Posts Tagged ‘Foreclosures’
Re-defaults on modified mortgage loans falling
Homeowners who had mortgages modified recently are faring better than those who did so earlier in the housing crisis, according to a report released Tuesday, possibly debunking predictions of a huge wave of defaults to come. The State Foreclosure Prevention Working Group warned of other troubling signs, however, on the same day that a separate industry report showed the most severe July sales drop-off for previously occupied homes in 15 years. The group of 12 state attorneys general and state banking regulators said Tuesday that foreclosures still easily outpace the number of loan modifications. Modifications lower monthly payments and reduce the odds of losing a home. Nearly three years into the foreclosure crisis, the group of state officials also found that nearly 63 percent of homeowners who are at least 60 days behind on their mortgage payments aren’t taking part in either government or private foreclosure prevention programs. Banking officials warned that lenders must aggressively seek out homeowners who are teetering on the edge, even if it means short-term pain for banks. “There is still a tremendous amount of work to be done to prevent unnecessary foreclosures,” said Neil Milner, president and CEO of the Conference of State Bank Supervisors, which is part of the working group. “Servicers must continue to perform meaningful outreach to those homeowners who are seriously delinquent and to perform modifications with significant principal reduction.” The working group compared delinquencies for mortgages modified last year with those revised in 2008, and whether borrowers were keeping up with payments six months after terms were changed. Borrowers getting modifications in 2009 were nearly 50 percent less likely to end up at least 60 days behind than those with modifications in 2008. About 15 percent among the 2009 group ended up becoming seriously delinquent six months after modification, versus nearly 31 percent for the 2008 group. The reduction “suggests that dire predictions of high re-default rates may not come true,” the report said, noting some analysts have predicted re-default rates as high as 75 percent. The report said recent modifications that reduce principal balances on loans have a lower default rate than those that merely cut the interest component of monthly payments. But most banks don’t trim the overall balance when they modify loans, according to the report. Only one in five modifications reduced the loan amount, with 70 percent of those studied in this year’s first quarter actually increasing the total by adding service charges and late payments to the loan balance, the report said. However, through adjustments of interest rates, about 89 percent of first-quarter modifications involved some reduction in monthly payments, the report said. Nearly 78 percent cut payments 10 percent or more. But the absence of loan balance reduction in most modifications will hamper future foreclosure prevention efforts, the report said. The authors noted that home prices have declined more than 30 percent from their 2006 peak, and nearly one-quarter of homeowners owe more than their homes are worth. The group said it “anticipates hundreds of thousands of foreclosures will occur later this year absent additional improvements in foreclosure prevention efforts.” Michael Fratantoni, vice president of research and economics with the Mortgage Bankers Association, said modifications must strike a balance between helping borrowers stay in their homes, and enabling lenders and investors to avoid taking big losses. Reducing a loan amount in a mortgage modification “can be the tool to get you there to that balance, but sometimes it isn’t,” Fratantoni said. He said a key reason many at-risk borrowers don’t take part in foreclosure prevention programs is they simply don’t pick up their phone or otherwise respond when lenders contact them about mortgage modification. “It really is a bit of a two-way street,” he said. The state officials’ report examined mortgage modification trends at nine nonbank mortgage companies servicing 4.6 million loans nationwide as of March. Since the group of state officials began collecting data in October 2007, those nine companies have completed more than 2.3 million foreclosures. That’s about three times greater than the 760,000 loan modifications they completed. As of March 31, the nine servicers reported 778,000 borrowers were late at least 60 days on their payments. On Friday, the Treasury Department said nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out. Economists said the report suggests the $75 billion government effort is failing to slow the tide of foreclosures, which are expected to grow well into next year. Copyright © 2010 The Associated Press, Mark Jewell, AP business writer.
Investors turn to flipping for quick profits
Private equity firms and other groups of wealthy people are purchasing foreclosures at distressed prices, rehabbing them and selling them for a quick profit. This used to be a game for amateurs, but because of the lack of other investment opportunities, the money-management pros have stepped in. The influx of new players is pushing up auction prices and making it harder to make a profit. The average discount at auctions – the difference between a home’s sale price and its actual value – is 21.6 percent, down from 28 percent in January 2009, according to ForeclosureRadar. “In crisis there’s opportunity,” says Rick Hudson, president of investment firm Prosperity Group Real Estate in Irvine, Calif. “Right now there’s huge opportunity with flipping houses.” Source: Los Angeles Times, Walter Hamilton and Alejandro Lazo
Nearly 50 percent leave Obama mortgage-aid program
Nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out. The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday’s report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say. More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year. “The government program as currently structured is petering out. It is taking in fewer homeowners, more are dropping out and fewer people are ending up in permanent modifications,” said Mark Zandi, chief economist at Moody’s Analytics. Besides forcing people from their homes, foreclosures and distressed home sales have pushed down on home values and crippled the broader housing industry. They have made it difficult for homebuilders to compete with the depressed prices and discouraged potential sellers from putting their homes on the market. Approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the government program have been cut loose through July, according to the Treasury report. That’s about 48 percent of the ones who had enrolled since March 2009. And it is up from more than 40 percent through June. Another 421,804, or roughly 32 percent of those who started the program, have received permanent loan modifications and are making their payments on time. RealtyTrac reported that the number of U.S. homes lost to foreclosure surged in July to 92,858 properties, up 9 percent from June. The pace of repossessions has been increasing and the nation is now on track to having more than 1 million homes lost to foreclosure by the end of the year. That would eclipse the more than 900,000 homes repossessed in 2009, the firm says. Lenders have historically taken over about 100,000 homes a year, according to RealtyTrac. Zandi said the government effort will likely end up helping only about 500,000 homeowners lower their monthly payments on a permanent basis. That’s a small percentage of the number of people who have already lost their homes to foreclosure or distressed sales like short sales - when lenders let homeowners sell for less than they owe on their mortgages. Zandi predicts another 1.5 million foreclosures or short sales in 2011. “We still have a lot more foreclosures to come and further home price declines,” Zandi said. He said home prices, which have already fallen 30 percent since the peak of the housing boom, would drop by another 5 percent by next spring. Many borrowers have complained that the government program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork. The banking industry said borrowers weren’t sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out. Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers’ monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out. Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period. Those who have successfully navigated the program to reach permanent modifications have seen their monthly payments cut on average by about $500. Homeowners first receive temporary modifications and those are supposed to become permanent after borrowers make three payments on time and complete all the required paperwork. That includes proof of income and a letter explaining the reason for their troubles. But in practice, the process has taken far longer. The more than 100 participating mortgage companies get taxpayer incentives to reduce payments. As of mid-June only $490 million had been spent out of a potential $75 billion the government has made available to help stem the wave of foreclosures. Copyright © 2010 The Associated Press, Martin Crutsinger, AP economics writer.
Tax credit boosts building permits
Federal homebuyer tax credits are being credited for a 45 percent boost in new housing permits in the second quarter in Volusia and Flagler counties. "We're happy to see the movement and the promotion for homeownership," said Greg Blose, executive director of the Volusia Building Industry Association. "But we're keeping (the second-quarter increase) in perspective. Looking month to month, we expect a slide in the third quarter." Federal tax credits of at least $8,000 for first-time buyers and up to $6,500 for owners who move expire Sept. 30 for deals signed before the end of April. During the April-May-June quarter, builders in the two-county area pulled 322 permits for new single-family and multifamily units. That's up 45 percent from the 222 pulled during the same period a year ago, according to figures released this week by Hanley Wood Market Intelligence. Volusia saw a 6 percent gain while Flagler saw a 296 percent increase. Much of Flagler's jump is due to the 72 multifamily units at the Beach Village Apartments on State Road 100. Flagler County had zero multifamily permits in the second quarter of 2009. Multifamily permits in Volusia County were down 19 percent to 21, from 26 last year. Single-family permits rose in both counties. Volusia builders pulled 182 single-family permits, up 10 percent from the 166 issued last year. Flagler builders pulled 47 single-family permits, up nearly 56 percent from 30 last year. The 45 percent increase in permits in the two-county area was better than the state's 21 percent increase to 9,996 permits and the nation's 8 percent increase to 166,200 permits for the second quarter. Still, the numbers are low because of too many foreclosures and short sales closing at prices below what a new home costs to build, said Jason de Lorenzo with the Flagler County Home Builders Association. "The lack of jobs is the driving force here right now. We've been steady at 10 to 13 permits a month for about two years." If there is a positive trend, it's that the few permits are being spread out among more builders and not just a few, de Lorenzo said. "That shows me that there are customers and not just the large builders building spec homes." The opposite is the case in Volusia County where large national builders, including KB Home, Taylor-Morrison and Maronda Homes, are pulling the most permits, Blose said. "It's still a rough economy," he said. "The larger builders have the money, but some upper-end builders are also working." Through the first half of the year, Port Orange-based Paytas Homes has pulled 16 permits, equaling the same number of permits for all of 2009, said Jim Mather, Paytas production manager. "Most of our activity has been in the upper end. They're the ones who can afford to build a home for future retirement without having to sell their home up north right away," Mather said. "When they were nervous, they didn't spend. They feel more relaxed now and more confident about spending." But even the higher-end builders have cut prices and home sizes to attract customers. "The higher prices just don't work anymore," said David Kohn, president of ABD Developers, which has two model homes under construction in the gated Toscana community off Old Kings Road in Palm Coast. "These are $360,000 and $370,000 when we used to build in the $600,000s." Kohn said the models are not in response to short-term trends but to be ready for an optimistic positive turn in the market next year.
Unemployment drives more home sellers to cut price
A new report from Trulia.com shows that 25 percent of homes on the market in July had price cuts as sellers tried to attract buyers who are dealing with high unemployment rates, lower wages, tighter lending practices and falling home values. For-sale homes also face competition from foreclosures. In the 50 biggest U.S. cities, the amount cut from residential prices rose to $30.1 billion as of Aug. 1 from $27.3 billion the prior month; and in half of these cities, prices were reduced on 30 percent of homes. However, the average discount was the same as in June: 10 percent. The most price cuts were reported in Minneapolis, where 42 percent of listings saw price reductions, while the share of sellers slashing prices rose 56 percent to 18 percent in Las Vegas. “Sellers need to continue to be very aggressive with pricing to compete against all the low-priced short sales and foreclosures that they’ll be on the market with, for a long time to come,” says Tara Nelson of Trulia. In Florida, only two cities made the top 50 list for price cuts, however, with only No. 11, Jacksonville, surpassing the national average – 32 percent of listings there had a price reduction that averaged 12 percent. Miami made the top 50 list at No. 41, with 23 percent of listings facing a reduction of 14 percent. © Copyright 2010 INFORMATION, INC.
Homes lost to foreclosure up 6% from last year
The number of U.S. homes lost to foreclosure surged in July, another sign lenders are moving quicker to take back properties from homeowners behind in payments. Lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009, foreclosure listing firm RealtyTrac Inc. said Thursday. Banks have stepped up repossessions this year to clear out the backlog of bad loans. July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. Meanwhile, homeowners who are falling behind on their payments are being allowed to stay in their homes longer because lenders are reluctant to add to the glut of foreclosed homes on the market. The number of properties receiving an initial default notice – the first step in the foreclosure process – rose 1 percent last month from June, but tumbled 28 percent versus July last year, RealtyTrac said. Initial defaults have fallen on an annual basis the past six months. The latest data reflect a foreclosure crisis that continues to drag on as many homeowners struggle to make their monthly payments amid high unemployment, slow job growth and an uneven rebound in home prices. Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures. Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can’t qualify or fall back into default. The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 percent, or about 530,000 homeowners, have fallen out of the administration’s main effort to assist those facing foreclosure. That program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners, or 30 percent of the 1.3 million who have enrolled since March 2009. Still, RealtyTrac estimates more than 1 million American households are likely to lose their homes to foreclosure this year. In all, 325,229 properties received a foreclosure-related warning in July, up 4 percent from June, but down 10 percent from the same month last year, RealtyTrac said. That translates to one in 397 U.S. homes. The firm tracks notices for defaults, scheduled home auctions and home repossessions - warnings that can lead up to a home eventually being lost to foreclosure. Among states, Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. The number of properties in Nevada receiving a foreclosure warning last month rose nearly 7 percent from June, but fell nearly 30 percent from the same month last year. Rounding out the top 10 states with the highest foreclosure rate last month were: Arizona, Florida, California, Idaho, Michigan, Utah, Illinois, Georgia and Maryland. Las Vegas continued to be the city with the highest foreclosure rate in the U.S., with one in every 71 homes receiving a foreclosure notice in July – more than five times the national average. Copyright © 2010 The Associated Press, Alex Veiga, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Related Topics: Foreclosures
5 Reasons to Buy a Home Now
The tax credit expired, but it’s still a great time to buy a home thanks to low mortgage rates and motivated sellers. Here are five reasons why now is a great time to buy: 1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today’s record-low rates, they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction. 2. Houses are in move-in condition. Homeowners continue to spend on maintenance and repair, according to the Harvard Joint Center on Housing. As these houses enter the market, they stand in marked contrast to tattered foreclosures. 3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties. 4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market. 5. Plenty of programs. Many programs that encourage middle-class families to buy homes still exist, despite market downturns. Buyers who qualify can get a big boost by combining one of these programs with today’s low mortgage rates. Source: ForSaleByOwner.com (07/29/2010) © Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
A Beginner’s Guide to Investing in Distressed Homes
People often invest their money in the stock market, cars, gadgets, business and alike. But lately, probably due to the housing crash, most people have stopped thinking about investing in real estate. Buying and selling/holding properties, especially distressed homes such as foreclosures and short sales is one of the best investment methods in today's market ... for the exact same reason that most people are shying away from buying homes -- the market has tanked. Real Estate is without a doubt one of the best ways to invest your money when you properly research the market. Buying properties that are in need of rehabbing will most likely, be listed below market value and repairing the home can earn substantial equity. Then relist the newly repaired home back on the market and pull that equity back out. For real estate investors looking to rent out properties, the home does not need to be in bad shape, merely finding a home in a good location under market value will reap monetary rewards for years to come. Foreclosed homes are properties that have been turned over to lender because of the homeowners' failure to pay the mortgage. These "bank owned" homes are now put on the market by sellers that have only seen the home in pictures and are looking to sell the property in less then 180 days. This truly creates a motivated seller situation and a saavy investor who is an expert in identifying these properties has the potential to bring in more profit then during the real estate boom. When considering which distressed home to buy as an investment, it is important to remember location is a huge factor. Check into your area's unemployment rate, crime rates and economic conditions before choosing a designated area to start investing. The local housing markets' status is also an important point to consider in this business. Foreclosed homes for sale in markets that have not suffered sudden surges in price during the housing boom will be the most immune to drastic drops in real estate values and will offer the best chances of steady price increases. Look into the population rate of a particular city or state. Those areas that are highly populated like Florida, Texas, South Carolina, Indiana and Oklahoma bring in high chances of real estate success. Doing these things alone won't guarantee success to your real estate business. It will still depend on your skills and determination to triumph, but you these tips as a guide.
When to Hire an Attorney to Fight Your Foreclosure
Both the economy in general and housing market in particular have experienced major upheavals. This combined with a several additional negative economic factors has resulted in a record number of foreclosures throughout the United States, causing untold devastation for American families. Innumerable homeowners and renters facing foreclosure have no idea where to turn to for help. Despite all the lawyer jokes, an attorney can actually be your best asset in the fight against foreclosure. Renters Can Be Foreclosure Victims Too Homeowners far outnumber renders in terms of the percentage of people affected by foreclosures. However, renters can certainly be foreclosure victims as well - and in no small measure - if their landlords lose their homes or apartments to the foreclosure process. Being a renter in a property pending foreclosure can be extremely confusing, so contacting an attorney early on would be prudent - unless you are already prepared to leave anyway. You will want an attorney who specializes in real estate and foreclosures. What is the Foreclosure Process for Renters Renters must be provided advance notice of the foreclosure and impending eviction well ahead of the day they are required to move out. This is mandated by law in most U.S. states. Even if you have a new landlord, that person still must give you at least several weeks notice if they need to evict you. Depending on the laws in your geography, they may even be required to honor your lease to its expiration. This would allow you to remain in your house or apartment until your lease is up, buying you much more time to locate an alternative living arrangement. The Foreclosure Process for Homeowners Homeowners should still consider seeking the assistance of a qualified attorney to help push back on the foreclosure. A real estate attorney - primarily one specializing in foreclosures - will certainly know the ins and outs of the foreclosure process, helping you take advantage of legitimate loopholes and small windows of opportunities available to you. Why Hire an Attorney Attorneys are familiar with foreclosure procedures and possible means of stopping one. They can provide you expert advice on prudent actions to take and can also assist in dealing directly with your lender, thus preventing you from making costly mistakes that would normally decrease your chances of holding onto your home. The foreclosure process is a grim reality, but you almost certainly do not know the specifics of all the laws and procedures involved. This is why tapping into the expertise of a real estate attorney can be your best opportunity to fight foreclosure.
Losing Your Home to Foreclosure – Is a Short Sale the Best Way to Go?
With the millions of Americans behind on their mortgage or are about to lose their home to foreclosure provides a great opportunity to look at some potential options for those folks in trouble with their homes. One of the most popular ways to go is what we call a "Short Sale." Essentially, this is a way that someone that can't make their mortgage payments AND the amount they could sell the house for is less than they owe on their mortgage(s). The short sale is not a new way to get rid of a house it is just become prevalent in today's world thanks to the millions of potential foreclosures that are out there. For example, let's say the Jones family has a house that they bought for $250,000 three years ago and put 5% down ($12,500) so they had a mortgage balance of $237,500 and over 3 years they paid it down to $228,199. Mr. Jones loses his job and they don't have enough savings to continue to make their house payment, in fact they are 2 months behind so they actually owe closer to $230,500 with interest and penalties. They would like to sell the house, but the market for their home could only get them about $225,000. This is what they call being "underwater on your mortgage." A majority of successful home sales are done with a Real Estate Agent, so if we factor in that we'd need to add at least 6% ($13,500 6% of $225,000) to the equation. So if the house sold for $225,000, we owe $230,500 and need another $13,500 to facilitate the sale. That means the Jones' family would need at least $19,000 (Owe $230,500 + $13,500 to sell = $244,000 minus $225,000 sale price = $19,000 difference) to facilitate the sale. Remember, they don't even have enough money to make their payments so how could they come up with $19,000? (To keep this simple we didn't include potential sales concessions, property taxes due, any repairs needed, etc. but all those costs would be added to the total the Jones family owes.) In order to sell the house the lender would have to agree to take $19,000 less than what is currently owed to them. Why would a lender want to do that? Well, when a house goes completely through the foreclosure process the costs could be much higher. The lender would have to pay the legal costs, it takes longer so they miss more payments (no interest payments), a lot of the time the house is left in poor condition so they either have to spend money to fix it or accept a lower price for its condition, and they have to pay a Real Estate Agent to sell the house and any other sales concessions. The bottom line is that the foreclosure process could cost the lender thousands and thousands more than to cut their losses and do a short sale. It makes sense to cut one's losses, yet the lenders still make this process extremely difficult and their delays can make it even tougher to get a buyer to stick thru the home buying process. Sounds like a great deal for the Jones family, they get rid of their house and don't have a foreclosure on their credit, right? It's not quite that simple. First of all, contrary to popular belief, a short sale has a very similar impact on your credit and your ability to buy a home in the future. Future lenders will look at it much like they would a foreclosure. The credit score will suffer a significant drop, just like a foreclosure, maybe not quite as much but it will be very close. It will take a few years before you'd be able to get financing again and I would look for that time frame to be longer as this current crisis plays itself out. You will likely have to wait 3 to 4 years or more even with a short sale before you can qualify to get a new home loan AND your credit score will have to have come back up significantly, which doesn't just happen. Cleaning up your credit will take work on your part too. Another issue is the amount that the lender "wrote off" on what you owed them. The $19,000 in our example could be held as a "deficiency balance" that you would likely have to pay or some lenders would require the Jones family to sign a promissory note to repay that money (which can be a legally enforceable debt that could have a monthly payment attached to it). If the lender agreed to "forgive" the "deficiency balance" then they could issue you a 1099 form which would mean you would have to pay taxes on that money like it was income. The point here is there are many variables that must be fully understood before attempting a short sale so trying to do this on your own, or with the help of just a Real Estate Agent is probably not a good idea. You need to also involve a financial pro that understands all the possibilities and probably even look for a real estate attorney that can help to make sure you are fully protected from the lender coming back at you. I would also strongly recommend a conversation with a Bankruptcy Attorney to make sure you understand all your options. All in all "Short Sales" can be a viable way to get out from under a house you can no longer afford, but it isn't a quick and simple process. In fact it is such a complex process that trusting just one individual to guide you thru it is not a financially intelligent thing to do. Real Estate Agents are not necessarily financial experts or legal experts, financial people are not attorneys may not understand mortgages and how they work so you'll need to find one that understands this unique discipline and attorneys are not financial pros nor are they necessarily well versed in selling homes. Kurt Jackson, Financial Pro 4 the Average Joe is a credit expert and is well versed in the potential financial aspects of the short sale and other ways to minimize the damage that someone with mortgage and housing issues will be facing. If you or anyone you know is facing issues with paying for their home have them call me at 816.582.5532 for a Free Consultation to assess the situation. Kurt Jackson, Financial Pro 4 the Average Joe combines years in the mortgage and financial services to offer a unique way to help Average Americans have someone working for YOU in advising YOU to do what is best for YOUR interests. Check us out on line at http://www.FinancialPro4theAverageJoe.com. Article Source: http://EzineArticles.com/?expert=Kurt_Jackson
