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RESEARCHERS CONCLUDE REFINANCING RECENT GAINS IN BILL WOULD SAVE HOMEOWNERS $35B ASKING PRICES THREATENED BY FORECLOSURES If it becomes law, a Senate bill could on average, according to the Columbia increase the number of homeowners who refinance under the Home Affordable Refinance Program (HARP) by up to 13 million. That's the consensus reached by researchers from the Columbia University Business School. Their study sketched the likely effects of a bill recently co-sponsored by Sens. Barbara Boxer (D-California) and Robert Menendez (D-New Jersey). The researchers contend new HARP modifications could lead to roughly $35 billion in annual savings for homeowners, a number that could help stem the rate of foreclosure activity nationally. The savings could result in a windfall for states that continue to feel the brunt of foreclosures and state budget shortfalls. The Columbia researchers found that cash-strapped California could see more than $5.6 billion in annual savings, the most of any state, with about 1.3 million additional homeowners eligible to refinance under new conditions. California homeowners who refinance under the proposed revised program would save $4,133 study. Other hard-hit states that could rake in billions in annual savings include Florida ($3 billion), New York ($2.6 billion), Texas ($2.5 billion), Illinois ($1.8 billion), New Jersey ($1.7 billion), and Georgia ($1.3 billion), among others. The researchers believe opening up refinance opportunities could stem the tide of foreclosures. According to their report, more than 2.7 million homeowners had lost their homes to foreclosure as of February, with many more on their way down the pipeline. "At a time when agreement is rare in Congress, everyone should come together to encourage more refinances," said Mike Calhoun, president of the Center for Responsible Lending, commenting on the Columbia University report. "We urge Congress to go forward with this legislation as it is," Calhoun added, "with no controversial side provisions that could derail this important bill or undercut consumer protections." MODIFIED BORROWERS LESS RISKY THAN NON-MODIFIED: TRANSUNION According to a new TransUnion study, consumers who received a mortgage modification did better with maintaining payments on loans opened after their initial delinquency than those who did not benefit from a loan modification. Even though nearly six in 10 mortgage modifications re-default within 18 months of being modified, borrowers with a modified loan still tend to do better with new consumer loans. "The purpose of this study was to learn how consumers performed on other loans opened following serious mortgage delinquency and what impact mortgage mods might have on that performance. To do this, first we needed to determine the outcome of certain mortgage loan modification programs," said Steve Chaouki, group VP in TransUnion's financial services business unit. 40 The study revealed that modified borrowers who took out a car loan after the initial delinquency had a 60-plus delinquency rate of 6.06 percent, while non-modified borrowers had a 60-plus past-due rate of 11.4 percent on car loans. For credit cards, modified borrowers had a 60-plus delinquency rate of 13.63 percent, and non-modified borrowers had a 17.13 percent 60-plus delinquency rate. The study also broke down the recidivism rate by state and found the states with the highest rate were Delaware (67.5 percent) and Rhode Island (66.3 percent). With the national mortgage recidivism rate at 59.1 percent, states with the lowest recidivism rates included Wyoming (46.3 percent) and Montana (48.2 percent). After falling flat in May, asking prices on listed homes rose in June, according to the online real estate marketplace Trulia. Trulia's price monitor shows asking prices made a 0.3 percent month-over-month and year-over-year increase in June. When excluding foreclosures, asking prices moved upward by 0.8 percent from May to June and by 1.7 percent from June 2011. Asking prices are said to lead sales prices by about two to three months. "We saw asking prices start to rise in February and predicted that other home price indexes would report sales price increases this summer for those homes—and they have," said Jed Kolko, Trulia's chief economist. "Since February, asking prices showed solid gains in four out of five months, including in June, so I expect to see the sales-price indexes show further increases in the months to come." On a seasonally adjusted basis, 44 out of the 100 largest metros saw yearly gains in asking prices, and 84 out of the 100 largest metros had quarterly increases for asking prices. The metro with the biggest yearly gain in asking prices was Phoenix, where prices rose by 18.9 percent. Florida metros took the next three spots, with Miami coming in second (+16.1 percent), Cape Coral (+14.9 percent) third, and West Palm Beach (+9.6 percent) fourth. Denver was fifth with a 7.2 percent increase. Despite the recent gains, Trulia warns that some of these top-performing metros will start moving in the opposite direction. "The huge price gains we've seen in Miami and Phoenix are not built to last. These increases will shrink or reverse as the backlogged foreclosures in these metros hit the market," said Kolko. "In contrast, Denver, San Jose, and Austin, which were spared the worst of the housing crisis, have strong price growth and strong job growth without a foreclosure overhang," Kolko continued. "Their recent price gains are less dramatic than Miami and Phoenix but are less at risk. Slow and steady wins the housing recovery." STAT INSIGHT 17,202 Loan modifications granted by investors in private-label mortgage-backed securities during the month of June. Source: Amherst Securities Group

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