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Federal officials today announced a higher-than-expected rate for borrowers re-defaulting after participating in loan modification programs. More than half of the loans modified in the first quarter of 2008 became delinquent within six months, announced John Dugan, Comptroller of the Currency, based on new data.

If you have been watching the antics on Capitol Hill over the past few days, several Congressional Committees have been conducting hearings about the economy and the $700 Billion Dollar package that Congress approved known as TARP, of Troubled Assets Recovery Program. If you recall, this was sold to the Congress as a plan to buy up the failing mortgages and mortgage securities from Banks, so the Federal Government could properly value them and then sell these assets off to private parties once the markets recovered. It now turns out that Treasury Secretary Paulson was re-thinking that plan even before...

The housing downturn continues to crush Florida bankers: Overdue loans, mostly real estate related, have nearly quadrupled the past year in the Sunshine State. If that were not enough, the state's lenders have unusually low cash reserves to protect against mortgage defaults. And 41 percent of Florida-chartered banks were unprofitable the first three months of this year. That's twice the number of banks that bled red ink last year. These not-so-encouraging trends emerged from reports released the past week by the Federal Deposit Insurance Corp. Experts blame a chain reaction ignited by a two-year plunge in real estate values. It's...

WASHINGTON -- Pessimism is a contagious affliction, born by fears of some cataclysmic result that is based on little or no compelling evidence -- usually in the face of a pile of facts to the contrary. That's the illness that spread through Wall Street last week, triggered by the continuing turbulence in the housing and credit markets amid fears that the situation is only going to get worse and drag the rest of the economy down with it. Some of the gloomiest traders on Wall Street have begun, once again, to talk about a recession, the dreaded r-word that rears...

Arnold Schwarzenegger was elected on a promise to clean up the fiscal mess but so far has failed. His first act as governor was to reinstate a $4-plus billion a year car tax cut that widened the deficit, and since then, he has spent every nickel the state has taken in and then some, even though a vigorous economy pushed revenue to record levels. While the deficit narrowed a bit in the last couple of years, it's projected to grow again for the remainder of this decade -- and the remainder of Schwarzenegger's governorship -- unless he and lawmakers do...

WASHINGTON -- Market experts expecting the home construction lull to end some time soon are going to have to wait longer than hoped. The chief economist for the National Association of Home Builders said new home construction in the U.S. may take until 2011 to return to last year's level. According to the NAHB, monthly construction starts would need to jump by 21 percent to reach David Seiders' benchmark for full recovery — 1.85 million. There were 1.53 million construction stats in April, the Commerce Department reported. At the height of the five-year housing boom in January 2006, construction began...

According to U.S. Federal Reserve Governor Susan Bies, banks can expect more defaults on mortgages made to high-risk borrowers in the months to come. She believes that mortgage default rates among so-called ‘subprime' borrowers, already high, will continue to grow. 'What's happening is the front end of this wave of teaser- rate loans that are coming into full pricing'this is not the end, this is the beginning,'' said Bies recently at a meeting in North Carolina. Bies has been the highest ranking bank policy official at the United States central bank. The loans to risky borrowers that Bies refers to...

The mortgage market has been roiled by a sharp increase in bad loans made to borrowers with weak credit. Now there are signs that the pain is spreading upward. At issue are mortgages made to people who fall in the gray area between "prime" (borrowers considered the best credit risks) and "subprime" (borrowers considered the greatest credit risks). A record $400 billion of these midlevel loans -- which are known in the industry as "Alt-A" mortgages -- were originated last year, up from $85 billion in 2003, according to Inside Mortgage Finance, a trade publication. Alt-A loans accounted for roughly...

• Q2 jumps by 67 percent year over year • Buyers done in by ‘creative mortgages’ according to figures released Monday by Foreclosures.com, a Central Valley-based real estate investment advisory firm and publisher of foreclosure property information. "Year over year at the end of the second quarter of 2006, foreclosure activity in California has increased more than 67 percent," says Alexis McGee, president of Fair Oaks-based ForeclosureS.com. The once hot housing markets in Las Vegas and Phoenix are cooling off rapidly and defaults there are on the rise as well, she says. "Both Las Vegas and Phoenix were impacted by...

Democrat wants Congress to block pension defaults By Susan Cornwell Fri May 13, 5:15 PM ET United Airlines Flight Attendants supporters protest outside the Dirksen Federal courthouse in Chicago prior to the bankruptcy hearing of United Airlines, May 11, 2005. On May 13, 2005 a Democratic lawmaker said congress should impose a six-month moratorium keeping bankrupt companies such as United Airlines from dumping their workers' pension plans onto a federal agency. A bankruptcy judge this week approved a deal between United Airlines, a UAL Corp unit, and the federal pension insurer allowing the carrier to terminate its pension plans, in...