Donovan described Orlando as the ground zero of the foreclosure crisis. He also defended the Obama Administration’s $75 billion Making Home Affordable program and Neighborhood Stabilization Program (NSP).

He said that the initial goals of the federal loan modification program will be met but he admitted that the program is not a solution for the country’s unemployment problem. The officials toured a foreclosure home that is being renovated through the NSP. The city of Orlando purchased bank and government foreclosures homes using NSP grant from the HUD.

The renovated house that was toured by the three officials was bought for $125,000. The city intends to spend $20,000 on renovation and repairs of the house. The renovated house is expected to be sold for $145,000. Industry experts are hoping that the rise in sale price will help drive up property values of surrounding houses.

Meanwhile, Donovan said that the government program provides much needed respite to distressed homeowners who are facing foreclosure while the NSP helps stabilize and strengthen property prices and values.

He urges the Congress to approve President Barack Obama’s modernization plan for the country’s financial system and for the creation of the Consumer Financial Protection Agency in order to protect families who avail of financial services and purchase financial products daily.

On the other hand, Grayson pointed out that the two HUD programs are important in helping families remain in their homes, staving off foreclosures, helping create affordable home ownership and providing shelter to those who cannot afford to own a home.

The federal program was created to stabilize the housing market in the country. The initiative includes Home Affordable Refinance Program to help nearly 5 million homeowners have an easy access to refinancing, Home Affordable Modification Program to lower monthly loan payments and providing support to low mortgage rates.

So far, the loan modification program has helped modify mortgages of more than half a million families and prevented bank and government foreclosures homes from further spreading across the country.

The federal funds are intended to be used to purchase foreclosure properties in High Point neighborhoods badly hit by the foreclosure crisis. The funds will also be used to rehabilitate these foreclosure homes.

Industry experts are anticipating a demand for funding, adding that the program is a good chance to move the foreclosure properties. According to market data, about 400 houses were foreclosed in High Point in 2008. And most of the foreclosed homes are located in the zip code of 27265 where moderate and high-income neighborhoods can be found.

Under the NSP, eligible buyers must be first-timers or those who have not owned a house for the past three years.

A loan will be provided to qualified families to help them buy foreclosed homes for sale. The deferred loan amounted to $7,500 and will be used for down payment. Furthermore, qualified buyers may be given as much as $20,000 for repair assistance after they have acquired the properties.

Also covered in the program are 27260 and 27262 zip codes which are inner city areas where foreclosure houses and blighted properties are in abundance. To qualify for the program, potential buyers should meet the income requirements, undergo and complete a consumer credit counseling training.

Industry experts are hoping that the program would help expedite the recovery of the housing market in the area. So far, everything points towards recovery. Last August, the number of home foreclosures in North Carolina dropped by 6 percent compared with the previous year.

Market data showed that 4,317 properties were foreclosed in North Carolina in August, or one out of 956 households. This earned the state the 29th position nationwide in terms of rate of foreclosure filings.

But despite the improvements in this year’s numbers compared with the previous year, foreclosures in North Carolina jumped by 26 percent in August from July. Industry experts attributed the increase to the lifting of moratoriums and the continuing rise in unemployment rate. But they are hoping that the program that aims to help families buy foreclosed homes for sale would pull up home prices and values and may lead to the recovery of the housing market.

The bill gives hope to thousands of distressed families who want to remain on their homes and to communities that are badly hit by the foreclosure crisis.

Under the proposed Preserving Homes and Communities Act of 2009, all qualified homeowners will be evaluated and offered mortgage modifications. The law also establishes a program that will provide mortgage payment assistance to distressed homeowners.

Additionally, the law proposes to provide incentives to local and state governments to motivate them to develop mediation programs that will allow troubled homeowners and servicers to negotiate and create alternatives to help curb the growing bank foreclosure list.

Reed explained that the foreclosure crisis has left many American families devastated and homeless, crippled local communities and neighborhoods and further dragged down the already sick economy.

He said that despite federal, state and local efforts to prevent the spread of foreclosures, the problem continues to grow rapidly. Industry experts said that the current foreclosure rate surpassed the numbers for last year by almost a third.

They said that even homeowners who have fixed-rate mortgages are finding difficulty paying their mortgages and are at risk of losing their homes to foreclosures.

They predicted that the number of troubled loans could increase to almost four million in 2009. Additionally, fixed rate loans accounted for a third of the total repossession starts filed in from April to June of this year. This means that one out of eight homeowners has missed at least one payment.

Durbin believed that the economic crisis could not be resolved unless the housing market has been stabilized. He explained that the proposed law would force lenders to workout with troubled homeowners to modify their loans.

The bill also proposes to expand the loan modification of the government to allow more homeowners to avoid bank foreclosure list and to require banks and lenders to offer approved mortgage modifications to all borrowers who qualify.

Co-sponsors of the bill are Senators Sheldon Whitehouse, Dick Durbin and Jeff Merkley.

The Obama Administration’s program is designed to help local neighborhoods badly hit by the foreclosure crisis. It will provide funding to support state and local governments’ efforts to prevent foreclosure houses from becoming eyesores in communities.

The program has a wider area of coverage, encompassing rural areas and cities across various ZIP codes in the state. Some counties identified to be eligible under the program are New Castle, Sussex and Kent and the city of Wilmington.

According to industry experts, buying bank foreclosures would mean a lot on the recovery of neighborhoods and the housing market. They said that foreclosure properties that have been vacant for a long period of time are magnets to vandals, thieves and squatters. They also lower property values in neighborhoods.

So far, Delaware posted foreclosure filings on over 4,200 properties this year. In August, the number of foreclosure filings totaled over 550, a decline of 15 percent compared with July. Experts said that many programs were designed to help distressed homeowners remain in their houses. But the current state initiative provides buyers in the low and moderate income level extra incentives to buy abandoned foreclosure houses.

Experts said that one less foreclosed home on the market means that a family is living there, earning a living and using local services and goods. The county governments of Kent, Sussex and New Castle have their own program to administer the funds that will be allocated by the Delaware housing agency. The same goes with city governments of Wilmington and Dover.

To be eligible, buyers must meet all the income requirements, including $70,000 for a four-member family or not over 120 percent of the median income in the area.

In Sussex County, each potential buyer is given as much as $50,000 in interest-free loans, provided that it is secondary financing. Buyers may also receive $20,000 for assistance in home cleaning and rehabilitation and additional $20,000 for deposit and closing cost payments.

All participating counties and cities have partnered with nonprofit agencies and organizations to provide homebuyer counseling to those who are interested in buying bank foreclosures in Delaware.

In his decision for the case of Luminent Mortgage Capital Inc. versus Merrill Lynch and Co., Surrick said that the bank foreclosed home crisis is most likely the cause of plaintiffs’ loses. The judge said that there is no evidence to support plaintiffs’ allegation that the defendants committed misrepresentations in 2005, thereby causing their economic loss. He added that the market’s downturn in 2007 was the cause of the plaintiffs’ economic loss.

The securities fraud lawsuit was filed against Merrill Lynch and its subsidiaries by two real estate investment trusts that alleged that they were fooled by false statements issued by Merrill Lynch. They claimed that they invested nearly $26 million on mortgage-backed securities which proved to be full of problem accounts.

Merrill Lynch’s defense team is composed of Karen Pieslak Pohlmann and Marc J. Sonnenfeld of Morgan Lewis and Bockius and Paul J. Lockwood and Jay B. Kasner of Skadden Arps Slate Meagher and Flom.

The defense team sought the dismissal of the case by arguing that plaintiffs committed several fatal flaws, including their failure to prove that Merrill Lynch and its brokers have committed securities fraud that led to their losses.

In his decision, Surrick compared the Merrill Lynch case with a previous lawsuit filed against the company before the 2nd U.S. Circuit Court of Appeals which dismissed the case.

He agreed with the defense team’s argument that the losses incurred by the plaintiffs stemmed from the collapse of the mortgage industry and the subsequent failure of mortgage-backed securities.

Plaintiffs’ lawyers said that Merrill Lynch intentionally withhold information about the risks surrounding the mortgage-backed certificates which it sold to Mercury Mortgage Finance Statutory Trust and Luminent Mortgage Capital Inc.

In its argument, plaintiffs’ lawyers said that Merrill Lynch falsely represented the underlying mortgage loans as having prepayment penalties which would have provided Luminent and Mercury Mortgage with steady income.

Surrick said that in securities fraud lawsuits, plaintiffs must show more than motive and opportunity to prove intentional fraud.

She initiated the call in a letter signed by several of her colleagues in Congress and sent to the U.S. Housing and Urban Development (HUD). The letter is written to call attention to the lack of response from mortgage services to help distressed homeowners.

Also, the lawmakers wanted to point out the need to make sure that the Obama Administration’s Making Home Affordable program will be able to help responsible borrowers who are having difficulty making their mortgage payments and are at risk of losing their properties to foreclosures.

Matsui has urged the federal government to use all the available resources to make sure that distressed borrowers are properly helped by lenders. She added that the Administration’s program is important to provide relief and help to responsible homeowners.

Under the federal program, an array of incentives is being offered to mortgage lenders to encourage them to modify troubled loans to make them affordable to pay by distressed homeowners.

But a report released by the U.S. Department of Treasury showed that only about 9 percent of the target 4 million eligible borrowers under the program had their loans altered into more sustainable and affordable terms.

In July, foreclosure activity across the country rose by 7 percent compared with June and 32 percent from the same month in 2008. In the first seven months of this year, filings of default, auctions or bank repossessions reached 2.3 million.

Meanwhile, Matsui’s letter cited a National Foreclosure Mitigation Counseling Program report which stated that homeowners who were able to connect with their lenders waited for as long as 2 months for a response to their loan modification request.

She and her colleagues urged the Obama Administration to encourage mortgage lenders to intensify their loan modification efforts, to improve responsiveness to homeowners’ assistance request and expand the coverage of existing assistance programs for homeowners.

According to Neil Barofsky, special inspector general for the Troubled Asset Relief Program, the $700 billion initial bailout funding could balloon to $23.7 trillion in addition to the $7.4 trillion already allotted to TARP and other Treasury programs.

The country’s commercial real estate market, valued at $3.5 trillion, is now being battered by defaults on loans for office buildings, apartment buildings, retail centers, shopping malls, hospitals, hotels and residential towers.

Based on data from the Center for Real Estate at the Massachusetts Institute of Technology, commercial property prices have dropped by about 39 percent from their peak in the middle of 2007. Studies by Moody’s Investors Service also show substantial price declines.

The 39-percent price decline has already surpassed the 27-percent price drop that occurred during the savings and loan crisis in the late 1980s and early 1990s.

Additionally, Wall Street enterprises would further suffer from derivative securities backed by these commercial loans, at a time they are still carrying the burden of over $1.5 trillion in losses from delinquent residential loans and foreclosures.

In their most recent quarterly reports, Wells Fargo and Morgan Stanley posted large losses from bad commercial property loans. Regions Financial, Marshall & Isley, Zions, SunTrust and Comerica posted losses and are expected to continue struggling with their bad loans in 2010.

Citigroup, KeyCorp. and Bank of America also have reported commercial property losses. Enterprises like General Electric and Marriott International are also hemorrhaging from their commercial property losses.

According to Steven Sandler, CEO of private equity investor Crosswind Capital, about $1.4 trillion of commercial property loans will mature within the next 5 years and about $750 billion loans will mature in less than 3 years. This year alone, according to Sandler, about $165 billion to $204 billion commercial property loans will mature, adding more pressure for commercial loan refinancing to an already overwhelmed lending market.

Last May, the federal government launched the Term Asset-Backed Securities Loan Facility program to offer loans at low rates to investors buying commercial securities that are mortgage-backed. It announced an initial funding of $100 billion for loans with 5-year maturities, with further funding that could reach $1 trillion.

Rell reflected on the change in the mood of the country from the previous year, adding that the economic downturn has victimized everyone in the state. She pointed out the crisis in the subprime mortgage loan market and noted that many homeowners are currently struggling and need help to survive the crisis.

According to industry analysts, many homeowners who are creditworthy are struggling to make their mortgage payments because they have lost their jobs or their working hours were reduced.

As part of its assistance to help distressed homeowners avoid foreclosures, the state expanded the eligibility for its Connecticut Fair Alternative Mortgage Lending Initiative and Education Services (CTFAMILIES) and the Emergency Mortgage Assistance Program (EMAP) in order that many families could avail of these programs.

Under the CTFAMILIES, a 30-year fixed rate mortgage is provided to homeowners. The original program was intended for homeowners with subprime adjustable rate loans. Under the new CTFAMILIES, all types of home loans are eligible for refinancing.

The program received many criticisms because since it was launched in December 2007, it was able to refinance just 72 loans. Data released by the Connecticut Housing and Finance Authority showed that the program declined 79 loan applications because borrowers do not have the ability to repay loans while 158 applicants did not qualify in the program’s income requirement.

Meanwhile, EMAP provides loans with low interest rates to homeowners who experience a drop in their income to help them make their accounts current. However, the program was criticized for providing assistance only to just 50 homeowners in its first year of operation.

The old EMAP was available only to homeowners who lost about 25 percent of their income. But the new program removed the income requirement and added unanticipated household expenses. This means that homeowners who anticipate loan delinquency can apply for the program.

In addition, Rell signed a law mandating courts to supervise foreclosure mediation between lenders and borrowers.

Members of the city council are expected to apply for about $80 million federal funding to buy the three parcels of land on Bank Foreclosure List. Under the plan, the city government will give the bulk of the federal funds to builders who will need them to construct affordable houses.

Santa Rosa’s director of economic development and housing David Gouin said that aside from providing affordable housing to poor resident of the city, the program is also expected to generate about 550 construction jobs.

The $80 million money is part of the $1.9 billion federal package set up to help states and local governments purchase and renovate abandoned residential properties on Bank Foreclosure List. The city’s funding request represents about 4 percent of the total federal package available nationwide.

Gouin explained that some areas in the country, including California, have competitive edge for the federal funds because of high default rates. California is one of the states with the highest foreclosure rate nationwide.

Since February, the city has been asking banks, land owners and real estate agents what properties are in danger of foreclosure, the criteria in order for the city to qualify for federal funds.

For its project, the city has identified the 2.8-acre Kawana Terrace which was once targeted for 39 houses by Das Homes before it was taken over by Exchange Bank. The second property involved in the project is the 8.3-acre Sundance Village which was originally planned for 51 home developments by MetroPacific Properties. The property was repossessed by Comerica Bank.

Another property selected for the project is the 8.7-acred Village Gardens where Christopherson Homes planned to build 110 condominiums until it was taken over by Wells Fargo Bank.

Economic development and housing manager Nancy Gornowicz said that two of the proposed projects have a better chance of meeting requirements and federal spending deadlines because of the existing roads and utilities.

The planned development of properties on Bank Foreclosure List is intended for low income residents, families and individuals who are earning between 30 percent and 60 percent of the median city income.

Hamilton County Mayor Claude Ramsey and Chattanooga Mayor Ron Littlefield have set up a task force to address the growing problem of foreclosure in their areas. The task force is made up of area agencies that will develop new strategies to help troubled homeowners who are on the brink of losing their homes to foreclosure.

Members of the task force have partnered with the U.S. Department of Housing and Urban Development’s regional office to offer a housing fair that will provide resources for struggling homeowners facing foreclosure.

Industry experts said that there are many assistance programs that can help low and middle-income homeowners save their properties from bank foreclosure listings. However, many distressed homeowners hesitate to seek help until it is too late.

One of the assistance programs is the Chattanooga Foreclosure Prevention Hotline launched by the Chattanooga Neighborhood Enterprises (CNE), a nonprofit organization that helps distressed families purchase or renovate their homes.

David Johnson, CNE president, said that the task force and the hotline should help more struggling homeowners avoid the foreclosure process. He pointed out the need to educate distressed homeowners on the importance of responding immediately to the threat of foreclosure.

Meanwhile, Littlefield said that nonprofit agencies are offering local services to distressed homeowners. He urged them to avoid companies offering foreclosure prevention services for a fee.

On the other hand, real estate experts are concerned that with some foreclosure moratoriums coming to an end and the rise of unemployment rate, the number of properties on bank foreclosure listings will continue to increase.

In Hamilton County, 669 properties were on foreclosure in the first six months of 2009, representing a 3.2 percent increase compared with the first half of the previous year. In May, one in every 800 homeowners in the county received a notice of foreclosure.

Industry experts take solace on the data that the number of properties on local bank foreclosure listings is less than 50 percent of the national average of one in every 389 housing units.