Foreclosures Back to Pre-Crisis Levels

1388610_30715085A new sign that the foreclosure crisis may largely be in the rearview mirror, new filings in the third quarter of this year were down 16 percent from a year ago — bringing overall foreclosure activity down to its level before the housing crisis, according to RealtyTrac’s Foreclosure Market Report. What’s more, default notices, scheduled auctions, and bank repossessions in September dropped 9 percent from the previous month and were down 19 percent from a year ago. That’s the lowest level since July 2006.

“September foreclosure activity was back to pre-housing-bubble levels nationwide, in large part thanks to a continued slide in bank repossessions,” says Daren Blomquist, vice president at RealtyTrac. “However, a recent rise in scheduled foreclosure auctions in many markets across the country shows lenders are continuing to clean house of lingering delinquent loans. This rise in scheduled auctions foreshadows a corresponding rise in bank repossessions and auction sales to third-party buyers in the coming months.”

While foreclosure filings fell last month, they were up slightly by 0.42 percent in the third quarter from the previous quarter. It’s a small percentage, but it does mark the first quarterly increase since the third quarter of 2011, according to RealtyTrac. The uptick was largely attributed to a 2 percent increase in default notices and a 7 percent quarterly increase in scheduled foreclosure auctions.

That proves the foreclosure crisis isn’t over in every market quite yet. Default notices in the third quarter rose from a year ago in 10 states, including Indiana (up 59%); Oklahoma (49%); Massachusetts (38%); New Jersey (19%); Iowa (12%); and New York (2%).

Lenders are taking longer to process foreclosures, too. The foreclosure process took an average of 615 days in the third quarter, up 13 percent from a year ago. That’s the longest average time to complete a foreclosure since RealtyTrac began tracking such data in 2007. The states with the longest foreclosure wait times are New Jersey (1,064 days); Florida (951 days); Hawaii (937 days); New York (902 days); and Illinois (889 days).

The five states with the highest foreclosure rates in the third quarter were:

  • Florida
  • Maryland
  • New Jersey
  • Nevada
  • Illinois

Source: RealtyTrac

5 Types of Homes With Deepest Discounts

For home buyers who want to score the biggest discounts on a distressed property, they better be prepared to start the bidding. Distressed properties with the biggest price discounts are those scheduled for public foreclosure auction, and they are typically homes built between 1950 and 1990 that are now vacant, according to RealtyTrac’s May 2014 Residential & Foreclosure Sales Report. Such properties sold for an average discount of 28 percent below non-distressed sales.

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RealtyTrac analyzed residential property sales transactions for the year ending in March 2014 to pinpoint the types of distressed properties that sell at the largest discounts, comparing factors like foreclosure status, occupancy status, equity, and the year the home was built. The discount was calculated by comparing the average discount (below market value) or premium (above market value) of 24 different distressed property profiles, and then comparing it to properties not in foreclosure that sold during the same time period.

While scheduled auctions offered some of the largest discounts, RealtyTrac also found that the following distressed properties also tended to carry some of the largest price discounts to buyers:

  • Homes in default with positive equity: 26% discount
  • Homes in default with negative equity that were built in 1950 or before and are now vacant: 26% discount
  • Vacant homes with negative equity that are scheduled for foreclosure auction: 25% discount
  • Homes scheduled for foreclosure auction: 25% discount
  • Bank-owned properties that are vacant: 18% discount

Despite the discount on vacant bank-owned properties, RealtyTrac found that repossessed homes overall tended to sell for a 3 percent premium. Those built in 1950 or before sold at a 7 percent premium, according to the analysis.

The largest discounts on distressed properties were found to vary considerably by state. The following states had some of largest discounts on distressed properties, according to the RealtyTrac analysis:

  1. New York
    Vacant properties with negative equity that are scheduled for foreclosure auction: 38% discount
  2. Ohio
    Vacant properties with negative equity that were built between 1950 and 1990: 34% discount
  3. Michigan
    Vacant properties in default: 34% discount
  4. Florida
    Vacant properties with negative equity that were built between 1950 and 1990 and are scheduled for foreclosure auction: 29% discount
  5. California
    Properties with positive equity that are scheduled for foreclosure auction: 17% discount

Source: RealtyTrac

 

Foreclosure Halt Creates Problems for Buyers

The fallout from the crackdown on mortgage lenders’ handling of paperwork is affecting buyers’ ability to close.

Distressed properties make up about a third of home sales. About half of states are particularly affected by the problem. Two factors in various states are causing numerous delays are:

1. Officials in several states — including Texas, Maryland, and Connecticut — are seeking a suspension of all foreclosures until lenders prove what they are doing is legal.

2. Title insurers are refusing to sell title insurance when they can’t be sure there is a clean title.

When will the problem be resolved? Right now, it appears to be anybody’s guess, but until it is resolved, buyers, sellers, and real estate practitioners will be caught in the middle.

Source: The New York Times, Andrew Martin and David Streitfeld (10/07/2010)

Foreclosure Reviews Could Lead to Costly Delays

House Speaker Nancy Pelosi has called for a federal investigation of foreclosure sales and evictions.

Observers say that if the government gets further involved and millions of foreclosures need to be re-processed, it is unclear how long the job will take and how costs will be allocated.

Lenders are rushing to review their own situations. At GMAC Mortgage, a unit of Ally Financial Inc., a spokeswoman said, “The vast majority of these affidavits will be resolved in the coming weeks and before the end of the year,” And a spokesman for J.P. Morgan Chase & Co. said the company’s review process is expected to take “a few weeks.”

But fixing the problems won’t be that simple if the reviews uncover missing documentation or other serious problems that are likely to trigger more legal challenges.

The bottom line is: “It’s very hard to see how the servicers can avoid reimbursing the trusts for losses caused by taking short cuts,” said David J. Grais, an attorney in New York who represents investors.

Source: The Wall Street Journal, Robbie Whelan and Ruth Simon (10/06/2010)

Regulators to Banks: Review Foreclosures

Improper foreclosure procedures are throwing another curve ball at the troubled mortgage industry.

Regulators from the Office of the Comptroller of the Currency have told seven major banks to review their foreclosure procedures after Bank of America and Wells Fargo joined JPMorgan and GMAC (now known as Ally Financial) in freezing their foreclosure processes.

Banks that regulators contacted include HSBC, Citigroup Inc., PNC Financial Services Group Inc., and U.S. Bankcorp (USB).

Simultaneously, title insurer Old Republic National said Friday it would stop insuring the sales of homes foreclosed by JPMorgan Chase & Co. or GMAC Mortgage until questions about documentation are cleared. An inability to get title insurance could bring home sales to a halt.


Source: The Wall Street Journal (10/01/2010) and Reuters News (10/03/2010)

90-Day Delinquencies Fall Again

More evidence that the housing crisis is easing: Fannie Mae said Thursday that delinquencies of 90 days or longer on single-family mortgages declined in July for the fifth-straight month.

The overall delinquency rate fell to 4.82 percent in July, down from 4.99 percent in June. This was a 10-month low.

Source: The Wall Street Journal, Nathan Becker (09/30/2010)

Weighing the costs of walking away from an upside-down mortgage

(ARA) – Owing more on your mortgage than your house is worth may seem like a bad investment. But the alternative – choosing to default on your mortgage even if you can afford the monthly payments – will take a significant toll on your credit rating.

“Strategically defaulting – deciding to stop paying your mortgage regardless of your ability to actually carry the debt – will have a far-reaching, long-lasting impact on your ability to secure future credit,” says Maxine Sweet, vice president of public education for global information services company Experian, one of the three large credit reporting companies that receive and update consumer credit histories which are scored to help predict risk. “It’s by no means a move to be undertaken lightly.”

About 355,000 borrowers strategically defaulted in the first half of 2009, according to research conducted as part of the Experian-Oliver Wyman Market Intelligence Reports. Interestingly, Experian and Oliver Wyman found that the homeowners most likely to strategically default were also those with the highest credit scores.

While it may seem like a good move to simply stop paying and walk away from a bad investment, keep several factors in mind when you consider strategic default:

* It’s very final. Strategic default will lead to foreclosure by the lender. Foreclosure will negatively impact your credit report and scores. In fact, only bankruptcy will affect your scores more adversely than foreclosure.

For more information on just how severe the impact can be, VantageScore LLC recently completed a study that evaluates the effect that foreclosures, bankruptcies, short sales, and various mortgage programs have on consumers’ VantageScore credit scores.

* The default will remain on your credit report for seven years. Since credit scores are based on information in your credit report, the foreclosure will greatly impact your credit scores during those seven years. Securing other credit at reasonable terms and rates will be very difficult, if not impossible, during that time.

* Potential lenders aren’t the only ones looking at credit reports these days. Insurers, employers and even cell phone companies are considering the creditworthiness of those who want to do business with them. By impacting your credit report, a strategic default may affect your ability to get a job, secure insurance and enter into important service contracts.

* Fannie Mae, the government-controlled mortgage giant, announced on June 23 policy changes that will make you ineligible for a new Fannie-Mae-backed mortgage if you walk away from a current mortgage that you actually could afford to pay. The ineligibility will last for seven years from the date of foreclosure.

* Finally, in some cases, the debt that foreclosure “erases” may be recorded as income, which means you will have to pay taxes on it.

“Strategic default may seem like ‘walking away’ from a bad debt, but it’s really anything but,” Sweet says. “While you will no longer have to pay the actual debt, you’ll almost certainly ‘pay’ in other ways, in the form of lowered credit scores and a drastically curtailed ability to secure future credit for the next seven years. Higher interest rates and unfavorable terms could end up costing you more in the long run than continuing to pay on an upside-down mortgage.”

To learn more about credit management, credit reports, credit scores and the factors that affect them, visit www.Experian.com.

Courtesy of ARAcontent

It’s a Great Time for Housing Deals

Paying off an underwater mortgage and buying a better home could be the best tactic in this troubled market.

“If you are trading up, what better time than when interest rates are at record lows and the cost of the trade-up is much less than it used to be?” says Christopher J. Mayer, a Columbia Business School economist.

With 15-year fixed-rate mortgages at about 4.5 percent, it also makes sense to pay off the mortgage and keep the house. “At this point,” says Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington, D.C., “if they don’t have anything else that is bringing a tremendous return, then they are buying themselves an annuity by paying their house off sooner than they needed to.”

Source: The Wall Street Journal, M.P. McQueen (07/24/2010)

HINTS FOR HOMEOWNERS

Tips On Saving Your Home From Foreclosure

 

(NAPSI)-There’s hopeful news for homeowners who fear they may be facing foreclosure on their home.That’s because there are practical steps they can take-such as a new refinancing program from the federal government-to resolve the problem before it gets to the point where the lender takes over their home for nonpayment.

Remember, lenders do not want your house. That’s one reason there are options available to help borrowers through difficult financial times.

Here are some tips from the experts at the Federal Reserve Board:

• Don’t ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

If you are unable to make your mortgage payment, contact your lender as soon as you realize that you have a problem.

• Open and respond to all mail from your lender. The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include an important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

• You can contact a HUD-approved housing counselor in your area. The U.S. Department of Housing and Urban Development (HUD) can connect you with free or very-low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and help you in negotiations with your lender if you need this assistance.

One option may be to participate in a new program, created by Congress, that is intended to help borrowers at risk of default and foreclosure to refinance into more affordable loans. It’s called HOPE for Homeowners, or H4H.

If you are having trouble making your mortgage payments, this program may allow you to refinance your loan into a new 30-year fixed-rate loan with lower payments. All HOPE for Homeowners loans are 30-year fixed-rate mortgages insured by the Federal Housing Administration (FHA).

The program began on October 1, 2008 and will end on September 30, 2011.

To learn more, call (800) 569-4287 or TTY (800) 877-8339, or visit the Web site at www.hud.gov/hopeforhomeowners/index.cfm.

If you are unable to make your mortgage payment, contact your lender as soon as you realize that you have a problem.