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

Refinancing, repeatedly for lower mortgage rates

(Marketwatch) — Homeowners eager to lock in lower monthly mortgage payments have discovered serial refinancing, a practice last in vogue during the housing boom.

To keep up with falling rates, almost 2.2 million homeowners have refinanced their mortgages at least twice since 2009, according to data compiled for The Wall Street Journal by SMR Research, a mortgage-research firm in Hackettstown, N.J.

From 2006 through 2008, some 3.5 million homeowners refinanced at least twice.

There is little incentive to stop refinancing. Rates are still hovering near record lows, and lenders increasingly are offering to waive some or all of the closing costs for the borrower, making refinancing effectively freeor at least very cheap.

Dean Spalding, a financial-services executive in Louisville, Ky., has refinanced his 15-year mortgagewhich now has a balance of roughly $350,000four times since 2009, including twice in the past 12 months. Over this period, his rate has dropped from 4.25% to 2.875%. After his last refi, he says, his monthly mortgage payment dropped by about $150.

“It has been a no-brainer,” says Spalding, who used First Commonwealth Mortgage, a mortgage broker based in Louisville.

The last time homeowners were so eager to refinance, it was a more expensive proposition. At the height of the housing boom, 86% of borrowers who refinanced took out cash and ended up with a higher loan amount, according to Freddie Mac.

To do so, they typically agreed to pay thousands of dollars in closing costs and often a steep prepayment penalty, a fee levied on those who paid off a substantial portion or all of a mortgage typically in less than four years.

Those costs made refinancing prudent only for those who could get a significantly better rate, often two percentage points or more, financial advisers said, and expected to stay in their houses long enough for the monthly savings to offset the upfront costs.

Read full article from MarketWatch

source: thenichereport.com

Bank coffers swelling with profits from mortgage sales

Independent mortgage bankers and the home-loan arms of major banks are making the highest profit in years on loans they make and then sell, thanks to rock-bottom interest rates.

The record-low rates have been a recent boon to borrowers, who have enjoyed 30-year fixed-rate loans starting with a "3" for the first time.

But the rates could be still lower if lenders cut their profit margins, according to data released Friday by the Mortgage Bankers Assn.

Instead, bankers have been making extra money by keeping the rates higher than necessary, which makes them more profitable when they are sold to Fannie Mae, Freddie Mac or other buyers in the secondary markets, the Mortgage Bankers Assn. figures show.

The lenders made an average profit of $1,654 on each loan they originated in the first quarter of 2012, up 51% from $1,093 per loan a year earlier.

Secondary-market income rose from an average $3,827 per loan in the first quarter of 2011 to $5,011 in the latest quarter, a gain of 31%. The average gain on the sale of a loan was the highest since the trade group began tracking mortgage banker production profits in 2008.

One factor in the bonanza is big banks charging higher than market rates when they refinance their customers using the government's Home Affordable Refinance Program. HARP lowers the risks for banks despite the fact that the borrowers owe more than their homes are worth.

Nomura Securities analyst Brian Foran said in a recent report that the banks are typically making an extra 2% of the HARP loan amount — an additional $7,000 on a $350,000 loan, for example.

The gains in profit have come despite rising costs for personnel, commissions, office space and equipment in the mortgage industry, the trade group said.

source: latimes.com