Foreclosures

Mortgage giant Fannie Mae said Thursday that it would throw a lifeline to some people losing their homes to foreclosure by allowing them to lease those properties back for up to a year at market rental rates. The move is the latest in a series of steps by lenders trying to manage inventories of foreclosed homes on their books in an attempt to keep a wave of properties from slamming a housing market that has shown some signs of recovery. The news came as Fannie Mae reported a net loss of $18.9 billion in the third quarter ended Sept.

Miss a mortgage payment, and the foreclosure clock starts ticking. In as little as five months, the sheriff could be at the door, ordering you to leave the house that is no longer your home. But free help is available, including professional legal advice, and a host of ways to stop the clock. Or it might make sense to simply run the clock out, staying in the house at no cost until you're kicked out. The only inherently bad choices when faced with a foreclosure are delay and denial.

Bill Hoffman has logged more than 1.5 million airline miles in his travels to troubled hotels, office buildings and other business properties. As a court-appointed receiver who takes care of distressed commercial real estate, Hoffman has a long way to go to catch up with George Clooney's ambitiously nomadic character Ryan Bingham in "Up in the Air." But Hoffman is adding mileage points fast. These are boom times for receivers. With the brutal real estate market causing owners to lose their buildings to their lenders, more professionals like Hoffman are being tapped to look after properties until they can be resold.

MANY see trouble in falling home prices and rising foreclosures. Karen Krynen sees opportunity. So after dropping her two children off at preschool one day last month, Krynen headed for Los Angeles County Superior Court in Norwalk, where foreclosed houses were being auctioned on the steps outside. The ponytailed Krynen spotted a small crowd gathered against the building's towering, black-marble portico.

Amid concern that many Californians would not qualify for assistance from the federal anti-foreclosure plan, a powerful state legislator called on the Obama administration to make more homeowners eligible. The plan limits federal refinancing assistance to people who owe just a small amount, 5% or less, over what their homes are worth.

Federal programs aimed at modifying loans to stem foreclosures aren't working, witnesses told a Senate Judiciary subcommittee, and some lawmakers called on Congress again to pass a bill allowing bankruptcy judges to modify home loans -- a procedure known as mortgage cram-downs. Separately, the Federal Reserve took steps to make lending terms more understandable as part of its efforts to avoid another mortgage meltdown, which triggered the deep recession worldwide.

You're paying your bills, but your landlord isn't. And you're the one holding the eviction notice. This is becoming an all-too-familiar scenario for thousands of renters nationwide who have become the unintended victims of foreclosures. Banks are booting good tenants onto the streets with little to no notice after seizing a property from a delinquent owner, ignoring tenant leases.

The housing plan unveiled by President Obama on Wednesday goes further than any previous effort to break the vicious cycle of declining home values, rising mortgage defaults and frozen credit that triggered the country's worst recession since the 1930s. And it embraces strategies that attack the complex problems on several fronts but without requiring a long struggle in Congress.

The Obama administration, stepping up efforts to stem foreclosures, will offer lenders and homeowners incentives to cut payments on second mortgages, write down balances on first mortgages that are underwater, and repay loans in a timely fashion. The new measures announced Tuesday would especially help many distressed homeowners who have both first and second mortgages -- and can't afford either.

Banks can offer loan modifications or other programs if you're behind -- or will soon be -- on a mortgage. Often the changes involve easing up on the interest rate, at least temporarily, or changing the payment schedule to give you more breathing room. But banks generally will offer these programs only if you have good prospects for paying off the loan eventually. The bank to which you write your mortgage check isn't always calling the shots in these matters.

The Obama administration's $75-billion program to help troubled borrowers hold on to their homes appears to be keeping more California families out of foreclosure, data released Wednesday showed, but the relief may be temporary. The number of homes entering the first stage of foreclosure declined 24.3% during the fourth quarter from the previous three months, according to MDA DataQuick, a San Diego real estate research firm. The decline in the default number is significant because any new wave of foreclosures, which could swamp the housing market's recovery, would be preceded by a surge in defaults.

Bill Hoffman has logged more than 1.5 million airline miles in his travels to troubled hotels, office buildings and other business properties. As a court-appointed receiver who takes care of distressed commercial real estate, Hoffman has a long way to go to catch up with George Clooney's ambitiously nomadic character Ryan Bingham in "Up in the Air." But Hoffman is adding mileage points fast. These are boom times for receivers. With the brutal real estate market causing owners to lose their buildings to their lenders, more professionals like Hoffman are being tapped to look after properties until they can be resold.

Foreclosure activity in California took a steep dive in December, a report shows, but the decline had more to do with holiday forbearance than economic improvement. Notices of default dropped 17.5% compared with November, according to the report by ForeclosureRadar.com. The number of homes seized by lenders dropped 12%, and the number of homes sold to third parties declined 28.9%. The drop in foreclosures appears to reflect an easing in activity by banks and other lenders hoping to avoid delivering disheartening news to troubled buyers and shutting people out of their homes during the holiday season, the website said.

Troubled home loans continued to mount in the nation's banks in the third quarter as even once-solid borrowers increasingly fell behind on their mortgage payments. For the first quarter ever, the number of homes in foreclosure with mortgages serviced by U.S. national banks and savings and loans topped the 1-million mark, according to figures released Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency. The percentage of prime borrowers whose loans were 60 or more days past due doubled from the July-to-September period a year earlier.

A supply of 1.7 million homes headed for sale because of foreclosure or delinquency looms over the nation's housing market, which could dampen progress toward recovery should the Obama administration fail in its efforts to aid struggling homeowners, researchers said. A variety of measures to keep discounted bank-owned properties off the market -- including moratoriums on foreclosures by major lenders and federal initiatives aimed at keeping people in their homes with mortgage payments they can afford -- has helped increase a backlog of so-called shadow inventory 55% in the year ended Sept.

California's population grew less than 1% in the last year, the slowest growth rate in more than a decade and a vivid indicator of the continued toll that the deep recession has taken on the state. Demographers said the population slowdown was largely attributable to two of the main effects of the recession: high unemployment and the skyrocketing number of home foreclosures. Hans Johnson, associate director of the Public Policy Institute of California, noted that the state's jobless rate of 12.5% was higher than the national rate of 10.2% and that the gap was even more noticeable when California unemployment was compared with the rates in Texas and Washington, two traditional sources of migrants to California.

With rising foreclosures still threatening the economy, the Obama administration is trying to pump new life into its much-criticized program to lower payments for homeowners at risk of defaulting on their home loans. Officials unveiled requirements Monday that would step up government scrutiny and threaten fines on banks and other mortgage lenders should they lag in converting temporary mortgage modifications into permanent changes in loan terms and conditions by the end of the year.

Go ahead. Break the chains. Stop paying on your mortgage if you owe more than the house is worth. And most important: Don't feel guilty about it. Don't think you're doing something morally wrong. That's the incendiary core message of a new academic paper by Brent T. White, a University of Arizona law school professor, titled "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis." White contends that far more of the estimated 15 million U.S. homeowners who are underwater on their mortgages should stiff their lenders and take a hike.

Habitat for Humanity International has been known for its mission to provide new homes for the poor ever since former President Carter, its most famous volunteer, grabbed work gloves and hammer in the 1980s to help build dwellings in struggling communities. These days, Habitat is renovating the way it does business because of the mortgage meltdown, in which loose lending standards left thousands of foreclosed properties sitting vacant in the very neighborhoods the group aims to revitalize.

In October 2008, JPMorgan Chase & Co. shaved 25% off Rick Mullen's mortgage payment by lowering his interest rate, helping him to stay in his Valencia home despite a downturn in his small business refurbishing large shipments of damaged shoes. More than a year later, Mullen is grateful but frustrated, he says, because Chase has repeatedly lost his paperwork and never finalized what was supposed to be a three-month trial loan modification. "I've talked to them at least 50 times, and it's always the same: . . . 'Oh, we're missing some documents, your modification is at risk,' " Mullen said.