More active trial and permanent modifications under the Home Affordable Modification Program (HAMP) took place in California than any other state, says the US Treasury Department.  Regionally, however, the switches to permanent modifications is uneven as Florida and Illinois rounded up the rest of the top three spots.  The Treasury launched HAMP in March 2009 to provide capped incentives to servicers for the modification of loans on the verge of foreclosure. Nationwide, more than 116,000 permanent modifications took place through January, up from 66, 0000 mods in December.  There are more than 830,000 active trial modifications currently under the program.  California led all states with more than 191,000 permanent and active trial modifications through January, according to the Treasury. Florida came in second with 116,000. Illinois was third with more than 49,000.  In 2009, California ranked fourth in the highest foreclosure rate, according to RealtyTrac.  There, one in every 21 homes received a foreclosure filing for the year. Filings include default notices, scheduled foreclosure auctions and bank repossessions. Florida had the third highest foreclosure rate in 2009, where one in every 17 homes received a notice. Illinois had the ninth highest foreclosure rate with one in every 40 homes receiving a notice, according to RealtyTrac.

Based on Treasury estimates, 5.6m homeowners are currently 60 or more days behind on their mortgage. Of those, 1.7m are eligible for HAMP, but that number is expected to increase through 2012 – when HAMP is supposed to end.  According to the monthly Treasury report card, however, participating servicers hold more than 3.4m HAMP-eligible mortgages. The Treasury uses this number to gauge the percentage of loans servicers have either put into active trial modifications or provided permanent relief for.

All HAMP modifications include an interest rate reduction to get a borrower’s debt-to-income ratio down to 31% after the modification. For those that needed further modification, 41.7% received a term extension on their loan, and 27.4% received principal forbearance. The average median monthly payment for borrowers dropped to $835 from $1,431 before entering the program.

The Fed announced today that it will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, and expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time.  “Information….  suggests that economic activity continues to strengthen and that deterioration in the labor market is abating,” the Fed said in a prepared statement.  “Household spending is expanding at a moderate rate, but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.  Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls.  While bank lending continues to contract, financial market conditions remain supportive of economic growth.  Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability,” the Fed said.

To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve also said it will purchase a total of $1.25 trillion of agency mortgage-backed securities and nearly $175 billion of agency debt, and will gradually slow the pace of these purchases in order to promote a smooth transition in markets.

Home prices are expected to grow modestly next year and sales will keep rising as the housing market continues to recover from the worst downturn since the great depression, the National Association of Realtors said Friday. Home resales are projected to total 5.7 million next year, up from an estimated 5 million this year. Prices will climb about 4% after a projected decline of 13% this year, according to Lawrence Yun, chief economist for the trade association.  “Going into 2010, I anticipate that prices will also begin stabilizing or begin to modestly improve,” Yun told the audience at the association’s annual conference and expo in San Diego.  That should help ease buyers’ anxiety. “I don’t think the fear factor will be at play in 2010,” Yun said.  The housing market’s rebound has been aided by an aggressive federal intervention to lower mortgage rates and bring more buyers into the market. Home resales rose in September to the highest level in more than two years, something Yun said shows buyers are eager to get back into the market.

A federal tax credit of up to $8,000 for first-time homebuyers has helped stoke sales this year. The incentive was set to expire at the end of this month, but the NAR and other housing groups successfully lobbied to get the credit extended.  Now buyers can claim the credit if they sign a contract by April 30 and close the deal by the end of June. Lawmakers also expanded the program to include a $6,500 credit for existing homeowners who have lived in their current residence for at least five years.  First-time buyers accounted for a record 47% of home sales this year, up from 41% last year, the trade group said.

That surge helped drive traffic for real estate agents like Jan McGill of Omaha, and the extension makes her more optimistic about business next year.  “I’ve got to be positive,” McGill said.

Yun estimated around 2 million people took advantage of the tax credit this year and projects it will continue to lift the market.  However, some housing analysts said the NAR’s forecast was overly optimistic, as it was during the housing bubble. Economists like Patrick Newport argue the tax credit has already enticed many buyers who otherwise would have waited until next year.  “It induced first-time homebuyers who were going to buy a home in 2010 to buy in 2009 because they thought it wasn’t going to be extended,” said Newport, an economist at IHS Global Insight. 

 His forecast calls for sales of newly built homes to surge by about 38% from 2009 levels. That translates to about 549,000 homes, still well below historical trends.

California home sales increased 4.7 percent in November compared with the same period a year ago, while the median price of an existing home rose 5.8 percent, according to a C.A.R. report released yesterday.  The median price of an existing, single-family detached home in California during November 2009 was $304,520, a 5.8 percent increase from the revised $287,880 median for November 2008, C.A.R. reported.  The November 2009 median price rose 2.4 percent compared with October’s $297,500 median price.  The median home price in California has risen nine consecutive months in month-to-month comparisons, but November marked the first time California’s median home price has risen in year-to-year comparisons since August 2007.

Southern California home sales rose in October as prices showed more signs of firming. The median sale price fell by the smallest amount in two years, the result of a shrinking inventory of homes for sale and government and industry efforts to stoke demand and curtail foreclosures, a real estate information service reported.  Two counties – Orange and San Diego – posted modest year-over-year increases in their overall median sale price last month. It was the second consecutive gain for Orange County and the first in more than three years for San Diego. Both counties also posted small annual gains the past two months in their median price paid for resale single-family detached houses.

Last month 22,132 new and resale houses and condos closed escrow in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was up 2.8 percent from 21,539 in September and also up 2.8 percent from 21,532 a year earlier, according to MDA DataQuick of San Diego.  October marked the 16th month in a row with a year-over-year sales gain, although last month’s was the smallest of those increases. The 2.8 percent uptick in October sales from September wasn’t unusual, given sales have increased between those two months in half of the years – including 2007 and 2008 – since 1988, when DataQuick’s statistics begin. The average change between September and October is a decline of just under 1 percent.  Last month’s sales were the highest for an October since 2006, when 23,745 sold, but were still 9.5 percent lower than the historical October average of 24,458 sales. Since 1988, October sales have ranged from a low of 12,913 in October 2007 to a high of 37,642 in October 2003.  Sales increases over the last two months can be partially attributed to the recent increase in short sales, which take longer to close escrow. The result is that some summer deals that might normally have closed earlier instead closed in September and October.

Other factors driving home sales higher of late: A rush by some to take advantage of the federal tax credit for first-time buyers, which was initially set to expire at the end of this month but was recently extended and expanded. Also, mortgage rates remain extremely attractive and, combined with home price declines, have boosted housing affordability.

The rate of existing home sales increased 10.1% in October, the National Association of Realtors (NAR) said. The seasonally adjusted annual sales rate of existing homes — including single-family, town home, condominium and co-op dwellings — was 6.1m in October, up from a rate of 5.54m existing home sales in September. October’s rate is 23.5% above the rate of 4.94m in October 2008 and is at its highest rate since February 2007, when the rate was 6.55m. NAR chief economist Lawrence Yun credited the increase to a last-minute push of first-time homebuyers trying to close a deal on a home before the credit was set to expire prior to an extension passed in November. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.” The nation’s inventory of existing homes decreased 3.7% to 3.57m, representing a seven-month supply of homes at the current pace. That’s a decline from an eight-month supply in September. Unsold inventory is down 14.9% from one year ago. The months supply of homes hasn’t been this low since February 2007, when it was at a seven-month supply. Distressed properties accounted for 30% of sales in October. “The supply of homes on the market is now at the lowest level in over two-and-a half years — we’re getting closer to a general balance between buyers and sellers,” Yun said.

The national median existing-home price for all housing types was $173,100 in October, down 7.1% from October 2008. Low prices, along with historically low mortgage interest rates are fueling the increase in sales, Yun added, but he warned prices could increase in 2010. “With the abnormal drop in home prices over the past few years, the price-to-income ratio has fallen below the historic trend line,” Yun said. “This is adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970, but prices are beginning to flatten and are poised to rise next year.” The single-family segment of home sales increased 9.7%, while the condo and co-op segment was up 13.2%. Existing sales in the Midwest increased 14.4%, leading all regions of the country in October, followed by increases in the South (12.7%), Northeast (11.6%) and the West (1.6%).