A law enforcement task force is investigating thousands of Bay Area homeowners, mortgage agents, investors and others who may have committed mortgage fraud, the latest fallout from a housing bubble that wrecked the finances of countless people.

Federal, state, and local investigators who make up the 30-member task force have begun to probe as many as 11,000 cases involving people who may have committed fraud during the residential real estate frenzy, said Assistant U.S. Attorney Susan Badger. She heads the task force on behalf of the U.S. attorney’s office in San Francisco.

Some local mortgage agents say at least one-third — and perhaps one-half — of the home loans that were written in the East Bay at the height of the housing bubble were loans with fraudulent documentation about income and debt of borrowers.

“The crimes run the gamut,” Badger said. “The task force is looking at crimes committed by people from the top down and from the bottom up. There were a whole lot of participants in this. There is a whole array of culpability from people who turned a blind eye or committed out-and-out fraud.”

Among the types of people who are being probed for illegal activities:

Of all the problems facing America’s Main Street economy, housing remains the most significant.

In spite of having a long lead-time on the rest of the economy – the housing market began to tank 18-24 months ago – the situation is only getting worse.

One recent report, from property research firm First American CoreLogic, estimates that at least 7.5m Americans are already in negative equity – owing more on their mortgage than their home is worth – with another 2.1m on the brink. MoodysEconomy.com estimates the negative equity figure could be as high as 12m.

More than 1m homeowners are already in the process of having their home foreclosed – or repossessed – by their mortgage lender, and a further 4m have missed at least one monthly mortgage payment.

In spite of these figures, the end does not seem to be in sight. Most economists agree that the US has yet to reach the nadir of its mortgage crisis, but until it does, the economy cannot really begin to turn the corner.

As Sheila Bair, chairman of the Federal Deposit Insurance Corporation, has stressed in recent days, a portion of the Treasury’s $700bn Troubled Assets Relief Programme (TARP) could be well used to assist those struggling to meet mortgage payments.

Her plan – which she continues to discuss with Treasury Secretary Hank Paulson – would see 3m homeowners given some assistance. The problem with such a scheme, however, is that it would be terribly divisive, leaving out millions of taxpayers who are having difficulties paying their mortgages – and yet will still contribute to the TARP fund through their taxes.

A better way – and possibly the only way – of solving the situation is for the lending banks themselves to begin to work through the problems in the mortgage market. JP Morgan Chase’s move on Friday to modify $110bn of mortgages in a bid to limit foreclosures is certainly a step in the right direction, one that the rest of the $12 trillion mortgage industry should take notice of – or be made to take notice of by a future Presidential administration – in order to ensure the problems within the market do not get any worse.

JPMorgan Chase won’t put any more homes into foreclosure for the next 90 days while it implements a plan to help borrowers stay in their homes, the company said.

The plan will include proactive offers to refinance mortgages to more affordable terms and a network of 24 regional counseling centers.

Chase will hire 300 loan counselors and 150 people to review mortgages before they are placed into foreclosure to ensure homeowners were offered modifications first.

With the customers of the newly acquired Washington Mutual in the fold, Chase’s program could help about 400,000 families with $70 billion in loans, the company said. It didn’t estimate a cost.

New York-based JPMorgan Chase (NYSE: JPM) received $25 billion through the U.S. Treasury Department, which became a shareholder in the bank.

Chase will offer borrowers with payment option ARMs alternatives such as 30-year, fixed-rate loans with affordable payments, principal deferral and interest-only payments for 10 years.

“All the offers will eliminate negative amortization and are expected to be more affordable for borrowers in the long term,” Chase stated in a press release.

Other Chase and WaMu borrowers who could experience problems also will receive help through interest-rate reductions and principal forbearance, in which the bank would forgive part of the principal.

As another part of the program, Chase said it plans to discount or donate 500 homes to community groups, nonprofits or government programs.

SACRAMENTO, CA - The Central Valley has been impacted by the foreclosure crisis more than any other area in the country. Finally that recognition brings with it some reward.

Sacramento city and county officials announced Friday they will receive nearly $32 million in federal aid to buy and rehabilitate foreclosed homes in the hardest hit neighborhoods.

The money comes as part of the Housing Rescue bill passed by Congress last summer.

“It is our intention to take it and target it in areas where we think we can make a real difference,” said county supervisor Roger Dickinson.

Pending approval next week from the city council and county supervisors, the Sacramento Housing and Redevelopment Agency will administer the federally-sponsored Neighborhood Stabilization Program.

SHRA has already identified areas where it will buy bank-owned homes and subsidize developers to rehab them for new homeowners or renters. The areas include Galt, south Sacramento, Del Paso Heights and North Highlands.

In cases where developers are not interested, SHRA will take a more active role.

“The city and county are becoming flippers,” joked Mayor Heather Fargo.

SHRA expects to supervise the purchase and rehabiliation of more than 400 homes within 18 months. Money raised from the operation will be used to buy more homes over the next five years. Any excess money must then be returned to the federal government.

No city in California is receiving more money for foreclosure purchases other than Los Angeles. The money going to Sacramento is more than the amount being received by any one of 20 individual states.

Stockton will be getting $12.1 million for a similar program, and unincorporated San Joaquin County will get $9 million.

Modesto will get $8.1 million and the rest of Stanislaus County will get $9.7 million.

LATHROP, CA - Usually you can spot the foreclosure homes through abandoned yards and newspapers in the driveway. One home in Lathrop is identifiable by its missing garage door.

It’s in the Mossdale Landing development west of Interstate 5. The developer, Pacific Mountain Homes, has gone into foreclosure for the 66-home project.

What used to be one of the model homes is anything but inviting now. The garage door has been torn from the foundation, as has a regular door leading from the garage to the side yard. Thieves were so thorough, they even gouged a large piece of metal from an exterior wall of the home.

The 66 homes will be up for auction at the courthouse in Stockton later this month.

 Some of the country’s top economists and bankers gathered with representatives from the Federal Reserve on the University of California, Berkeley campus. Their focus was falling home prices and the foreclosure crisis - one of the keys to getting the economy on a rebound.

Nearly half of all California homes sales in September were foreclosures. Reversing that trend is not going to be easy; home prices are expected to continue to fall, San Francisco Federal Reserve bank President Janet Yellen said.

“First, the ratio of house prices to rent still remains high by historical standards, suggesting that further price declines are needed to bring housing markets into long-run balance,” Yellen said. “Second, the large inventories of unsold homes, that also can be expected to continue to put downward pressure on prices.”  

It will take long-term solutions to address the economic downturn, Yellen said, and the group of 300 leaders from the academic and banking world is hoping to come up with some break-through ideas.

“Well, there will be various proposals that we’ll probably hear that will do with write-downs on the amount of mortgages that some of the troubled homeowners have; that’s one possibility,” Haas School of Business professor James Wilcox said. “I wouldn’t be surprised if people start to talk about tax cuts that would give stimulus to people who buy houses during 2009.”

Some participants also recommend that one agency take charge of regulating the lending industry, replacing several with overlapping duties. Others suggest Congress will need to consider changing laws, such as lifting the ban on bankruptcy courts modifying loan contracts on principal residences.

“They need to inspire home buyers to buy property — to share in the American Dream,” Wells Fargo executive Brad Blackwell said. “Second, to educate them, and third is the enable them through a healthy financial market.”

Banks will face stiff fines for not maintaining foreclosed properties in Richmond. 

The city council decided Wednesday to fine banks up to $1,000 per day.

The decision was in response to the large number of foreclosed homes that are left unattended and falling into disrepair. A state law passed in July gives cities the authority to impose fines on banks neglecting their foreclosed properties

Foreclosures have become so pervasive, they are improving sales in some locations,  but not without deeply depressing home prices. 

On the other side of the coin, foreclosure prevention law may be helping stem the tide.

Nationwide, one in every 475 homes was in some state of foreclosure in September and the rate of foreclosures for the third quarter soared by 71 percent, compared to a year ago, according to RealtyTrac’s September and third quarter U.S. Foreclosure Market Report.

Nevada, Florida and California posted the top state level foreclosure rates in September. Foreclosures in California accounted for nearly a third of the nation’s foreclosures.

One in every 189 housing units received a foreclosure filing during September in the Golden State, which accounted for six of the top 10 cities with the highest rates of foreclosure.

California’s foreclosure sales are yanking prices down from San Diego to Silicon Valley.    

In Southern California, with a full 50 percent of all home sales coming from the foreclosure sector, sales skyrocketed a record-setting 65 percent in September, compared to a year ago, as the median price headed south of the $300,000 border, plunging more than 33 percent, according to San Diego, CA-based DataQuick.

Up north, in the nine-county San Francisco Bay Area, the weather was only slightly better. Some 42 percent of all resale homes sold in September were from the ranks of foreclosures. Sales soared 45 percent, but prices plummeted 36 percent, compared to a year ago, DataQuick reported.

The real estate research firm also said in Silicon Valley, where more than 30 percent of sales came from foreclosed properties, home prices dropped more than 27 percent even as sales charged ahead by 30 percent.

The foreclosure numbers do show a 12 percent decline from August to September this year. RealtyTrac says that’s due to new state laws that help avoid house wrecks.

“Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures,” said James J. Saccacio, chief executive officer of RealtyTrac.

“Most significantly, SB 1137 in California took effect in early September and requires lenders to make contact with borrowers at least 30 days before filing a Notice of Default (NOD). In September, we saw California NODs drop 51 percent from the previous month, and that drop had a significant impact on the national numbers given that California accounts for close to one-third of the nation’s foreclosure activity each month,” he added.

The US Government is to spend up to $250 billion buying direct stakes in banks and other financial institutions under a controversial emergency plan which President Bush insisted today was “not intended to take over the free market but to preserve it”.

In a rescue scheme modelled on that announced for British banks by Gordon Brown last week, the partial nationalisation of companies such as Wells Fargo or JP Morgan Chase will be accompanied by a package to unblock the credit logjam paralying the system.

It is a painful move in a country that prides itself on being the home of market capitalism - as Mr Bush’s Treasury Secretary, the former Wall Street CEO Hank Paulson, was the first to admit.

The Fed’s “helicopter economics” — throwing money out of a helicopter to flood the market with liquidity — worked in the early 2000s, but it won’t turn the housing market around this time, says Eugenio J. Alemán, senior economist at Wells Fargo Economics.

When the Fed tried that approach to turn around the downturn in the early 2000s, he notes it did boost home prices albeit at the cost of a strong dollar. Alemán says the Fed was hoping it could work the same magic again.

It did work this time in one way.  By flooding the market with dollars, further lowering its value.  Gasoline and food prices initially soared, but then consumers stopped buying and,  Alemán notes, commodity subsequently prices came down.

SAN FRANCISCO   — The number of foreclosure notices is down in the Bay Area, but it’s not clear if there are fewer homeowners in trouble or if the drop is due to a new state law.The Mortgage Relief or Foreclosure Reform Bill passed by state lawmakers this year requires lenders to make a number of attempts to contact homeowners and then wait 30 days before filing a foreclosure notice. It also encourages them to look at restructuring the loans before initiating foreclosure procedures.

Notices of default averaged 350 a day during the first week of September in the nine Bay Area counties, according to Andrew LePage, an analyst with Data Quick. After September 8th when the law took effect, default notices dropped to less than 60 a day, he said.

This whole downward spiral seemed to start with U.S. subprime mortgages. What exactly are they?Subprime mortgages are home loans made to people who would not, under normal circumstances, be ideal candidates to get a mortgage - thus they are “subprime.” These are individuals who have a higher risk of defaulting on their loan, such as those who have been delinquent in making payments in the past, or people with a bankruptcy on their credit record, or those who simply don’t have a credit history.

Starting around 2005, U.S. lenders loosened their rules and began granting mortgages to borrowers who provided very little evidence of their income and ability to repay. Many of these mortgages had very low initial interest rates, for the first six months to three years, but when that period ended the payments jumped sharply. Borrowers were led to believe that they would be able to refinance their homes at this point because the value of the property would have increased. But the slump in the housing market meant that didn’t happen. As a result many people - especially those who had not been completely frank about their income levels - defaulted on their mortgages and lost their homes.What is the “money market,” and why does it matter if it freezes?The money market is made up short-term loans (generally of less than one year), such as certificates of deposit, commercial paper, banker’s acceptances, and 30-day treasury bills.

If the money market freezes up - in other words, no one wants to make short-term loans because they are worried about borrowers defaulting - companies cannot get the cash they need to pay staff, buy supplies, or pay rent. Often companies need to borrow this money because they are waiting for revenue that may not arrive for a few days or weeks.

But if they can’t get short-term cash from the money markets, it can make day-to-day operations very difficult. If our banking system and mortgage lending practices are more stable than in the U.S., why do the Canadian dollar and TSX continue to go down?The precipitous drop in the stock markets now seems to have little to do with fundamentals. It is tied to the fear and panic gripping investors. People appear to think the world is going to move into a broad recession, and companies are going to suffer as a result. If the U.S. economy shrinks because of the credit crisis it will inevitably hurt Canadian firms who export across the border. And while our banks seem to be strong, they too are having trouble getting - and giving - short-term credit, which could slow growth of companies here.

The Canadian dollar is likely reacting to the fall in crude oil and commodity prices. As Philips, Hager & North’s chief economist Patricia Croft noted, the loonie is still regarded on world markets as something of a “petro-currency.”

What is the problem with the banks in Europe, since they haven’t had a subprime mortgage crisis?Some European banks have U.S. operations that have been hit by the subprime crisis, while others have assets backed by U.S. mortgages. At the same time, the real estate market in some European countries has been depressed because of worries over a recession, and this has damaged mortgage lenders. On top of all this, many big European banks operate in several countries, but there is no pan-European rescue package that can be used to help them out if they are in danger of failing and their home-country governments aren’t up to the task. Do interest rate cuts actually help boost the stock market?In theory, they should. If an investor is trying to make a decision between putting money into a bond or a stock, he or she will look at the difference between the yield on the bond and the possible return on the stock. Bond yields should fall when interest rates go down, making stocks more attractive. Essentially, for a stock to compete for an investor’s money, it doesn’t need to offer as high a rate of return.

However, bond yields do not always follow central bank interest rate cuts, and they haven’t this time. Some very high-quality corporate bonds, for example, are offering huge yields compared with the stock market.

While lower interest rates should also make corporate borrowing easier and thus lower costs and finance growth, that hasn’t been happening either in the current credit crunch.

On top of all this, worries over a recession or panic over falling stocks can trump any minor tweaking of interest rates.

***

WHAT ARE FANNIE MAE AND FREDDIE MAC? WHY THE CUTE NAMES?

Fannie Mae is the nickname of the Federal National Mortgage Association, while Freddie Mac is the Federal Home Loan Mortgage Corp.

Fannie Mae is the older of the two. It was created as a government agency in 1938 under U.S. president Franklin Roosevelt’s New Deal. The idea was to give local banks federal money to finance home mortgages, since private lenders were leery of lending money. The government wanted to help more people buy homes, and encourage the building of affordable housing. In 1968 it became a private company.

Freddie Mac was set up in 1970 to expand the secondary mortgage market, and ensure there was competition with Fannie Mae’s monopoly. Both companies buy loans from banks or mortgage firms, and re-sell these as mortgage-backed securities. Together they own or guarantee about half of U.S. mortgages.

The two were put under “conservatorship” by the U.S. Federal Housing Finance Agency on Sept. 7 - essentially a takeover by the government.

Joey Goldner always approached real estate with a gardener’s zeal. He’d plant his money in a building, patiently care for it and watch its worth grow. For 30 years, it was a brilliant avocation—right up until the heavy thud of the housing market helped flip Goldner’s mortgage upside down.

Facing debilitating health problems, Goldner refinanced his Highland Park home repeatedly only to wind up with a $729,000 mortgage on a house that eventually sold for $450,000.

In real estate circles that’s called being underwater—owing more than the value of a home. Goldner is just now coming up for air.

“I kept refinancing it to pay the mortgage,” he said. “I kept hoping the market would level off. I never imagined this would happen.”

Few did. But an estimated 12 million American mortgage holders now owe the bank more than their homes are worth. And with housing prices sliding still and the credit crunch worsening, the number of so-called upside-down mortgages is expected to rise to record levels.

Within a year, Moody’s Analytics predicts, a whopping 30 percent of all U.S. mortgage holders will owe more on their homes than they are worth. In some California communities, according to real estate service firm Zillow.com, negative equity already is the norm.

The effects of this are many.

The risk of default rises—and it’s good to recall that it was people defaulting on their home loans last year that set much of the current economic crisis in motion. Home equity lines of credit—even for people who pay their mortgages faithfully—will be harder to come by. And woe to those who lose a job or get sick.

“If you have some kind of disruption to your income and you can’t make your mortgage payment, it’s going to be very hard for you to refinance or anything like that,” said Mark Zandi, chief economist for Moody’s. “This was the bedrock of most people’s savings, their home.”

Goldner walked away from his three-bedroom home once he could no longer make the mortgage payments. A friend who is a real-estate broker was able to arrange what’s called a short sale—the home was sold for less than Goldner owed, all the proceeds went to the bank and the remainder of Goldner’s mortgage debt was forgiven.

“I feel very fortunate to be out of that place and moving forward, unlike a lot of people in this kind of situation,” Goldner said. “That’s one big debt off my shoulders.”

Real estate agents say short sales, once unthinkable, have soared.

Nancy Karp of Baird & Warner in Highland Park said over the last three months, almost 7 percent of all closings in six of the suburbs in which she works have been short sales.

Goldner’s situation—in which his health cost him his livelihood and in turn led to insurmountable debt—is an extreme case. But the upside-down effect will change the financial equation for millions of people who do not face an immediate crisis.

Matt Bender and Susan Flynn of Chicago’s West Ridge neighborhood are among those who, all of a sudden, are staring down a financial hit.

The couple are expecting a baby in January, but Bender’s nicely rehabbed third-floor condo is too small and the stairs are too numerous to regularly cart a newborn—and the equipment he or she will require—up and down.

They need a house, desperately, but to get one they must first sell the condo. It has been on the market for a while at $6,000 less than what Bender paid for it three years ago. They’ve had nary a nibble.

The couple are now forced to hold their breath and go underwater. If and when they sell the place, Bender will have to tap into his savings to pay off the rest of his mortgage.

“You’ve got to feel lucky to have a place to live and a job, I suppose,” said Bender, a grade-school teacher. “But this is pretty humbling. And we’re kind of stuck.”

Real estate agents across the Chicago region say many people are simply giving up and pulling their homes off the market.

“How can somebody sell a house that they paid $450,000 for in the year 2005 and now it’s worth $300,000? ” said Dotti Ellis, who owns Re/Max Properties Northwest in Park Ridge.

To avoid a loss of their own, Bender and Flynn may end up having to wait and buy a home together after their baby is born rather than before.

“We just never thought we’d be faced with this,” Flynn said. “Real estate was supposed to be the one investment you could really count on.”

That’s certainly what Goldner believed, ever since he was in his early 20s. Now at 55, living in a townhouse his father had to sign for and driving a friend’s car, he wonders if he’ll ever own a piece of property again.

 Last week, Sheriff Tom Dart of Cook County, Illinois issued a press release that quickly became news across the country; he was suspending all foreclosure evictions in the area because banks weren’t notifiying tenants about their landlord’s problems. “These mortgage companies only see pieces of paper, not people, and don’t care who’s in the building,” Dart said in the release. “We’re just not going to evict innocent tenants. It stops today.” The Illinois Bankers Association quickly fired back with its own public statement, calling Dart’s move “vigilantism.” But supporters have been just as vocal; one local resident wrote a letter to the Chicago Tribune hailing Dart as a true American patriot, proclaiming “Dart for President.” spoke with the 46-year-old sheriff about his controversial decision, his duties during the economic crisis and how he thinks evictions should be carried out.

How has the housing situation changed since you were first elected three years ago?

Obviously, it would be no shock to anybody to hear that we’re having a record number of foreclosures going on in our county like I’m sure is going on in every county in the United States because of the financial crisis right now. It’s gotten crazier than it’s ever been.

How is the eviction process breaking down?

In theory, the bank has gone to court because Mr. Jones did not fulfill his requirements on his mortgage, and he’s in default so they go ahead with foreclosure proceedings. Then we go out and find out that it isn’t Mr. Jones who’s living there. It’s Mrs. Smith, who lives there with her three children. Has Mrs. Smith been served with anything? No.

Tell me about your thoughts on the “cavalier” attitude at the root of this problem.

I don’t consider myself an economic expert and I’m not going to pontificate about what put our economy in the crisis it’s in now, but it does seem abundantly clear that lenders were giving subprime loans out, mortgages to people they had not done their due diligence on in the first place, and it’s caused a lot of mortgages to go bad. I think we all agree to that. What we’re seeing is the other end of that: now those same people who acted recklessly and carelessly on the front end are asking me to rather carelessly and recklessly go and throw out whoever happens to be living in that building. And that is the same type of mindset that got us off the track in the first place.

I’m supposed to make sure that justice is being done and people’s rights are being looked after. When you are sitting there witnessing horribly unjust things occuring, I could just be the typical bureaucrat who falls back on, “Hey, I’m just following the law.” But that’s wrong, it’s plain-old wrong, call it what you want. Last I checked our constitution, people are allowed due process rights before property is taken away from them. The people I’m talking about now have no idea they’re even the subject of a lawsuit. And somehow, that is justice? Somehow that makes sense?

How are evictions typically carried out?

I go out on quite a few of our evictions myself and — I’m not kidding with you, I run the 2nd largest jail in the country — we have a very large police department so we see alot of nasty things. But my experience on these evictions are truly some of the most traumatic things I have ever seen. I’m going to these homes while the family is being put outside, because we first have to clear the house, and the movers then come in and take whatever possessions these folks have, and they put them out on the street. And it’s not always done with the most care, let’s put it that way. And you look at these little kids and you sit there and say to yourself, “This isn’t right here.” This kid didn’t do anything wrong, and the few possessions they have are now on the street.

Your announcement has gotten quite a response, what are the reactions you’ve seen?

Apparently our website’s server crashed twice. We’ve never had input like that ever, and we’ve never had phone calls like this either. I tend to think my staff tries to read me the nicer stuff instead of the e-mails where people are calling me names [laughs], but there’s been a lot of very favorable things written and a lot of favorable comments. I’ve had so many people stop me on the street who are excited about what I’m doing.

Did you anticipate such an overwhelming response?

I think there is this sense that people have right now that the larger entities treat people like numbers and pieces of paper. To blindly continue to go along with that and just act as if that’s okay because I have an order telling me to do that — I think people realize that that’s the wrong way to go.

How do you respond to critics like the Illinois Bankers’ Association, who say you’re ignoring the law, that this is a publicity stunt? 

Nothing surprises me anymore. I’m aware this is not the normal way to proceed and I am aware that there is a legal court order, but I am more aware that we have a higher role here to make sure that justice is being served, and it is not being served, and I am not going to be party to that. If I was asking them to do crazy stuff here, I would say they have a point. But I’m not. This is your property, bank, find out who’s in it please.

You’ve also argued that the banks are the ones breaking the law.

There was a statute passed here in Illinois that gives these renters a 120-day grace period to get their stuff together and get moved out, and nobody knew who was eligible for the 120 days or when it started or not because — once again — no one even knows they’re there.

You recently met with several county judges who oversee foreclosure proceedings to talk about reform measures, how did that come about and what is the aim?

We gave them language that we think can resolve this issue. Basically, it requires these mortgage holders, primarly the banks, to do the work we’ve asked them to do. And we think, with that, we might be able to put this behind us. Now, will it lengthen the foreclosure process for the banks? Yeah, it could. But my goal here is not to ensure all the banks are taken care of around-the-clock no matter who’s expense. The goal here is to ensure that justice is being done. We need to get this right, and until we do, we can’t just keep throwing people out on the street and hide behind a court order — “I know I just destroyed your life and your family and, oh God, that’s horrible about your children crying all the time, but hey, I have a court order.” Enough’s enough.

You were a state prosecutor and a state representative before becoming sheriff, how has this background affected your approach?

I’ve worked with police departments throughout my career. But I think the fact that I’m not a traditional sheriff in the sense that I’m not a police officer, I think it helps me in a lot of respects because I have a tendency to look at things from a little bit of a different angle. And I’m not saying that’s necessarily the best or the worst thing, but I’m saying that I can sometimes look at things that have been sitting there for awhile and done a certain way and say, “Maybe we ought to take this in a different direction.”

Florida remained among the leading states in preforeclosures and bank repossessions, according to the U.S. Foreclosure Index report from Foreclosures.com.

Florida posted 64.2 year-to-date preforeclosure filings per 1,000 households, up 166 percent from the same period in 2007. Florida trailed only Nevada’s 77.8 filings per 1,000 households and Arizona’s 74.6 filings per 1,000 households for the first nine months of this year.

Preforeclosures include notices of default and/or foreclosure auction prior to actual foreclosure.

For the third quarter, Florida posted 29,591 real estate owned filings, or when the bank repossesses a foreclosure property. That ranked third in the nation, behind California’s 89,450 and Arizona’s 31,882, the report said.

Nationwide, foreclosures remain on track to post more than 1 million by year’s end, the report said. Pre-foreclosures should end up at a record 2 million, the report said.

Real Estate News from the We Buy Houses Team 

The US have seen a reduction in their fixed 30-year mortgage rates, the average is now down to 5.99 percent down from 6.07 percent a week previous.

According to data published by an industry group on Wednesday, application for US residential mortgages climbed last week as home loan rates came down, although the lending conditions remain tight due to the financial crisis countries around the globe are feeling that are still badly affecting the mortgage industry.

The Mortgage Bankers Association that they saw a rise of 2.2 percent in the week ending October 3 in the index of mortgage applications which is indexed seasonally. However the previous week mortgage activity fell 23 percent to the lowest level since the end of August.

More results showed the week ending October 3 saw a rise of 0.9 percent of application for loan refinancing, but tumbled 34.7 percent the previous week.

Wells Fargo Bank, N.A., said today it is lowering its prime rate from 5.00 percent to 4.50 percent, effective today, Oct. 8, 2008.Wells Fargo & Company is a diversified financial services company with $609 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”

CHARLOTTE, N.C., Oct 08, 2008 — Bank of America, N.A., LaSalle Bank N.A. and LaSalle Bank Midwest N.A., announced today that they are lowering their prime-lending rates to 4.50 percent from 5.00 percent, effective October 8, 2008.

Charlotte, N.C. — Wachovia Corp. said Wednesday it lowered its prime lending rate to 4.5 percent from 5 percent.

The cut in the prime rate matches the 0.5 percent rate cut in the fed funds rate which the Federal Reserve Board announced earlier in the day.

The prime rate usually moves in lockstep with the fed funds rate, which is now 1.5 percent. The prime rate is often used for consumer loans such as car loans and home equity loans.

Real Estate News from the We Buy Houses Team 

NEW YORK, Oct 8  - Applications for U.S. residential mortgages climbed last week from the lowest level in a month as home loan rates declined, according to data published by an industry group on Wednesday.

Lending conditions remained tight with global financial markets in chaos, crimping mortgage activity, analysts said.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 2.2 percent in the week ending Oct. 3 to 465.5 after falling 23 percent the prior week to the lowest level since the end of August.

Mortgage rates declined last week. As investors rushed to the safety of U.S. Treasury securities, yields fell on the debt, which is used as a peg for home loan rates.

Fixed 30-year mortgage rates averaged 5.99 percent, down from 6.07 percent the prior week.

The MBA’s seasonally adjusted index of applications for loan refinancings rose 0.9 percent last week to 1,345.8 after tumbling 34.7 percent a week earlier. The gauge of loan requests for home purchases climbed 3.2 percent to 314.5 after dropping by 10.9 percent.

Major U.S. stock indexes tumbled even after a $700 billion U.S. government rescue program was enacted on Friday and the Federal Reserve this week unveiled new steps to improve financial system liquidity.

The programs are intended to boost confidence and the willingness of financial institutions to lend.

Unemployment is at a five-year high and expected to keep rising, meantime, which could dampen demand for home purchases, analysts said. (Reporting by Lynn Adler; Editing by Leslie Adler)

Real Estate News from the We Buy Houses Team

WASHINGTON — Pending home sales rose 7.4 percent from July to August, an unexpected piece of positive news for the battered U.S. housing market.

The National Association of Realtors said Wednesday its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was the highest since June 2007.

Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed. Typically there is a one- to two-month lag before a sale is completed.

Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 84.9.

The index, which sunk to a record low of 83 in March, stood at 85.8 in August 2007.

Sales are picking up in places that have seen the most severe declines in housing prices — including California, Florida Nevada and Arizona, plus Rhode Island and the Washington, D.C. area, said Lawrence Yun, the trade group’s chief economist. Still, Yun does not expect home prices to rebound until next year and only expects a modest gain of 2 to 3 percent in 2009.

A major unknown is how the worldwide financial crisis and economic slump will affect the housing market.

Despite numerous efforts by the Federal Reserve to encourage banks to lend more, lenders have kept tight reins on mortgage lending, and average rates on 30-year mortgages have remained over 6 percent for most of the year.

The latest effort by the central bank came Wednesday, when the Fed and six other major central banks around the world slashed interest rates Wednesday in an attempt to prevent a mushrooming financial crisis from becoming a global economic meltdown.

The Fed reduced a key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent. Also cutting rates were the central banks of China, Canada, Sweden, and Switzerland.

There’s no guarantee, though, that mortgage rates will match the Fed’s cut.

That’s because long-term interest rates, which influence 30-year mortgages, don’t always move in sync with the Fed’s action, which lowered the interest rate banks charge each other on overnight loans.

However, the Fed action will reduce borrowing costs almost immediately for U.S. bank customers whose home equity and other floating-rate loans are tied to the prime interest rate. Bank of America, Wells Fargo and other banks cut their prime rate by half a point to 4.5 percent after the Fed announcement.

A Porter Ranch man who murdered his family and killed himself last weekend as he faced financial ruin is the latest and most extreme case of a wave of distress washing over the American psyche.

Karthik Rajaram, an unemployed financial advisor, left a suicide note saying that his financial state left him few options but to kill his wife, three children and mother-in-law. Los Angeles Deputy Police Chief Michel Moore described Rajaram, 45, as a man stuck in a rabbit hole of despair.

A massive homeowner rescue plan announced Monday by the Bank of America will commit $3.5 billion in relief for an estimated 125,000 Californians who are having trouble making payments on subprime loans and other risky mortgages from Countrywide Home Loans.

Bank of America bought Countrywide for $4 billion July 1 after the Calabasas-based home loan giant, among the largest subprime lenders in the state, collapsed under the weight of mounting defaults and foreclosures.

The bank’s “Home Ownership Retention Program for Countrywide Customers” was devised by California and 10 other states to settle predatory lending lawsuits filed against Countrywide. The plan could also set a precedent for other banks whose books are weighed down by defaulting mortgages.

“This is going to help some families,” said California Attorney General Jerry Brown, “but the overall economy is in the hands of God at this point.” Brown helped lead the settlement negotiations.

The program — described by the bank as $8.4 billion and the state attorney general as $8.6 billion — allocates up to $3.5 billion to help California Countrywide borrowers renegotiate their mortgages; the figure assumes every borrower participates. Nearly 400,000 customers of Countrywide will be eligible nationwide.

The bank said the program is for borrowers who are, or who are likely to fall seriously behind on their loans as the result of loan features such as interest rate resets or payment changes. For some borrowers, interest rates could go as low as 2.5 percent. The program includes suspension of foreclosures, reduced interest payments and for select borrowers, reduction of principal balances.

Shares of Bank of America on Monday declined 6.55 percent after the company announced a 68 percent drop in third quarter profit and said it would halve its dividend and sell $10 billion shares of common stock.

The lawsuit, which also named related companies Countrywide Financial and Full Spectrum Lending, accused Countrywide of deceptively marketing risky mortgages to borrowers who didn’t understand them.

Brown said Monday’s settlement could provide a model for other banks saddled with troubled home loans. The settlement “certainly” sets a precedent for other banks to follow, said Brown, although he noted that some banks don’t have the deep pockets Bank of America has and may have trouble coming up with the money.

 Real Estate News from the We Buy Houses Team 

WASHINGTON, Oct 2 - U.S. 30-year mortgage rates changed little in the latest week, according to a survey released on Thursday by home funding company Freddie Mac.

U.S. 30-year mortgage rates reached an average of 6.10 percent for the week ending Oct. 2, from 6.09 percent last week, while 15-year mortgages were at an average of 5.78 percent from 5.77 percent last week.

One-year adjustable rate mortgages, or ARMs, fell in the week to an average of 5.12 percent from 5.16 percent last week.

Freddie Mac said the “5/1″ ARM, set at a fixed rate for five years and adjustable each following year, fell to an average of 6.00 percent compared with 6.02 percent a week earlier.

A year ago, 30-year mortgage rates averaged 6.37 percent, 15-year mortgages 6.03 percent, and the one-year ARM 5.58 percent. The 5/1 ARM averaged 6.11 percent.

Although average mortgage rates were fairly stable this week, the hike from two weeks ago caused the number of loan applications to drop 23 percent last week, according to the Mortgage Bankers Association.

“Consumers are feeling the effects of the slowing economy,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. “For example, consumer spending was unchanged in August and revised downward for the month of July.”

Nothaft also noted that the Institute for Supply Management’s manufacturing index dipped from 49.9 in August to 43.5 in September.

Nothaft explained that this indicated “further erosion in new orders, a decline in order backlog, and lessened production, suggesting further cutbacks in manufacturing activity in coming weeks.”

Lenders charged an average of 0.6 percent in fees and points on 30-year mortgages, up from 0.7 percent last week.

Fees and points averaged 0.6 percent on 15-year mortgages and the 5/1 ARM, both unchanged from last week. The one-year ARM fees were 0.5 percent, also unchanged from last week.

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio

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