Many people, many more than usual and many more than in past years, have recently experienced the trauma of not being able to make the house payment, not being able to catch up after delinquencies and the horror of foreclosure, not to mention the people who never really missed a payment but were completely unable to sell the home for as much as they owed when they needed to move, thereby resulting in a “short sale” on their credit report.

And all of these problems affect your credit scores and your credit reports. The question is how much? And how long? And what can I do to improve now that the crisis has past?

Well the people at FICO, the credit score people, have long been tight-lipped about how much these types and even other types of problems can affect you. You can check out this article on Mintlife, “How Mortgage Delinquencies Affect Your Credit Scores” to see some of the worst details.

Apparently, it has much to do with how high your credit score was in the first place. If you had a score of 680 there is no difference between a 30 day late and a 90 day late (except of course, it is much easier to pull out of a 30 day late and if you haven’t been able to make payments for as long as 90 days, you may find that nasty foreclosure to be inevitable).

But if you had a 780 score to start there is a difference between the 30 and 90 day delinquency.

An interesting note is that if you had a 680 score, a short sale would negatively affect your score as much as a foreclosure. Rather seems extremely unfair for those millions of folks who just got unlucky in the market and couldn’t sell their home. You know, if you haven’t missed a payment that ought to count for something, don’t you think? Is the typical homeowner in the typical town in the USA actually responsible for the fact that real estate prices have plummeted since they purchase their home? See, these credit scores are not always reasonable and very often not really fair.

And no matter what your score was to start with, any one of these problems can make it much, much worse. It will take time to recover.

Approximately, 3 years for a short sale or a foreclosure, 5 years for a bankruptcy.

But one consideration is the fact that until mortgages are more readily available, even to the people who have struggled in the past recession the housing crisis will not really end.

And that is a boon for you if you had these types of problems in the past because the price of housing in coming down. By the time your credit has recovered the prices will probably be even lower.

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The mortgages that are at least 30 days late decreased more last month than it has in over a year.

Delinquencies in February 2011 were down 1.2 percent from January 2011 and 18.4 percent from last year at this same time.

But the foreclosure inventories are still quite high and significantly higher than last year at this time. Right now there are approximately 2,196,000 foreclosures in the market and there is a total of 6.865,000 that are 30 delinquent or already in the foreclosure process.

The states with the highest numbers of foreclosures are Florida, Nevada, Mississippi, New Jersey and Georgia. The states with the lowest numbers are Montana, Wyoming, Alaska and North Dakota.

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Housing prices in many cities across the nation are at their lowest level in years. And while everybody has a theory as to why and the comments on the Internet have people blaming the banks, the homeowners, the legislature, the government, the truth probably lies somewhere in the middle.

The fact is that is will most likely get much worse before it gets better. It is inevitable as there is an estimated 5 million mortgages right now that are at least 2 months in arrears. And there is also a huge inventory of foreclosures now that are already in the pipeline, the so-called “shadow inventory”.

But if you consider what happened to the price of homes since around 1996, you can see that such a big bubble was forming that a housing crisis could have been predicted and in fact it was predicted by a few.

Between 1997 and 2006, the average price on a typical American home in a typical American city rose by an astounding 124%. In the 1980′s and the 1990′s the national median home price was 2.9 to 3.1 times the median household income. By 2004 this increased to 4.0 and by 2.6 it increased to 4.6 times.

While these numbers don’t appear that alarming when you look at them in that way when you consider that if your income was $60000. a year in 1990 your average house at 2.9 times would have cost $174000. while for the same exact house and the same exact income in 2006, the house would have cost $276000. And along with that is the additional costs involved, meaning people are paying more for housing and saving less and both spending more and borrowing much more for housing.

In short, it was unsustainable.

Sure it’s great if you bought in 1985 and you still lived there and planned on living there forever. But what about the people just getting in? What about the people who need to move for jobs? What about the young people just getting into the workforce.

And during that time of rapidly increasing housing prices, many of the loans for houses were also unsustainable with adjustable rate mortgages, no documentation loans and of course, just sub-prime lending in general.

Again, it was unsustainable.

So be it a double dip, another housing crisis, whatever you want to call it, essentially it is and has been just an unfortunate but inevitable market correction.

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Real Estate analysts from RealtyTrac Inc. are predicting that 2011 will be the height of the Real Estate crisis with an expected 1.2 million homes being repossessed. Lenders are poised to take back more homes than at any other time since the crisis began in 2006.

At this time there are 5 million borrowers who are at least 2 months behind on their house payments and in the month of December 257,747 homes in the United States received at least one foreclosure-related notice.

While the pace slowed during the last quarter of 2010 due to the banks reviewing their foreclosure processes because of allegations that they had been handled improperly, most evictions have been resumed and the foreclosure numbers are rising steadily.

The good news is that it is expected that the worst will come this year in 2011 and then things will pick up again. Whether prices will come back though is another story.

See Banks repossess 1 million homes in 2010.

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In an interesting article from the Huffington Post, an individual requested information from his mortgage servicer, Bank of America, about who actually owned his mortgage. He did this through a website called “Where’s the Note?”.

As a customer you actually have the right to know who owns your note. However, after initially declining to tell him who owned his note, a few weeks later he received notice of the investor who actually owned the note.

And some other bad news.

His credit score was dinged 40 points, dropping from an excellent 780 to 740 (still excellent but it is the principle of the thing!!)

All for requesting information???!!!

Speculation that he might be interested in mortgage modification? He wasn’t requesting info on modification, just info about who owned the mortgage.

Read the entire article here at Honey, I shrunk the credit score

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The nationwide halt on foreclosures by Bank of America, along with other banks that are considering the same thing will most likely slow up the real estate market even more.

The problem lies in the many foreclosures that are currently and soon to be on the market. If there is any type of “mortgage fraud” it could feasibly cloud the titles of the homes thereby making a transfer of title in a sale much more difficult.

But of course, there is title insurance. That ought to cover it right?

Well, you must remember that even title insurance is still “insurance”. If there is even an inkling of risk, they won’t cover it. Nope. Insurance companies are out for the profits. Until the “mortgage fraud” is handled, we can expect a more difficult real estate market at least for the foreclosed homes. At this point there are a few title insurance companies that have stopped issuing title insurance for foreclosures from certain banks. Expect more of that.

However, this potential decrease in home sales could also potentially prop up prices for the non-foreclosed homes. That would be a benefit for regular sellers. Instead of losing a whole ton of money from the time they bought their house, they will only be losing about three quarters of a ton of money, right?

But the shadow inventory will increase. It is highly unlikely that a temporary halt on foreclosures will become permanent. It is also highly unlikely that the temporary halt will help distressed homeowners in any way, especially with large house payments it gets to a point where you are just buried way too deep to dig yourself out.

It’s a mess.

Read more at Unclear Titlesand be sure to check out all the links in that article. Interesting mess…..

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Nearly a third of all Americans are unable to secure a mortgage in these challenging times.

According to the real estate website, Zillow, people with credit scores below 620 were unable to secure mortgage financing even when they had a solid source of income and offered a down payment of 15-25%.

According to myFICO.com as many as 29% of all Americans have a credit score that low.

While banks are being more careful in the wake of the mortgage crisis, this is seriously stopping the recovery of real estate across the nation.

According to myFICO.com as many as 55% of all Americans “lost ground” or in other words, their credit scores have suffered during the recession of the past few years. 47% “held their own” or had their credit score remain the same.

Unfortunately, it seems that the majority of people who “held their own” were the older and more established Americans who were long time homeowners. According to Pew Research Center, 69% of people age 18-49 lost ground on their credit scores.

Read Credit Scores May Hamper Housing Comeback.

Without the ability to obtain mortgages the housing market it likely to continue its nasty decline.

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Not so good but possibly stabilizing.

That is the verdict from Harvard’s Joint Center for Housing Studies 2010 report on the state of the American Housing Market.

“The nation has not faced housing problems of this magnitude since the Great Depression.”

Job losses and high unemployment of course, have contributed and also the significant decrease in home prices throughout the nation. There is also a great number of homeowners that are “underwater” meaning that they owe significantly more on the home than it is possible to sell it for. This is leading to more defaults sometimes even by strategy just to get out of the house.

Check out the whole article about the State of the Nation’s Housing Market at the Washington Independent.

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Rumor has it that in the area where I live, a smaller community that just came about around 2006, every single home sale is either a short sale or a foreclosure.

And the truth is that not “every” home sale has to be a short sale or a foreclosure, there are those few people who either had huge down payments or paid cash outright. Of course, those people are probably few and far between, if they exist at all.

But prices have plummeted, much like most other part of the country.

A recent article from the Las Vegas Review-Journal claims that short sales in the area are taking more than a year and sometimes as much as 18 months just to get approval to close.

The banks need appraisals, broker price opinions and then all the paperwork goes through miles of red tape.

And all the while the homes in the area are dropping in value.

Some claim that the banks would prefer to foreclose on the house and then wait for the market to turn around.

Only problem is that they may be waiting a long, long time, especially if it is taking over a year for homes that are sold to close and with more foreclosures happening every day, in fact, one report claimed that one in 10 homeowners are at risk for foreclosures, is there any light at the end of the tunnel for the folks that are upside down on their homes.

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July 2010 statistics on home sales or previously owned homes fell by more than 27 percent to a seasonally adjusted 3.83 million, the National Association of Realtors reported on Tuesday.

This represented the largest monthly drop on record, dating back to 1968 and it also included every region of the country.

This followed the expiration of the tax credit, which accounted for a relatively robust spring selling season.

The inventory of homes on the market that remain unsold hit about 4 million in July. This makes a 12.5 month supply when you take into consideration the current sales pace. A healthy inventory is around a 6-month supply.

Any realtor who is telling the truth will say that home sales always come down to price, if the price is right the home will sell. However, buyers and sellers seem to be at a impasse over prices as sellers don’t want to come down on their prices and buyers are reluctant to buy when they believe that the market has yet to hit bottom.

Add into that the fact that financing is getting much more difficult to obtain and the real estate market is looking glum.

See “Home Sales plunge 27 pct. To lowest in 15 years”.

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