Home prices showed significant erosion during the past year, according to the latest report from the Office of Federal Housing Oversight, the federal regulator that oversees Fannie Mae and Freddie Mac.

In a news release that is a monument to confusing numbers, OFHEO said that “U.S. home prices fell in the second quarter of 2008 according to OFHEO’s seasonally-adjusted purchase-only house price index. The index, which is based on data from home sales, was 1.4 percent lower on a seasonally-adjusted basis in the second quarter than in the first quarter. This decline was less steep than the 1.7 percent decline in the prior quarter. Over the past year, prices fell 4.8 percent between the second quarter of 2007 and the second quarter of 2008. The decline is the largest in the purchase-only index’s 17-year history, but is much smaller than those of other indexes.”

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The FHA has restructured its loan modification policies to assure that foreclosure fees and attorney charges can be financed.

This may seem like a fairly-obscure action and one of little consequence, but it’s a good example of how a little tweak in the rule-book can potentially benefit troubled FHA mortgage borrowers and cut foreclosure rates at the same time.

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The Center for American Progress argues that it’s the 1930s again, at least in terms of real estate.

The statement below makes you wonder: Wasn’t the FHA mortgage program supposed to mitigate the foreclosure mess — not end it, not help everyone, but just make it a little less awful?

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If you were Fannie Mae or Freddie Mac how would you answer the various news stories which question your financial health?

FHALoanPros.com has obtained the letter below. It’s a response by Peter Federico, Freddie Mac’s senior vice president of asset and liability management, to recent news coverage in the Wall Street Journal and offers a perspective which does not seem to be getting much attention.

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For the past few days Fannie Mae and Freddie Mac have been taking a beating on Wall Street. The drop in value since the start of the year has been astonishing for both companies, and it is a matter which should concern anyone who has hopes of financing or refinancing a home.

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While the trend should come as no surprise, the actual numbers are amazing:

The Mortgage Bankers Association reports that of the “mortgage applications accepted during the month of July 2008, 29.1 percent were for government-insured loans (consisting of mostly FHA loans) compared to 8.4 percent in July 2007.”

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The story is hard to beat: Donald Trump will buy Ed McMahon’s Beverly Hills mansion — a property facing foreclosure — and then rent it back to the 85-year-old entertainer.

According to the Los Angeles Times, Trump will pay off the existing $4.8 million debt, acquire the property, and then lease it back to the long-time sidekick of Johnny Carson.

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If you want to increase the use of FHA mortgages here’s the way to do it: Freddie Mac has announced that it will stop buying subprime loans in New York state after September 1st.

The reason? A new law which could make mortgage investors liable if a loan has been improperly originated in the state.

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This being the Internet Era, the Nehemiah Corporation of America has created a new web site to get downpayment assistance programs (DPAs) re-instated for FHA mortgage borrowers.

The programs were eliminated under the FHA mortgage reform package passed earlier in the month.

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The latest figures from RealtyTrac show that foreclosure numbers continue to mount.

In July, says the company, “foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 272,171 U.S. properties during the month, an 8 percent increase from the previous month and a 55 percent increase from July 2007. The report also shows one in every 464 U.S. households received a foreclosure filing during the month.

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What started out as an FHA mortgage reform measure has concluded with various additions. One of the best concerns foreclosure help for veterans — but help with both good news and bad news.

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I was reading a release from Lenders One Mortgage Cooperative, a self-described “national alliance of mortgage bankers.” According to the group they closed mortgages worth $3.4 billion in a 30-day period.

What was interesting to me was the composition of the loans they originated:

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Below is a news release from a Phoenix real estate broker predicting that local sales will soon fall another 10 percent.

You don’t usually see new releases from real estate brokers, and it’s surely unusual to see a release which suggests a decline in market activity. These reasons alone would make the release below stand out, but it’s a third element which makes the release from David Lorti truly unique.

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The National Association of Realtors is out with its pending home sale information and the numbers are up!

According to NAR, “the Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 5.3 percent to 89.0 from a downwardly revised reading of 84.5 in May, but remains 12.3 percent below June 2007 when it stood at 101.4.

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We have been a critic of the FHASecure program since HUD first began issuing news releases which claimed vast success in preventing foreclosures, claims not supported by HUD’s own figures — but claims gleefully repeated at the White House and various news outlets.

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