A look at the hardest-hit areas around NYC (source: Zillow)

For all the recent signs of the improving U.S. housing market, nearly one in three Americans with home mortgages are still underwater on their property, according to a report released today by Zillow. About 16 million Americans, or 31.4 percent of those with mortgages, owed more on their mortgages than their home was worth in the first quarter. That’s a slight increase from 31.1 percent recorded in the fourth quarter of 2011. However, they continue to make payments, as just one in 10 of the underwater borrowers is more than 90 days delinquent. [more]

The Federal Housing Administration and President Barack Obama’s plan to jump-start the housing market has led to historically low interest rates of 3.75 percent on 30-year mortgages, but critics of the policy warn that the FHA’s easy lending may lead to a second housing-bubble, the Fiscal Times reported. [more]

President Obama

As the election approaches, President Barack Obama is increasing his push to help more Americans refinance their home loans, according to the Wall Street Journal, but recent data shows that his efforts to date have had lackluster results. Bloomberg News reported that more Federal Housing Administration-insured loans entered foreclosure in March, largely because of refinanced loans. [more]

From the February issue: Ever since the credit crunch barreled into Manhattan, New York City condo developers have partnered with preferred lenders to help their buyers get mortgages in a difficult financing climate.

Until recently, however, individual home sellers rarely got involved in buyers’ mortgage woes. But that is now starting to change, brokers say. [more]

Bank of America and Freddie Mac and Fannie Mae mortgage bonds were the big winners from a Federal Reserve housing study that circulated through Congress this week, Bloomberg News reported, while mortgage bonds backed by high-cost debt lost in a massive market-shakeup. [more]

As the Federal Housing Administration prepares to release its annual financial report next week, there’s growing concern that the agency could run out of money and seek a taxpayer bailout for the first time ever.

The Wall Street Journal cited a report by University of Pennsylvania professor Joseph Gyourko that estimated the agency stands to lose $50 billion in the coming years because of the larger role it has taken in mortgage loan originations since the housing bust. Gyourko said the FHA is underestimating the potential impact of prolonged high unemployment and fallout from the homebuyer’s tax credit in its internal calculations. Comments

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From left: President Barack Obama and Utah Senator Orrin HatchThough critics have long panned sections of the U.S. tax codes that subsidize housing and mortgages as overly expensive and unfairly benefiting the wealthy, policy makers at a Senate Finance Committee hearing were wary of changing any law that could do more harm to the fragile housing sector, the Wall Street Journal reported.

The mortgage-interest deduction tax code deducts taxes from mortgage interest and property taxes and excludes home sellers from the capital gains tax on most sales. Some say it facilitated the housing bubble and the Congressional Budget Office has estimated that gradually abolishing it would save about $215 billion by 2021. Other research has shown eliminating the code would have a minimal affect on the nation’s homeownership rate. [more]

Source: CoreLogic

Nearly a quarter of Americans with residential mortgages are in negative equity and that number is barely improving, according to second-quarter data released today by analytics firm CoreLogic. In the second quarter, 10.9 million homes were worth less than their mortgages, or 22.5 percent of all residential properties with a mortgage. That’s down ever-so-slightly from the 22.7 percent recorded in the first quarter. Another 2.4 million borrowers had less than 5 percent equity, or near-negative equity.

The report notes that the widespread negative equity situations are keeping many Americans from refinancing their mortgages to capitalize on record-low rates. Nearly 75 percent of all underwater borrowers are paying more than the market rate for their mortgage, compared to 53 percent of above-water mortgage borrowers. – Adam Fusfeld [more]

New York judges are beginning to take a stricter interpretation of the “good faith effort” banks are required to make under a 2009 state law passed to offer support to distressed homeowners, according to the New York Daily News.

The law states that banks must try to negotiate with distressed homeowners so that they can modify the loans and keep their property. But those homeowners are increasingly complaining that they can’t get modifications. Since November, 2009 judges have found at least seven cases where banks, including Wells Fargo, HSBC, Bank of America and Deutsche Bank, failed to act in good faith, and in one case the judge ordered the mortgage debt wiped out (although that was later reversed by an appeals court). [more]

Drastic changes are needed to stimulate a housing recovery according to a New York Times editorial, which urged President Barack Obama to push forward plans for principal reductions on home mortgages and easier refinancings.

The editorial argued that the overall economy won’t improve until the “tens of millions of Americans… crushed by the overhang of mortgage debt” get some relief. Because nationwide housing prices have declined 33 percent since the market’s peak, 14.6 million homeowners are underwater on their mortgages. Lowering interest rates, the argument goes, simply is not enough. [more]