Lights! Camera! Action!

No it’s not one of the big commercial television networks spending millions of dollars on some game show with a stupid name. Rather, it’s more of a “reality” television show.

The State of Michigan is hitting the airwaves with a cable television show of its own called “House Michigan” aimed at promoting homeownership and everything that entails.

Since January 2006 Michigan has ranked in RealtyTrac’s top 10 states with the greatest foreclosure activity in the nation, most of that time maintaining a position in the top five.

In June 2008 — the most recent monthly ranking available from RealtyTrac — the Great Lakes State ranked fifth nationally, reporting 12,025 properties with foreclosure filings, accounting for 5 percent of the nation’s total foreclosure filings for the month. With one in every 375 Michigan households receiving a foreclosure filing during the month — 1.3 times the national average — the state’s foreclosure rate ranked fifth highest among the 50 states.

With all these distressed homeowners getting into financial trouble, combined with layoffs from the auto industry, it’s understandable that the state government may want to do something to promote homeownership and to educate its citizens about the details of what owning a home really means from a practical standpoint.

In a press release distributed by the Michigan State Housing Development Authority, the goal of the show is to provide programming that will give “realistic advice to improve the quality of life for everyone and lead to vibrant cities and neighborhoods across the state.”

Everything from affordable housing and refinancing a mortgage, to avoiding foreclosures and where to go for help with homelessness and domestic violence will be topics open for discussion on the program.

With unemployment well above the national average, and average home prices continuing to deflate statewide, any information that can help struggling homeowners deal with their situation and become more informed borrowers in the process can only help in these times of financial turmoil that are affecting so many people around the country.

First-time homebuyers in California are getting help in purchasing their piece of the American Dream thanks to a public-private partnership and $200 million in bond funds allocated to the California Housing Finance Agency (CalFHA).

Gov. Arnold Schwartzenegger announced Monday that CalFHA’s Community Stabilization Home Loan Program will dole out the money, expected to help as many as 1,000 Californians obtain their piece of homeownership.

But there is a catch!

The catch is buyers have to be willing to buy their dream home in one of the designated areas approved by CalFHA — such as Alameda, Contra Costa and Riverside counties — and the foreclosure property must be specifically set aside for the program and owned by one of the participating lenders — including Wells Fargo, HomeEq, CitiMortgage and Fannie Mae.

The reward for participating in this program is actually pretty sweet, however. The lenders (and hopefully more will come forward as the program gets going) have all agreed to price the properties at 12 percent below market value.

Also, the program will offer financing at a fixed 5.5 percent interest rate for 30 years and without a down payment! However, there is the normal catch here too in that the consequence for no down payment is that borrowers will be required to pay for PMI (private mortgage insurance).They will have to meet CalHFA’s income limits as well.

Will this help slow down the onslaught of foreclosure activity in the state? No! But it could help potential homebuyers looking to RealtyTrac for bargain properties to realize their dream of homeownership if it is the right house in the right place, as determined by CalHFA and its partners.

Home prices were down again in May, but a few regions of the country experienced a ever-slight uptick in prices from the previous month, giving officials at the Office of Federal Housing Enterprise Oversight (OFHEO) a chance to be cautiously optimistic in the press release announcing the numbers.

"It is very hard to draw conclusions from a one-month number, especially in these uncertain times; but the numbers in the Pacific, East and West North Central Divisions may be good signs," said OFHEO Director James B. Lockhart in the release.

Nationwide, the OFHEO report showed home prices in May were down 0.3 percent from April and down 4.8 percent from May 2007. The three Census Divisions mentioned by Lockhart were the only ones out a total of nine that did not report a monthly decrease.

The Pacific Division, which includes Hawaii, Alaska, Washington, Oregon and California, reported a 0.3 percent increase in home prices from April to May, although the region documented a 14.5 percent decline in home prices from May 2007. The East North Central Division, which includes Michigan, Wisconsin, Illinois, Indiana and Ohio, reported a 0.1 percent monthly increase, but still a 3.7 percent year-over-year decrease in home prices. The West North Central Division, which includes North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Kansas and Missouri, reported no monthly change in home prices.

It will be interesting to see how these home price numbers correlate to the Q2 foreclosure numbers RealtyTrac will be releasing Friday. We'll be posting those numbers as soon as they are available.

As it has in times past, real estate has led this nation into recession, and it will lead us out as well — when the signs are there for a recovery. We’re now mid-way through 2008 and the signs aren’t there yet to say for certain that we’re over the hump and on the way out of recession. But a recession it is nonetheless.

But real estate — housing prices to be precise — is the sign that forecasters at the A. Gary Anderson Center for Economic Research at Chapman University are looking to lead the way back to prosperity.

In their June 2008 issue of the Economic & Business Review, the U.S. Forecast article for 2008-2009 is entitled, “The Recessionary Outlook: Housing Prices Will Determine Its Length and Intensity.”

“The Fed has moved aggressively into a stimulation mode,” said Chapman University President James L. Doti in presenting the national forecast to attendees of the university’s forecast update conference. “There’s no question that the Fed needs to dig in because of the potential for inflation.”

Banks are holding back on all types of lending, the report notes, and probably for good reason considering the $300 billion in write downs already taken by the nation’s financial institutions, with the prospect of more on the way, depending on which direction home prices go in the future.

Median home prices have already dropped 13.6 percent from their peak of $227,333 back in Q3 2005. “The most dramatic decrease since the Great Depression,” Doti noted.

The housing “bubble” which occurred due to the abuse of subprime and other exotic financial vehicles has now burst, causing home prices to decline back to the level where housing affordability is back to the level it was before the subprime boom hit (a home price to income ratio of  3.3), the Chapman report notes.

Other highlights of the Chapman forecast update are:

• The annual number of housing starts has reached a recent low of one million units. So pent-up demand for housing will increase and quickly cut into the 10+ month inventory of vacant and unsold housing
• The lagged effects of the housing price drop has reduced household wealth by $2 trillion. This is expected to reduce consumer spending by about $100 billion.
• The overall impact of the administration’s stimulus checks will be minimal as consumers use a good share of the money to pay down debt
• Housing prices will depreciate 6.1 percent in 2008 with a mild uptick in 2009
• The Fed will raise the Federal Funds Rate by 100 basis points (1 percent) in 2009 which will be mirrored in other short-term interest rates
• Stable to moderately increasing long-term interest rates

“I think it’s going to be a mild recession followed by a mild recovery,” Doti said.

Chapman also has a econometric model in their computer system to predict the outcome of the national election which has a very good record at correctly predicting the next president based on certain economic factors.

As for election 2008, the winner (according to Chapman) will be…..

Barack Obama by a 2.4 percent margin of victory.

What this means for the future of foreclosures in this country? As for the election, it’s hard to tell. As for the economic outlook, if it comes to pass the way the Chapman forecasters are predicting, a mild recovery could lead to a bit of a softening in foreclosure levels. However, this most likely will be countered by the expected reset of interest rates on many more option ARMs this year and next.

Bottom line: we’re not over the hump yet. Foreclosures are here to stay for the foreseeable future.

What do you think? We’d like to hear from you and get your opinions on these economic projections.

U.S. foreclosure activity in June decreased 3 percent from the previous month but was still up 53 percent from June 2007, according to the RealtyTrac U.S. Foreclosure Market Report released today. The 3 percent decrease may lead some to speculate that the upward trend in foreclosure activity may be nearing an end, but as RealtyTrac CEO James J. Saccacio pointed out in a statement, the year-over-year change is a more indicative number of the overall trend.

"The year-over-year increase of more than 50 percent indicates we have not yet reached the top of this foreclosure cycle," he said.

In fact, the RealtyTrac report has shown month-to-month decreases in previous months, even during the dramatic run-up in foreclosure activity that has occurred over the past year and a half: in February 2008, November 2007, September 2007, June 2007, April 2007, and February 2007.

What may be a better argument -- although certainly not an ironclad case -- that the foreclosure surge is starting to run out of steam is the trend over the past 18 months in YOY percentage changes, broken down by type of foreclosure filing. As can be seen in the chart below, the default and auction categories experienced double- and triple-digit YOY percentage increases for much of 2007. But the increases in those categories started to slow down in 2008. Meanwhile, REO (bank repossession) activity actually decreased on a YOY basis in January and February of 2007 but gradually started to gain momentum in the second half of 2007, and increases in REOs have far outpaced the increases in defaults and auctions in all six months of 2008.

One could argue that this chart shows that the bulk of the properties that were at risk for foreclosure have migrated through the process and are now being repossessed by the foreclosing lenders. There is not a continued massive surge in defaults and auction notices, so once the lenders have disposed of their REO inventory, the real estate market can start to return to normal. On the other hand, some might argue that many properties are still at risk for falling into foreclosure, but the default notices against those properties may have been delayed by artificial means -- for example laws in Colorado, Maryland and Massachusetts requiring lenders to give homeowners more time before initiating foreclosure. Those artificial means may just temporarily be forestalling another wave of defaults that we'll see sometime in the coming months.

We'd like to hear if you buy into either of these theories or have another theory of your own that explains the foreclosure trends.

At present, approximately two percent of the outstanding mortgage loans in the U.S. are in some stage of foreclosure, according to RealtyTrac. And who knows how many more may be on the verge of going over the edge anytime soon as subprime loans adjust up to higher interest rates in the next couple of years.

Taking all those people into consideration, it makes for a very large potential pool of distressed homeowners to choose from when judging any kind of a contest offering to pay off someone’s mortgage.

And that is probably what Columbia Pictures is counting on.

According to the Reuters news service, the movie studio, in promoting it’s soon to be released picture “Hancock” starring Will Smith as a “flawed but good-hearted superhero” has decided to hold an essay contest to select one lucky family to have their mortgage paid off.

Offering to pay off up to $360,000 of the winning family’s mortgage debt, the contest requires the entries to be no longer than 200 words on the subject of why they believe they deserve to win the grand prize, Reuters reports.

Considering that any movie of this caliber coming out of a major Hollywood studio garnered a multi-million advertising budget, offering only $360,000 may seem like peanuts.

But to a family facing possibly losing their home to foreclosure, that kind of money can make a huge difference. In some areas of the country it could pay off their entire mortgage, while in others it could mean paying off enough of the debt owed to let them remain in the house and to refinance the balance at a lower interest rate.

Kudos to Columbia Pictures for trying something fresh and different. And good luck to them in choosing the winning entry. Word of this gets around they could be facing thousands if not millions of submissions.

Hopefully Will Smith is on board with the concept. Maybe he will even hand over the check to the winning family. Wouldn’t that be something!

We’re interested in what you think about this kind of “publicity stunt.” Do you see it as totally self-serving on the studio’s part to draw audience to the movie? Do you think they are taking advantage of people who are down and out on their luck?

In any case, you can’t deny there are plenty of cash-strapped families out there that are hurting and could use a quick influx of funds to save their homes.

For more information, and to submit an entry, check out the movie's official website and click on the "Hancock's Helping Hand Mortgage Payoff Contest" button.

Three top indices of economic health in the U.S. came out with negative reports this month, supporting the notion that the nation’s inventory of available properties — particularly the supply of properties in foreclosure — will remain elevated for at least the immediate future.

According to its latest report released Tuesday, Standard & Poor’s said home prices across the nation continued to fall in April 2008, with prices in all 20 metro areas it studies for the S&P/Case-Shiller Home Price Indices showing annual declines. Of those 20 metros, 13 of them posted record annual lows, and 10 of them reported double-digit declines.

“There might be some pockets of improvement, but on an annual basis the overall numbers continue to decline,” said David M. Blitzer, Chairman of the Index Committee at S&P. The biggest decliners were Las Vegas and Miami, with 26.8 percent and 26.7 percent declines respectively. These areas were two of the fastest gainers during the boom of 2004-2005.

Also on Tuesday, The Conference Board released its monthly Consumer Confidence Index report, showing an almost eight point decline between its May measurement (58.1) and its June measurement (50.4) of consumer confidence nationwide.

In the group’s monthly release, Lynn Franco, Director of The Conference Board Consumer Research Center, said, "This month's Consumer Confidence Index is the fifth lowest reading ever. Consumers' assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear. Perhaps the silver lining to this otherwise dismal report is that Consumer Confidence may be nearing a bottom."

In addition to a general negativity from consumers regarding the present state of the economy, the Board’s monthly Expectations survey concluded that consumers were pessimistic about business conditions improving over the next six months, and their outlook on the labor market was also negative.

Adding more insult to injury, the Commerce Department came out with its May report of new residential home sales on Wednesday, revealing a 2.5 percent decline from the revised number for April, and down 40.3 percent  from a year ago. At the current sales rate the report projects there is a 10.9 month inventory of new homes available.

Considered together, the three reports give further credence to the belief that the nation’s real estate marketplace will not be making a sudden turnaround of fortune anytime soon. And in fact things may have to get worse before they get better.

In the meantime this all portends well for would be homebuyers as well as investors looking for potential bargains in real estate around the country.

The Federal Open Market Committee took the advice Wednesday of all the financial analysts and market watchers and did absolutely nothing with the short term Federal Funds Rate (FFR).

After whittling away at the rate over time from a high of 5.25 percent back in August 2007 down to 2 percent last month, the Fed has decided to go back to the wait-and-see stance Chairman Ben Bernanke established when he first took over the reins of the agency back in August 2006. At that time former Fed Chairman Alan Greenspan had just finished adjusting the rate upward 17 consecutive times.

Of the 10 Committee members, the only dissenting vote was from Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas, who preferred that the Committee not wait and raise the FFR at this meeting.

This move by the Fed is recognition of the fact that further increases in oil prices threaten the economy by pushing up prices in goods and services, according to the New York Times.

Oil, other commodities and food prices are a chief concern to the Fed Committee at this time as the expectation of continued inflation could change their entire way of thinking, possibly even convincing them to start raising rates sooner than later in reaction to those concerns.

Still, the official FOMC statement says the Committee “expects inflation to moderate later this year and next year.” The problem is, that’s what they’ve been saying all along even as they were cutting the FFR back.

The ongoing housing contraction, along with stressed financial markets and soft labor markets are key concerns for the Fed, as are tight credit conditions and rising energy costs. All told, the Fed says these “are likely to weigh on economic growth over the next few quarters.”

Reading between the lines, it appears the Fed does not have a definite grasp on which way the economy is headed at this time so it has decided to hedge its bet until further data comes in.

What’s your take on the Fed’s latest move? ForeclosurePulse would love to have your comments.

The nation’s housing slump, crippled by falling prices and rising inventories of unsold homes, is the worst in a generation and still hasn’t run its full course, according to Harvard University’s annual housing report.

Harvard University’s Joint Center for Housing Studies painted a bleak picture of the current housing downturn, claiming that “the nation is in the throes of a housing downturn that is shaping up to be the worst in a generation.”

The study,  the “State of the Nation's Housing 2008,” noted that housing starts, new home sales and existing home sales are at all-time lows since after World War II, while home price declines and foreclosure filings are the worst on record.

A recession followed six of the last seven housing downturns, said Nicolas P. Retsinas, director of Harvard University’s Joint Center for Housing Studies. The report concludes that the high levels of foreclosures will continue to exert downward pressure on housing prices, especially in low-income and minority communities, where subprime loans are heavily concentrated.

“The slump in housing markets has not yet run its full course,” Retsinas said in a news release. “With home prices falling in most metropolitan areas, homeowners are tightening their belts, remodeling less and staying on the sidelines.” 

Are we headed for a recession or are we already there? Send your comment to ForeclosurePulse..

So far in 2008 nearly 240,000 households have been facing some stage of the foreclosure process on average every month. Even those homeowners who are not currently facing foreclosure may be at some point in time if they can’t sell their home. And then there’s those homeowners who just want to sell but don’t necessarily have to.

No matter why they are trying to sell, today’s declining market is bad enough that some homeowners are starting to look at alternative options for intervention, choosing not to wait for government entities that promise to offer up a ray of hope a day late and a dollar short.

According to a recent poll, government intervention is not the kind many buyers are looking to these days. Feeling that they don’t stand a prayer against the big bad lender who is either about to take their home away from them, or making it difficult for them to line up a buyer who qualifies for a loan, they are looking to something else…divine intervention!

Commissioned by the St. Joseph Statue organization, the poll revealed that nearly one-third of adults (23.5 million) would consider asking their real estate agent to bury a four-inch statue of St. Joseph in their yard if it would help sell their home in today’s sluggish economy.

We’d like to know if you’ve heard of statue-burying sellers in your community or if you are one yourself.