frank doesn’t want Fannie Me and Freddie Mac to go back to the way they were before. National Mortgage News Online reports on his opposition:

Chairman Frank said he plans to hold hearings on restructuring the U.S. housing finance system and he has no desire to see Fannie and Freddie return to the former “hybrid” status as a private companies with a public mission.

It is unclear about what might happen going forward, but if Fannie and Freddie are no longer GSEs, they would end up either being completely private, or they would be turned into government home financing programs.

Goldman Sachs has managed pull in profits as revenues jump. So far, the earnings season for financial companies has been somewhat mixed, with some companies reporting profits (like JP Morgan Chase and Morgan Stanley), while others, like Citi, post losses.

But with Goldman in the profit category, it seems as though things are probably looking better overall for the big banks that seemed on the verge of collapse toward the end of 2008. MarketWatch reports on the Goldman Sachs response to their profits:

“Despite significant economic headwinds, we are seeing signs of growth and remain focused on supporting that growth by helping companies raise capital and manage their risks, by providing liquidity to markets and investing for our clients,” Chief Executive Lloyd Blankfein said in a press release.

Some of the biggest helps to Goldman include underwriting fees it earned, as well as the fact that there were pay cuts. Compensation and benefits were cut in response to public outrage, and Goldman appears to have reaped some benefits.