The government’s Home Affordable Modification Program (HAMP) continues to add borrowers to its roster each month, but the pace has slowed.

Data released Friday by Treasury and HUD shows 19,940 permanent HAMP mods were granted during the month of March. That’s down 10 percent from the 22,263 permanent mods completed in February and down 45 percent from 36,432 in March 2011.

Raphael Bostic, HUD assistant secretary, says fewer borrowers are falling behind on their mortgage these days. “We’re making important progress in providing relief to homeowners under the Obama administration’s programs,” Bostic said.

As of the end of March, there were 794,748 borrowers in active permanent HAMP modifications, and 76,218 of these also had payments reduced on a second lien or the lien extinguished entirely through the Second Lien Modification Program (2MP) of the government’s mortgage relief effort.

Bostic notes that in addition to HAMP modifications, homeowners are finding relief under the Home Affordable Refinance Program (HARP). Nearly half a million families have taken advantage of HARP, standing to save on average $2,500 a year, Bostic explained.

Though he described these efforts as providing “significant positive benefits,” Bostic followed that with an appeal to lawmakers to help improve program results. “[W]e are asking the Congress to approve the President’s refinancing proposal so that more homeowners can receive assistance,” he said.

While HAMP activity has slowed, other government-assisted foreclosure alternatives have held fairly steady. During March 2012, 4,486 homeowners received a short sale or deed-in-lieu of foreclosure through the Home Affordable Foreclosure Alternatives Program (HAFA).

There were 4,340 HAFA deals put in place the month before and 5,447 a year earlier in March 2011. To date, servicers have completed a total of 40,252 HAFA transactions.

More and more HAFA short sales are being approved in Temecula while borrowers are finding that the Loan Modification Programs may not be in their best interest at the end of the day.

Existing-home sales were down in March but continue to outpace year-ago levels, while inventory tightened and home prices are showing further signs of stabilizing, according to the National Association of REALTORS®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 2.6 percent to a seasonally adjusted annual rate of 4.48 million in March from an upwardly revised 4.60 million in February, but are 5.2 percent above the 4.26 million-unit pace in March 2011.

Lawrence Yun, NAR chief economist, says the recovery is in the process of settling into a higher level of home sales. “The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases,” he says. “Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year. With job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year.”

As things slowly start to turn around, this year is believed to be a year of recovery in the housing industry in and around the Temecula area. Only time will tell the whole story but more and more economists are saying the same thing. Housing will be notably better this year. Have you been on the fence waiting for a sign?

Foreclosure rates down in most markets

CoreLogic data shows improvement in 61 of 100 largest metros

By Inman News
Inman News®

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Foreclosure rates are lower than they were a year ago in 61 of the nation’s 100 largest housing markets, according to a new analysis of loan data by CoreLogic.

CoreLogic counted 1.4 million homes in the foreclosure process during February, down 7.6 percent from a year ago.

With 65,000 homes completing the foreclosure process in February, loan servicers were completing foreclosures at an annual rate of 670,000 per year. That compares to 862,000 foreclosures actually completed in the preceding 12 months.

The percentage of borrowers behind on their mortgage payments by 90 or more days fell to 7.3 percent in February, down from 7.8 percent at the same time a year ago but up slightly from the 7.2 percent seen in January 2012.

As we have been noticing, the number of bank owned properties continues to decline and by the sound of this article notices of defaults are falling as well. Could this be another sign of recover? Time will tell.

NAR: 2012 home sales will be strongest in past 5 years

February pending sales up 9.2% from year ago

By Inman News
Inman News®

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The National Association of REALTORS® is predicting existing-home sales will jump 7 to 10 percent in 2012 to the highest level in five years, based on an “uneven but higher sales pattern” so far this year.

Pending home sales fell a seasonally adjusted 0.5 percent from January to February, which was up 9.2 percent from the same time a year ago, NAR said today in releasing its latest Pending Home Sales Index.

Last week, NAR reported a similar trend for existing-home sales, which were down 0.9 percent from January to February, but up 8.8 percent from a year ago.

The pending sales data released today provides a glimpse into more recent trends, because it tracks homes that were under contract in February — deals that will in most cases be finalized within one or two months.

NAR said 31 percent of REALTORS® experienced contract failures in February, in some cases because buyers’ mortgage applications were rejected or because appraisals came in below the negotiated price.

In the Northeast, NAR’s index slipped a seasonally adjusted 0.6 percent from January but was up 18.4 percent from a year ago.

The Midwest saw a month-over-month gain of 6.5 percent and a 19 percent gain from a year ago.

Pending home sales fell 3 percent in the South from January to February, but were up 7.8 percent from a year ago.

In the West, the index declined 2.6 percent from January to February and was 1.8 percent below the index rating in February 2011.

In its latest economic forecast, NAR predicts existing-home sales will total 4.65 million in 2012, up 9.1 percent from last year. That forecast assumes that the U.S. economy will grow at a 2.3 percent annual rate and add 2.7 million jobs this year.

More good news on the real estate front. Should all indicators be correct, we could finally be moving into a brighter future.

Sales of foreclosed homes in Murrieta fell slightly last month, in line with declines seen on the county and state levels, a real estate tracking firm reported Tuesday.

Bay Area-based ForeclosureRadar.com‘s monthly report shows that a total 72 repossessed properties were sold in Murrieta in February, compared to 76 in January—a 5 percent drop.

In neighboring Temecula, 58 foreclosed homes were sold in February, down from 59 in January.

Foreclosed homes sold in Lake Elsinore last month numbered 36, down from 62 in January, a 41 percent difference.

In Wildomar, 15 foreclosed homes were sold in February, down from 26 in January for a 42 percent dip.

Riverside County fell significantly last month, dovetailing with a double-digit decrease in auctions statewide, the website reported.

The monthly report shows that a total 1,141 repossessed properties were sold countywide in February, compared to 1,421 in January—a 19 percent dip.

The county’s foreclosure sales were down 23 percent from a year ago, when 1,482 homes ended up on the auction block.

In Murrieta, foreclosure sales were down 37 percent from February a year ago.

In California, sales of distressed properties sank 22 percent in February, and compared to a year ago, were down 23 percent.

ForeclosureRadar.com founder Sean O’Toole said the foreclosure “wave” that some observers had predicted this year was nowhere in sight. He warned, however, that laws in California and Nevada intended to delay eviction proceedings in preference to giving defaulting mortgagors an opportunity to work out loan modifications risked prolonging the foreclosure crisis.

Another sign of improvement? Only time is really going to tell us the whole story, but it is definitely a move in the right direction.

This column is brought to you by the NAR Real Estate Services group.

A lender will, on occasion, forgive some portion of a borrower’s debt. The general tax rule that applies to any debt forgiveness is that the amount forgiven is treated as taxable income to the borrower. Some exceptions to this rule are available, but, until recently, the borrower was required to pay tax on the debt forgiven. A new law enacted in December 2007 provides relief to troubled borrowers when some portion of mortgage debt is forgiven. However, this relief expires on December 31, 2012 and NAR will be working to obtain an extension throughout the year.

Below is some general information you need to know about this law and cancellation of mortgage debt.

General Rule for Debt Forgiveness
If a lender forgives some or all of an individual’s debts, the general rule is that the forgiven amount is treated as ordinary income and the borrower must pay tax on the forgiven amount. Exceptions apply for bankruptcy, insolvency and certain other situations, including mortgage debt.

Current Law for Mortgage Debt
(Jan. 1, 2007 through Dec. 31, 2012): A borrower can be excused from paying tax on forgiven mortgage debt. The debt must be secured by a principal residence and the total amount of the outstanding obligation may not exceed the original mortgage amount plus the cost of any improvements.

Does the relief apply only to a sale?
No. The provision has broader application. Lenders might forgive some portion of mortgage debt in a short sale (when value at sale is less than the amount owed) or in a foreclosure where the debt is wiped out. In addition, if a borrower still living in the home is able to make an arrangement with a lender that reduces the principal balance of a mortgage, the amount forgiven in that workout will not be taxed.

Can the homeowners in a short sale or foreclosure claim a loss?
No. The loss is considered a personal loss and is, therefore, ineligible for either capital loss or ordinary loss treatment.

What happens to the seller when mortgage debt is forgiven?
Until January 1, 2013, the homeowner will pay no tax on any forgiven amount.

Does this provision apply to a refinanced mortgage?
Only in limited circumstances. The relief provision can apply to either an original or a refinanced mortgage. If the mortgage has been refinanced at any time, the relief is available only up to the amount of the original debt (plus the cost of any improvements). Tax relief is generally not available for second mortgages or home-equity lines of credit where the funds are not used for home improvement. Any amount that is not eligible for the relief provision will be taxed as ordinary income.

How does the homeowner get the correct information to the IRS?
The lender is required to provide the homeowner and the IRS with a Form 1099 reflecting the amount of the forgiven debt. The borrower/homeowner must file a Form 982 to reflect the amount forgiven and to show the reason why the forgiven amount is not taxable. Any taxable portion of forgiven debt will then be reported on the homeowner’s Form 1040 for the tax year in which the debt was forgiven.

What if a property declines in value but the owner stays in the house?
The provision would not apply. The provision applies only at the time of sale or other disposition or when there is a workout (reduction of existing debt) with the lender.

Do all lenders forgive mortgage debt when property values decline or the home is in foreclosure?
No. Some states have laws that allow a lender to require a repayment arrangement, particularly if the borrower has other assets. Forgiveness of debt is always at the lender’s discretion.

Linda Goold is the Tax Counsel for National Association of REALTORS®.

If you are thinking about a short sale or letting your house go into foreclosure, you might want to read this article regarding the current law for Mortgage Debt Forgiveness scheduled to expire on December 31, 2012.