Fannie, Freddie short sales hit record high

January 8, 2013 By Leave a Comment

REO inventories down 36 percent from 2010 peak

BY INMAN NEWS, MONDAY, JANUARY 7, 2013.

Inman News®

<a href="http://www.shutterstock.com/pic.mhtml?id=50051371" target="_blank">Short sale sign</a> image via Shutterstock.
Short sale sign image via Shutterstock.

Loan servicers working on behalf of Fannie Mae and Freddie Mac signed off on a record number of short sales in the third quarter of 2012, according to a report from the mortgage giants’ regulator, the Federal Housing Finance Agency (FHFA).

Short sales and deeds-in-lieu of foreclosure totaled 37,966 for the three months ending Sept. 30, 2012, up 4 percent from the previous quarter and 23 percent from a year ago. Fannie and Freddie implemented accelerated timelines in June 2012 for reviewing and approving short-sale transactions.

Fannie and Freddie short sales and deeds-in-lieu


Right-click graph to enlarge. Source: Federal Housing Finance Agency.

The mortgage giants’ inventories of “real estate owned” (REO) homes also continued to decline, as Fannie and Freddie got rid of homes faster than they acquired them through foreclosures.

During the first nine months of the year, Fannie and Freddie acquired 197,507 homes through foreclosure, and sold 218,321 REOs and foreclosed homes.

Fannie and Freddie REO inventories (thousands of homes)


Right-click graph to enlarge. Source: Federal Housing Finance Agency.

All told, Fannie and Freddie had 158,138 homes in their REO inventories as of Sept. 30, 2012, down 13 percent from a year ago and a drop of nearly 36 percent from a Sept. 30, 2010, peak of 241,684.

Fannie and Freddie were placed under government control, or conservatorship, in September 2008. Since then, loan servicers working on their behalf have approved 2.1 million home retention actions, including 1.26 million permanent loan modifications.

During the same period, Fannie and Freddie acquired more than 1.1 million homes through foreclosure, and signed off on 413,436 short sales and deeds-in-lieu of foreclosure.

There have been about 4 million completed foreclosures nationwide since September 2008, according to data aggregator CoreLogic.

Of the 62,561 loan modifications completed in the third quarter, about 45 percent of borrowers saw their monthly payments decrease by more than 30 percent. More than a third of loan mods included principal forbearance. Less than 15 percent of loans modified in fourth-quarter 2011 had missed two or more payments as of Sept. 30, 2012, nine months after modification, the report said.

Since the beginning of the Obama administration’s Home Affordable Modification Program (HAMP) in April 2009, just over 1 million borrowers have been offered a trial loan modification, and more than half had been granted a permanent modification. Of those, 21.2 percent had defaulted as of the third quarter. The vast majority of the remainder, 428,946 borrowers, were in active permanent modifications as of the third quarter.

Since October 2009, Fannie and Freddie have offered 564,822 non-HAMP permanent loan modifications. Non-HAMP modifications made up two-thirds of all permanent loan mods in the third quarter, the report said.

The share of mortgage loans 30-59 days delinquent rose slightly to 2.08 percent of all loans serviced in the third quarter, but the share of seriously delinquent loans fell slightly to 3.39 percent. Seriously delinquent loans are those that are 90 days or more delinquent or in the process of foreclosure. More than half of seriously delinquent borrowers had missed more than a year of mortgage payments as of the end of the third quarter, the report said.

Nearly 3 in 10 of these deeply delinquent borrowers are located in Florida.

 

Courtesy of your Arcadia Real Estate Agent

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10 Banks Agree to Pay $8.5B for Foreclosure Abuse

January 7, 2013 By Leave a Comment

By Associated PressJan. 07, 2013
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(WASHINGTON) — Ten major banks and mortgage companies agreed Monday to pay $8.5 billion to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.

The banks, which include JPMorgan Chase, Bank of America and Wells Fargo, will pay billions to homeowners to end a review process of foreclosure files that was required under a 2011 enforcement action. The review was ordered because banks mishandled people’s paperwork and skipped required steps in the foreclosure process.

Under the new settlement, people who were wrongfully foreclosed on could receive from $1,000 up to $125,000. Failing to offer someone a loan modification would be considered a lighter offense; unfairly seizing and selling a person’s home would entitle that person to the biggest payment, according to guidelines released last summer by the Office of the Comptroller of the Currency. Monday’s settlement was announced jointly by the OCC and the Federal reserve.

The agreement covers up to 3.8 million people who were in foreclosure in 2009 and 2010. Of those, about 400,000 may be entitled to payments, advocates estimate.

About $3.3 billion would be direct payments to borrowers, regulators said. Another $5.2 billion would pay for other assistance including loan modifications.

The companies involved in the settlement also include: Citigroup, MetLife Bank, PNC Financial Services, Sovereign, SunTrust, U.S. Bank and Aurora. The 2011 action also included GMAC Mortgage, HSBC Finance Corp. and EMC Mortgage Corp.

The deal “represents a significant change in direction” from the original, 2011 agreements, Comptroller of the Currency Thomas Curry said in a statement.

Banks and consumer advocates had complained that the loan-by-loan reviews required under the 2011 order were time consuming and costly without reaching many homeowners. Banks were paying large sums to consultants who were reviewing the files. Some questioned the independence of those consultants, who often ruled against homeowners.

Curry said the new deal meets the original objectives “by ensuring that consumers are the ones who will benefit, and that they will benefit more quickly and in a more direct manner.”

“It has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers,” Curry said.

Some consumer advocates said that the agreement lets banks off the hook for payments that could have ended up being much higher.

“It’s another get out of jail free card for the banks,” said Diane Thompson, a lawyer with the National Consumer Law Center. “It caps their liability at a total number that’s less than they thought they were going to pay going in.”

Leaders of a House oversight panel asked regulators for a briefing on the proposed settlement on Friday. Regulators agreed to brief committee staff after the settlement was announced on Monday.

– By DANIEL WAGNER

 

Courtesy of your Arcadia Real Estate Agent

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Over 25 Percent of Home Price Depreciation Due to Proximity of Foreclosures: Study

October 25, 2012 By Leave a Comment

BY JANN SWANSON

The enormous numbers of foreclosures over the last six years have, of course, had immediate impacts on the families who lose their homes. The effects include physical displacement, drained savings and retirement accounts, and ruined credit. They also suffer longer-term financial impacts such as losing the ability to tap home equity for business or education purposes or retirement as well as losing the financial cushion home equity provides and the main vehicle for transferring wealth inter-generationally.

But there are ramifications to foreclosures that extend beyond those families who actually lose their homes. Communities with high concentrations of foreclosures lose tax revenue and incur the financial and non-financial costs of abandoned properties and neighborhood blight, while homeowners living in close proximity to foreclosures suffer loss of wealth through depreciated home values.

Three researchers from the Center for Responsible Lending (CRL) have produced an updated report on this secondary cost of mortgage foreclosures with a particular focus on the damage being done to communities of color. Collateral Damage: The Spillover Costs of Foreclosure released Wednesday was written by Debbie Gruenstein Bocian, Peter Smith and Wei Li and is an update of three earlier reports on the issue produced by the Center. The last report was issued in 2009.

The authors looked at loans that entered foreclosure between 2007 and 2011 using data collected by the federal government under the Home Mortgage Disclosure Act (HMDA) and a second data set from Lender Processing Services (LPS). They calculated the number of foreclosure starts for each census track then calculated the loss of value of neighboring homes within 1/8 mile of the foreclosed property.

The authors found that $1.95 trillion in property value has been or will be lost by residents who live in close proximity to a property that has been foreclosed. This figure includes the spillover impact of homes that have been foreclosed as well as future losses from foreclosures that are in process.

Over one-half of this loss has been experienced in communities of color. Minority neighborhoods have lost or will lose $1 trillion in home equity largely because of a high concentration of foreclosures in these neighborhoods.

In all neighborhoods these losses average out to $21,077 in household wealth or about 7.2 percent of the home’s value. However, in neighborhoods of color the average loss is $37,084 or 13.1 percent of the home’s value.

Despite the magnitude of these losses the authors caution that they represent only the wealth that has been lost or will be lost as a direct result of being in close proximity to homes that have begun the foreclosure process. “We do not include in our estimate the total loss in home equity that has resulted from the crisis (estimated at $7 trillion),” they state, “the negative impact on local governments (from lost tax revenue and increased costs of managing vacant properties) or the non-financial spillover costs, such as increased crime, reduced school performance and neighborhood blight.

COURTESY OF YOUR NUMBER ONE ARCADIA REAL ESTATE AGENT

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Foreclosure activity hits lowest level since Q4 2007

May 11, 2012 By Leave a Comment

RealtyTrac warns distressed-property ‘dam … will eventually burst’

BY INMAN NEWS, THURSDAY, APRIL 12, 2012.

Inman News®

<a href="http://www.shutterstock.com/gallery-449740p1.html">Foreclosed home image</a> via Shutterstock.Foreclosed home image via Shutterstock.

Foreclosure filings hit their lowest level in more than four years in the first quarter, according to a report from foreclosure data aggregator RealtyTrac.

Default notices, scheduled auctions, and bank repossessions were filed on 572,928 properties in the first quarter, or one in every 230 U.S. housing units — the lowest number of filings since fourth-quarter 2007, when 527,740 properties received filings.

Last quarter’s foreclosure activity was down 2 percent from the fourth quarter and 16 percent from first-quarter 2011. March accounted for nearly 38 percent of the quarter’s foreclosure activity, with 198,853 properties receiving filings. That was the lowest monthly total and the first under 200,000 since July 2007, the report said.

On an annual basis, foreclosure activity fell 17 percent in March.

“The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated,” said Brandon Moore, RealtyTrac’s CEO, in a statement.

“There are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and nonjudicial states in March.

“The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short-sale activity.”

States that use the nonjudicial foreclosure process lead the nationwide decline in foreclosure activity, RealtyTrac said. Those 24 states and Washington, D.C., saw foreclosure activity drop 8 percent from the fourth quarter and 28 percent from first-quarter 2011.

Several nonjudicial states saw significant year-over-year drops in activity in the first quarter: Arkansas (79 percent), Nevada (62 percent), Washington (55 percent), Arizona (41 percent), Texas (31 percent), and California (21 percent).

By contrast, foreclosure activity rose 8 percent quarter to quarter and 10 percent year over year in the 26 states that mainly use the judicial foreclosure process.

Judicial states that posted some of the biggest annual increases include Indiana (45 percent), Connecticut (38 percent), Massachussetts (26 percent), Florida (26 percent), South Carolina (26 percent), Pennsylvania (23 percent).

Source: RealtyTrac.

Foreclosure starts, which include default notices or scheduled auctions depending on the state, rose for the third straight month in March, up 7 percent from February, though still down 11 percent year over year.

Foreclosure starts increased on a monthly basis in 31 states, with the biggest jumps in Nevada (153 percent), Utah (103 percent), New Jersey (73 percent), Maryland (53 percent), and North Carolina (47 percent).

Nevada posted the nation’s highest foreclosure activity rate last quarter, with one in 95 units receiving a filing — a 62 percent year-over-year drop.

California had the second-highest foreclosure activity rate (1 in 103 units), followed by Arizona (1 in 106 units).

Top 10 states with the highest foreclosure rates

Area Foreclosure rate (Q1 2012)
U.S. 1 in 230 housing units
Nevada 1 in 95
California 1 in 103
Arizona 1 in 106
Georgia 1 in 119
Florida 1 in 123
Illinois 1 in 141
Michigan 1 in 162
Colorado 1 in 191
Utah 1 in 198
Wisconsin 1 in 206

Source: RealtyTrac

California metro areas accounted for 12 of the 20 metros with the highest foreclosure rates in the nationa in the first quarter, including eight of the top 10.

20 U.S. metros with the highest foreclosure rates

Metro area Foreclosure rate (Q1 2012)
Stockton, Calif. 1 in 60 housing units
Modesto, Calif. 1 in 60
Riverside-San Bernardino-Ontario, Calif. 1 in 62
Vallejo-Fairfield, Calif. 1 in 63
Merced, Calif. 1 in 72
Sacramento–Arden-Arcade–Roseville, Calif. 1 in 77
Bakersfield, Calif. 1 in 81
Las Vegas-Paradise, Nev. 1 in 82
Phoenix-Mesa-Scottsdale, Ariz. 1 in 87
Visalia-Porterville, Calif. 1 in 89
Atlanta-Sandy Springs-Marietta, Ga. 1 in 90
Fresno, Calif. 1 in 92
Miami-Fort Lauderdale-Pompano Beach, Fla. 1 in 95
Oxnard-Thousand Oaks-Ventura, Calif. 1 in 97
Orlando-Kissimmee, Fla. 1 in 101
Rockford, Ill. 1 in 104
Chicago-Naperville-Joliet, Ill.-Ind.-Wis. 1 in 107
Chico, Calif. 1 in 111
Prescott, Ariz. 1 in 113
Santa Rosa-Petaluma, Calif. 1 in 113

Source: RealtyTrac.

From start to finish, the foreclosure process took an average of 370 days to complete nationwide, up from 348 days in the fourth quarter — the highest average in the past five years, according to RealtyTrac.

Some key states are seeing foreclosure timelines decrease, however. In California, the average was 320 days, down from 352 days in the fourth quarter.

Colorado, Utah, Massachusetts, Nevada, Michigan and Maryland also saw declines.

The five states with the longest foreclosure timelines were New York (1,056 days), New Jersey (966 days), Florida (861 days), Illinois (628 days), and Maryland (618 days).

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