Given that homeowners owe an estimated $700 billion more on their homes than they’re worth, much more will be needed to strike a serious blow at the foreclosure crisis, housing experts say. They also warn that the historic deal will have a limited impact on the housing market. Prices are still falling in much of the U.S. despite a 33% drop since late 2006.

The settlement also gives little immediate relief to the majority of U.S. homeowners who are current on their home payments, and even less relief for homeowners who’ll likely never end up with a distressed loan.

President Obama and other officials were quick to note Thursday that the settlement is no cure-all, but it does mark the most concrete action taken to date to compensate homeowners for past mortgage servicing and foreclosure abuses. Lenders have three years to fulfill their obligations under the settlement and receive incentives to provide relief within 12 months.

The accord also creates a testing ground for whether principal reduction can actually reduce default rates and, if successful, the settlement may drive more principal reduction, supporters say.

“This agreement is the only way we’re going to get to substantial principal reduction,” says Tom Miller, the Iowa attorney general who helped lead the settlement efforts along with other state attorneys general and federal officials.

The deal shows that “we can still get big things done in this country,” said Shaun Donovan, secretary of Housing and Urban Development.

The settlement — the largest involving a single industry since the 1998 multistate tobacco deal — covers five major mortgage servicers: Bank of America, Wells Fargo, JPMorgan Chase, Citibank and Ally Financial.

Federal officials said Thursday that the deal’s value could grow to $30 billion if nine more servicers sign on. Negotiations are underway with some of them.

As it is, the deal includes $5 billion in cash and $20 billion in loan modifications that the five servicers will make — mostly for borrowers who’re delinquent on loans and underwater on their homes, meaning they owe more on their homes than they’re worth.

California and Florida, two big states devastated by foreclosures, will get the largest share of the money, followed by Arizona, Illinois and Nevada, Donovan said.

Bank of America, the largest servicer, will be responsible for $11.8 billion of the $25 billion deal. Wells and JPMorgan Chase: $5.3 billion each. Citigroup, $2.2 billion and Ally, $310 million.

Oklahoma has separate settlement

Oklahoma is the only state that didn’t sign on to the settlement. Its housing market didn’t suffer as badly as most others. Oklahoma Attorney General Scott Pruitt criticized the national deal, saying it goes too far and rewards homeowners who stopped paying their mortgages over those who continued to make payments.

Instead, Oklahoma announced a separate settlement that requires the five banks to pay the state $18.6 million, largely for homeowners victimized by deceptive foreclosure practices.

For the other 49 states, the five servicers will provide $17 billion in mortgage relief, including principal reduction, to about 1 million homeowners, Donovan says.

An additional $3 billion will go to refinance borrowers who are current on their payments into loans at 5.25%. That’s far above existing interest rates of about 4% but “is still a good rate,” Miller says.

Up to 750,000 other borrowers could receive restitution averaging $1,500 to $2,000 if they lost homes to foreclosure from 2008 through the end of 2011, Donovan says.

The reductions in loan principal are expected to account for at least 60% of the $17 billion pot. By writing down principal, officials hope fewer people will eventually default on their loans.

That $17 billion could result in $32 billion in actual mortgage relief, officials say. That’s because the settlement includes formulas that give banks differing amounts of credit depending on which loans they write down.

To qualify for a reduction in principal, borrowers will generally need to be delinquent on their mortgages or at risk of imminent default and owe more on their homes than they’re worth.

Most of the write-downs are expected to occur on loans that the five servicers own themselves. No Freddie Mac, Fannie Mae or Federal Housing Administration loans will be eligible. They account for 56% of existing loans, says Inside Mortgage Finance.

The size of the principal write-downs will vary by borrower. If 1 million homeowners get them, they’d average about $20,000. But write-downs are likely to be larger in many cases, especially in higher-cost states where homeowners are deeply underwater.

Many economists estimate that at least $25 billion in principal reduction is needed to do more than just dent the foreclosure crisis, professor White says.

“Principal reduction is ultimately the only way this crisis will end,” says Dean Gould, lecturer at the University of Michigan Law School and an expert in real estate law. The $10 billion “is not enough. There has to be a sustained program of principal reduction for this to work.”

Whether that happens will largely depend on whether Freddie Mac and Fannie Mae do principal reduction. The government-backed entities guarantee or own almost half of all home loans. Their federal regulator has opposed principal reduction, saying that it hasn’t been shown to be more effective in reducing defaults than other loan-modification efforts.

“Freddie and Fannie is the other shoe that has to drop,” White says. “If this works and Freddie and Fannie follow suit, we could begin to see an end to the foreclosure crisis.”

Nationwide, more than 11 million U.S. homeowners owe more on their homes than they’re worth, market researcher CoreLogic says. Almost 4 million loans are in foreclosure or seriously delinquent, says LPS Applied Analytics.

If the settlement takes just 500,000 homes out of the foreclosure process, it “will be sufficient to get home prices moving north again,” says Mark Zandi, chief economist of Moody’s Analytics.

But economist Paul Diggle of Capital Economics calls the $10 billion in principal reduction a “drop in the ocean.”

He says the settlement “will help at the margins,” but that it won’t turn the “fragile housing recovery that appears to be underway into a significant and sustained one.”

The settlement could drive home prices lower, says Stan Humphries, Zillow economist. Now that the deal is done, mortgage servicers are likely to pick up the pace to liquidate homes that have been lingering in the foreclosure process, he says.

Instead of home prices going up this year, Zillow predicts they will drop almost 4%.

Robo-signing scandal’s epilogue

The nationwide settlement stems from abuses that occurred after the housing bubble burst. A federal probe in 2010 found widespread abuses of foreclosure practices. Many companies that process foreclosures failed to verify documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures — an action known as robo-signing.

As part of that 2010 probe, federal banking regulators are doing their own review of foreclosure cases that’s expected to result in payouts to borrowers who were harmed.

Those regulators on Thursday announced that they fined the same five servicers $1.2 billion for their servicing misdeeds but that the fines are included in the $25 billion settlement.

“Everyone gets their comeuppance,” says Roy Oppenheim, a Fort Lauderdale attorney who has represented more than 1,000 foreclosure victims.

While the servicers will get protections from some lawsuits in exchange for the settlement, disgruntled borrowers could still sue individually or as part of a class action.

Beyond the financial penalties, the settlement mandates a new code of conduct for how servicers treat distressed borrowers.

The new standards “move the ball significantly forward,” says Alys Cohen of the National Consumer Law Center. “But much will depend on how (the agreement) is carried out.”

A monitor will oversee the settlement.

Lenders that violate it could face penalties of $1 million per violation.

‘Dual-tracking’ targeted

The new standards are expected to restrict one practice that has long been criticized, known as “dual tracking.” That’s where servicers proceed with a foreclosure while a borrower is pursuing a loan modification.

The accord won’t ban that, but it would prevent servicers from completing a foreclosure sale of a home if a modification is being considered.

Other improvements will require that:

•Homeowners be reviewed for loan modifications before the foreclosure process starts. “That’s a game changer,” Cohen says.

•Borrowers be told why they’re denied a loan modification. Many have complained that they never understood why they were denied.

•Homeowners in default be charged no more than once in 12 months for property valuations or appraisals, which can cost hundreds of dollars.

•Servicers make more attempts to keep up homeowner insurance policies on delinquent loans so borrowers don’t later get stuck with higher-priced policies.

•Parties that attempt to foreclose show they have legal authority to do so and do the foreclosures properly.

“The goal here is to stop the abuses from happening again,” Cohen says.

Thousands of others in danger of foreclosure would be eligible to have their mortgage debt reduced, under the deal announced Thursday. Others whose homes are worth less than their mortgage would be allowed to refinance at lower rates.

Under the deal, the states won't pursue civil charges related to these types of abuses. However, the states can still file criminal charges, and homeowners can still sue lenders on their own.

It's the biggest settlement involving a single industry since a 1998 multistate tobacco deal.

The five banks are Ally Financial, Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo.

The deal requires the big banks to reduce loans for about 1 million households at risk of foreclosure across the nation. The lenders also will send checks of up to $2,000 to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.

"There were many small wrongs that were done here," said U.S. Housing and Urban Development Secretary Shaun Donovan. "This does not resolve everything. We will be aggressive about going after claims elsewhere."

The $25 billion program will "help around the edges" of the U.S. housing market but won't have a major impact, said Patrick Newport, economist at IHS Global Insight. He noted that U.S. homeowners owe an estimated $700 billion more than their homes are worth. The deal puts only about $13 billion toward refinancing or reducing debt for such "underwater" homeowners.

The national deal included every state except Oklahoma, which struck a separate deal with the five banks.

To be eligible, Missouri homeowners must have been foreclosed on by one of the five named banks, or their current mortgages must be serviced by one of them, according to Missouri Attorney General Chris Koster. Mortgages owned by government-run mortgage giants Fannie Mae and Freddie Mac are not covered by the deal.

The deal would provide no help for about a third of homeowners who show up at Catholic Charities in St. Louis seeking help in keeping their homes. Their mortgages are with servicers not covered by the deal, said Karen Wallensak, director of Catholic Charities Community Services, which provides free foreclosure counseling.

"Their loans are serviced by unregulated mortgage companies, like Litton and Beneficial," she said. "Typically those loans are the most egregious and difficult to resolve because those companies are basically unmotivated."

But Wallensak expects many of her other clients to benefit.

"Part of me feels like we're waking up from a four-year nightmare," she said. "There is a sense for me of justice and to some degree vindication."

Koster said the attorneys general tried to negotiate with all major mortgage servicers but found the process unwieldy. He said they will use Thursday's settlement as a "road map" as they begin bargaining with the next 10 largest mortgage servicers.

Missouri would receive more than $195 million, according to Koster. He and Gov. Jay Nixon have proposed diverting $40 million of that toward funding state universities while using the rest to aid homeowners.

Illinois Attorney General Lisa Madigan said Illinois would receive $1 billion. The amounts were decided by a formula accounting for population and the severity of the foreclosure situation in each state, Koster said.

Under the deal, people who lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2011, will be eligible for checks of roughly $2,000. Koster said about 20,000 Missourians fit in that category, and they will share $31 million. No figure for Illinois was available.

Many Catholic Charities clients who lost their homes are "far down in the hole" with other kinds of debt, and $2,000 checks will go far to help, Wallensak said.

Borrowers whose homes are worth less than they owe, and who are current on their mortgage payments, will be able to refinance at today's low rates. The Missouri settlement puts $38 million toward refinancing.

Borrowers who are behind on payments, and who owe more than their homes are worth, can have their debt reduced and receive other assistance. The Missouri deal allocates $86.5 million to that program. No figures were available for Illinois.

Homeowners who want to refinance under the deal will have to apply through the five banks.

That raises a red flag with Clayton lawyer Greg White, who represents homeowners in foreclosure. He noted that the banks' system for modifying mortgages has been a mess of lost paperwork and delays.

"I think they're going to drag their feet for three or four more years until people forget about it," he said.

The program will run for three years. Koster says the banks must provide 75 percent of the relief within two years, and banks are rewarded for relief they provide in the first 12 months. The banks will be fined $1.40 for every dollar they fail to put toward the agreement, Koster said.

The agreement names Joseph A. Smith Jr., North Carolina commissioner of banks, to enforce the agreement. He can impose fines of $1 million per violation and up to $5 million for certain repeat violations.

The deal also requires the banks to meet new standards for dealing with delinquent homeowners. Foreclosure must be a last resort, with other options considered first, according to the U.S. Justice Department, which helped negotiate the deal.

Banks won't be able to foreclose while the homeowner is being considered for a loan modification. The deal sets timelines for reviewing loan modification applications and gives homeowners the right to appeal denials. Servicers must maintain adequate staff to handle calls.

Homeowners will be able to review mortgage paperwork before the foreclosure process starts.

Koster said he insisted that the deal not rule out criminal charges. The Missouri attorney general last week filed criminal forgery charges against DOCX, a Florida document processor, and its former president, Lorraine Brown. They were charged with filing robo-signed real estate papers in Boone County.

Robo-signing was a widespread problem, Koster said.

"Kids were getting $10 an hour and signing as bank vice presidents," he said at a St. Louis press conference.

Attorneys general from across the nation have been investigating the mortgage business, and Koster said his office has been assigned the criminal part of the effort.

Foreclosures have been less of a problem in St. Louis than in most of the nation. As of October, 1.75 percent of homes in the metro area were in foreclosure, compared with 7.75 percent nationally, according to the real estate analysis firm CoreLogic.

Mortgage deal provides limited relief to foreclosed homeowners

Short sales are complicated because the final price must be approved by the both the home seller and the seller's lender. So short sales require extra time to move from an offer to a settlement -- sometimes as long as six to nine months.

"In general, first-time homebuyers should definitely consider short sales because they offer a terrific opportunity to get a great house at a discounted price,"

At the same time, the Los Angeles-based builder said net orders increased 38 percent in the fourth quarter from the same three months last year.

Policy makers are pushing programs aimed at reviving the U.S. housing market. The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.

Federal Reserve officials reiterated at a meeting this month that they will keep their benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.

So why are housing starts rising? A look inside the data reveals the answer. Builders have learned their lesson. They aren't foolishly building amenity-rich McMansions and Tudors with four-car garages to sell to highly indebted aspirational consumers. Rather, they're building smaller, practical abodes that they plan to rent out. Indeed, recent housing data help flesh out a post-crisis cultural, societal and financial shift toward housing: less owning and more renting. Thanks to foreclosures, walking away and a general inability to get financing, the homeownership rate has fallen in the U.S. from 69 percent in the third quarter of 2006 to 66.3 percent in the third quarter of 2011. That translates into several million households that used to own homes that are now renting.

Builders have reacted to this shift. They're building fewer family homes and more multifamily buildings. Look at the data. Yes, in November, the headline housing starts number was up sharply from October 2011, and from November 2010. (See Table 3 in the above document) But single-family starts haven't done much: They were up only 2.3 percent from October 2011, and down 1.5 percent from November 2010. But the market for structures with five units or more is going gangbusters. In November 2011, starts in this sector came in at an annual rate of 230,000, up 32 percent from 174,000 in October 2011, and up an eye-popping 180 percent from November 2010. Through the first 11 months of the year, single family housing starts are off about 10 percent from the first 11 months of 2010. By contrast, starts of structures with five or more units were up 60 percent in the same time period, from 97,700 to 156,200. The sharp rise in apartment construction is more than compensating for the continuing decline in house construction. The data on permits (Table 1) tells a similar story. Through first 11 months of 2011, permits for free-standing houses are off 7.7 percent from the first 11 months of 2010, while permits for 5+ unit structures are up 36.4 percent.

Rather than indicating optimism about the housing sales market, the data on housing starts and permits point to optimism about the apartment rental market. Builders, and the lenders who enable them, are looking ahead and concluding that it makes more sense to build multifamily units, which tend to be more efficient, smaller and less expensive than single-family homes. In addition, this type of housing offers developers far more flexibility. Depending on market conditions, they may decide to sell the units as condos, or rent them out. In recent years, as in the single-home market, the bias has shifted away from ownership. Check out the Census Bureau data that breaks down completed housing by purpose and design. (See Table Q6) In 2007, only 62 percent of the housing units in buildings with two or more units were built for rent; the percentage rose to 84 percent in 2009 and 87 percent in 2010. In the first three quarters of 2011, 90 percent of such units completed were built for rent.

"There are cards that are invitation-only," Beverly Harzog, an expert with Credit.com, tells MainStreet.

The most widely known of these elusive credit cards is the American Express Centurion or Black Card. AmEx refrains from formally disclosing the terms and conditions of the card; the only thing that a curious visitor can learn from perusing the issuer's website is that the Centurion is "rarely seen, always recognized."

While less is known about the particular perks these cards net for their holders, it is generally accepted that they receive some pretty swanky travel perks, including exclusive discounts and free upgrades on all sorts of carriers. "The concierge will basically do anything for you," Tim Chen, CEO of NerdWallet.com, says.

Curtis Arnold, founder of CardRatings.com, adds that the card doesn't only offer travel benefits. A current cardholder recently told the website about a dinner Centurion hosted at Bergdorf-Goodman in which the free meal came with a complimentary gift bag full of personalized swag.

Of course, the Centurion isn't the only invitation-only card out there. Chase offers the Palladium card, which Harzog says carries a much lower annual fee (about $595) than its AmEx counterpart, but requires an equally full private Chase bank account, believed to be about $20 million to $30 million.

Additionally, Chen says, to remain competitive "a lot of financial institutions have cards that they will only offer to customers who use their private wealth managers." This includes Smith Barney and Merrill Lynch, which both have their own cards tailor-made for their wealthiest customers.

"There are probably a few others that we don't even know about," Harzog adds. "They're very secretive about these cards because that's part of the allure."

While the specific perks associated with these cards are guarded and can vary widely in terms and perks, there is one factor that seems to universally define them.

"They have a totally different look and feel from regular cards," Arnold says. The Centurion, for instance, is made of titanium, while the Palladium is made of the precious metal that shares its name and has the cardholder's signature permanently etched into it.

"They all have what I call a 'plunk factor,'" Arnold explains. "You're likely to get somebody's attention when you put it down."

"You've still got to look under the hood," Arnold cautions. He points out that Visa's Black Card, for instance -- which touts limited availability and is largely considered to be Visa's answer to the Centurion -- actually has more in common with cards in the tier below its billing.

Arnold says that there are plenty of top-tier cards that you don't need to be rich and/or famous to snag, and that offer stellar rewards for average consumers.

American Express Platinum Rewards Card. You might recall this card from a previous MainStreet article. This AmEx card carries a $450 annual fee in exchange from some pretty sweet travel rewards and is geared toward affluent consumers, but isn't closed to those who aren't in the highest income bracket.

United Mileage Plus Explorer Card. One of Arnold's new favorites, Chase's recently released United Mileage Plus Explorer Card lets cardholders book their first checked bag on United for free (an estimated $50 savings per trip) and also lets them board their flight ahead of general-seating passengers. You also get two passes to visit the United Club each year, which will give you at least of taste of the high life.

Cardholders also earn two miles per $1 spent on tickets purchased from United or Continental and one rewards mile for each $1 spent on everything else. The card has a $95 fee that is waived during the first year and carries a 14.24% annual percentage rate.

Citi Thank You Prestige. One of Citi's elite cards, the Thank You Prestige carries a $500 annual fee, but "comes with a lot more travel perks" than other options, Chen says. This includes 24/7 concierge services similar to that of the AmEx Platinum, though not quite in the class of the Centurion.

Cardholders also receive unlimited access to swanky airport lounges, one complimentary ticket on a domestic flight per year, and automatic gold status in the Hilton HHonors program. They also aren't subject to the pesky foreign transaction fees charged on purchases made abroad. The card's APR is about 15.24%, depending on creditworthiness.

Ritz Carlton Premium Rewards Card. Another new offering from Chase, the Ritz Carlton card offers 24-hour concierge services and exclusive discounts and upgrades at the well-known hotel chain it's affiliated with. This includes an automatic $100 credit to the hotel's restaurants or spa with each two-night stay.

Additionally, cardholders get five rewards points for every dollar spent at Ritz-Carlton hotels, two points for every dollar spent on airfare, and one point on all other purchases. They also get admittance into airport lounges and a $200 credit for airline incidentals. The card has a $395 annual fee and variable interest rates around 15.24%.

The ballot question mirrors a bill that the agents have actively pursued on Beacon Hill, and the group would still prefer legislative approval to a ballot campaign. After all, gathering the nearly 70,000 signatures that the association will need to get over the biggest hurdle for the 2012 ballot isn’t much fun.

By proposing a ballot question debate, the agents are picking a potentially ugly fight with a well-funded opponent – big auto insurers. While agents sell insurance policies on behalf of insurers, the two groups don’t always see eye-to-eye on public policies. And they certainly don’t agree on this one.

Former insurance commissioner Nonnie Burnes hoped to quell the debate, once and for all, four years ago. That’s when she crafted an intricate system to shift the state’s highly-regulated auto insurance industry into a more loosely-controlled competitive market – “managed competition,” as she liked to call it.

Consumer advocates were upset when Burnes initially didn’t include a formal ban on using credit scores in her plan. So Burnes made sure it was there by the time she had the final draft done.

The agents’ group says an insurer should base its coverage and premium decisions on a person’s driving record, not socioeconomic status. The association argues it would be unfair, for example, to give a Harvard graduate a better deal on car insurance than someone who doesn’t have a college degree if both customers had similar driving histories.

But how do banks, from which he has taken no loan earlier, know that Gupta had a poor repayment record. There are big brothers in the form of credit bureaus that keep a tab on the credit behaviour of people.

What does a credit bureau do? It receives and shares information on the borrowing and repaying behaviour of people with all lending institutions like banks, non-banking finance companies (NBFCs), housing finance companies and credit card companies.

What information can one get from a credit bureau? A credit bureau provides credit information and also a credit score to estimate one’s creditworthiness. Cibil’s credit score, for instance, would range between 300 and 900. A lower score in the 400-500 range, indicates that it is risky to lend to the individual, while a high score in the 800-850 range, means that the borrower is likely to repay the loans on time.

What are the benefits of a good credit score? A good credit score is also a bargaining tool for the individual to get loans faster at better rates. “I got a 0.50 per cent discount on my car loan interest rate because of my good credit score. Banks would not mind lending to individuals at a lower interest rate as the risk in lending to the person is also low,” said K Ramalingam of Holistic Investment Planners.

While nationalised banks may give about 0.50 per cent discount, multinational banks may even give a 1 per cent discount on loans to people with good credit scores, according to Ramalingam.

Who can check the credit information/scores of consumers? Anyone who has taken any form of credit in his life, either a home loan, auto loan or even a credit card, will have his information recorded in the Cibil database. By providing documents like an identity proof, address proof and payment of a small sum (Rs 142 for credit information record and Rs 450 for credit score and credit information record) to Cibil, one can get the details.

The credit score and information of a person will be available only to the individual, his present lenders and future lenders, if he has applied for a loan and nobody else.

What are the factors that affect one’s credit score? The loan repayment history of a person carries the highest weightage on his credit score. “Other factors that matter, include the number of credit cards and personal loans that the person has taken. The number of loans that has one applied for, will also matter because it shows the credit-hungry behaviour of the individual and it will be viewed with caution by the lender,” said Arun Thukral, managing director, Cibil.

Over the past months though, financial advisers have attempted to help consumers understand what their credit score entails, in terms of how they will be rated by various financial institutions, as there are some questions as to whether the credit score a consumer will receive from an online resource will be the exact same score that their lender sees. This is where many advisers want consumers to focus on their credit history rather than simply looking at what their score is, as this will be more important in the life of the consumer in terms of tracking what they owe, correcting mistakes, and making sure that they keep their financial life in order.

There are also aspects of a credit score that will be factored into the equation that some consumers may not know, like using different lines of credit will be important, using lines of credit like a credit card with a longer history can be more beneficial than a new line of credit in many cases, and consumers need to make sure that they pay down their debts as a high ratio of debt to the available amount of credit a consumer has will also impact their score.

If consumers are aware of these aspects of their credit score, this is a good first start but it needs to be understood that increasing a credit history is not something that should necessarily be done for a one time purchase or borrowing opportunity as consumers who keep their credit in great condition often find that any purchases or borrowing needs that may arise in the future could also benefit from establishing a better credit score now. However, keeping bills paid on time, debt well under control, and keeping a close watch on a consumer’s credit history will all be steps that need to be taken and repeated throughout an individual’s financial life. Yet, since every consumer’s situation and goals will differ, there are those who may benefit from consulting a professional as the method that a consumer uses to repair their bad credit score may be different from one to another and, as a result, consumers need to look at their personal situation and goals in order to select which route of bad credit repair will be most beneficial for them.

Many lenders are easing up on their underwriting standards, nudging up the limits of individual credit lines and sending out millions of appealing credit card offers boasting perks like a free balance transfers, cash-back bonus rewards and travel incentives such as airline miles and V.I.P upgrades at airports and hotels. There are a plethora of new Visa credit card offers available that are loaded with perks being offered by some of the nation’s largest banks, including Chase, Capital One and Bank of America. MasterCard and American Express are following suit.

There were a dozen states that stood out in the report for declines in credit card debt larger than the national average. Showing an 11% drop in debt were California, Texas, and Massachusetts; in Illinois, Missouri and Minnesota there was a 12% drop; New York, Alabama and West Virginia dropped 13%; Wisconsin and Hawaii showed a 14% drop, and New Hampshire residents can boast the biggest drop in debt at 17%.

At the high end of the scale, the three states whose residents currently carry the highest average amount of personal debt are Connecticut with $7,479, New Jersey with $7,531 and Colorado with $7,543.

Some other interesting findings were that Minnesota, Wisconsin and Oregon are the states with the least amount of auto loan debt, while Texas, Louisiana and Oklahoma have the most debt attributed to automobile loans. Mortgage debt declined the most in Nevada since January, shrinking overall by 5%. In Iowa however, mortgage debt showed an increase of 3%.

The average credit score also remained constant since the start of the year, and fell just two points since last June to 667. "Economists are optimistic about the second half of 2011 as gas prices continue to drop and home costs level off. The data supports this trend, reflected by stable credit scores this year and consumers reducing their credit card debt," announced Kevin Lin, the CEO of the consumer credit advocate site that published the report.

CCCS points to data which shows that the average unsecured debt of its clients in the income group earning up to £13,500 a year is £12,870.

This is far more than CCCS clients in the higher earning income groups. The average unsecured debt for CCCS clients earning between £13,500 and £25,000 is £18,547, averaging 124 percent of their annual income and £28,569 for CCCS clients earning between £25,000 and £50,000, averaging 114 percent of their annual income.

The average unsecured debt for CCCS clients earning over £50,000 is £50,810, averaging 117 percent of their annual income

The charity fears that this will get worse if the prediction by the Office for Budget Responsibility, that total personal debt as a share of household incomes is set to rise over the next few years, is correct.

Delroy Corinaldi, CCCS external affairs director, says:

"Unmanageable debt is a problem across all income groups but those on low incomes are particularly financially vulnerable, often finding it hard to make ends meet let alone deal with unexpected demands on their living costs.

"I worry about the high debt burden that many are carrying and the impact it has on their ability to keep their heads above water.

"I am also concerned about the use of credit by many on low incomes and fear that many are using it to pay for day-to-day living expenses, which is an unhealthy use of credit, but what choice do they have as living standards are squeezed?"

Miami-Dade is second among Florida’s 67 counties, with 1,027 applications. Orange County is third (957), followed by Palm Beach County (939). Florida Housing Finance Corp., the agency administering the Hardest Hit Fund, has received 9,439 applications since the program launched April 18.

It’s not surprising that Broward and Miami-Dade lead in applications for aid because those are Florida’s most populated counties, said Roy Oppenheim, a foreclosure defense lawyer in Weston.

Regardless, the housing bust has hammered South Florida like few areas nationwide.

During the first quarter of this year, Broward had 6,876 homes in some stage of foreclosure, RealtyTrac Inc. said recently. Broward had the state’s sixth-highest foreclosure rate, with one in every 117 homes in the foreclosure process.

“I hear one story after another,” Oppenheim said. “It’s heartbreaking. And I don’t have a quick fix.”

Hardest Hit money will cover mortgage payments for homeowners who are unemployed or in jobs with salaries below what they need for basic living expenses. Funds also will be used to bring delinquent mortgages current for homeowners who have returned to work or found higher-paying jobs.

Homeowners can receive as much as $12,000 in mortgage payments and up to $6,000 to make mortgage payments current. But those who qualify for the program must share in the cost. They will contribute at least $70 per month or 25 percent of their monthly incomes.

All told, Florida housing officials expect to help about 40,000 homeowners.

Last year, Florida received about $1 billion as part of a federal initiative to help states devastated by the housing crash.

Florida is using $418 million of its allocation on Hardest Hit. The rest of the money could go to that or other foreclosure prevention programs, says Cecka Green, spokeswoman for Florida Housing Finance.

The agency sends completed applications to dozens of statewide housing agencies that help determine whether homeowners are eligible for assistance. Consumer Credit Management Services in Delray Beach has received about 250 applications, mostly from South Florida residents.

“A lot of the people are qualifying,” said Diane Stephenson, the Hardest Hit manager for Consumer Credit Management. “You’re always going to have a certain percent that don’t, but qualifications are not that stringent where people can’t qualify.”

But most of the visitors to the open house were curious neighbors, not would-be buyers.

Middle-income Americans in Middle America are not yet ready to get back into the market. Homes that do sell in the Kansas City area are often going for between 20 percent to 30 percent below the listed price.

"There are so many people questioning things right now, asking themselves, am I going to have my job in six months?" DeVore said, affable but seemingly resigned to a slow Spring. "The indicators are very mixed for the whole economy and the real estate market very closely follows the overall economy."

Unemployment of 8.8 percent in March was down from above 10 percent in 2009 but still high enough to worry many Americans.

According to RealtyTrac, which publishes foreclosure statistics, the number of foreclosure filings fell 27 percent in the first quarter from a year earlier but still affected nearly one in every 200 U.S. homes.

And although the National Association of Realtors (NAR) said existing home sales rose 3.7 percent in March, the median home price nationwide was down 5.9 percent from March 2010.

That has few housing market insiders willing to say the worst U.S. housing downturn since the Great Depression has played itself out, despite government support and mortgage interest rates that have scraped record lows.

"It's kind of quiet right now," said Fred Arnold, president of lender American Family Funding. "There's no real excitement out there that we are used to seeing in the springtime."

Many homeowners who are not obliged to move are staying put and investing in home improvements instead.

Home Depot said it has seen rising consumer demand for maintenance and repair projects this spring.

Despite sellers often resorting to painful cuts in their asking prices, realtors say many deals continue to fall through due to the unrealistic expectations on both sides.

"Buyers still think properties are too expensive and want bigger discounts," said Mario Greco, a Chicago-based realtor. "Sellers are still not ready to take their lumps yet and recognize what their property is worth in today's market."

RISK-SHY LENDERS

During the boom, lenders went wild, offering loans with no money down and, in many cases, no requirement on borrowers to prove their income.

Now, access to credit and hefty down-payment requirements are an issue even for buyers with good credit, one that realtors and brokers complain is slowing the market.

"It's difficult, and getting more difficult," said Bob Walters, chief economist at Quicken Loans in Detroit. "All the moves whether it be regulatory, underwriting, pricing -- I can't think of an exception -- all of them are pointing toward making it more challenging to get a loan."

The government-rescued housing finance giants Fannie Mae and Freddie Mac tightened up lending standards in 2007 and 2008 as bad loans began to soar and there has been a steady drip of new requirements since then. More changes to credit rules are under discussion and could constrain lending further.

Keith Klein, a mortgage loan consultant at Bank of Blue Valley, a local lender in Overland Park, Kansas, said tougher underwriting standards mean that if prospective buyers cannot put down 20 percent, they cannot get a mortgage.

"We're just not seeing very much right now," he said.

Realtors also complain that credit for first-time buyers has dried up, which has a knock-on effect on the rest of the market as people cannot sell to move up the property ladder.

As the bulk of the market remains hobbled, the contrast with the high end is sharpening.

Mike Sato of Chicago-based Jameson Sotheby's International Realty, cites the recent sale of a $4.5 million home not even built yet as a sign of the change among rich clients.

"I haven't seen a deal like that since 2008," he said.

Diane Saatchi, senior vice-president at Saunders & Associates Realty which specializes in the Hamptons oceanfront strip favored by Wall Street, said she was seeing a lot of buyers paying in cash for homes worth $10 million.

"There's a pent-up demand on the buy side because people have been waiting for a couple years."

High-end borrowers find it easier to get credit but even for them it is not guaranteed.

Matt Farrell, managing partner at Urban Real Estate in Chicago, recounted how a buyer with good credit and seeking a loan for a $2 million home was unable to secure a mortgage in time. So the buyer wired cash to pay for it with no loan.

"After the banking sector was infused with all that government cash to go out and lend more money, you'd think we'd be seeing more activity out there," Farrell said. "But when someone who can pay $2 million in cash can't get a loan, then you know you have a real problem.

After years in an apartment building, "we were just tired of sharing space with other people," says Cari Hodgson, 32. "It was time to have space of our own."

She and her commodities trader husband sold the condo and recently bought a $1.2 million, five-bedroom home in Chicago's north side, sealing the deal with the kind of big down-payment that is heating up the high-end of the U.S. property market.

That means the Hodgsons put down at least 40 percent of the house's value, a chunk far out of reach for most Americans.

"We were told by a number of people that it was very difficult to qualify for a jumbo loan," Cari Hodgson said. "So we didn't even try to get one."

Four years after U.S. housing prices began to nose-dive, eventually triggering a global financial crisis, signs of life are appearing at the top and the bottom ends of the market.

By contrast, a sustained recovery remains far off for the vast middle ground of the U.S. housing sector.

Affluent Americans are feeling more secure as the impact of the recession fades and the stock market racks up big gains.

"People who have decent income are saying, maybe I can trade up, buy a better property," said Bill Hardin, director of the real estate program at Florida International University.

"Some people are even saying, I'm willing to take a loss on the property I'm selling now to get something I couldn't buy during the housing peak."

Sales of homes worth over $1 million, which account for about 1.5 percent of total U.S. sales, have risen in most states so far in 2011.

Realtors, brokers and others in the housing industry report the first bidding wars for expensive homes since the crash.

"There is a surge of confidence among high-end buyers and we're unfortunately short on inventory," said Pamela Liebman, chief executive of New York property firm The Corcoran Group.

Her firm saw a doubling in the sale of luxury co-ops, worth more than $10 million, in the first three months of 2011.

At the bottom end, homes are also on the move as investors pay cash for foreclosed properties to rent them out.

It's a different story in the middle of the market.

Properties worth between $100,000 and $500,000 make up more than 60 percent of U.S. housing. Sales in that category in March were down across every region of America from the same month a year earlier, when tax breaks were propping up demand.

Foreclosures and short sales -- whereby struggling homeowners sell their homes for below what they owe, with the consent of their lenders -- are still a big drag. Credit remains tight and middle-income families are more pessimistic than their wealthier compatriots about the economy.

So this year's Spring selling season, when buyers typically start to look for a home after winter, has mostly been a dud.

Access to credit is cited as a broad problem. While the rich can simply put more money down, for most would-be buyers the need for more 'skin in the game' is a deal-breaker.

Realtors and brokers complain that the credit drought is as extreme as the flood of loose lending of the boom years.

"The pendulum has swung from too far to the left to too far to the right," Corcoran's Liebman said. "We need to find some balance in lending."

In total, the nation recorded 1.55 million filings in 2010, an increase of 8 percent from 2009 and a far slower growth rate than the 32 percent jump recorded in the year before and the 33 percent jump the year before that.

At the law firm Mayer & Newton in Knoxville, Tenn., staff members continue to work six days a week to handle the massive bankruptcy caseload. But filings there have leveled off, and partner John Newton said the firm decided it did not need to replace an attorney that left about a year ago.

He said the economy in Tennessee, while still challenging, appears to be more stable than other parts of the country. And he said many of the people who need relief from their debts have already gone through the bankruptcy process.

"I think we've sort of turned the corner," he said.

Numbers indicated stark regional differences. Thirteen states recorded an annual decline, mainly in the South, with West Virginia leading the way with a 10 percent drop in cases. The West, however, indicated ongoing growth in filings, with numbers rising in places like Hawaii (22 percent), Utah (19 percent), California (19 percent) and Arizona (18 percent).

Tracy Compo of Tucson, Ariz., said her family's financial troubles began about three years ago when her husband could no longer get overtime at work and mortgage payments became too costly. They tried unsuccessfully to get a mortgage modification before leaving the house to foreclosure.

Since then, they've tried to regain financial strength by selling their possessions -- jewelry, clothes and anything else that could help pay the bills -- but credit card debt has continued piling up. In December, they filed for bankruptcy in hopes of getting a fresh start.

"It's very depressing," said Compo, a 32-year-old mother of three. "It's degrading -- like you've just lost all sense of control. I hate it. I'm embarrassed by it."

Bankruptcy filings have had a volatile decade, with a surge to records highs in 2005 as filers rushed to make their claims before Congress overhauled the system. Lawmakers made bankruptcy filings more cumbersome -- and, as a result, more costly -- amid concerns that some consumers were taking advantage of the system to escape debts.

Immediately after the law change, bankruptcy filings sank before steadily climbing again. Experts attributed the ongoing rise in part to an expected rebound after the shock of the 2005 law, and in part due to the financial conditions of consumers. The number of filings in 2010 matched the tally for 2004 -- one of the highest-ever years before the spike attributed to the law-change.

"That is kind of the 'natural' level of filings in the kind of the economy we have," said Katie Porter, a professor at the University of Iowa College of Law. "We have a lot of debt and we have a lot of volatility. When you combine those things together, the debt makes it hard for people to withstand a shock to the system."

Those shocks are frequently job losses or medical bills, she said.

The return of bankruptcy filings to their pre-2005 levels also raises the question of how much was was accomplished by the law changes. Porter said the law appears to have accomplished little more than to make filing for bankruptcy more costly because of extra paperwork.

Bob Lawless, a professor at the University of Illinois College of Law who tracks bankruptcy data, said the difficulty in accessing consumer credit over the past couple years may be helping limit the number of people overly burdened by debt. He expects filings to be slightly lower in 2011.