The administration intends to start a Federal Housing Authority effort at refinancing to help struggling homeowners meet their mortgage payments. It will also begin an emergency loan scheme for unemployed home owners intended to let them retain their homes. According to Donovan, they are going to ensure that people retain their homes. Sales of new homes across the nation fell to record lows in July implying that with declining costs and lowered interest rates, the housing sector is marching backwards.

Purchases fell to an annual count of 276,000 falling by 12% from June, a record low since 1963. Existing house sales declined in July by 27% which is a record as the results of government sponsored tax credit program elapsed and growing unemployment threatened the economy as well as the housing market. House sales plunged to an annual rate of 3.83 million, the least in ten years of records and lesser than the worst predictions of economists, according to The National Association of Realtors. The single family homes demand plunged to a 15 year decline swelling the pressure of homes in the market.

Home prices across the nation fell by 1.6% in quarter 2 since last year even as a record number of foreclosures for sale swamped the market. The yearly drop follows a 3.2% fall in quarter one according to a report by Federal Housing Agency. Meanwhile the administration was dilly-dallying on whether to revive the 1st time home buyer credit program amounting to $8000 that expired on April 30. According to Donovan, the administration was concentrating with great focus on where the housing market is heading and will try all methods to ensure that it stabilizes and restores itself.

Florida governor Charlie Crist said that rejuvenating the tax credit may benefit the efforts to combat foreclosure properties enormously and energize the economy. Florida was placed third in foreclosure filings in the nation with one in 171 homes facing a foreclosure notice this year. Experts point out that if the government helps in refinancing all kinds of loans, it will amount to a bailout for private holders of mortgages. It may also be back door subsidy for banks. The impact on reducing foreclosures is hoped to be favorable.

The biggest nationwide hotline is 888-995- HOPE which is operated by the Home Preservation Foundation funded by the Congress and offers free home counseling. The HOPE hotline has offered counseling to 4 million house owners from 2008 and aided 70% of home owners avoid foreclosure in a year. You need to call HOPE before you approach for loan modification as well as before a costly legal representation. Here a counselor will attend to your requirements of financial and legal help and bring in another party to the consultation if his or her services are required. The hotline is very efficient as there are 550 employees with the hotline placed at 8 centers through out the nation. This is vital to prevent home owners from falling prey to scammers out there in the market who are ready to cheat innocent victims.

Neighbourworks America is one other program funded by the Congress which provides technical and financial help to foreclosure prevention programs supported by the community like the National Foreclosure Mitigation Counseling Program (NFMC) that enjoys a 60% rate of success. The agency also manages a comprehensive data base of HUD approved, certified housing counselors in every state.

At the local level several community based initiatives are helping home owners struggling against foreclosure in a show of compassion and generosity. For instance The Brooklyn Volunteer Lawyer’s Project consists of a group of eighty Brooklyn lawyers helping poor Brooklyners. Even though volunteers received training in continuing legal education, each case takes up a vast portion of time. Foreclosures for instance, can involve anything from few months to few years and mostly require multiple appearances in court and continuing counseling.

In Philadelphia, a lifeline is the Residential Mortgage Foreclosure Diversion Program which is counted as the first victorious community based anti foreclosure program. Under the humane guidance of a judge named Annette Rizzo, this 2 year program makes it compulsory for lender and borrower to meet personally and discuss all options before the home is subject to foreclosure.

Each home owner is also provided with a counselor to guide them through visits to the court and help them through the foreclosure process: It has been highly rewarding with 75-80% of the cases in mediation been saved from foreclosure. Because of its success the program has been adopted in other areas of the country such as Boston, Miami, Louisville, New Jersey etc.

Housing prices stayed stable in July completing 30 months of steady decline. Historically decreased interest rates encouraged affordability of homes and refinancing alternatives of homeowners nationwide according to the department in the Monthly Score Card on housing.

The report says that over 3.5 million loan modifications were achieved from 2009 April to 2010 June. The Obama administration had launched several programs to aid home owners struggling to meet mortgage payments such as the Home Affordable Modification Program (HAMP). HAMP attempts to reduce the mortgage payments of struggling home owners.

The report says that housing market recovery remains fragile but there are chances that the situation might improve. For instance foreclosure properties surged marginally in July from June but were much below 2009 July level.

Foreclosures in the nation rose by 4% in July compared to last month to 325, 229 accounting for the seventeenth straight month with total foreclosure activity crossing 300,000 as per a realtor agency. This placed additional stress on the market according to Department of Housing and Urban Development (HUD) and Treasury department.

The government’s scorecard uses the Standard & Poor’s/ Case shiller home price index and the Federal Housing Finance Agency index. But according to another report, which uses a 10 city composite index, prices have fallen substantially from recent high in last summer. Morgan Stanley has questioned the validity of these indices.

The report also points to low mortgage rates which have helped 7.1 million home owners refinance from April 2009. This resulted in rendering savings to borrowers amounting to $12.7 billion. But the report also says that new home sales are down 25% from last year and new mortgage-purchase originations have plunged by 7.2% from a year ago.

The report also claimed that there have been twice as many modifications compared to foreclosure completions. From April 2009, 1.3 million modifications were started via the HAMP, 1.4 million modifications via proprietary programs and 472,000 early interventions in delinquency by the FHA (Federal Housing Administration). These are much ahead of the number of foreclosures (1.24 million) in the same period.

But more responsibility is on the way. Realtors report that 3.8 million household could get foreclosure filings by end of 2010. Also according to the report nearly 1.3 million of the loan modifications that were started have been canceled. Officials defend this trend by saying that many who entered the program did not meet the qualifications. Thus foreclosures continue unabated.

The latest news reports on the real estate market trends across major U.S states have pointed out the highest rates of foreclosures in Texas, Chicago, Illinois and California. The percentage of foreclosures in these regions has been steadily rising at the rate of 3.5% per month. While home owners are having a tough time mediating with the lending agencies these foreclosed homes have a positive side to an otherwise dismal situation.

As these foreclosures are hitting the market constantly banks and mortgage companies are getting keener everyday to clear off their inventories. A direct result of this predicament is reflected in the highly reduced selling prices of these properties which are hovering around an average of 30-55% of their actual market worth. According to the last quarter survey carried out by CNN, the asking prices of two to three bedroom units in the South of Florida has gone down from last year’s $300,000 to last month’s average of $180,000.

While the prime reason of the popularity of foreclosures amongst first time home buyers are the highly affordable prices of these properties, buyers are also taking advantage of the various assistance programs that have been launched across all U.S state under the Nations Department of Housing and Urban Development. In view of the high rate of influx of foreclosures all over the country the U.S government has recently set aside a fund under the HOME program under which low and mid income family groups are being given financial support to purchase these properties at highly reduced asking prices.

One of the most popular housing incentives that have received a very positive response from first time home buyers is the tax credit abatement scheme. Successfully working in the regions such as Nevada and Illinois this scheme offers mid income families who are interested in purchasing a foreclosed home a considerable tax credit incentive based upon their annual earnings. The tax credit incentive more or less pays for the down payment of the property which has made the prospect of investing in foreclosures a highly attractive and profitable deal for modest budget buyers.

A survey carried out by the Economic Times in its quarterly issue has pointed out to a marked shift in the housing industry as buyers from modest income have changed the trend of real estate values in prime neighborhoods in the country. In Nevada alone, 75% of the properties that have been sold in the past three months have been reported as being foreclosures of which a whopping 82% have been picked up by first time home buyers.

On the whole while home owners are being overly cautious about their housing loans, foreclosures have resulted in a favorable opportunity for fist time home buyers who can now purchase a property which was otherwise out of their reach last year.

But sometimes loan modification procedure could falter because of the lack of trained staff on the part of lenders to handle the complicated loan modifications. However you could help speed up the process of loan medication to avoid foreclosures by following certain important guidelines.

The following are guidelines to be followed while dealing with lenders in the loan modification process:

Record every thing on paper: Lenders often lose track of your application for loan modification. In order to avoid delays in the processing of your request, you must record or document all the details of the efforts made on your part. Even details of telephone calls made to and received from lenders and lawyers as well as all transactions must be recorded in detail.

Create a personal financial statement: A vital part of loan modification is the financial statement you have to submit to the lenders. The lenders may have their own financial documents but you must have one of your own, prepared by yourself, available for ready reference whenever required.

Provide detailed information: In order to avoid delays in processing of your request for loan modification, you must provide detailed information to the lender. The work sheet of the Federal loan modification program consists of the following details:

• Personal information: residential information, telephone number etc
• Estimate of the value of your home
• The amount of your monthly income
• Any additional income
• Sum total of your investments, savings, stocks and bonds
• Details of other outstanding liabilities like loans, credit card debt, electricity bills etc.

Keep all bills: You need to provide correct information to your lender and your loan modification lawyer. So you have to keep all records ready. By retaining bills of the past and present, you are ready to furnish all information whenever required because lenders may want you to submit bills along with records of hardships when you are required to prove your eligibility for loan modification.

The Obama administration’s mortgage modification program is free of cost to home owners to take advantage of but the application process is strict and full of details. The first consideration is that the borrower must have defaulted on his mortgage payment. The second condition is that the home owner must be living in the premises of the home whose mortgage has been defaulted upon.

The aim of the Mortgage modification program is to reduce monthly payments to no less than 31% of the household income. The aim of this program is to reduce the rate of foreclosures for sale in the country.

Loan modification is led by the government’s HAMP (Home Affordable Modification Program) which has targeted home owners who were refused loan modification by their lenders. There are a variety of options available under HAMP. The duration of the loan can be extended or the monthly payments and interest rate reduced or both these modifications can be combined.

The HAMP program is free for home owners but the procedure of application requires many details. The first criteria for lenders are that home owners must have defaulted on their payments. Secondly, the home owner must be staying in the property that is in danger of being foreclosed. This Program ends in December 2012.

Short sales have helped home owners who are under water on their mortgages and are facing a spate of financial problems. Being underwater means that the value of the home has slipped below the amount owed on the loan. Home owners have seen the slump in value of their homes over the past months and some have found it difficult to make their mortgage payments. Many homeowners have found the short sell option a good way to get rid of their under water homes and have the remaining part of their loan forgiven by lenders.

Deeds in Lieu of foreclosures have become popular with home owners who have not been able to modify their loans under the loan modification program but still want to avoid foreclosures. The signing over of deed to the home may negatively affect the credit score of the home owner but it is definitely a better option than facing foreclosure. There are many lenders ready to work with borrowers in this method of avoiding foreclosures. Some lenders may also allow home owners to stay in their property for several months till they find alternative living arrangements.

Alternatives to foreclosures are not popular with all lenders but many are ready to offer the above three options to struggling home owners. Home owners denied loan modification via HAMP may find it possible to negotiate with their lender and arrive at a reduced payment plan, an alternative modification, or follow up with short sales or deeds in lieu of foreclosures.

Housing counselors with the Department of Housing and Urban Development (HUD) are ready to help home owners but the latter are advised to consult their lenders directly. They will be able to arrive at an alternative payment plan and alternative living arrangements.

The only stumbling block to loan modifications may be that lenders have to train staff to handle the procedures of loan modification. In spite of this, there are several pertinent reasons why the banks prefer loan modification over foreclosures.

• Fast and cheap process: Loan modification is a much faster and cheaper process for the banks. It provides the opportunity to the home owner to get current on the payments of their mortgage. Usually within 30 to 60 days, the lenders give approval to the application of your loan modification as they scrutinize your documents and negotiate with your attorney for loan modification.
• It involves less work: Loan modification implies less work for the lender. The documentation procedures are taken care of by the attorney for loan modification. Compared to this in a foreclosure process, the lender has to determine the late penalties, issue Default notice, hire the services of a lawyer and even prepare for auction of the home. Also if the home owner starts being current on mortgage payments, he retains the home and most of the expenses incurred by the lender goes to waste.
• Retaining Investors: The program for loan modification by the Obama administration aims to help struggling home owners combat foreclosures and retain their homes. The main reason why lenders offer loan modification is because investors do not like those banks which have big inventory of foreclosed properties as their responsibility. With the present economic down turn, where prices of homes have descended to new depths, instead of stamping your duties as bad debts, regular payments are ensured on their records.

Some of the big banks like GMAC mortgage, J.P. Morgan Chase and Wells Fargo are implementing the federal Home Affordable Modification Program but number of foreclosures are still on the rise. The number of permanent modifications given by these banks has seen a rise. But many home owners are angry with their lenders as they have either have been refused trial modifications or have had their trial modifications canceled because of which they have been denied permanent modifications. Many home owners have entered into foreclosures as they have not been given aid.

The banks argue that they have given home owners who do not qualify for loan modification options like assistance for short sales and deeds in lieu to combat foreclosures.