Monday, March 26, 2012
Thursday, March 15, 2012
Foreclosure Activity Continues to Fall
The "foreclosure wave" many predicted at the end of last year is beginning to look more like a drought, as foreclosure sales dropped significantly in February. Although sales to 3rd Parties, typically investors, were down month-over-month, as a percentage of all sales 3rd Parties purchased a record 37.6 percent of foreclosures, up from 20.3 percent a year earlier, and just 2.2 percent in February 2008.
Further eliminating any possibility of a foreclosure wave for months to come, was a substantial drop in new foreclosure filings in California, Nevada, and Washington. Arizona saw a modest increase in foreclosure starts, while Oregon jumped a dramatic 39.4 percent. Despite the size of the increase, it simply offset a drop in January, and showed little change in comparison to earlier months. Nevada remains far below the average number of foreclosure starts; and the dramatic changes to their foreclosure laws will likely drag out the Nevada foreclosure process for years to come.
Unlike years past, February's drop in sales was not due to the short month. Thanks to the Leap Year, California had only one less business day than usual in February (because of the Abraham Lincoln's birthday observation). The other states do not observe Lincoln's birthday, and so had the same number of business days as other months.
Further eliminating any possibility of a foreclosure wave for months to come, was a substantial drop in new foreclosure filings in California, Nevada, and Washington. Arizona saw a modest increase in foreclosure starts, while Oregon jumped a dramatic 39.4 percent. Despite the size of the increase, it simply offset a drop in January, and showed little change in comparison to earlier months. Nevada remains far below the average number of foreclosure starts; and the dramatic changes to their foreclosure laws will likely drag out the Nevada foreclosure process for years to come.
Unlike years past, February's drop in sales was not due to the short month. Thanks to the Leap Year, California had only one less business day than usual in February (because of the Abraham Lincoln's birthday observation). The other states do not observe Lincoln's birthday, and so had the same number of business days as other months.
Friday, March 9, 2012
Where Are All the Home Sellers?
Inventories of homes listed for sale in January dropped by 6.6% from December to 1.77 million, the eighth straight month that listings have declined. For-sale listings are 23.2% below year-earlier levels and at the lowest point since the housing bust accelerated five years ago, according to data from Realtor.com.
All but one of the 146 markets tracked by Realtor.com had fewer homes listed than one year earlier, with Springfield, Ill., as the outlier.
Compared with one year earlier, listings were down by a whopping 55% in Fort Lauderdale, Fla., and by nearly half in Miami, Phoenix, and Bakersfield, Calif. Markets with the smallest declines included New York (-1.7%) and Philadelphia (-3%).
Housing inventories typically rise heading into the spring selling season, but only four markets saw inventories increase from December, all of them in Florida. San Francisco and Boston, reported some of the largest monthly inventory declines, of 16% and 10%, respectively.
The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.
The National Association of Realtors estimated on Wednesday that there were nearly 2.31 million homes for sale at the end of January, a 21% decline from one year earlier. The NAR estimates that at the current pace of sales, it would take 6.1 months to clear that inventory, the lowest level since April 2006, before home prices began falling.
Low inventories are a prerequisite for any housing recovery because a glut of unsold homes has been one factor pulling down prices. But it’s an open question whether these inventory declines are the sign of health that they would appear to be.
If homeowners are giving up on selling their homes because of low prices, or if inventories are declining because banks are still facing complications trying to process foreclosures, the declines could be artificial.
Economists at Goldman Sachs said the declines are a “modest positive” for the housing market, but said they also “exaggerate the improvement” in correcting supply-demand imbalances because they have stemmed primarily from a decline in new listings, and not a major pickup in sales.
Compared with one year earlier, listings were down by a whopping 55% in Fort Lauderdale, Fla., and by nearly half in Miami, Phoenix, and Bakersfield, Calif. Markets with the smallest declines included New York (-1.7%) and Philadelphia (-3%).
Housing inventories typically rise heading into the spring selling season, but only four markets saw inventories increase from December, all of them in Florida. San Francisco and Boston, reported some of the largest monthly inventory declines, of 16% and 10%, respectively.
The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.
The National Association of Realtors estimated on Wednesday that there were nearly 2.31 million homes for sale at the end of January, a 21% decline from one year earlier. The NAR estimates that at the current pace of sales, it would take 6.1 months to clear that inventory, the lowest level since April 2006, before home prices began falling.
Low inventories are a prerequisite for any housing recovery because a glut of unsold homes has been one factor pulling down prices. But it’s an open question whether these inventory declines are the sign of health that they would appear to be.
If homeowners are giving up on selling their homes because of low prices, or if inventories are declining because banks are still facing complications trying to process foreclosures, the declines could be artificial.
Economists at Goldman Sachs said the declines are a “modest positive” for the housing market, but said they also “exaggerate the improvement” in correcting supply-demand imbalances because they have stemmed primarily from a decline in new listings, and not a major pickup in sales.
Bills aim to curb unfair foreclosure practices
Published: Wednesday, Feb. 29, 2012 - 1:38 pm
California Attorney General Kamala Harris joined state Senate President Pro Tem Darrell Steinberg and Assembly Speaker John Perez to unveil a package of bills designed to curb unfair foreclosure practices.
Dubbed the "California Homeowner Bill of Rights," the six measures call for more transparency by banks, provide protections for renters who live in foreclosed properties, impose fees on banks each time they foreclose on a home and create a special grand jury to investigate financial and foreclosure crimes.
One of the bills also aims to do away the controversial practice of dual track foreclosures, where a bank starts the foreclosure process at the same time it is negotiating a loan modification with the owner.
Click here for the SacBee website
Dubbed the "California Homeowner Bill of Rights," the six measures call for more transparency by banks, provide protections for renters who live in foreclosed properties, impose fees on banks each time they foreclose on a home and create a special grand jury to investigate financial and foreclosure crimes.
One of the bills also aims to do away the controversial practice of dual track foreclosures, where a bank starts the foreclosure process at the same time it is negotiating a loan modification with the owner.
Click here for the SacBee website
Tuesday, February 21, 2012
Housing Crisis to End in 2012 as Banks Loosen Credit Standards
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
DSNews.com
By: Krista Franks
Monday, February 13, 2012
Q&A: What the foreclosure settlement means for homeowners
Here's how homeowners can get their share of the $25-billion foreclosure settlement.
By Matt Stevens
February 9, 2012, 12:17 p.m.
Homeowners who were affected by the collapse of the housing market and a wave of foreclosure abuses may get a share of the $25-billion settlement announced Thursday morning.
The up to 2 million people who are struggling to make loan payments, owe more than their homes are worth or have already lost their homes could receive aid from the nation’s five largest mortgage servicers that settled with federal officials and 49 state attorneys general today.
Though it is unclear exactly how much money each homeowner might receive, officials have estimated that about $17 billion will go to current homeowners, to help reduce the principal they owe on their mortgages, while people who have already lost their homes can expect to receive checks for $1,500 to $2,000.
The National Mortgage Settlement has prepared some immediate answers for homeowners wondering how to get their share of the settlement:
Q: What is a mortgage servicer and how do I know who services my loan?
A: The company that you make your monthly payment to is your mortgage servicer. Your mortgage servicer may or may not be a lending institution and may or may not own your loan. Many of the loans administered by servicers are owned by third-party investors.
This settlement involves the nation’s five largest mortgage servicers and you may reach them at the Web sites and phone numbers below:
Ally/GMAC: 800-766-4622
Bank of America: 877-488-7814
Citi: 866-272-4749
JPMorgan Chase: 866-372-6901
Wells Fargo: 800-288-3212
Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. You may visit the following websites to learn if your loan is owned by either Fannie Mae or Freddie Mac:
http://www.fanniemae.com/loanlookup
http://www.freddiemac.com/mymortgage
These sites will also include information about mortgage and foreclosure programs you may be eligible to access.
Q: How will I know whether this settlement affects my situation?
A: Only homeowners in the states who joined the settlement are eligible for benefits under this settlement. Borrowers from Oklahoma will not be eligible for any of the relief directly to homeowners because Oklahoma elected not to join the settlement.
Click here for the full LA Times article: Q&A: What the foreclosure settlement means for homeowners
February 9, 2012, 12:17 p.m.
Homeowners who were affected by the collapse of the housing market and a wave of foreclosure abuses may get a share of the $25-billion settlement announced Thursday morning.
The up to 2 million people who are struggling to make loan payments, owe more than their homes are worth or have already lost their homes could receive aid from the nation’s five largest mortgage servicers that settled with federal officials and 49 state attorneys general today.
Though it is unclear exactly how much money each homeowner might receive, officials have estimated that about $17 billion will go to current homeowners, to help reduce the principal they owe on their mortgages, while people who have already lost their homes can expect to receive checks for $1,500 to $2,000.
The National Mortgage Settlement has prepared some immediate answers for homeowners wondering how to get their share of the settlement:
Q: What is a mortgage servicer and how do I know who services my loan?
A: The company that you make your monthly payment to is your mortgage servicer. Your mortgage servicer may or may not be a lending institution and may or may not own your loan. Many of the loans administered by servicers are owned by third-party investors.
This settlement involves the nation’s five largest mortgage servicers and you may reach them at the Web sites and phone numbers below:
Ally/GMAC: 800-766-4622
Bank of America: 877-488-7814
Citi: 866-272-4749
JPMorgan Chase: 866-372-6901
Wells Fargo: 800-288-3212
Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. You may visit the following websites to learn if your loan is owned by either Fannie Mae or Freddie Mac:
http://www.fanniemae.com/loanlookup
http://www.freddiemac.com/mymortgage
These sites will also include information about mortgage and foreclosure programs you may be eligible to access.
Q: How will I know whether this settlement affects my situation?
A: Only homeowners in the states who joined the settlement are eligible for benefits under this settlement. Borrowers from Oklahoma will not be eligible for any of the relief directly to homeowners because Oklahoma elected not to join the settlement.
Mortgage deal could bring billions in relief
WASHINGTON (CNNMoney) -- In the largest deal to date aimed at addressing the housing meltdown, federal and state officials on Thursday announced a $26 billion foreclosure settlement with five of the largest home lenders.
The deal settles potential state charges about allegations of improper foreclosures based on robosigning, seizures made without proper paperwork.
The settlement includes the Justice Department and the U.S. Department of Housing and Urban Development, as well as 49 state attorneys general -- all but Oklahoma.
"We are using this opportunity to fix a broken system," said U.S. Attorney General Eric Holder at the news conference announcing the settlement.
The settlement sets up a federal monitor to oversee the process and try to prevent roadblocks and red tape that tripped many homeowners seeking help in earlier programs designed to address the housing crisis.
President Obama said the settlement will "begin to turn the page on an era of wrecklessness that has left so much damage in its wake."
"No action, no matter how meaningful, is going to by itself entirely heal the housing market," he said in separate remarks. "But this settlement is a start."
Most of the relief will go to those who owe far more than their homes are worth, known as being underwater on the loans. That relief will come over the course of the next three years, with the banks having incentives to provide most of the relief in the next 12 months.
"This settlement is about homeowners, homeowners in distress," said Iowa Attorney General Tom Miller at the news conference with state and federal officials.
What the settlement means to you
Principal reduction: At least $17 billion will go to reducing the principal owed by homeowners who are both underwater and behind on their mortgages.
The agreement calls for principal reduction for as many as 1 million people. But it's unlikely the money will go that far, because many people need more than the $17,000 average reduction that would result if the money is split among 1 million homeowners.
At the same time, total principal reduction could go higher -- to as much as $34 billion -- since the agreement requires deeper principal reductions for the most troubled loans.
Refinancing: Officials say up to 750,000 other underwater homeowners who are current on their mortgages will be able to refinance their current loans at lower rates. They will not receive a reduction in principal, but with mortgage rates now near record lows, they could receive substantial savings on their monthly payments.
The settlement sets aside $3 billion to account for the reduced interest payments the banks will receive after the refinancing.
Robosigning payments: About $1.5 billion of the settlement will go to homeowners who had their homes foreclosed upon between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. They will receive up to $2,000 each.
Accepting that payment does not preclude homeowners who lost their home in an improper foreclosure from suing the bank to recover damages, Donovan said.
Participating banks: The five mortgage servicers that are parties to the settlement -- Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial -- will pay a total of $5 billion to the states and federal government. Some of that money will go to foreclosed homeowners and the rest to the states.
Federal officials say negotiations are underway to expand the settlement to nine other major servicers, which would raise the overall value of the settlement to $30 billion.
Related settlements: The deal spurred pacts between the authorities and banks in similar cases.
Oklahoma Attorney General Scott Pruitt announced a separate $18.6 million settlement that addressed homeowners whose homes were foreclosed through improper means, but did not provide help to those whose mortgages were underwater. He said he believes the broader agreement "overreached" the authority of both federal and state governments.
"We had concerns that what started as an effort to correct specific practices harmful to consumers, morphed into an attempt by President Obama to ... fundamentally restructure the mortgage industry in the United States," Pruitt said.
The Federal Reserve said it had reached an agreement with the five banks to pay $766.5 million in sanctions related to their servicing practices. And Loretta Lynch, the U.S. Attorney in Brooklyn, N.Y., announced a $1 billion settlement with Bank of America to resolve claims of underwriting and mortgage origination fraud by BofA and mortgage lender Countrywide Financial, which BofA bought in 2008.
The bigger foreclosure problem: The $26 billion deal announced Thursday is the second biggest settlement ever involving states. It trails only the $206 billion pact in 1998 with the tobacco industry.
And it dwarfs any settlements that major Wall Street firms have reached to resolve other allegations of misdeeds related to the financial markets meltdown and the Great Recession.
Still it only will help a faction of those homeowners who are struggling with mortgages. The relief would not be available to those homeowners whose mortgages have been sold to the government-sponsored mortgage guarantors Fannie Mae and Freddie Mac.
There are 1.5 million homeowners who are 90 days or more delinquent on their mortgages but not yet in foreclosure, according to the most recent estimate from the Mortgage Bankers Association. An additional 1.9 million are in the foreclosure process. And CoreLogic estimates that 11 million homeowners are underwater on their mortgages.
Obama proposes new home refinancing plan.
The settlement does not preclude criminal prosecutions from being pursued. It also doesn't stop investigations into other allegations of misdoings, such as the process of bundling loans into mortgage-backed securities and selling them to investors.
"It wasn't the servicing practices that created the bubble nor caused the collapse," said Donovan. "It was the origination and the securitization of these horrendous products. We will be aggressive about going after those claims."
The deal is supposed to protect consumers when it comes to robosigning, and ensure that mortgage servicers agree to communicate better, avoid delays and give homeowners who are late on mortgage payments a fairer shake.
New York's participation had been shaky this week, because some of the banks involved in the multi-state deal had also been sued by Attorney General Eric Schneiderman last week. Those banks -- Bank of America, Wells Fargo and JPMorgan Chase -- had also asked for a legal pass from Schneiderman's lawsuit, which accuses them of deceptive foreclosure practices for relying on the Mortgage Electronic Registration System.
On Tuesday, Schneiderman's office organized a media briefing to talk about the deal and then canceled it minutes before it was supposed to begin.
At least one consumer advocacy group, the Center for Responsible Lending, has said the deal -- while "no silver bullet" -- leaves room to hold banks accountable in other mortgage probes, said Kathleen Day, a spokeswoman for the nonprofit.
But other left-leaning groups, including Move On and the New Bottom Line, are continuing to urge states to hold out for a big criminal investigation and a $300 billion settlement award.
--CNN's Jessica Yellin contributed to this story.
First Published: February 9, 2012: 10:07 AM ET
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