If you lose your job in Pennsylvania, but your credit has been okay up until then - help may be forthcoming.  The Pennsylvania Housing Finance Agency offers help where all that’s needed is a break.  According to CNN Money.com, candidates are carefully screened but the end result is it gives people who have recently lost a job the chance to find another one without losing their house in the process.

“You must have a reasonable prospect of resuming full payments within 36 months and of paying the mortgage in full,” [Brian] Hudson [program director] said.

Loan payments are made directly to the servicers and a lien is placed on the property. The aid is repaid at a 5.25% interest rate over 10 years on average, though the borrower’s financial circumstances are taken into account.

Bravo to Pennsylvania for offering this amazing program to its citizens who are trying to survive the hardships of this economy!

Photo by mknobil via flickr creative commons.

Mortgage companies may be breathing a sigh of relief right now because fewer homeowners were delinquent in their mortgage payments this past quarter than the one before.  According to CNN.com, this could mean that the mortgage market is starting to heal,

This figure is significant because it shows a reduction — even if just slight — in the volume of loans heading toward the foreclosure process. This has not happened since 2006.

Always being an optimist, I hope the healing has begun.  However until I stop hearing about friends who’ve just received their formal foreclosure notice, I’m not buying into this sunny outlook quite yet.

There are thousands of homeowners huddled in their houses today, hiding in the giant shadow of looming foreclosure.  I talked with one earlier today and our conversation turned to the phenomenon of Deed in Lieu of Foreclosure.

Sometimes mortgage companies will agree to work with homeowners, but only if they can prove their ability to pay future house payments if a loan modification is granted.  Other times, it’s simply better for the homeowner to cut his/her losses and walk.

Before you take that drastic action, however, it’s ALWAYS better to stay in contact with the lender.  See if they can help.  In most cases, people have confided in me that the mortgage company won’t do anything until they’ve missed X number of payments.  After this has happened, they are told they won’t help until they get caught up.  O.o

Every now and then, however, a mortgage company will realize it’s more sensible to work with a homeowner and accept a deed in lieu of foreclosure. The company will tell a homeowner they can remain in the property for a certain amount of time, but will need to vacate by a specific date. The homeowner has the opportunity to find another place to live (and is sometimes paid so they don’t destroy the property), while the mortgage company saves on the massive cost of performing an actual foreclosure.

I just asked a local lender about the possibilities of a Deed in Lieu Of from his company. He advised homeowners to contact the Loss Mitigation Department, but overall that they would allow the Deed in Lieu Of was very rare.

Read more about other options other than foreclosure here at Being Frugal.

Nevertheless, good luck!

The last of the housing market data is being tallied from 2009, and it looks like things have ended on something of a weak note. Housing starts dropped 4% in December. Multi-family housing starts gained, but that small victory was completely overwhelmed by the fact that single-family housing starts were down so much.

In my mind, it appears that the news illustrates continued stress on families. Demand for multi-family units indicates that there are plenty of families in financial trouble, and even suffering through foreclosure, looking for less expensive housing. Single-family housing starts are above the bottom seen in 2009, but they are far from showing strength. Improvement in this area is likely to be slow, depending on a change in the employment situation.

Until families can afford single housing units gain, housing starts are likely to continue to struggle.

Even as we hear about a recovering economy, the fact of the matter is that there are some places that have higher rates of foreclosure than others. Here is a chart on foreclosure distribution from 2005 to 2009 found at The Mortgage Reports.

You can see the large spike after the financial crisis toward the end of 2008. And it does appear that foreclosures are declining right now. As long as we see something of an improvement in terms of employment and the overall economy, there should be continued declines in the rate of foreclosure.

Labor market issues continue to plague the economy, slowing recovery and prompting a host of issues. One of the concerns is that the continued high unemployment rate could lead to an increase in foreclosures down the road. This is because as people continue to lose their jobs (or fail to find jobs), they are less able to make their housing payments. And this could result in foreclosure.

Real Estate Pro Articles makes a very interesting point about the rather vicious cycle we’re seeing with regard to unemployment and the economy:

A greater amount of consumer and business confidence is an essential factor in any economic recovery; financial recovery hinges on it. We need more than just incentive programs to prop up businesses and consumer spending; we need an increase in confidence in the economy across the board. Only when the public’s confidence is raised will consumers feel comfortable in investing their money in real estate as well as the rest of the economy; unfortunately, the economy will need to look like it is faring better before more consumers show a higher level of confidence in it.

Until the economy improves, employers will be reluctant to hire. However, the economy can’t improve until employers hire more people, boosting their ability to spend and make mortgage payments. It’s rather circular. But it’s the way things are right now. So it will be interesting to see how things proceed from here.

While the housing market is slowly improving, the fact of the matter is that foreclosures are still very much on the market, and provide a number of interesting opportunities to buy. However, as you move forward with buying foreclosures, it is a good idea to keep some of these considerations, from Real Estate Pro Articles, in mind:

1. Look for a foreclosure in a good location.

2. Research your foreclosure choice, and learn about its back story. Watch out for liens against the home.

3. Keep within your budget, understanding that sometimes even foreclosures can end up out of your price range.

4. If you decide to buy a foreclosure at an auction, make sure that you understand the rules.

5. Know that an auction is not your only choice. You can look for foreclosure listings elsewhere and buy homes from a number of sources.

It is also possible to look into other distressed homes, such as those in pre-foreclosure, or homes that are being sold short, for less than the owner owes.

Even though things are starting to improve in the overall economy (expectations for November home sales are positive), for individuals things are still a bit difficult. This is especially telling in the fact that many prime borrowers are starting to slip into delinquency. The Wall Street Journal reports on the situation with regard to prim mortgages:

The most troubling finding was that even borrowers considered “prime,” or the least risky, increasingly can’t pay their loans. The report said that 3.6% of prime mortgages were more than two months behind on payments, more than double from a year ago.

Some borrowers might receive relief from foreclosures by the fact that some mortgage lenders and servicers are suspending foreclosures at some point during the holidays. However, things are still difficult for many people in terms of the personal finance situation. Jobs are still scarce, and this makes it difficult for borrowers to make their mortgage payments in a timely manner.

The news that 25% of mortgages are underwater is not particularly surprising to many people. Indeed, with home values so low, it is to be expected. While an underwater mortgage does not necessarily lead to foreclosure, it is still a problem, since it can prevent some homeowners from getting a refinance or a loan modification. However, as long as you can afford to make your payments, and you plan to stay in your home for a long time, chances are that you will see a measure of recovery.

CNBC offers this list of U.S. cities that have the most underwater mortgages:

* Tampa-St. Petersburg-Clearwater, Florida: 48.2%

* Bredenton-Sarasota-Vencie, Florida: 48.2%

* Lakeland-Winter Haven, Florida: 49.2%

* Bakersfield, California: 50.4%

* Riverside-San Bernardino-Ontario, California: 58.5%

* Cape Coral-Fort Meyers, Florida: 60.5%

* Valleyo-Fairfield, California: 61.1%

* Orlando, Florida: 62.3%

* Reno-Sparks, Nevada: 62.4%

* Port St. Lucie-Fort Pierce, Florida: 62.5%

* Phoenix-Mesa-Scottsdale, Arizona: 63.5%

* Stockton, California: 66.9%

* Modesto, California: 70.4%

* Merced, California: 74.2%

* Las Vegas-Paradise, Nevada: 81.1%

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?