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Foreclosure Sales Outpace Modifications for January
Foreclosure Sales Outpace Modifications for January
03/05/2012BY: ESTHER CHO
During January, 73,767 homeowners received permanent loan modifications from mortgage servicers, according to modification data released by HOPE NOW, a voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors.
While the January numbers are a decrease compared to the previous two months, it was a record-breaking month for foreclosure sales.
For the first time since October 2009, foreclosure sales, which reached 78,734, outpaced loan modifications.
About 79,061 loans received modifications in December 2011, and 83,825 were modified in the previous month of November.
For foreclosure sales, the numbers were up compared to previous months, with 69,616 foreclosure sales in December and 70,626 in November.
Of the approximately 74,000 who received modifications, about 56,000 were non-government proprietary modifications and 17,992 were through the government’s Home Affordable Modification Program (HAMP), as reported by US Treasury Department.
Loan modifications with reduced principal and interest payments years or more, afor approximately 67 percent, or 37,547, of 5all proprietary modifications, down from the previous month’s figures at 82 percent, or 45,407.
Fixed-rate modifications, or those with an initial fixed period of 5 years or more, accounted for about 89 percent, or 49,845, of all proprietary modifications, up from the previous month, which stood at 81 percent, or 45,034.
“HOPE NOW and its members have charged full speed into 2012 in the ongoing collaborative efforts to assist at-risk homeowners,” said Faith Schwartz, executive director ofHOPE NOW in a statement. “Loan modifications continue at a steady pace and proprietary mods continue to show real signs of sustainability and affordability for homeowners. This is important to note, as these characteristics are vital to housing market recovery.”
Processing Delays Manifested: 39% Fewer Foreclosure Starts in 2011
Processing Delays Manifested: 39% Fewer Foreclosure Starts in 2011
01/27/2012 By: Carrie Bay
The number of foreclosure actions initiated in 2011 was down 38.7 percent compared to 2010, according to a new report from Lender Processing Services (LPS).
The company also reported that delinquencies at the end of 2011 were down nearly 8 percent from the previous year and were 25 percent below their peak in January 2010.
The foreclosure inventory, on the other hand, remains near historic highs, at 4.11 percent as of the end of December.
The numbers illustrate the impact of foreclosure processing delays brought on by the robo-signing controversy that surfaced in the fall of 2010, the impact of which remains strong in judicial states.
LPS says foreclosure inventories in judicial states remain 2.5 times that of non-judicial, while foreclosure sale rates in non-judicial states stood at approximately four times that of their judicial counterparts in December.
The company also found that half of all loans in foreclosure in judicial states have not made a payment in more than two years compared to 28 percent in non-judicial states.
Still, on average, LPS says pipeline ratios – which is the amount of time it would take to clear the inventory of loans seriously delinquent and in foreclosure at the current rate – have declined significantly from earlier this year.
The company’s data show that the states with the largest declines in non-current loans are all non-judicial, including Nevada, Arizona, Michigan, and California.
NAR – housing and jobs are voters’ main concerns
NAR – housing and jobs are voters’ main concerns
A recent survey by Houselogic.com, the consumer website from the
National Association of Realtors (NAR), finds that jobs and the
housing market will be two of the most important issues for
voters in the 2012 election. Nearly one-third of respondents said
housing will be the top issue on their mind when they head to the
polls next November. Respondents were asked “What issue area
will have the greatest impact on your vote in 2012?” National
security, healthcare, and energy/environment trailed housing and
unemployment by wide margins. With unemployment still high, it
is easy to see why so many Americans are concerned about the job
market. However, employment and the housing market are
inextricably linked because economic growth and job creation
cannot occur without a housing recovery.
Housing accounts for more than 15% of the US. Gross Domestic
Product – it’s a key driver of the national economy. Home
sales generate jobs. NAR estimates that for every two homes sold,
one job is created. New spending on homebuilding products,
furniture, and other residential investments also have a
significant economic impact. Some recent indicators show that
the economy might be starting to rebound, with pending home sales
rising strongly in October, according to NAR’s Pending Home
Sales Index. However, any changes to current programs or
incentives must not jeopardize a housing and economic recovery.
Unemployment, consumer confidence and consumer spending will not
rebound until a number of issues are addressed.
Home Prices Continue Four-Month Run of Gains in FHFA Study
Home Prices Continue Four-Month Run of Gains in FHFA Study
09/22/2011 By: Carrie Bay
Home prices in the U.S. rose 0.8 percent between June and July, marking the fourth consecutive monthly increase, the Federal Housing Finance Agency (FHFA) said Thursday.
The agency’s House Price Index (HPI) has been trending upward since April of this year. That string of gains is coming off a streak of declines that was three times as long. Prior to April, FHFA’s HPI had been on a slippery downward slope for 12 straight months, going back to May 2010.
The federal agency’s index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.
Looking at the 12 months ending in July, U.S. homes lost 3.3 percent of their value, according to FHFA’s assessment.
The July index reading is 18.4 percent below its April 2007 peak and roughly the same as the March 2004 index level.
Among the nine census regions, the biggest monthly gain was seen in the West North Central division – which includes the Dakotas, Minnesota, Nebraska, Iowa, Kansas, and Missouri. There, home prices rose 3.6 percent between June and July.
The South Atlantic division – Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, and Florida – saw the biggest decline for the month, down 0.4 percent.
The West North Central division was the only region to experience a price increase over the last 12 months, posting an annual gain of 0.2 percent.
Housing Advocacy Group Targets Billionaire Investor Sam Zell
Housing Advocacy Group Targets Billionaire Investor Sam Zell
Posted by Carole VanSickle on Tuesday, September 20th 2011
Thanks to public comments made back in 2008 about how the real estate market could recover – in short, by “clean[ing] out all those people who never should have bought in the first place and not give them sympathy” – billionaire Sam Zell is now the target of housing advocacy groups hoping to convince Wells Fargo not to sell him 1800 apartment units in East Palo Alto, California[1]. The groups and many families in the area fear that Zell will bring an end to affordable housing in the area and possibly knock down existing buildings to make way for “high end condos and high rises.” According to some sources, “2700 families are in danger of losing their homes without relocation benefits.” Mayor Carlos Romero also discourages the sale, as does the San Mateo County Housing Director Duane Bay.
The groups and families are not just concerned about their current places of residence, but also about what Zell might do to their options for rent-controlled housing. He has used his company, Equity LifeStyle, to “sue multiple California cities to invalidate local rent control laws,” according to a press release from the Youth United for Community Action (YUCA) and has also pushed a statewide ballot measure to end rent control in California[2]. The groups are arguing that since “Wells Fargo has money [they] don’t have to sell to the highest bidder” on the property and that the lender should not sell to a “classic vulture investor.”
MBA – mortgage applications up
MBA – mortgage applications up
Mortgage applications increased 6.3% from one week earlier,
according to data from the Mortgage Bankers Association’s Weekly
Mortgage Applications Survey for the week ending September 9,
2011. This week’s results include an adjustment to account for
the Labor Day holiday. The Market Composite Index, a measure of
mortgage loan application volume, increased 6.3% on a seasonally
adjusted basis from one week earlier. On an unadjusted basis,
the Index decreased 15.4% compared with the previous week. The
seasonally adjusted Purchase Index increased 7.0% from one week
earlier. The unadjusted Purchase Index decreased 16.2% compared
with the previous week and was 7.2% lower than the same week one
year ago.
The Refinance Index increased 6.0% from the previous week,
stopping a run of three consecutive weekly decreases. The
Refinance Index is not seasonally adjusted but is adjusted for
the holiday. On an unadjusted basis, the Refinance Index
decreased 15.2% and is 23.5% lower than the same week a year
ago. The four week moving average for the seasonally adjusted
Market Index is down 2.9%. The four week moving average is up
0.5% for the seasonally adjusted Purchase Index, while this
average is down 3.9% for the Refinance Index. The refinance
share of mortgage activity increased to 77.3% of total
applications from 77.1% the previous week. The adjustable-rate
mortgage (ARM) share of activity decreased to 6.9% from 7.1% of
total applications from the previous week.
Slowdown Impacts Commercial Real Estate Markets
Slowdown Impacts Commercial Real Estate Markets
Commercial real estate vacancy rates are flat and projections for
growth have been moderated because economic growth and job
creation have been weaker than expected, but modest improvements
are expected over the coming year, according to the National
Association of Realtors. Disappointing economic growth in recent
months means a slower recovery for most of the commercial real
estate sectors, although multifamily housing continues to benefit
from pent-up demand resulting from an abnormal slowdown in
household formation in recent years,” he said. “Many young
people, who normally would have struck out on their own from 2008
to 2010, had been doubling up with roommates or moving back into
their parents’ homes.
However, they’ve been entering the rental market as new
households in stronger numbers this year. As a result, apartment
vacancy rates are declining and rents are rising at faster
rates,” shared Lawrence Yun NAR Chief economist. “Normally,
rising rents correspond to rising home prices. However, this
isn’t happening in this recovery because buyers are constrained
by unnecessarily restrictive mortgage underwriting standards, so
the underlying demand isn’t drawing inventory down quickly
enough to support price growth,” he added. Looking at
commercial vacancy rates from the third quarter of this year to
the third quarter of 2012, NAR forecasts vacancies to decline 0.3
percentage points in the office sector, 0.6 point in industrial
real estate, 0.7 point in the retail sector and 0.9 percentage
points in the multifamily rental market.
HUD and Justice Department Seek Support for Servicer Settlement
HUD and Justice Department Seek Support for Servicer Settlement
08/22/2011 By: Krista Franks
While New York, Nevada, Massachusetts, and Delaware attorneys general continue to oppose the proposed settlement with the nation’s top servicers, HUD and the Justice Department are taking steps to persuade at least one of them to comply.
Both HUD and the Justice Department are specifically asking New York Attorney General Eric Schneiderman to abandon his objections to the claim and approve the settlement, which could preclude him from any further legal action against the servicers, according to a Sunday article in the New York Times.
“Our aim is to reach a settlement that holds the banks accountable and helps homeowners who have been wronged. We have reached out to a number of attorneys general to ensure the agreement preserves their ability to pursue other claims not included in this settlement, such as securitization,” a HUD spokesperson said.
HUD Secretary Shaun Donovan and others in the administration have reached out to Schneiderman and consumer groups opposing the settlement aiming to win Schneiderman’s approval, according to the New York Times.
The proposed settlement for Bank of America, JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., and Ally Financial Inc. could require as much as $20 billion from servicers for loan modifications and possibly homeowner counseling. One major sticking point is whether attorneys general would be able to pursue separate claims related to their own individual probes.
“The disagreement is around whether we should wait to settle and resolve the issues around the servicing practices for him [Schneiderman] – and potentially other AG’s and other federal agencies – to complete investigations on the securitization side,” Donovan said, according to the Sunday Times article.
“He might argue that he has more leverage that way, but our view is we have the immediate opportunity to help a huge number of borrowers to stay in their homes, to help their neighborhoods and the housing market,” the New York Times quoted Donovan.
Nevada Attorney General Catherine Cortez Masto is in the midst of civil and criminal investigations of Bank of America for illegal foreclosure practices.
According to Bloomberg, Masto would be “very cautious” about signing a settlement that would interfere with her own investigations.
In addition to dissention over the immunity clause, attorneys general and the banks have disagreed over whether the servicers should include principal reductions in the settlement. Bank of America recently began considering the provision.
Bloomberg also recently reported that BofA is considering agreeing to the proposed settlement while allowing exceptions for further probes from a few attorneys general, including Schneiderman.
Industry’s Shadow Inventory of Distressed Homes Shrinks
Industry’s Shadow Inventory of Distressed Homes Shrinks
08/19/2011 By: Carrie Bay
Housing has become an industry afraid of its shadows. That shadow inventory of repossessed and soon-to-be repossessed homes has professionals from every side of the business worried about the impact such a sizeable volume of distress will have on property values and overall market fundamentals. But according to Standard & Poor’s (S&P), the obscurity hiding in the corner is getting smaller.
The analysts at S&P have issued a new report putting the shadow inventory into perspective. In the second quarter of 2011, the agency’s assessment of how long it will take to clear the supply of distressed homes in the U.S. fell for the first time since mid-2009, and it has S&P analysts asking, “Is it a sign of good things to come?”
The agency’s current estimate of time-to-clear the market’s distress is 47 months. That number represents a five-month decline from S&P’s first-quarter estimate and the largest quarter-to-quarter drop since mid-2008.
S&P estimates shadow inventory as all outstanding properties whose borrowers are 90 days or more delinquent on the mortgage; properties in foreclosure; and REO properties that are owned by the lender but have not yet been resold.
The agency also factors in 70 percent of properties on which the mortgage delinquency has been cured within the last 12 months on the basis that historical trends show “cured loans are more likely to re-default,” S&P says.
To calculate the months-to-clear the shadow inventory of distressed properties, the agency’s analysts look at the six-month moving averages of default, liquidation, and loan-cure rates across the United States.
S&P’s analysis uses loan-level data provided by CoreLogic on non-GSE residential mortgage-backed securities (RMBS). The agency says while its assessment of the shadow inventory “uses only non-agency data, we believe that the months-to-clear is similarly high for the market as a whole.”
While the volume of these distressed U.S. non-agency residential mortgages remains “extremely high” S&P says, the total volume of distressed loans has been falling since the beginning of 2010.
As of June 2011, this amount stood at $405 billion, the lowest level since December 2008. The agency’s latest assessment represents just under one-third of the outstanding non-agency RMBS market. At the end of March 2011, S&P put the distressed volume at $433 billion.
In tandem with S&P’s declining estimates of distress volume and months-to-clear the overall inventory, each of the individual top-20 metropolitan statistical areas (MSAs) the agency tracks reported lower months-to-clear estimates in the second quarter.
S&P says in its view, “this is a yet another sign that the months-to-clear has leveled off.”
At 144 months, the New York MSA still tops the list at the highest months-to-clear. However, S&P says even New York’s estimate improved slightly by two months.
The improving shadow inventory trends reflect default rates that have been falling since the first quarter of 2009 and liquidation rates that appear to be stabilizing, S&P explained.
“Provided liquidation and default rates continue their flat trends, we believe our estimate of the months-to-clear should continue to decline at a steady pace of approximately three months each quarter,” the agency said.
S&P stresses that despite the recent stability of its months-to-clear estimates, these distressed loans continue to loom over the housing market and threaten to further depress home prices.
“Low liquidation rates over the past two years allowed the shadow inventory to grow as distressed homes have remained tied up in foreclosure proceedings,” S&P said in its report. “The shadow inventory will continue to jeopardize the housing market’s recovery until servicers are able to improve liquidation times.”
However, the agency notes, if and when that happens, an influx of homes will likely enter the market, increasing supply and driving down home prices.
S&P says long liquidation timelines and the accumulation of so many distressed loans are due in large part to rising court delays in foreclosure proceedings, a problem that plagues both agency and non-agency loans.
“As long as these delays continue to affect the housing market, the shadow inventory remains a market-wide threat,” S&P said.
The agency’s analysis also provided a snapshot of the credit profile of shadow inventory loans. Their average FICO score is 645 while the average FICO score for current loans is 685. The average shadow inventory loan is significantly “underwater,” and loans that are currently 90-plus days delinquent, in foreclosure, or REO have missed an average of more than 19 payments.
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