Where to Find Foreclosures

When the housing bubble burst in 2007 and more than six million families lost their homes, the pain was greatest in markets where lax lending standards (which have since been outlawed) were the most widespread. Florida, Nevada, Arizona, and California—the so-called “sand states”—led the nation in foreclosures.

What has changed since then?

Today, the foreclosure picture has changed dramatically. Last year’s number of 1.1 million foreclosure filings was the lowest annual total since 2006, the year the housing bubble began to burst.[1] The number of completed foreclosures in January 2016 was down 67.6 percent from the peak of 117,743 in September 2010.[2]

The geography of foreclosures also has changed. Today, Florida and California remain in the top five states for foreclosures. The five states with the highest number of completed foreclosures for the 12 months ending in January 2016 were:

1. Florida (74,000)
2. Michigan (49,000)
3. Texas (29,000)
4. California (25,000)
5. Ohio (24,000)
6.  

These five states accounted for almost half of all completed foreclosures nationally.

“In 2015 we saw a return to normal, healthy foreclosure activity in many markets even as banks continued to clean up some of the last vestiges of distress left over from the last housing crisis,” said Daren Blomquist, vice president at RealtyTrac. “The increase in bank repossessions that we saw for the year was evidence of this cleanup phase, which largely involves completing foreclosure on highly distressed, low-value properties.[3]

“Meanwhile, local economic problems became a larger driver of foreclosure activity in 2015,” Blomquist said. “Examples of this are Atlantic City, New Jersey, which posted the nation’s highest metro foreclosure rate for the year, along with several heavy oil-producing markets in Texas and Oklahoma where foreclosure activity increased in 2015, counter to the national trend.”

Foreclosure rates are on the rise in other areas

In 24 states and the District of Columbia—many of which missed the massive defaults seven years ago—there was an increase in foreclosure activity in 2015 compared to 2014. These included Northeastern states like Massachusetts (up 55 percent) and New York (up 24 percent), where home price increases have lagged and states suffering from the downturn in oil prices like Oklahoma (up 36 percent),) and Texas (up 16 percent). States with the highest foreclosure rates in 2015 were New Jersey (1.91 percent of housing units with a foreclosure filing), Florida (1.77 percent), Maryland (1.60 percent), Nevada (1.40 percent), and Illinois (1.26 percent). 

 

Among the nation’s 20 largest metro areas, six posted year-over-year increases in foreclosure activity in 2015: Boston (up 44 percent, St. Louis (up 38 percent), Dallas (up 25 percent), Detroit (up 22 percent), New York (up 9 percent), and Houston (up less than 1 percent).[4]

Metro areas with the highest foreclosure rates in 2015 were Atlantic City, New Jersey (3.43 percent of housing units with a foreclosure filing); Trenton, New Jersey (2.14 percent); Tampa Bay-St. Petersburg-Clearwater, Florida (2.03 percent); Jacksonville, Florida (2.02 percent); and Miami (1.98 percent).

What does this mean for you?

If you’re considering an investment in a foreclosure, you may no longer be limited to searching in areas that were hardest hit by the housing crisis. That may mean that you find a greater variety of foreclosures in more popular neighborhoods.

It may also, however, mean more competition. And when the process of buying a foreclosure is already so complex, more competition isn’t exactly welcome.

source: totalmortgage.com

Are New “For Sale by Owner” Sites Changing the Rules?

When home prices rise steadily over several straight years, seller’s markets crop up where demand is strongest. One of the side effects is a renewal of interest among home sellers in trying to find a way to forgo the traditional six percent commission that real estate brokerages charge. Typically, that means marketing their homes on their own.

During the current three-year old housing recovery, however, there’s no sign that more sellers are going “FSBO”, or “for sale by owner.” Since 2012, sale prices have risen about 20 percent, according to CoreLogic.[1] In several of the hottest markets like Riverside CA or Los Angeles price increase are near or exceeding 10 percent in 2015 alone.[2]


Despite the strength of the recovery, interest among home sellers in going it alone has yet to materialize. According to the National Association of Realtors’ annual Profile of Home Buyers and Sellers, only 8 percent of sellers went FSBO in 2014, fewer than in 2013 and the smallest share since the association started collecting data in 1981.[3] But a lot has changed in 35 years and NAR’s survey may not be providing a complete picture of how the Internet may be empowering consumers to reduce the fees they pay real estate brokerages.

The traditional definitions of FSBO may mask a growing trend among many sellers to do more of the marketing themselves with the help of the Internet and brokerages using newer models.

Here are a few of the new ways people are saving when selling their home:

Auctions. Foreclosure auctions were a significant part of the real estate business four or five years ago and now online auctions have become an increasingly popular way for owners to sell their homes at a good price without having to wait for months. Sites like Auction.com and Hubzu.com offer incentives to buyers to buy their next home at an auction.

Discount brokers. There is nothing new about brokerages that offer their services at rates significantly less than their competitors. Most, however, provide less service for their lower prices. Redfin is probably the best known of a new breed of brokerages that gives buyers rebates and sellers commissions as low as 1.5 percent without reducing service.[4]

Owners.com gives buyers a rebate equivalent to about 1.5 percent of brokerage fees after the closing. The rebate comes from the 3 percent commission that traditionally goes to the buyer’s agent.

Fee for service/listing on MLS. During the housing boom that ended ten years ago, demand was so strong that many owners saw no need for a real estate agent with one exception—they wanted to list their homes on their local MLS. Dozens of brokerages went into business by simply listing homes for a flat fee of $500 to $1000 and not providing other marketing services, or providing other services for fixed fees.

 New online tools. Ten years ago the first web sites and online brokerages for FSBO owners created the first listing inventories of FSBO homes and distributed turnkey tools like yard signs and brochures. Today a new breed of sites has taken FSBO tools to a new level.

Sites like forsalebyowner.com and owners.com provide sophisticated advice and unique tools to help owners value their properties and price them properly. Owners.com provides a trend tracking tool that helps owners see priding trends down to the neighborhood level.

source: totalmortgage.com

Raise Your Credit Score with These Tips

When it comes to getting a good deal on a mortgage, your credit score may be even more important to you than you realize.

It’s one of the three most important metrics lenders use to decide whether or not to approve your mortgage application; the higher your score, the more confident they are that you will make your monthly payments on time. Most home buyers don’t know how much their credit scores impact the mortgage rates they will pay.

Let’s play with some numbers.* A $250,000, 30-year fixed mortgage will require monthly payment of principal and interest of $1,527, for a borrower with a 620 score. That’s a total of $299,821 of total interest paid over thirty years.

If you have a better credit score of 700, you are considered a less risky borrower. You can expect to pay $1,313 monthly for a total of $222,689. If you have an extremely favorable credit score of 780, you fall into the top-tier range of borrowers, and lenders will likely offer you a lower mortgage rate along with more loan choices. Your monthly payment will be $1,280 for a total of $210,681.

Here are some tips to help you get your credit under control and turn it into an asset if it is a liability today.

Start now. Credit scores don’t change overnight. If you plan to buy a home a year from now, you need to get to work immediately in order to get your credit in shape by the time you apply.

Do a reality check. Order your credit histories from the three primary credit bureaus: Experian, Equifax and Transunion. Review them for accuracy. You’ll see immediately how detrimental making a payment that is late by only a few days can be to your credit.

If you see errors that you can document, ask for them to he removed. Take note of any really serious marks against you like foreclosure, bankruptcy, tax liens and collections actions. If you have any of these, they will remain on your record for five to seven years and you will have to work extra hard to improve every other aspect of your credit to qualify. Sign up for a service that will notify you of changes in your credit.

Pay your bills on time. If you have missed payments, get current and stay current. Sign up for a “wallet” program through your bank or online service. Pay your bills through your bank so that there is no delay.

With today’s technology, there is no excuse for ever making a late payment to a regular monthly creditor. The longer you pay your bills on time after being late, the more your FICO Scores should increase. Older credit problems count for less, so poor credit performance won’t haunt you forever. The impact of past credit problems on your FICO Scores fades as time passes and as recent good payment patterns show up on your credit report

Reduce your use of credit. Most people use their credit too much. Create a budget and learn to live on a cash basis. Use your credit cards only for purchases you can pay off quickly or for emergencies. Keep balances low on credit cards and other “revolving credit”; high outstanding debt can affect a credit score.

Don’t close unused credit cards as a short-term strategy to raise your scores, but don’t open new credit cards just to increase your available credit. Reducing your balances is important, but taking the next step and closing cards won’t really improve your case; lenders like to see that you have credit available. A closed account remains on your credit report.

Especially, do not close your oldest credit card account. A long history of using and making monthly payments will improve your score. However, this is certainly not the time to open new credit cards. New accounts will lower your average account age, which will have a larger effect on your scores if you don’t have a lot of other credit information. Rapid account buildup can look risky if you are a new credit user.

Keep balances low on credit cards and other “revolving credit”. This is also not the time to make large purchases. Rather reduce your outstanding debt by increasing your monthly payments. If making minimum payments has been your practice, stop now and pay more.

Have credit cards – but manage them responsibly.
In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit scores. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

Don’t relax until you have closed on your new home. Mortgage lenders often pull the credit history of a customer the day before they close. If there is a significant change in their FICO or a new purchase that raises their debt, they are within their rights to raise the interest rate or cancel the mortgage altogether. Don’t relax until they hand you the keys to your new house.



*These are for demonstration purposes only. Your numbers may differ.

source: totalmortgage.com

Tread Carefully when Buying or Selling a Short Sale Home

Short sale properties are sold for less than what’s owed on the mortgage loan. It’s a provision for homeowners who can’t afford their mortgage payment, and it’s a way for these borrowers to avoid foreclosure.

A short sale can also be advantageous for buyers. These properties are sometimes cheaper, so you can buy more house for your money—but don’t get excited too quickly. Whether you’re a buyer or a seller, there are definitely some reasons to stop and consider if you want to go down the path of the short sale.

 Buying a short sale home

Short sales are often fixer-uppers


Short sales are sold as-is, and in many cases, these homes need a lot of work. Because the previous owner had financial hardships, he probably didn’t have resources to keep up with home maintenance and repairs.

From a price point, a short sale can be an excellent deal, but you’ll need money to improve the interior and exterior of the home. This includes updating the kitchen and bathrooms, replacing the flooring, painting the walls and making other structural improvements. It’s the perfect property if you don’t mind some renovations, but if you’re looking for a move-in ready property, a short sale may not be the right property for you.

Not every house qualifies for a short sale


Some home sellers and real estate agents don’t fully understand how short sales work, and they might list the house as a short sale before getting permission from the bank.

Before bidding on a short sale, speak with your real estate agent so he can confirm that the seller’s bank is aware of the situation. There are rules for short selling a property. For example, the seller must prove there’s some sort of financial hardship, and they must have defaulted on their mortgage loan. Additionally, a seller cannot request a short sale if he’s filed bankruptcy. Don’t waste time bidding on a property that doesn’t meet a lender’s short sale qualifications.

Short sales have a lengthy approval time

Even if you’re pre-approved for a mortgage and ready to purchase, you’ll need to be patient. Buying a short sale takes longer than buying other properties. With a non-short sale property, you can realistically close within two to four weeks. Since there’s a lot of back-and-forth and red tape with short sales, it can take as long as 90 days to purchase these homes—that’s if the bank approves the sale. At the end of the day, you need the lender’s approval, and the bank can decide at the last minute not to approve a short sale, putting you back at square one.



Selling a short sale home

Short sales produce potential tax problems


What many people don’t realize is that if your lender allows you to sell your home at a loss, you may be liable for taxes on the losses incurred by the lender.  The IRS considers a short sale loan forgiveness.  Loan forgiveness is considered debt discharge income (DDI), and DDI is taxable.

If a lender forgives more than $600 of principal, they might send you and the IRS a 1099-c form, and you are required to report the loss as income.  In many cases whether you have a tax liability or not will depend upon your lender.  Some lenders will report the DDI to the IRS, others will not.


In addition to DDI, there can be other tax implications with a short sale


Take for example the case of someone who bought a $100,000 home.  The market did well and the property increased in value to $125,000.  At the peak, the borrower taps the home’s equity and took out a second mortgage for $50,000. Now the borrower has a house worth $125,000 and $150,000 worth of mortgages (first and second).

The market stagnates and they sell the house in a short sale for $125,000.  For tax purposes, they have actually made $25,000, despite being $25,000 shy of breaking even on their mortgages.  This is because the sales price exceeds the tax basis of the home.  Mortgage debts do not factor into gain-on-sale calculations.  This is in addition to the taxes that must be paid on $25,000 worth of DDI.  It is possible that the $25,000 gain may be excluded from taxes as a result of the federal home sale gain exclusion tax break.

Now take the example of a person who purchased a home (to be their primary residence) for $100,000, the market improves and the house appreciates to $125,000.  The homeowner borrows $50,000 against their home equity, and now has $150,000 worth of mortgage debt. Then the market declines and the house is worth $75,000 and is sold in a short sale. The borrower is left with $50,000 worth of DDI, but they have also incurred a $25,000 loss on the property.  The borrower may not deduct the loss.  This is because you may only claim losses on investment or business properties, not principal residences.

There are some circumstances where DDI can be exempt from taxes. If the debt write-off is deemed a gift, discharged in bankruptcy, or you were insolvent (have debts that are in excess of your assets) at the time the lender forgave your debt, your DDI may be exempt from taxes.

Consult an accountant, lawyer, and mortgage professional when undertaking a short sale

There are many benefits, but some downsides associated with short sales.  In addition to DDI taxes, increasing numbers of banks are making the borrower sign a promissory note for the lender’s losses or agreements that allow the bank to pursue the borrower for deficiency when selling a home in a short sale.

 Bottom Line

If you’re not in a hurry to purchase a home, a short sale might be the answer. On the other hand, if you’re looking for a quick and simple sale, and if you don’t have the patience for a lot of back-and-forth negotiations with the mortgage lender, you might do better skipping a short sale and buying a traditional listing.

source: totalmortgage.com

5 Things to Consider When Buying a Foreclosure

Buying a home in foreclosure may seem like a good way to get in on some cheap real-estate, but with all the possible headaches, is it worth it? Ultimately, that’s for you to decide, but if you do choose to give it a go, keep these five thoughts in mind.

1. Find a real estate broker who specializes in foreclosed homes

Having an expert on hand is always a good thing. They’ll provide useful insight, and a lot of times, they’ll be aware of homes that haven’t even reached the market yet.

2. Get a pre-approval from a lender

Most buyers want to shop around, find their perfect home, and then work out the financing. However, with foreclosed homes, the deals move quickly, and if you aren’t pre-approved, that extra time could cost you your desired home.

3. Prices can change

Just because it’s a foreclosed home doesn’t mean the price is set in stone; there can still be multiple offers that drive the price up. Do your research, and find out the recent prices of comparable properties (comps) to make sure your offer is on point.

4. Plan for the long-run

If you’re only goal is to make a quick flip, you could end up with regrets if your plan falls through. To avoid such a tragedy, have a back-up plan that accounts for you holding onto the property for at least five years.

5. It’s going to need work

Foreclosed homes are sold as they stand, and this almost always means you’ll be doing some renovating. If you aren’t friends with a skilled tradesman, or don’t like DIY projects, foreclosed homes may not be for you.

source: totalmortgage.com

5 Options for Avoiding Foreclosure

Falling behind on your mortgage payments may mean that foreclosure is around the corner—something everyone wants to avoid. Foreclosure damages your credit and can keep you from owning another home for years.  Here are 5 options you still have.

1. Transfer the loan.

If you’re less concerned with keeping your house than you are with keeping your credit and financial history intact, you may want to check to see if your mortgage is assumable or not. If yours is, then you could transfer the loan to anyone who qualifies, allowing you to sell your home with minimal fees.

Even if your loan isn’t assumable, you may be able to take a name off of it, or refinance to change the name on it.

2. Try for a loan modification.

In 2009, the government created HAMP, or the Home Affordable Modification Program, to reduce the monthly payments of qualified homeowners to 31% of their monthly income. Often, this means stretching the loan over a longer term or changing the interest rate structure.

Of course, “qualified” is the operative word here, as not all lenders participate in the program and those that do have different qualification criteria. Often, you’ll have to provide documentation about your current hardship and prove that you will be able to afford a modified mortgage.

3. Short sell your home.

Short sales usually allow you to get out of your home with less damage to your credit than a foreclosure, but they do generally involve selling your home for less than the balance of your loan. Some lenders may be willing forgive the difference, but that will vary depending on your situation.

4. Get a forbearance.

You don’t hear about forbearances very often, but they can be very helpful if your financial hardship is temporary in nature. A forbearance suspends or reduces your payments for a set period, allowing you time to resolve your problems.

5. Rent out your home.

If you haven’t yet gotten too behind on payments—or if you see problems on your horizon—and want to keep your house, then you always have the option of renting out your house and finding a cheaper apartment somewhere else. Many homeowners find that that this temporary solution can provide free up enough money to make the mortgage payment.

source:  totalmortgage.com

Important Items to Investigate When Buying a Foreclosure House to Flip

Many pitfalls exist when buying a foreclosure house for a resale or flip.  You obviously need to learn about the physical condition of the property to determine what needs to be repaired, replaced or upgraded.  Another must do is to obtain a title search.  The title search will show what liens or judgments encumber your property that were not discharged as part of the foreclosure process.   This article summarizes additional matters to consider that are not necessarily disclosed in your physical inspection or title search.


Often, foreclosure homes are in poor physical condition.   Each locality has a code enforcement department to make sure that properties are kept in good condition and are not renovated or repaired in violation of city or county code.   A homeowner can run afoul of the code enforcement rules by allowing the property condition to deteriorate, which is common in foreclosure homes, or by undertaking certain kinds of repairs on their own without a valid permit.  Another problem occurs when a permit has been obtained for a given activity, yet the work was not completed and the permit remains open.  An open permit often requires hiring a different contractor to complete the work or provide a valid contractor with a license to allow the final inspection to be completed.  Either way, resolving the matter is an expense.

What a potential buyer needs to do is call the local code enforcement agency to determine if any open code enforcement violations exist for the particular property.  If the code enforcement problem has existed long enough, the agency could have filed a lien on the property and that would be disclosed in the title search.  Unfortunately, you cannot rely on the the code enforcement lien to already be recorded.  Many municipalities have an online method of checking for code enforcement violations for properties such that a visit to their office or phone call is not necessary.  Also, the party doing the physical inspection may search this as well, but you as the buyer need to make sure what the inspection service encompasses.

Home Owners' Associations

Nearly all properties within subdivisions are subject to homeowners' associations.   The recorded covenants and restrictions are akin to a constitution governing the upkeep and use of the homes within the subdivision.   You need to read the covenants and restrictions to thoroughly understand them.

Similar to the code enforcement scenario, the foreclosure house may run afoul of the rules and regulations of the homeowners' association, sometimes called an HOA.  The association could have delivered a notice of violation of the covenants and restrictions to the prior owner and the violation has not been addressed or rectified.  Your title search would not pick this up unless the HOA recorded a lien in connection with the violation.  In any event, as the new owner of the property, you have to make the home compliant with the association requirements.  Depending on the severity of the problem, correction could be a significant expense.

Each homeowners' association has officers and directors.  Assuming the HOA is an actual not for profit corporation, which is usually the case, the identity of the officers is public information.  Further, each association generally has a management company to collect dues and provide a contact for owner issues.  Your best bet is to ask an owner in the subdivision for a contact at the management company and you can inquire from them as to the violation status of your property.

Another reason to contact an association representative is that many associations have rules and requirements with respect to renovations, such as roof replacement.  Often, the covenants and restrictions for a subdivision provide for an architectural control board or committee.  In addition to obtaining a building permit for an activity like installing a new roof, which would likely be obtained by your roofing contractor, you could need approval from the HOA architectural control board.   They often want to know about color schemes and materials.  Your subdivision may only allow certain colors or certain material, such as a tile roof.  Investigating the association renovation guidelines is necessary to avoid additional expense and delay.

Conclusion

In addition to investigating the physical condition and status of title to a foreclosure house prior to acquisition, you also need to check into code enforcement status and homeowners' association violations and improvement requirements.  Checking these additional matters could save you from heartache later.  

source: infobarrel.com

Fewer U.S. Homes Entered Foreclosure Track in 3Q

LOS ANGELES -- The number of U.S. homes set on the path to foreclosure slid to a seven-year low in the third quarter, reflecting a gradually improving housing market and fewer homeowners falling behind on mortgage payments.

Lenders initiated foreclosure action on 174,366 homes in the July-September period, the lowest level since the second quarter of 2006, foreclosure listing firm RealtyTrac Inc. said Thursday.

Foreclosure starts declined 13 percent from the previous quarter and were down 39 percent from the third quarter last year, the firm said.

The national slowdown in foreclosure starts comes as the U.S. housing market continues to recover from a deep slump, a rebound driven by rising home prices, steady job growth and fewer troubled loans dating back to the housing bubble days. Fewer homes entering the foreclosure pipeline should translate into fewer properties that eventually end up lost to foreclosure.

"It's looking really good that there are not more coming into the pipeline," said Daren Blomquist, a vice president at RealtyTrac. "Barring any other economic shock to the system, we expect that to bode well going forward."



Foreclosure starts fell on an annual basis in the third quarter in 38 states, including Colorado, Arizona, California and Illinois. They increased from a year earlier in 11 states, including Maryland, Oregon, New Jersey and Connecticut.

While fewer homes are entering the foreclosure process, lenders stepped up home repossessions, which led to a quarterly increase in homes lost to foreclosure.

Completed foreclosures rose 7 percent in the third quarter versus the April-June period, the firm said. Completed foreclosures were down 24 percent from the third quarter last year, however.

All told, 119,485 homes were taken back by lenders in the July-September quarter. That puts the nation on pace to end this year with roughly 507,497 completed foreclosures, or down about 24 percent from 2012's total.

Foreclosures peaked in 2010 at 1.05 million and have been declining ever since.

The number of homes taken back by banks in the third quarter climbed from the previous quarter in 26 states, including New York, New Jersey, Illinois and Virginia, RealtyTrac said.

Much of the quarterly increase in foreclosures came about in states where courts oversee the foreclosure process. Those courts were backed up with cases two years ago, but have been making progress working through their backlog.

Even so, it's taking longer for homes in many states to complete the foreclosure process.

In the third quarter, it took an average of 551 days, or 1.5 years, for a U.S. home to move from initial default status to ultimately being repossessed by the lender, the firm said.

That's up from an average of 526 days in the second quarter and an increase from 382 days in the third quarter of last year.

"It's a sign that we're still dealing with the wreckage of the last housing bust," Blomquist said.

In New York, it took an average of 1,037 days, or nearly three years, for the foreclosure process to run its course in the third quarter, the longest of any state. Maine clocked the shortest average time to foreclose at 160 days.

The impact of foreclosures remains sharply elevated in some states. Florida topped the nation with a foreclosure rate of more than twice the national average in the third quarter.

Rounding out the top 10 states with the highest foreclosure rates in the July-September period were: Nevada, Maryland, Illinois, Ohio, Connecticut, Delaware, New Jersey, Indiana and South Carolina.

source: dailyfinance.com

Home Foreclosures Fall to Lowest Level in Nearly 8 Years

LOS ANGELES -- Fewer U.S. homes entered the foreclosure process or were repossessed by banks in June, the latest sign that the nation is shaking off its housing bust hangover.

Lenders initiated the foreclosure process on 57,286 homes last month, the lowest level for any month in 7½ years, foreclosure listing firm RealtyTrac Inc. said Thursday.

Foreclosure starts are on pace to reach roughly 800,000 this year, down from 1.1 million last year, the firm said.

Completed foreclosures, when the lender repossesses a home, are on track to hit a half-million, or about a quarter below last year's total.

The trend comes as the U.S. housing recovery continues to gain strength, propelled by steady job gains, low interest rates, improving consumer confidence and growing demand for homes at a time when there's a thin supply of available homes for sale in many markets.

That's helped boost home prices, which jumped 12.2 percent in May from a year earlier -- the biggest gain in seven years, according to data provider CoreLogic.

Even so, foreclosures remain a potential drag on housing in many states, including Florida, Nevada, Illinois and Ohio.

"Halfway through 2013, it is becoming increasingly evident that while foreclosures are no longer a national problem, they continue to be a state and local market problem," said Daren Blomquist, a vice president at RealtyTrac.

Homes scheduled for auction in states like Florida, where the courts play a role in the foreclosure process, were up 34 percent in June from a year earlier, the firm said.

Scheduled home auctions doubled last month in New Jersey and Florida, which also posted the highest foreclosure rate of any state -- nearly three times the national average -- in the first six months of the year, the firm said.

Most homes lined up for public auction typically end up going back to lenders, which opens the door for the properties to be placed on the market as sharply discounted foreclosed homes later this year or in 2013.

Nationally, the inventory of previously occupied homes on the market was 10 percent below prior-year levels in May, according to the National Association of Realtors. So the potential for more foreclosures going on sale will likely be welcome news to would-be homebuyers in markets where there is a tight supply of available homes.

The number of homes that entered the foreclosure process in June was down 21 percent from May and about 45 percent below June 2012's total.

Lenders repossessed 35,507 homes last month, down nearly 9 percent from May and a drop of 35 percent from a year earlier. That's still short of the 25,000 or so a month that Blomquist considers the benchmark for foreclosures in a "normal" housing market.

At the height of the housing boom in 2006, completed foreclosures averaged 22,000 a month. They peaked in September 2010 at 102,000. Tighter lending standards for home loans since the housing bubble burst have helped slow the pace of foreclosures.

About 75 percent of the 824,292 U.S. homes in the foreclosure process as of June are tied to loans that were originated between 2004 and 2008.

"That's a good sign that the lending has much improved and we're not seeing high foreclosure rates on mortgages that have been taken out since 2008," Blomquist said.

source: dailyfinance.com

Case-Shiller Index: Home prices post largest gain in a decade, just not in NY

Housing prices surged nationwide in March, but growth in the New York area lagged behind, according to Case Shiller Index data released Tuesday.

One reason for sluggish local growth was that prices here didn't fall as much as more speculative markets did during the crash. Experts also cited the impact of a shrinking Wall Street, New York's long foreclosure process, and superstorm Sandy.

Nationally, prices rose in March by 10.2 percent compared to a year earlier. That gain was the highest annual return since 2006, when the housing market was peaking. The biggest growth was in Phoenix, San Francisco and Las Vegas, where year-over-year increases topped 20 percent.



In the New York area -- defined as a 29-county region that includes Long Island -- prices rose by 2.6 percent, the smallest gain among 20 metropolitan areas covered by the index.

Prices on Long Island actually slipped in the first quarter from a year earlier, according to data published last month from a different source. The median Island home price, excluding sales in the Hamptons and on the North Fork, fell 2.6 percent, to $341,000 from $350,000, according to real estate appraisal firm Miller Samuel Inc.

The uneven recovery speaks to the disparity of the housing crash, experts said. While Phoenix is up 30 percent since the trough and New York is up 3 percent, prices in that Sunbelt city plunged 56 percent in the crash, while those in the local market fell 27 percent, said Craig Lazzara, an analyst at S&P Dow Jones Indices, which publishes the index.

"New York had relatively low decline in the deflation of the bubble," Lazzara said, "and so it had less to bounce back from."

Lazzara said the shedding of Wall Street jobs was also a factor. "New York, to a large degree, is influenced by the financial industry, and we all know that that industry is contracting," he said. "When one of the major industries affecting the area is downsizing or is shrinking more than it's rising, that inevitably is going to affect the demand for real estate."

Other factors that create a drag on area prices are a backlog of foreclosures due to the state's relatively slow legal process, and the fact that the housing market in suburban areas like Long Island is underperforming compared to urban areas, said Jonathan Miller, president and chief executive of Miller Samuel.

Other parts of the country also didn't have to deal with last fall's superstorm, said Kevin Leatherman, president of the Multiple Listing Service of Long Island. "Hurricane Sandy also skews the numbers," Leatherman said, "because you have houses that are physically distressed."

source: newsday.com

$10-billion settlement of foreclosure abuse cases said to be near

Banks and regulators worked late Sunday to finalize a nearly $10-billion settlement that would halt a much-maligned program to review foreclosures from the height of the housing crisis, according to four people familiar with the talks.

At least 14 banks are involved. Since the reviews began in late 2011, the banks have paid $1.5 billion to consultants examining foreclosure records -- but not a penny to aggrieved borrowers. Both bankers and regulators found that result untenable, officials have said.

The new agreement could be announced as early as Monday morning by the Office of the Comptroller of the Currency, the arm of the Treasury Department that regulates banks with national charters, four people familiar with the negotiations said.

The people spoke on condition of anonymity because the discussions were sensitive and incomplete. The principal negotiators included six big banks that provide customer service on 90% of all U.S. home loans: Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., U.S. Bancorp and PNC Financial Services.

Regulators were presenting the deal late Sunday to eight smaller mortgage servicers that had agreed to the reviews in 2011 but were less involved in the settlement negotiations.

The regulators were prepared to announce a settlement even if some of the smaller banks declined to accept it, three of the people with knowledge of the talks said, in part because of pressure from bankers wanting to report a settlement when they announced fourth-quarter financial results.

Other efforts to help troubled borrowers and address foreclosure abuses include a $26-billion settlement last February among five giant banks and a coalition of federal agencies and state attorneys general.

The reviews of individual cases were distinctive, however, because they represented a chance to gauge the extent of the legal shortcuts, lost paperwork and abusive fees that had prompted widespread complaints.

Consumer advocates fretted that abandoning that process could mean there would be no such definitive accounting of the foreclosure mess. And they called for detailed disclosure of how the consultants had conducted reviews and how the nearly $10 billion would be spent.

“Unlike the AG settlement, which had a huge amount of scrutiny, there’s been a real lack of transparency in the foreclosure reviews and this settlement,” said Paul Leonard, California director of the Center for Responsible Lending.

The proposed settlement includes $3.75 billion in cash payments to borrowers eligible for reviews, two people familiar with the proposed agreement said.

Under the original plan devised by the comptroller and the Federal Reserve in April 2011, 4.4 million Americans whose homes were in foreclosure proceedings in 2009 and 2010 could  request a free review. Only about half a million have done so.

Borrowers who never requested a review would get only a few hundred dollars under the proposed settlement. Those who requested reviews would get bigger payments. And those determined to have definitely or likely suffered harm from flawed foreclosures could be in line for much larger payments.

Another $6 billion in "soft" aid would assist delinquent borrowers, mainly through loan modifications, relocation assistance and short sales, in which homeowners are allowed sell their home for less than they owe on their mortgage. Some, but not all, of those borrowers are among those who had been eligible for the foreclosure reviews.  

 

Payments will be allocated according to the share of the homes in foreclosure in 2009 and 2010. That would mean Bank of America, which at the time was the biggest servicer of the loans, would pay the most.

After the initial agreement was reached with the 14 banks accused of improper foreclosures, the Federal Reserve filed enforcement actions accusing the giant Wall Street investment banks Goldman Sachs and Morgan Stanley of similar abuses. Those cases are pending and it couldn't be determined if those banks would sign on to a similar settlement.

source: latimes.com

California foreclosure activity creeps up in July

The number of California homes entering foreclosure creeped up in July, a new report shows, but in Southern California they were up sharply in the Inland Empire counties of San Bernardino and Riverside.

ForeclosureRadar.com showed that the number of default notices statewide was essentially flat from June, up 1.4% month-over-month, but rose 12.3% from July 2011.

It’s key to watch the number of notices of default, as any new deluge of foreclosed homes will be picked up by an increase in the number of those filings. With that said, a change in the number of foreclosure filings month-to-month by degrees of about 10% are common.

Statewide the number of homes that went back to banks was up 10.4% from the prior month and down 54.2% from the same month a year earlier. Meanwhile, the number of properties sold to a third party was up 10.6% from the prior month and down 6.6% from the same month a year earlier.

The number of foreclosed homes selling on the California market has also been dwindling, which you can read more about here.

The number of default notices ramped up in San Bernardino County last month. Notices of default were up 13.5% from the prior month and 31.2% from July 2011 in San Bernardino County.

In neighborhing Riverside County, default notices were flat from the prior month, up 0.7%, but increased 21.7% from the same month a year earlier.

In Los Angeles County, the number of default notices increased 3.0% from the prior month and up 18.1% from July 2011.

In Orange County, default notices were up 5.5% from the prior month and up 10.5% from July 2011.

In San Diego County, default notices were up 6.1% from the prior month and 21.3% from the same month a year earlier.

In Ventura County, default notices were up 21.8% from the prior month and 21.5% from the same month a year earlier.

source: latimes.com

Rents soar as foreclosure victims, young workers seek housing

Few new units and tight standards for home loans add to the pressure. The average monthly U.S. rent is at an all-time high, and a 10% jump in Los Angeles County over the next two years is forecast.

A nation still struggling to clear up one housing debacle has run smack into another — soaring rents.

The foreclosure mess has pushed millions of former homeowners with tarnished credit into a competitive apartment market across the U.S. Add fresh demand from young workers, few new units and tight standards for home loans, and the result is rental sticker shock not seen in years.

Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts. USC's Lusk Center for Real Estate forecasts a 10% jump in Los Angeles County rents over the next two years. In certain markets, it is now cheaper to own a home than rent.

Menachem Krinsky of Hancock Park recalls how in late 2008 every street seemed ornamented with "for rent" signs when he first moved to Los Angeles from the East Coast. Back then, his landlord was so desperate to keep him as a tenant that he slashed his rent of about $2,000 by $800 after Krinsky's first roommate bailed on the lease.

These days, however, Krinsky's search for a one-bedroom apartment costing around $1,500 is shaping up to be a major headache.

"I am looking for something clean and new, and unless you want to spend a fortune, it's hard," said Krinsky, a 22-year-old art director and graphic designer.

Units that years ago would have languished for weeks are snapped up in days. The Santa Monica-based listing service Westsiderentals.com is operating 14 hours a day to meet demand from renters. The company has even seen a bump in interest for its "platinum" relocation service, which offers to chauffeur clients to various Southern California listings.

Ellie Balderrama, who lists properties in Los Feliz, Silver Lake and Atwater Village for TheRenterGirl.com, said that as many as 20 people have showed up at some of her open houses. The ones who win arrive with completed rental applications and deposits in hand.

"In L.A., people have gotten so used to how relaxed it was, they are not aware how competitive it's become," Balderrama said. "Some people have got it, and some people don't, and the ones that don't suffer."

Rob Magnotta, a real estate agent, recently listed his two-bedroom Irvine condominium for rent on Craigslist for $2,300. He had six applicants within 24 hours, including one who wrote a poignant letter about losing a home to foreclosure.

"It was almost too easy," said Magnotta, who chose another renter. "I know the rental market was strong. But until you are actually renting the place, I think you are surprised it is that strong."

A big driver of rent increases has been demand from young workers who are striking out on their own after doubling up with family members during the worst of the economic downturn.

Alaia Williams, 27, recently moved out of her mother's Inglewood apartment to be nearer to her job at a Santa Monica tech start-up. She and a roommate are splitting the $1,400 rent on a two-bedroom apartment in Palms.

"We can't afford to live" closer to work, she said.

People who've lost their homes to foreclosure or short sales are also feeling the sting. Damaged credit means many must pay a premium or put down a bigger deposit to secure a place.

Robert Corlette pays about $1,700 a month for a two-bedroom town house in Anaheim Hills that he shares with his wife and five children. The family lost their home to foreclosure in 2009 after Corlette lost his $75,000-a-year job selling insurance. His current job, also in the insurance industry, pays about half that.

"There is a lot of pressure," said Corlette, 56. "It wears you down."

The crash has made owning a home more affordable than renting in some markets. An index by the research firm Green Street Advisors compares buying with renting in 79 metro markets; that index hit its most attractive point last year for buying since 1991, when the firm began tracking the data. Researchers calculate that the after-tax cost of a mortgage is only 10% higher than what it costs to rent nationally after taking into account mortgage rates, property taxes and other factors.

Orange and Los Angeles counties remain more expensive for buyers than renters, though that gap has narrowed, according to the index, while owning a home in the Inland Empire is now more affordable than renting.

Rising rents have converted some renters into buyers. Scott Matulis, 48, recently purchased a town home in Oak Park after enduring two consecutive years of rental increases. His mortgage, taxes and homeowner association fees now total $2,200, just $100 more than what he was paying his former landlord.

"I finally just pulled the trigger and figured I'd be throwing money away on rent," Matulis said.

Although rising rents may be motivating home purchases by people who are in good shape financially, those increases are walloping working class families and the poor — groups already hard hit by job losses, lost income and stagnant wages.

Marisela Alfaro has lived in the same one-bedroom Santa Ana apartment for 28 years. A large bed sits in her living room, where she and her husband sleep; their teenage daughters share the bedroom.

Modest religious art adorns her carefully kept home, but outside Alfaro's door the building is in disrepair, with tattered screens, broken lights and graffiti. Alfaro said the family pays $820 a month and feels lucky to have the apartment.

"There are other places that cost much more," she said in Spanish. "It's been difficult because my husband works in the fields, and that's the lowest salary that there is, and if there is no rain, there is no work."

Even for those with better jobs, paying rent can be difficult.

Virginia Villa of Brea, a single mother of four who works as a manager at Disneyland, has doubled up with her adult daughter, who contributes $400 to the monthly household budget. Still, Villa said, about half her take-home pay goes toward rent and utilities.

"I have a decent job and I would love to buy a house, but I don't think that's possible to do," Villa said. "In O.C., it's even difficult to find a substantial apartment or especially a house to rent — the rental cost for houses is really high."

source: latimes.com