The complaints about the success — or lack thereof — of the Home Affordable Modification Program (HAMP) are getting louder.

By all accounts, the program is far less successful than government officials had hoped. Out of 1 million homeowners who received a temporary loan modification from their lenders, just 116,000 — or 11 percent — have received a permanent loan modification.

But the number of people who have received permanent loan modifications is probably only a small fraction of the entire number of people who either applied for a loan modification under the Obama plan or wanted to. The number is far short of the 4 million homeowners President Obama said would be helped when he announced the program.

Homeowners looking for permanent modifications are running into significant roadblocks, including:

• Homeowners who are current on their mortgage but are at risk of imminent default are being told by lenders that they can’t be helped unless they are 60 days late on their mortgage.
• Uneven training for customer service personnel means homeowners hear different stories every time they call their lender.
• Important documents are frequently lost. Homeowners report sending in documents over and over again.
• Three-month trial loan modification periods have stretched into 5, 6 or even 8 months.

• Homeowners told they have been approved for permanent loan modifications cannot get their lenders to send the paperwork.

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First, there was the default last month by Tishman Speyer Properties and BlackRock Realty on billions of dollars in loans on Stuyvesant Town and Peter Cooper Village, the huge apartment complexes in Manhattan. When the deal was done, in 2006, it was the biggest of its kind in American history.

And this week, Simon Properties tried to buy General Growth Properties, its shopping mall rival, for $10 billion, a price General Growth says is too low even though the company is in bankruptcy.

Yet in the midst of this, financial advisers are telling their wealthy clients that there is tremendous opportunity in real estate. What is equally intriguing is that these investors are looking again at something as illiquid as a building, which goes to show just how quickly people can reacquire their appetite for risk if it means higher returns.

“The trick with investing in commercial real estate is not knowing if something is bad, but knowing if that ‘bad’ is priced in,” said David Frame, global head of alternative investments at J.P. Morgan Private Bank.

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Stonington, CT — For more than a half century, the Westerly Ambulance Corps has allowed a large number of Pawcatuck residents to buy a $35 annual subscription that pays for any costs not covered by their own insurance or medicare.

But the ambulance company had to end the offer and refund the subscription fees last year after discovering Connecticut insurance law does not allow the ambulance company to sell subscriptions, because it is not an insurance company.

On Tuesday, First Selectman Ed Haberek plans to travel to the State Capitol to testify in favor of a bill that would allow the corps to once again offer the subscriptions. The hearing on HB 5305 is scheduled to begin at 1 p.m. in room 2B in the Legislative Office Building before the Insurance and Real Estate Committee.

The $35 fee offers subscribers emergency and non-emergency transport within 100 miles when requested by police, a doctor or a 911 call. The corps then waives any balance not covered by the patients’ insurance company. Haberek said he has heard from many residents who want the subscription reinstated.

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Low mortgage rates over the past year have inspired many Americans to refinance their home loans, but some eligible borrowers haven’t made the leap.

Often that reluctance to refinance stems from the fact that interest rates on their adjustable-rate mortgages have fallen below 3% – a better rate than they’d get by switching to a fixed-rate loan.

For now, anyway.

As the economy strengthens, super-low ARM rates will adjust upward. Meanwhile, rates on fixed-rate mortgages are expected by many in the industry to start rising this year, after the Federal Reserve halts its purchase of mortgage-backed securities.

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When Toronto resident Celia Bernath files her annual income tax return, she includes a long list of deductions from her home-office income. After all, as a chartered accountant, she knows that travel, bank charges, postage, courier, utility and other expenses are fair game for the micro-entrepreneur. But the item that sometimes has the most impact is deducting a proportion of her residential mortgage interest.

“The mortgage-interest deduction — like other deductions — is based on the square footage of my office divided by the total square footage of the house. Keeping track of all your household expenses is very important,” says Ms. Bernath who has about 15 corporate and 100 personal clients.

Ms. Bernath is one of the more than 700,000 home-based business owners who might be eligible to deduct a portion of their mortgage interest on their principal residence as an expense.

Generally speaking, in Canada, interest on residential mortgages is not tax deductible.

However, Ms. Bernath can do so because there is a direct link between the borrowed money and earning income.

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Suspicious activity reports filed in the third quarter of 2009 showed a 7.5 percent increase in possible mortgage loan fraud over a year earlier, the Financial Crimes Enforcement Network (FinCEN) reported on Thursday.

Forty-two percent of the reported activity took place in California and Florida, while the greater Miami, Los Angeles and New York areas topped the list of metropolitan locations.

The Bank Secrecy Act requires financial institutions to file suspicious activity reports, or SARs, with FinCEN when they identify or suspect fraudulent activity.

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Tech giant joins banking, insurance firms in litigation with the government

Hewlett-Packard Co. has become an unlikely member of a group of companies targeted by the U.S. Internal Revenue Service in a coordinated legal assault on suspect international tax credits.

H-P is one of roughly a half-dozen firms, nearly all in the banking and insurance industries, now ensnared in the IRS’s “three-and-out” litigation strategy targeting so-called foreign tax credit generators, experts say. The IRS has pegged a handful of such cases as promising enough to pursue, in hopes of winning at least three decisions in a row — and thereby gaining a more solid legal footing on the issue.

“Usually the government does a good job of starting with cases that are very weak for the taxpayer, and developing law,” said University of Southern California Law Professor Edward Kleinbard.

Foreign tax credit generators are investments by U.S. companies that earn income and result in taxes overseas. Companies can then claim foreign tax credits, to offset their tax payments in the U.S. However, the IRS alleges that many are designed to unnecessarily load up on foreign tax credits, and create an artificial financial benefit.

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In a nod to the effects of the real estate meltdown, Freddie Mac shows that mortgage borrowers, if not lenders, may have learned their lesson. According to Freddie Mac’s quarterly Product Transition Report for Q4, 2009, refinancers are overwhelmingly choosing fixed-rate loans, whether or not the original loan was an adjustable-rate mortgage (ARM) or a fixed-rate mortgage.

ARMs are the reason that many found themselves in trouble during the real estate meltdown. Sub-prime loans with attractive interest rates that adjusted to a higher rate, or even had a balloon payment, put those who had gotten themselves into homes they could not justifiably afford, into situations that could only end in foreclosure.

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On the eve of major demonstrations in Iran, California Insurance Commissioner Steve Poizner demanded Wednesday that insurers doing business in California withdraw $6 billion of investments they indirectly hold in Iranian nuclear, energy and defense companies that he said are backing the nation’s “rather evil” regime.

California law bans insurance companies doing business in the state from investing in Iran, which the State Department considers to be a state sponsor of terrorism. This week, Iran announced that it would begin producing more highly enriched uranium – which would bring it closer to producing weapons-grade nuclear fuel.

While no California insurer is directly investing in Iran, Poizner said some of them have found “a big loophole,” by funneling money to Iran through third-party companies based in other parts of the world.

On Wednesday, Poizner published on his department’s Web site a list of 50 companies that the agency found to be holding such investments.

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There is growing concern in Congress that the shaky $6.7 trillion commercial real estate market could implode, delivering a major blow to the economic recovery. A bipartisan group of 79 House members led by Representative Paul E. Kanjorski, Democrat of Pennsylvania, and Representative Ken Calvert, Republican of California, sent a letter to the Treasury Department and the Federal Reserve on Monday urging them to take a more active role in keeping the commercial real estate market from turning into a disaster.

“The growing bubble in the commercial real estate industry has the potential to infect our economy and slow a recovery,” Mr. Kanjorski said in a statement.

“In order to safeguard the businesses operating on Main Street and protect the millions of jobs depending on commercial real estate, the Treasury and the Federal Reserve now must take needed and urgent action to stave off a potentially devastating wave of commercial real estate foreclosures and bank losses,” Mr. Kanjorski said.

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