Fannie Mae And Freddie Mac Agree To Guidelines That Prohibit Mortgage Lenders And Mortgage Brokers From Targeting Certain Values In Appraisals Allowing For More Objective Property Valuation

“Erecting and enforcing meaningful firewalls between appraisers and lenders, and forcing Fannie and Freddie to stop working with unscrupulous lenders and brokers, are key steps in cleaning up the mortgage industry and avoiding another crisis like this in the future,”

The new agreement prohibits lenders from providing appraisers with a target value for the property or loan amount requested by the borrower.

http://www.nytimes.com/2008/12/24/business/24fannie.html?_r=1&ref=business&pagewanted=print

Fannie Mae and Freddie Mac have agreed to improve the reliability of appraisals on mortgage loans bought by the two financing companies.

The amended guidelines were agreed upon by the two companies and their regulator, the Federal Housing Finance Authority, as well as Attorney General Andrew M. Cuomo of New York, the regulator said on Tuesday.

Among the main changes is that lenders will be able to use internal assessors, a step banned in the initial code of conduct, but must use various firewalls to ensure their independent views. The intent is to prevent improper influence in the valuation process, according to the agreement.

The new program will be put in place for single-family mortgages delivered to Fannie Mae and Freddie Mac starting May 1.

“Erecting and enforcing meaningful firewalls between appraisers and lenders, and forcing Fannie and Freddie to stop working with unscrupulous lenders and brokers, are key steps in cleaning up the mortgage industry and avoiding another crisis like this in the future,” Mr. Cuomo said in a statement.

Last year, Mr. Cuomo’s office started an investigation to determine if home appraisers were inflating home values, contributing to the housing bubble that burst into the worst market since the Great Depression.

The new agreement prohibits lenders from providing appraisers with a target value for the property or loan amount requested by the borrower.

Also under the agreement, an appraisal watchdog called the Independent Valuation Protection Institute will be created.

The two companies, both taken under government control in September, struck a deal in March with their regulator and Mr. Cuomo regarding new standards for mortgage appraisers.

These revisions come after criticism from John C. Dugan, the comptroller of the currency, and industry groups, among others.

 

Over Half Of Mortgage Loan Modifications Will Re-Default Unless Substantial Principal Is Reduced Along With Lower Monthly Mortgage Payments

“…borrower advocates contend that many mods in fact reduce interest, but unless the principal is cut, the reduction in payments is insufficient to make enough difference with many borrowers…”

http://3.bp.blogspot.com/_rWY3qGfe6gc/SU_NBRsYoYI/AAAAAAAABgw/MMFUBnS_cWo/s1600-h/Picture+38.png

 

 

Proponents of mortgage modifications contend that the cost of even a deep principal reduction still puts the lender ahead of foreclosure, and experience in past real estate downturns would bear that contention out.

So why is this time different? Data from the Office of the Comptroller of the Currency show that 55% of mortgage mods redefault within six months. Even more discouraging, the three month re-default rate was higher for loans modified in the second quarter of 2008 than the first.

It is hard to know for certain without digging further into the data. With housing prices down nearly 30% nationwide, and foreclosure costs averaging $50,000, banks could afford significant principal reductions and still come out ahead. However, borrower advocates contend that many mods in fact reduce interest, but unless the principal is cut, the reduction in payments is insufficient to make enough difference with many borrowers. Without mining the data further, it is hard to know where the truth lies.

 

Mortgage Rates Move Lower During Week On Fed Comments And Weak Economic Data

Thanks largely to Tuesday’s Federal Reserve statement, the historic drop in mortgage rates over the last few weeks continued a little further this week. Lower than expected inflation data from the November Consumer Price Index (CPI) report also was favorable for mortgage rates. According to Freddie Mac’s weekly survey, average 30-year fixed conforming mortgage rates fell to the lowest level in 37 years. Mortgage rates turned slightly higher late in the week, however, raising the question of whether the downward trend will continue.

 

In a unanimous vote, the Fed cut the target Fed Funds rate from 1.00% to a range between 0.00% and 0.25%. The 75 basis point cut was larger than the consensus forecast for a 50 basis point cut. According to the statement, the Fed will employ “all available tools” to stimulate economic growth. Most notable for the mortgage industry, the Fed mentioned the option of expanding the purchase of large quantities of mortgage-backed securities. Mortgage rates generally move based on changing levels of demand for mortgage investments. Immediately following the release of the statement, mortgage rates dropped due to this expected increase in demand.

 

In the housing sector, November Housing Starts fell -19% to a record low. Building Permits, a leading indicator, showed a similar decline. The slowdown in the building of new homes will help reduce the inventory of unsold homes on the market.

 

 

Also Notable: The auto industry will receive emergency loans from the government The November CPI report showed a record monthly decline in inflation 3-month Libor rates fell to 1.5% from a recent peak near 5.0% Oil prices fell below $35 per barrel, the lowest level in almost 5 years

	Average 30 yr fixed rate: Last week: -0.32% This week: -0.27%
	Stocks (weekly): Dow: 8,700 +200 NASDAQ: 1,575 +75

Week Ahead During Christmas week, all of the economic data will come out on Tuesday and Wednesday. The final revisions to third quarter Gross Domestic Product (GDP) will be revealed on Tuesday. GDP is the broadest measure of economic activity. Both Existing Home Sales and New Home Sales will be released on Tuesday as well. Durable Orders, another important indicator of economic activity, is scheduled for Wednesday, along with Personal Income. Consumer Sentiment and Jobless Claims will also come out before Christmas. Mortgage markets will close early on Wednesday and Friday, and will be closed on Thursday.

Jumbo Loan And Alt-A Prime Loan Delinquencies Rapidly Increasing With High Number Of Foreclosures Expected

“…a “rapid increase in 60+ day delinquencies experienced over the past six months,” despite servicers’ collective efforts to hold off on actual foreclosure sales — likely implying that a halt to foreclosures is having little effect in resolving borrower delinquencies..”

http://www.housingwire.com/2008/12/15/fitch-alt-a-mortgages-deteriorating-more-rapidly-than-expected/

The rating agency said it now expects average cumulative losses om 2005, 2006 and 2007 vintage Alt-A transactions to hit 2.72, 6.78 and 9.58 percent, respectively, up dramatically from expectations at the agency earlier this year.

Fitch cited a “rapid increase in 60+ day delinquencies experienced over the past six months,” despite servicers’ collective efforts to hold off on actual foreclosure sales — likely implying that a halt to foreclosures is having little effect in resolving borrower delinquencies. Between May and October 2008, Fitch said that 60+ day delinquencies for the 2007 vintage increased from 8.80 percent to 14.65 percent; 2006 and 2005 vintages also experienced steep increases rising from 10.30 percent to 14.24 percent and 6.57 percent to 8.79 percent, respectively.

While delinquencies are continuing to pile up, cumulative losses are not — at least, not yet.. “The small increase in cumulative losses relative to the rising level of 60+ day delinquencies reflects, in part, the lengthening foreclosure/liquidation timeline being experienced throughout all vintages,” analysts at the agency wrote.

All of which means that it’s time to get ready for a whole new slew of downgrades to Alt-A in the coming few weeks. Fitch warned in its note Monday that it expects that it will downgrade many senior bonds to below investment grade — just in time for fourth quarter earnings.

 

Jumbo Prime Loans Will Begin To Default As Home Owners May “Walk Away” From Their Homes Instead Of Making Payments On “Massively Depreciating Asset”

“…These are the ultimate ‘walk away’ loan, as a household income of $85k per year could legitimately buy a $650k home with 5% down during the bubble years. With stated, no ratio and no doc available at a slightly higher rate, many didn’t even need $85k. Now that home is worth 25-70% less and borrowers are making the wise decision to walk away given most their after-tax income is going towards this massively depreciating asset…”

http://seekingalpha.com/article/110659-has-a-market-reversal-happened?source=email

Jumbo Prime are high-leverage programs that allowed borrowers to buy much more home than they should have. Because Jumbo Prime borrowers had better credit overall, banks were very easy on the qualifying.

…It goes hand in hand with the Moody’s downgrade of many Bank of America (BAC) Jumbo Prime deals citing a 13% delinquency rate. This represents a total meltdown in the sector happening right now that nobody is reporting.

…..Now that the raters are reporting such massive default rates, I am going to officially say that the ‘Jumbo Implosion’ is upon us. The sad part is (ex-Countrywide) BofA was one of the better lenders during the bubble years. In my opinion, it was much more conservative than Wells Fargo (WFC), Citi, Chase (JPM), Wachovia (WB) or WaMu (WM).

These programs offered by most of our nations largest banks allowed a considerable amount of leverage when purchasing or refinancing. These are the ultimate ‘walk away’ loan, as a household income of $85k per year could legitimately buy a $650k home with 5% down during the bubble years. With stated, no ratio and no doc available at a slightly higher rate, many didn’t even need $85k. Now that home is worth 25-70% less and borrowers are making the wise decision to walk away given most their after-tax income is going towards this massively depreciating asset.

Analysts are not taking into consideration how much trouble the American economy will be in across the nation when those middle to upper class home owners all over the nation see their prices fall as much as the lower end has. This will happen – it has to.

Home Buyers Must Be Financially Secure With 6 Months Savings After Down Payment Before Purchasing Home

 

 

“…Most responsible borrowers need to feel financially secure before purchasing a home. With a very weak economy, job losses and lack of confidence in the future, most prudent people will think twice before taking on the large financial commitment of owning a home.

..”

“…Given the large transaction costs of buying or selling a home, is it worth purchasing a home unless you know with certainty that you will remain in the home for an extended period of time? Transaction costs including sales commissions, financing and moving can easily equal 10% of an average home’s value….”

http://seekingalpha.com/article/110459-long-term-housing-stability-is-based-on-strong-borrowers?source=email

When you hear that financing is hard to get for a home mortgage, what you are really hearing is that unqualified buyers are not being approved.

If you can verify adequate income, are able to make a down payment of at least 3% and have decent credit (at least a 580 FICO score), getting a mortgage approval at a low rate is not difficult. You will not be approved for a mortgage if you cannot verify your income, if you have terrible credit or if your income is insufficient to support your mortgage and other debt payments. This is a healthy change for housing long term since ultimately, weak buyers are not capable of sustained home ownership.

Buyer psychology is an important part of the home buying process. Just as in the stock market, where higher price trends will entice more buyers, the same is true of housing. Everyone talks about the wisdom of buying when prices are down, but the fear of future price depreciation deters present buying; everyone wants to wait until they can see a bottom.

Most responsible borrowers need to feel financially secure before purchasing a home. With a very weak economy, job losses and lack of confidence in the future, most prudent people will think twice before taking on the large financial commitment of owning a home. The disappearance of 100% financing also means that a buyer faces the loss of his capital investment if the mortgage payments cannot be maintained.

Is it cheaper to rent equivalent housing? If it is cheaper to rent, does that imply that housing is overpriced? Have prices been adequately discounted to adjust for past purchases made with easy financing by speculators and unqualified buyers?

A buyer contemplating a home purchase today must consider whether the various government schemes to keep delinquent homeowners in their homes is artificially propping up the market and extending the decline of housing prices. If a homeowner is unable to pay his mortgage today and with incomes and jobs disappearing, how likely is it that a delinquent homeowner’s income will increase? Are the loan modification programs and foreclosure holidays making a home buying decision more difficult? If these programs fail, will the future flood of foreclosed homes on the market cause further large home price decreases?

Is the average buyer today prepared to pay the large maintenance and repairs associated with home ownership? If buyers today see little chance of future price appreciation, are they prepared to invest a large part of their free time maintaining a home?

Given the large transaction costs of buying or selling a home, is it worth purchasing a home unless you know with certainty that you will remain in the home for an extended period of time? Transaction costs including sales commissions, financing and moving can easily equal 10% of an average home’s value.

Am I really ready to own a home? In the past, when people foolishly believed that housing values could only go up, this question was rarely asked. Before considering the purchase of a home, a buyer should discuss in depth with other homeowners the pros and cons of home ownership. The question of whether to buy or rent has never been more difficult. A very uncertain housing future and lack of confidence breeds indecision and purchase deferral.

Many of the current problems in the housing market arose due to the easy credit offered to buyers who should have stayed renters. Buyers should not consider the purchase of a home unless their total mortgage and other debt payments are easily affordable. Buyers should not use their last dollar of savings when purchasing a home. Many unexpected expenses will routinely come up. If you don’t have at least 6 months of income in savings, after your down payment, consider postponing the purchase until your finances improve. After years of house buying mania and then a bust, how many confident and strong buyers are out there?

Most mortgage companies and home builders involved with first time home buyers offer advice on determining the affordability of a buyers mortgage payment but do not address many of the other issues discussed here. Major companies such as KB Homes (KBH), for example, discuss the affordability question, but I think more needs to be done in this area.

In the long run, an educated buyer with financial stability will be the bedrock of a stable housing market. Hopefully, future regulations arising from the current housing crisis will address the issue of educating home buyers and make this a mandatory part of the home purchase process.

Fannie Mae And Freddie Mac Should Limit Aggressive Lending In “Bubble-Inflated Markets” In Order To Stabilize Housing Market Report Finds

“By simply limiting the flow of capital into bubble-inflated markets, the GSEs have the opportunity to bring stability back to the housing market by helping prices return to trend levels.”

If Fannie and Freddie no longer supported the purchases of homes at bubble-inflated prices, there would be a quick price decline of 20 to 30% in the most over-valued markets. After this drop, homebuyers need be less fearful of further price declines, both boosting demand and reducing vacancy rates. At the same time, the consequent flow of loans into non-bubble markets would help prevent a downward price spiral in these areas and avert the risk of overshooting on the negative side.

 

http://rismedia.com/wp/2008-12-03/house-prices-must-return-to-trend-levels-to-stabilize-market/

 

The report, “The Key to Stabilizing House Prices: Bring Them Down,” notes that prices are still hugely out of line with trend levels in bubble markets and calls for Fannie Mae and Freddie Mac to restrict the buying of mortgages in these areas. This would lead to fewer loans being issued in these markets and prices would quickly adjust to normal levels.

“Most policy analysts failed the public by missing the housing bubble,” said report author and CEPR Co-Director Dean Baker. “By simply limiting the flow of capital into bubble-inflated markets, the GSEs have the opportunity to bring stability back to the housing market by helping prices return to trend levels.”

The report, which draws on data from the Case- Shiller Index, emphasizes that house prices used in mortgage appraisals should be based on rental values to avoid over-valuation. The fact that real house prices exploded by 80% from 1996 to 2006 while rents increased by only 4% over the same time period points to a degree of speculation and the fact that prices still have further to fall before the bubble deflates.

If Fannie and Freddie no longer supported the purchases of homes at bubble-inflated prices, there would be a quick price decline of 20 to 30% in the most over-valued markets. After this drop, homebuyers need be less fearful of further price declines, both boosting demand and reducing vacancy rates. At the same time, the consequent flow of loans into non-bubble markets would help prevent a downward price spiral in these areas and avert the risk of overshooting on the negative side.

“A rapid return to trend levels is significant for homeowners in that it gives them a sense of how their home equity figures into their real wealth and how they have to adjust their consumption and saving decisions,” said Baker. “This is even more important for the huge cohort of baby boomers rapidly approaching retirement who may find that they have little or no wealth to support them in retirement beyond Social Security.”

For those faced with foreclosure due in part to falling home prices, the best solution is one that amends the rules on foreclose to give homeowners the right to rent their home at the market rate. This would have the dual effect of keeping families in their houses and give bankers an incentive to renegotiate terms by making foreclosure an even less attractive option.

High-Cost Area Jumbo Conforming Loan Limits Going From $729,750 to $625,500 On January 1, 2009

On Jan. 1, the limit of these so-called conforming jumbo loans in the Washington area is scheduled to decline from $729,750 to $625,500.

If the borrower were somehow able to obtain a $720,000 loan after the deadline, it would bear a nonconforming jumbo 30-year fixed rate. That rate recently stood at 7.49 percent, according to HSH Associates. The difference in the monthly mortgage payment (6.11 percent versus 7.49 percent) for a $720,000 loan would be $661.

 

http://washingtontimes.com/news/2008/dec/09/jumbo-loan-limits/print/

The window is rapidly closing for some borrowers to take advantage of this year’s big increase in the size of mortgage loans that can be bought by Fannie Mae and Freddie Mac, and still qualify for a much lower interest rate.

This reduction will significantly raise monthly payments for 30-year fixed-rate mortgages in this range.

This lower limit could also exert downward pressure on Washington-area home prices between $650,000 and $800,000, according to Brian Bonnet, president of Signature Mortgage Services in Alexandria.

“It’s possible to do a loan, particularly a refinance, by the end of the year, but it’s not very easy to do,” said Guy Cecala, publisher of Inside Mortgage Finance.

“It’s very difficult to close a loan in 30 days,” said Keith Gumbinger, vice president of HSH Associates, a financial publisher. “Unless you are absolutely ready to go when filling out the application, the window is already closed.”

To cover the additional risk involving the uncertainty of demand for the conforming jumbo mortgage after Dec. 29, Mr. Bonnet said some lenders were charging a “price adjustment” of 1.75 percent of the loan to guarantee the conforming jumbo interest rate for mortgages closed between now and Dec. 29.

If a borrower manages to meet the deadline and purchases a $800,000 home by making a Fannie-conforming down payment of 10 percent and by borrowing $720,000, the loan would qualify as a conforming jumbo mortgage. As such, it would be eligible for a 30-year fixed interest rate of 6.11 percent, according the HSH Associates.

However, if the buyer misses the deadline, he or she will encounter several problems. Beginning Jan. 1, loans between $625,501 and $729,750 will no longer qualify as conforming jumbo loans. As a result, the borrower may not meet the more stringent underwriting standards, which would likely include a substantially higher down payment.

If the borrower were somehow able to obtain a $720,000 loan after the deadline, it would bear a nonconforming jumbo 30-year fixed rate. That rate recently stood at 7.49 percent, according to HSH Associates. The difference in the monthly mortgage payment (6.11 percent versus 7.49 percent) for a $720,000 loan would be $661.

Jumbo mortgages have undergone big changes in recent months.

For years, a jumbo loan was simply a mortgage that exceeded the conforming limits of Fannie and Freddie. For 2006 and 2007, that limit was $417,000. Fannie and Freddie, which own or guarantee more than half of the nation’s mortgages, could not purchase these jumbo loans above $417,000, which generally carried an interest-rate premium of one-quarter percentage point.

The jumbo premium was so low because a huge secondary market existed for jumbo loans, which were bought by investment banks and packaged for sale to private investors.

“In October 2007, Wall Street’s securitization of jumbos collapsed,” Mr. Gumbinger said. “The risk of jumbos increased because banks had to retain them in their portfolios.” The jumbo premium jumped to 1 percentage point and higher.

In February, Congress raised the maximum limit for conforming loans by 75 percent to $729,750. The new maximum was based on prevailing home prices and applied only to select markets, such as San Francisco and the D.C. area. In Baltimore, for example, the conforming limit was increased to $560,000. In most areas of the nation, the $417,000 limit wasn’t increased at all.

In high-cost areas such as Washington, loans between $417,000 and $729,750 became known as conforming jumbos. Loans above $729,750 were known as nonconforming jumbos.

Because a $720,000 loan in a high-cost area could now be purchased by Fannie or Freddie, the premium fell significantly. The 30-year fixed rate for a conforming-jumbo loan of $720,000 was 6.11 percent, a quarter-point higher than the 5.86 percent rate for a $360,000 conforming loan, HSH Associates reported.

Fannie and Freddie cannot purchase nonconforming jumbos (mortgages above $729,750), which now carry premiums of 1.4 percentage points and higher.

Legislation passed in the summer reduced the nonconforming jumbo limit to $625,500 effective Jan. 1. In addition to carrying a much higher interest rate, loans above that amount must meet tighter credit standards. These might include a down payment of 20 percent or more, a credit score of 750 or higher and a debt-to-income ratio as low as 30 percent, Mr. Cecala of Inside Mortgage Finance said.

Mortgage Rate Proposal Should Make 4.5% Mortgage Rate Available To All Qualified Home Owners

First and foremost, the government should make that same 4.5% mortgage rate, the lowest in decades, available to all American homeowners through refinancings. Banks and other lenders would write the loans and then sell them to Fannie Mae and Freddie Mac, the secondary-market giants that were nationalized in early September.

 

“…the Federal Reserve would have to create a special funding facility for Fannie Mae and Freddie Mac so that they could effectively borrow at Treasury rates. Currently, the two organizations are borrowing at a significant spread over Treasury rates…”

http://online.barrons.com/article_print/SB122853114366984933.html?mod=googlenews_barrons

The new rates, and lower monthly payments, would be especially helpful for homeowners with negative equity (they owe more on their mortgages than their homes are worth). Such underwater borrowers — prime candidates for default — account for about $2 trillion of the $11 trillion of U.S. mortgage debt outstanding.

Meanwhile, the government must help “modify” the most troublesome group of mortgages — the roughly $500 billion of subprime and Alt-A mortgages that are in arrears and headed toward foreclosure. The government should facilitate extending the amortization periods from 30 years to as long as 40 years, cutting rates to 4.5% or lower and, on some loans, reducing principal balances.

Ambitious as all this is, it could probably be accomplished for $100 billion. That’s a relatively small sum in the context of this year’s bailouts, and it would excise the very tumor that triggered the global financial meltdown last year. The key: smart use of Fannie and Freddie, which up to now have been vastly underutilized.

Is this proposal utopian? Not really. We’ve talked to experts, from Economy.com’s Mark Zandi to former Fed Vice Chairman Alan Blinder, who in an op-ed piece in the New York Times early this year astutely warned of an impending mortgage-default tsunami. We’ve also borrowed from imaginative mortgage-relief ideas put forward by the likes of R. Glenn Hubbard and Chris Mayer of the Columbia Business School, long-time market strategist Edward Yardeni and the chief of the Federal Deposit Insurance Corporation, Sheila Bair.

The FDIC leader was turned down by Treasury when she sought $25 billion of the government’s $700 billion TARP plan to provide a federal guarantee and loss-sharing on approximately two million modified home mortgages. But Bair’s idea clearly had merit.

TO MAKE OUR PLAN WORK

, the Federal Reserve would have to create a special funding facility for Fannie Mae and Freddie Mac so that they could effectively borrow at Treasury rates. Currently, the two organizations are borrowing at a significant spread over Treasury rates.

That higher borrowing cost was the result of Treasury’s refusal during the nationalization to “explicitly” guarantee Fannie and Freddie’s debt and guarantee obligations — a move that Blinder, for one, has labeled as boneheaded. As a result, Treasury and the Fed two weeks ago unveiled a program to spend $600 billion buying back Fannie and Freddie debt and mortgage-backed securities to bring down the two titans’ borrowing costs. The move has diminished but not eliminated the spread over Treasuries.

The mortgage rates offered through Fannie and Freddie tend to run about 1.5 percentage points above their funding costs. If their borrowing rates converged with Treasuries’, they could offer mortgages at around 4.2% since the 10-year Treasury bond currently trades at around 2.7%. But to leave a margin for error, we’ll stick to a 4.5% rate.

 

 

 

Mortgage Loan Delinquencies And Foreclosures Rise To 10% Of Homes Nationally

Job losses are already having an impact in rising delinquency rates for traditional 30-year fixed rate loans made to borrowers with strong credit. Total delinquencies on those loans rose to 3.35 percent in September from 3.07 percent at the end of June, the Mortgage Bankers Association said.

http://biz.yahoo.com/ap/081205/home_foreclosures.html?printer=1

A record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted to the crumbling U.S. economy.

The Mortgage Bankers Association said Friday the percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and up from 7.3 percent a year earlier.

Distress in the home loan market started about two years ago as increasing numbers of adjustable-rate loans reset to higher interest rates. But the latest wave of delinquencies is coming from the surge in unemployment.

Employers slashed 533,000 jobs in November, the most in 34 years, catapulting the unemployment rate to 6.7 percent, the Labor Department said Friday.

“Now it’s a case of job losses hitting more across the board,” Jay Brinkmann, chief economist of the Mortgage Bankers Association.

The U.S. tipped into recession last December, a panel of experts declared earlier this week. Since the start of the recession, the economy has lost 1.9 million jobs.

Job losses are already having an impact in rising delinquency rates for traditional 30-year fixed rate loans made to borrowers with strong credit. Total delinquencies on those loans rose to 3.35 percent in September from 3.07 percent at the end of June, the Mortgage Bankers Association said.

There were some modest signs of stabilization. The number of loans that entered the foreclosure process totaled 1.07 percent of all loans in the third quarter, flat from the second quarter.

Though that number likely reflects changes in state laws that delay or extend the foreclosure process and efforts to work out or modify loans that could still fall back into foreclosure.