THE ECONOMY: Obama's housing scorecard

NEW YORK (CNNMoney) -- The housing market is gaining strength thanks in part to government programs aimed at helping struggling homeowners, the latest Obama Administration Housing Scorecard released Thursday found.

"The Obama Administration's efforts to speed housing recovery are showing clear signs of traction," said Erika Poethig, Acting Assistant Secretary for the Department of Housing and Urban Development (HUD) which releases the report in conjunction with the Department of the Treasury.

Home values are back to levels not seen since the beginning of the Obama administration and the number of homeowners who are underwater on their mortgage is down 11% since last year, the report said. In addition, more than half a million borrowers have had their loans refinanced through government efforts like the Home Affordable Refinance Program this year.

"It is clear that we're making progress. But with so many households still struggling to make ends meet, we have important work ahead," Poethig said.

Another boost to the housing market came last April, when the attorneys general of 49 states and the District of Columbia inked a $25 billion settlement deal with the nation's five largest banks over so-called robo-signing foreclosure abuses. That deal is expected to help another couple of million borrowers reduce their mortgage payments.

Since the administration started rolling out its programs in April 2009, more than 5.4 million borrowers have received aid, the Department of Housing and Urban Development (HUD) said.

Here's a rundown of the government's mortgage relief efforts and how they've fared:

Home Affordable Modification Program (HAMP)

Launch: March 2009

Borrowers affected: As of July 2012, there have been 1.9 million trial modifications started. More than 1 million have made the transition into permanent modifications. Some 235,000 of those have been canceled due to re-defaults or because borrowers sold their homes.

This program enables eligible borrowers to lower their first mortgage payments to more affordable and sustainable levels. Lenders receive incentives to reduce mortgage payments for at-risk borrowers; the target is 31% of income.

HAMP originally fell well short of estimates that it would lower mortgage payments for 3 to 4 million borrowers. And, many early workouts failed as borrowers soon re-defaulted on their loans.

Track record: HAMP's record has improved and re-default rates have declined, but they're still troubling. As of July, nearly 19% of all borrowers with HAMP modifications are at least two payments behind 12 months after their loans were modified.

HAMP modifications have slowed to a crawl lately, with just 17,000 permanent modifications started in July.

The modifications have led to a total of more than $14.4 billion in lowered borrowers' payments, according to the Treasury Department.

Home Affordable Refinance Program

Launch: March 2009

Participants: 1.5 million

This program helps borrowers who are current on their mortgage payments but are having a hard time refinancing their mortgage because they are underwater or owe more on their home than it is worth. The home must be underwater due to falling home prices and the mortgage must be backed by Fannie Mae or Freddie Mac.

Originally, HARP allowed homeowners to refinance if their loan balances were between 80% and 105% of the market value of their home. But after disappointing initial results, the rule was changed to include borrowers with loan-to-value ratios of up to 125%. Later, they removed that cap altogether.

Track record: The changes have helped make HARP one of the more successful government programs. The number of HARP refinancings has accelerated with more issued during the first seven months of the year than in all of 2011.

More than half the loans refinanced in June and July went to homeowners with loan-to-value ratios above 105%.

Second Lien Modification Program (2MP)

Launch: April 2009

Participation: 90,000 borrowers

The Second Lien Modification Program (or 2MP) provides assistance to homeowners who have second mortgages or home equity lines of credit in addition to their primary mortgages.

Many potential mortgage modifications have hit roadblocks because lenders of home equity loans and lines of credit refuse to cooperate. After all, the first mortgage holder typically gets paid first when an underwater mortgage gets modified and there's often nothing left for the

THE ECONOMY: Mass. foreclosures drop 17% from 2011

July figures are year’s lowest as state economy, housing market improve

Fewer foreclosures were started and completed in July as the Massachusetts housing market and overall economy continued to slowly improve, according to data released Monday.

The number of foreclosure petitions — the first step in the seizure process — dropped to 1,198 in July, nearly 17 percent fewer than during the same period last year and the lowest monthly total recorded in 2012, according to the Warren Group, a Boston company that tracks local real estate.

Foreclosure deeds — which signal the completion of the process — fell to 648 in July, also a 17 percent drop compared with July 2011. That was the smallest number of foreclosures recorded in a month since May 2011.

The slowdown in home-takings comes as the state’s economy and housing market are doing better. The Massachusetts unemployment rate in July was 6.1 percent, a long way from its 2010 peak of 8.7 percent.


And home values in Massachusetts rose by nearly 6 percent between March and June, according to the S&P/Case-Shiller Home Price Indices.

‘Homeowners are making payments and working out defaults through short sales and loan modifications.’


Alan Clayton-Matthews, an economist at Northeastern University, said the newest foreclosure numbers are in line with other recent statistics.

“The economy has been fairly slowly but steadily improving. You would expect to see an effect in [mortgage] default rates,” Clayton-Matthews said.

A multistate settlement between major US banks and attorneys general that resulted in about $25 billion to help troubled homeowners nationwide also is helping to wind down the number of foreclosures in Massachusetts.

“Homeowners are making payments and working out defaults through short sales and loan modifications,’’ said Timothy M. Warren Jr., chief executive of Warren Group.

But despite the slowdown in foreclosure activity for July, home seizures in Massachusetts remain ahead of last year’s pace. In 2011, lenders sped up foreclosure efforts to rid their

FORECLOSURES: Short Sales Boost 1st-Quarter Foreclosure Activity

Bank-owned homes and those in some stage of the foreclosure process saw their share of overall U.S. home sales grow to 26 percent in the first quarter.

The increase was driven by a spike in short sales, or homes that sell for less than what the owner owed on their mortgage, foreclosure listing firm RealtyTrac Inc. said Thursday.

Short sales make up the vast majority of homes sold while still in the foreclosure process. Those that aren't sold or auctioned off typically end up being repossessed by banks, what most people commonly think of as foreclosures.

In the first quarter, short sales grew 25 percent from a year earlier, hitting a three-year high. In contrast, bank-owned properties declined 15 percent versus the first three months of last year, the firm said.

The trend indicates a greater likelihood that home prices will continue to soften, as foreclosures and short sales typically sell at sharp discounts to other homes.

It also suggests a shift in the way lenders handle mortgages that have gone unpaid.

Lenders may be favoring short sales versus waiting for troubled loans to go through the foreclosure process to take back the homes securing the loan, said Daren Blomquist, a vice president at RealtyTrac.

"A short sale is a safer alternative to avoid any potential problems that they face because of the way they're processing foreclosures," Blomquist said.

Last year, mortgage lenders grappled with allegations that they had been processing foreclosures without verifying documents. The pace of foreclosures slowed sharply as the