Unemployment Rate Increases to 9.8% as Jobless Claims Come In Higher Than Expected

According to this New York Times article, Jobless Report Is Worse Than Expected; Rate Rises to 9.8%, the "American economy lost 263,000 jobs in September 2009, which was a lot more than was expected. As a result, the unemployment rate rose to 9.8%. This reduces the chances of the job market recovering by the end of 2009.

The US Labor Department raised concerns over huge government deficits coupled with high unemployment. The article stated "The numbers could intensify pressure on Congress to provide additional unemployment benefits and extend some programs that are set to expire toward the end of the year, such as tax credit for first-time homebuyers and health-insurance subsidies for people who lose their jobs."

According to the article, the government's stimulus efforts are not working to provide lasting employment. As an example, the article noted that state and local governments cut 47,000 jobs and auto dealerships (in the post "Cash for Clunkers" world) cut 7,100 jobs in September 2009. Also, the number of hours worked flattened and overtime hours declined in many industries. The article stated "while many businesses are making money again and seeing new orders trickle in, most are not ready to hire back the workers, even part-time. To economists, that suggests that unemployment could remain at historically high levels through next year, if not longer."

According to ean Baker, co-director of the Center for Economic and Policy Research, "People have been celebrating that we’re through the financial crisis, but the underlying issues are all still there. We’ve lost trillions of dollars in housing wealth, and consumption’s going to be weak. It’s not the ’30s, but there’s really nothing to boost the economy."

According to Andrew Stettner, deputy director of the National Employment Law Project, "This is still severe. It's not going to be turning around as fast as people want."

According to the article, there is a good chance that "other economic measures are beginning to waver, signaling that the initial phase of the recovery — a sharp rebound from a deep bottom — may be giving way to a long grind higher, marked by uncertainty and pain for many."

As I have been saying for quite some time now, this is only going to get worse. The problem was caused by too much debt. Now the economy needs to recede back down to a sustainable level not based on the high level of debt. The same goes for real estate - prices need to come down. All of this is going to result in more mortgage delinquencies, short sales and foreclosures.

If you are a homeowner in Middle Tennessee who cannot pay your mortgage and your home is worth less than the amount(s) you owe, please contact me to discuss selling your home via a short sale. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

You can find out more information about me via my website JimTheRealEstateExpert.com and my Active Rain profile Jim McCormack's Active Rain Profile - Short Sale REALTOR and Real Estate Expert.

Over 15% of Option ARM Mortgages Seriously Delinquent

According to this Office of the Comptroller of the Currency Office of Thrift Supervision news release, OCC and OTS Release Mortgage Metrics Report for Second Quarter 2009, in the 2nd quarter of 2009 15.2% of the 900,000+ Payment Option Adjustable Rate Mortgages (Option ARM's) were seriously delinquent and 10% were in the process of foreclosure. Both of these figures are approximately triple the rates for all mortgages. The release defined Option ARM Mortgages as mortgages which "allow borrowers to choose from a variety of payment options each month, including payments that reduce principal, cover interest only, or result in unpaid interest being added to the balance of the loan, resulting in an increased amount owed."

Other important points covered in the release regarding default rates and foreclosures are:

• The percentage of current and performing mortgages fell by 1.4 percent to 88.6 percent of the 34 million loans in the portfolios of reporting servicers.
• Economic factors continued to adversely affect credit quality, with delinquencies up across all risk categories—prime, Alt-A, and subprime. The percentage of serious delinquencies increased to 5.3 percent of all loans in the portfolio.
• Although delinquencies rose, the number of new foreclosure actions remained about the same as in the previous quarter. Total foreclosures in process continued to grow and reached 993,000 mortgages, or about 2.9 percent of the portfolio.

All I have to say is "wow".  This is really bad.  There is no way the real estate market is in any stage of recovery at this point in time.  There will continue to be high levels of foreclosures and short sales for the next few years.

If you are a homeowner in Middle Tennessee who has one of these Option ARM Mortgages and your home is worth less than the amount(s) you owe, please contact me to discuss selling your home via a short sale.  I am a Middle Tennessee short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

You can find out more information about me via my website JimTheRealEstateExpert.com and my Active Rain profile Jim McCormack's Active Rain Profile - Short Sale REALTOR and Real Estate Expert.

Over 50% of Modified Loans in Default

According to this Office of the Comptroller of the Currency Office of Thrift Supervision news release, OCC and OTS Release Mortgage Metrics Report for Second Quarter 2009, when evaluated after 9 months over 50% of modified loans are 60 or more days past due. The news release doesn't actually say this.  You need to read the supporting documentation, OCC and OTS Mortgage Metrics Report, to see the grim statistics.

Modified Loan Performance (from the OCC and OTS Mortgage Metrics Report)

As shown in Table 3 below, the percentage of loans that were 60 or more days delinquent or in the process of foreclosure rose steadily in the months subsequent to modification for all vintages for which data were available. Modifications made in third quarter 2008 showed the highest percentage of modifications that were 60 or more days past due following the modification. Modifications made during fourth quarter 2008 and first quarter 2009 performed better in the first three to six months after the modification than those made in the third quarter 2008.

As shown in Table 4 below, Loan Modifications on loans held in the servicers’ own portfolios continued to perform better than on loans serviced for others. This difference may be attributable to differences in modification programs and the servicers’ flexibility to modify loan terms to achieve greater affordability and sustainability.

As you can see as more time passes the percentage of homeowners who stop paying their modified loans increases across the board.  The reasons are that loan modifications cannot help you if you lose your job, or have a home that is worth far less than the mortgage balance(s).

If you are a homeowner who is having a hard time paying your mortgage you should try a loan modification first even though it is a low probability proposition and over 50% fail.  At least a loan modification will buy you some time and help you in the short term if you can get approved.  I would be glad to provide you with some FREE help so that you can increase your chances of obtaining a loan modification.  If you live in the following areas, please contact me as I can help you solve your real estate problems since I am a Middle Tennessee short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

Why Loan Modifications Won't Fix the Real Estate Market

It continues to sadden and anger me to read and hear the stories of homeowners who get the run around from lenders when trying to get loan modifications.  It is even more proof that the banks are incompetent.  What we all need to understand is that loan modifications will not solve this real estate market problem.

The reason loan modifications do not work is that over 50% of the people who receive loan modifications will re-default within 12 months. I am guessing that the figure is upwards of 80-90% when you extend the time frame out.  The lenders (servicers and investors) know this, and, as a result, have little to no motivation to modify loans.

The truth is that the loan investors (not the servicers) would prefer to do short sales, rather than loan modifications or foreclosures.  In a declining market this actually makes business sense.  Since the loan investors will likely have to foreclose later anyway they are better off doing it now before the market declines more and they end up with even less money from the foreclosure sale.  With respect to the loan servicers, there is a conflict of interest with their loan investor clients.  The loan servicers make more money by allowing loans to continue to be seriously delinquent and go all the way to foreclosure rather than approve loan modifications or short sales. The problem is that the loan investors reduce their losses more with short sales rather than foreclosures.  This is one of the reasons short sales are so difficult to get closed.  That is why short sale sellers need a "bulldog REALTOR" like me to close their short sales.  I am not afraid to pester the lenders to force a decision on a short sale.

The reasons loan modifications generally do not work are:

• Job Loss - Homeowners are losing jobs. You can't pay your mortgage if you are out of work for an extended period of time. The government needs to fix the problems (think laws, policies and taxation) that are causing jobs in the US to disappear.
• Negative Equity - Eventually, even the most stable of homeowners will give up paying their mortgage when they owe a lot more than their home is worth.

Therefore, regardless of whether more homeowners receive loan modifications or not, foreclosures and short sales will continue to get worse and housing prices will continue to decline.

If you are a homeowner who is having a hard time paying your mortgage you should try a loan modification first even though it is a low probability proposition.  I would be glad to provide you with some FREE help so that you can increase your chances of obtaining a loan modification.  If you live in the following areas, please contact me as I can help you solve your real estate problems since I am a Middle Tennessee short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

A Disturbing Trend: Delinquent Homeowners Abandoning Their Homes

In my efforts to locate homeowners who are behind on their mortgage payments, or already in foreclosure, I have discovered a disturbing trend. It appears that many of these homeowners are simply abandoning their homes and ignoring their problems. This is a terrible idea. Until the bank owns your home, you are liable for anything that happens to or on your property. Beside the liability issues, "abandoning ship" does nothing to stop, or even mitigate your potential liability to the lender(s).

If you are a homeowner in financial trouble, please do not abandon your home. Follow the instructions in my blog post Question and Answer: What Should I Do if I Can't Pay My Mortgage?.

If you live in the following areas, please contact me as I can help you solve your real estate problems since I am a Middle Tennessee short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

Question and Answer: What Should I Do if I Can't Pay My Mortgage?

Question: What should I do if I can't pay my mortgage?

Answer: If you are a homeowner who cannot pay your mortgage payment(s), or are already in foreclosure, you should do the following:

1. Loan Modification - Even though you do not have a good chance of getting a loan modification approved by your lender(s), you should give it a try.  Therefore, contact your mortgage company immediately to discuss a loan modification.
2. Discuss your situation with a real estate attorney and/or bankruptcy attorney to discuss your options if the loan modification is not approved.
3. If a loan modification will not work, or is not approved, and you owe more than your home is worth and you cannot pay you mortgage, you need to speak with a REALTOR who specializes in short sales and pre-foreclosures (preforeclosures) to discuss selling your home.

If you live in the following areas, please contact me as I can help you get out of this situation.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

Bank of America CEO Will Resign at the End of the Year

According to this New York Times article, Bank of America Chief to Depart at Year’s End, Kenneth D. Lewis, will resign at the end of 2009. According to the article, he "celebrated his daring takeover of Merrill Lynch as the crowning triumph of a long career. On Wednesday, that conquest proved to be his downfall, as he announced his resignation after months of legal and political scrutiny over how the deal went down. Mr. Lewis leaves as Congress, the attorney general of New York and investors turn up pressure on the bank over not disclosing Merrill's losses and bonuses to shareholders. A federal judge recently refused to accept a settlement brokered between Bank of America and the Securities and Exchange Commission, saying the bank and the commission never fully explained how the decisions were made."

I think all the bank CEO's should step down right now as they have mismanaged their banks and collected millions in pay and bonuses despite their failings. The banks has completely botched the handling of pre-foreclosures, short sales and foreclosures. I am personally dealing with Bank of America on a short sale located in Murfreesboro Tennessee (Rutherford County TN) and I was able to get approval within 3 weeks, but it took a lot of phone calls and emails to push them to a decision. It just should not be that difficult. As a result of Bank of America's incompetence (and the incompetence of other lenders) there are more short sales and foreclosures in Middle Tennessee (in the Nashville TN area) than there should be. Goodbye Mr. Lewis!

If you are a homeowner who cannot pay your mortgage payment(s), or are already in foreclosure, my recommendation is that if you should do the following:

1. Loan Modification - Even though you do not have a good chance of getting a loan modification approved by your lender(s), you should give it a try.  Therefore, contact your mortgage company immediately to discuss a loan modification.
2. Discuss your situation with a real estate attorney and/or bankruptcy attorney to discuss your options if the loan modification is not approved.
3. If a loan modification will not work, or is not approved, and you owe more than your home is worth and you cannot pay you mortgage, you need to speak with a REALTOR who specializes in short sales and pre-foreclosures (preforeclosures) to discuss selling your home.

If you live in the following areas, please contact me as I can help you get out of this situation.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

Get Expert Assistance from a Middle Tennessee Distressed Real Estate, Short Sale, Pre-foreclosure and Foreclosure REALTOR, Real Estate Expert & Real Estate Professional

Get Expert Assistance from a Middle Tennessee Distressed Real Estate, Short Sale, Pre-foreclosure and Foreclosure REALTOR, Real Estate Expert & Real Estate Professional

Attention Property Owners and Homeowners in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN) - Get Expert Assistance from a Middle Tennessee Distressed Real Estate, Short Sale, Pre-foreclosure and Foreclosure REALTOR, Real Estate Expert & Real Estate Professional

• Can't afford your mortgage payments?
• Received a Notice of Default (Foreclosure Letter) from your lender, or their attorney?
• Home worth less than your current mortgage balance(s)?

If one or more of the above situations apply to you then you need to get help from a Short Sale, Pre-foreclosure and Foreclosure REALTOR & Real Estate Professional who can help you avoid Foreclosure, sell your home via a Short Sale, or even get a Loan Modification.

A Loan Modification may help you keep your home and should be considered. However, many lenders seem unwilling to grant modifications. If you cannot get a loan modification, or your home is worth less than the mortgage balance(s), or you just can't afford to keep your home then a Short Sale may be your best option as it could salvage what is left of your credit and to reduce the risk of the lender pursuing you for their net loss (deficiency judgment). Acting quickly will give you the greatest chance of getting your life back without all the stress and worry. For immediate help please contact Jim McCormack now!*

Jim McCormack's Foreclosure and Short Sale Assistance Hotline

(615) 653-4383

*Jim McCormack is a REALTOR, not an attorney. You should consult an attorney before making any real estate decisions.

For more information, please visit my real estate website, JimTheRealEstateExpert.com, which is focused on helping property owners who are in foreclosure, or who need expert assistance with a short sale (i.e. where the property value is worth less than the mortgage debt). My website is designed to inform short sale and pre-foreclosure sellers and consumers on how to best solve their real estate problems in the quickest time possible. The articles and tools throughout the website are FREE, with zero strings attached.

If you would like more information first, please let me introduce myself. My name is James W. McCormack. I am a Short Sale, Pre-foreclosure and Foreclosure REALTOR and Real Estate Expert. I am a 10+ year real estate sales veteran and full-time real estate professional who specializes in helping people solve their real estate problems. I focus on short sales, pre-foreclosures, foreclosures and investment properties in the Middle Tennessee TN market with my primary focus being on Murfreesboro, Smyrna, La Vergne and Eagleville in Rutherford County, Brentwood and Franklin in Williamson County and Nashville and Belle Meade in Davidson County. My website helps you to search for and find short sale listings, pre-foreclosure listings and foreclosure listings in Murfreesboro TN, Smyrna TN, La Vergne TN, Brentwood TN, Franklin TN, Belle Meade TN and Nashville TN.

I am a real estate expert who is here to help you. Please call me at 615-653-4383 to discuss your real estate situation or problems. I almost always return phone calls by the next business day.

I provide the following real estate services:

Specialty and Challenging Real Estate (Sales, Consulting & Leasing):
1. Physically Distressed Properties (i.e. fixer uppers, rehab properties, handyman specials, etc.).
2. Foreclosures.
3. Pre-foreclosures (i.e. Notice of Default, etc.).
4. Short Sales (i.e. where the sale price is not enough to pay off the mortgage(s) and other liens.).
5. Bank Owned Real Estate (i.e. REO's).
6. Divorce Sales.
7. Estate Sales.
8. Abandoned and Vacant Properties.
9. Rental Homes and Properties (Leasing and Consulting).
10. Lease Option/Lease Purchase Homes (Sales, Leasing & Consulting).
11. Other Difficult Situations.

Commercial and Investment Real Estate (Sales & Leasing):
1. Small Multifamily Properties (2-4 units).
2. Apartment Buildings (5+ units).

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Freddie Mac Goes Door Knocking to Help Struggling Homeowners Complete Loan Modifications

According to this Freddie Mac news release, FREDDIE MAC STARTS DOOR-TO-DOOR EFFORT HELPING BORROWERS COMPLETE HOME AFFORDABLE MODIFICATIONS, Freddie Mac "has hired Titanium Solutions, Inc. to meet with delinquent borrowers at their homes and help them supply missing information, documents and complete other actions needed to begin their three month trial payment periods for Home Affordable Modifications under President Obama’s Making Home Affordable program. Titanium Solutions will target late-paying borrowers with Freddie Mac-owned mortgages who have not returned letters or phone calls sent by their servicers, or who need to provide additional information or documents to launch their three-month Home Affordable Modification trial periods. Titanium will also help those borrowers who have started their Trial periods complete the documentation process to enable them to be converted into final modifications."

The release quotes Ingrid Beckles, Senior Vice President of Default Asset Management at Freddie Mac, as saying "By meeting with our borrowers, one on one, in their homes Titanium Solutions can help them overcome the roadblocks keeping them from starting their Home Affordable Modification trial periods. We believe this can give borrowers seeking Home Affordable Modifications the same type of personalized guidance they may have had when they were buying their home or applying for their mortgage.

Overall, I think this door knocking is a good idea since most homeowners who have fallen behind on their mortgage payments, or are already in foreclosure, just stop communicating with the lenders and try to ignore the whole thing (not a good idea). Struggling homeowners should openly engage their lenders to see what options they have. A loan modification may indeed be the best option, however, most people do not qualify for a loan modification due to insufficient income (think unemployed) or too much overall debt.  While I do not think that loan modifications can solve the foreclosure crisis we are currently in, for some folks it is the best option.

My recommendation is that if you are a homeowner in financial distress you should contact your mortgage company immediately to discuss a loan modification even though you do not have a good chance of getting a loan modification approved. Some chance is better than the no chance you will have if you do nothing. You may also want to speak with a real estate attorney and/or bankruptcy attorney to discuss your options. If a loan modification will not work, or is not approved, then you need to speak with a REALTOR who specializes in short sales and pre-foreclosures (preforeclosures) to discuss selling your home when you owe more than your home is worth and/or you are not able to pay your monthly mortgage payments. If you live in the following areas, please contact me as I can help you get out of this situation.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN