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Bank Repo Homes Growth Slows, Default Rates Remain High

Ric DelVizo — Fri, 11 Sep 2009 06:39:32 GMT

The number of bank repo homes in August declined by 12.7 percent compared to the previous month, but default rates remained high, according to a real estate research firm.

As the number of foreclosure cases dropped by 0.5 percent compared to July, the number of repossessed houses repossessed by banks also dropped by 12.7 percent. More than 540,000 homes have been taken bank by lenders from January 1 to August 31.

According to housing analysts, the efforts of the federal government to pressure lenders and servicers to slow down their foreclosures and work out loans could be now making a significant dent on foreclosure filings. Another reason could be the decision of banks to delay their foreclosures or repossession of properties as they wait for better options.

Some lenders who have a lot of unsold vacant foreclosures may have decided not to pursue immediately repossessions and evictions to save themselves from maintaining the properties. They may have assumed that the delinquent borrowers would care for the properties.

Additionally, there had been many cases where delinquent homeowners were able to restore their loans to current status without help from loan modifications, reducing the number of units going to lists of bank repo homes.

According to data released recently by the Boston Federal Reserve, 30 percent of homeowners who failed to make two monthly payments were able to pay their arrears and make their accounts current.

The rise in short sales could be another reason for the drop in foreclosure actions, according to HBN Interactive president Duane LeGate. Lenders prefer short sales if they see that the home price is reasonable.

The one thing that is clouding the horizon is the scheduled resetting of option adjustable rate mortgages starting this fall. Based on a recent Fitch Ratings report, $29 billion of the $200 billion worth of option ARMS taken out during the housing boom will reset to much higher monthly payments by the end of 2009 and $67 billion will adjust next year.

The average monthly payment increase would be 63 percent, which is equivalent to $1,053, an amount too high and unaffordable for many borrowers.

Based on data from First American LoanPerformance, more than 60 percent of all borrowers who took out option ARM loans and more than 80 percent of all borrowers who took out option ARMs from 2006 to 2007 only pay the minimum amount. These very low monthly payments have actually pushed up the principal balances, making monthly payments unaffordable when they reset and pushing more mortgages into bank repo homes listings.

Foreclosure Listing for U.S. Government Foreclosures

Ric DelVizo — Thu, 10 Sep 2009 06:58:56 GMT

You can find a foreclosure listing for U.S. government foreclosures on the web sites of the HUD, VA, and DA or on homesales.gov. You can find commercial and land foreclosures at fasrp.sc.egov.usda.gov, which is the web site of the Federal Asset Sales Real Property.

Anybody can buy a foreclosed residential or commercial property from any federal agency, but you must find an accredited real estate broker, servicing representative or agent to submit your bid.

If you are a first-time home buyer looking for a home foreclosed by the government, it is best if you contact first a housing counselor working with the HUD. There are HUD counselors available across the country.

On the other hand, if you have already found an HUD-foreclosed house on homesales.gov, look for a trusted real estate agent who will submit your bid online. Your agent can submit your bid any day of the week, even during holidays and weekends. Your bid will be examined together with other bids submitted within a certain offer period. If your bid is accepted, HUD will notify your agent. If your bid is rejected, you can bid again in the next round if the home was not sold.

If you found a home you like in the USDA foreclosure listing, contact your local USDA servicing unit, which will give you further information on the conditions of the home and your eligibility for USDA housing programs. The USDA has bidding procedures that vary depending on the conditions of the property and your financial qualifications.

Just like HUD, the VA also requires you to find a real estate agent to prepare the VA form titled Offer to Purchase and Contract of Sale and complete all other documents. Your agent will submit your purchase offer through a listing broker accredited by VA. You can look at the required documents and VA forms at the REO section of ocwen.com.

If you are looking for commercial foreclosures by the government, you can visit the web site of the Federal Asset Sales Real Property. Other federal agencies that sell foreclosed properties but do not use the FASRP site are the Treasury, IRS, Marshals Service, SBA, FDIC, BLM, and Corps of Engineers.

In addition, the foreclosure listing for commercial properties foreclosed by the HUD and DA are also presented in other sites other than the FASRP site. Look for the multifamily properties sections of the web sites of Fannie Mae, HUD, USDA and the Corps of Engineers Properties.

Foreclosure Home Sales Affect Home Prices Differently

Ric DelVizo — Wed, 09 Sep 2009 07:05:33 GMT

The impact of foreclosure home sales on house prices differs state by state, according to researchers of Lender Processing Services Applied Analytics.

The researchers contend that the percentage of sales of bank owned foreclosed properties or REOs is correlated with the rate of house price declines.

Nima Nattagh, one of the key LPS researchers, said that REO sales has risen significantly in almost all areas of the country, but there are some states where REO sales reached a stunning 60 percent of all home sales. She explained that housing markets are much more battered when foreclosures are unprecedented and REO sales comprised a big majority of total home sales.

The LPS researchers focused on two different states – Massachusetts and Michigan – to illustrate their contention.

Michigan was chosen as a representative of the battered housing market because the state, along with Nevada, had the highest percentage of REO sales in the first 6 months of the year. Over 60 percent of total home sales in Michigan were REO sales in the first 6 half of 2009.

The other battered housing markets, Arizona and California, also had large percentages of distressed sales and REO sales, but they had lower REO percentages than that of Michigan. Over 50 percent of total home sales in California and Arizona in the first 6 months were REO sales.

LPS reported that REO foreclosure home sales comprised 64 percent of total home sales in Michigan in the first 6 months. This rate pushed down the prices of non-REO homes by over 26 percent since their highest price levels in 2005. But if REO sales are included in the computation, the drop in home prices was nearly 47 percent.

On the other hand, Massachusetts, which is one of the states which have avoided record foreclosure sales, REO sales did not push down home prices as sharply as in Michigan.

In the first 6 months of this year, only 14 percent of total home sales in Massachusetts were REO sales. This lower percentage pushed down the prices of non-REO homes by only 15 percent. If REO home sales were included in the computation, the home price decline was 19 percent, which is still close to 15 percent.

Another important finding in the LPS report is the increase in the percentage of REO foreclosure home sales despite the decrease in total home sales in the first 6 months of the year in several states.

Foreclosed Homes Continue to Be Part of Fannie and Freddie

Ric DelVizo — Tue, 08 Sep 2009 11:44:14 GMT

Foreclosed homes continue to be part of the operations of mortgage companies Fannie Mae and Freddie Mac. While their finances are being battered by foreclosures, they play big roles in the prevention of more foreclosures.

Fannie Mae had almost $171 billion in delinquent home loans as of the end of June and had allocated $55 billion to cover further home loan losses.

Freddie Mac meanwhile had almost $78 billion in distressed loans and had allocated $25 billion for future home loan losses.

Despite these big losses and big loan loss reserves, Fannie and Freddie have been helping the Obama administration implement its loan modification program to prevent more foreclosures.

Freddie Mac has hired around 600 employees to help modify troubled home loans and monitor the compliance of lenders to the foreclosure prevention program. Fannie Mae meanwhile said it has hired hundreds of additional workers to help carry out the foreclosure prevention program.

Fannie Mae was established in 1938 to help stabilize the mortgage market after the Great Depression. It was later privatized to control budget deficits in the late 1960s. Freddie Mac was created in 1970 to provide competition to Fannie Mae.

The two mortgage entities grew fast in the past decades as they bought home loans from banks, packaged them into securities and then sold them to investors.

When they collapsed last September due to the overwhelming weight of foreclosed homes, the federal government had to save them. Since their rescue, they have used up around $96 billion of taxpayer money allotted to them to prevent the mortgage market from totally collapsing.

As of date, the federal government now controls almost 80 percent of each entity, bearing their increasing problems arising from continued defaults and foreclosures in the housing sector.

Previously, the percentage of borrowers missing their monthly loan payments by three months or more was only 1 percent for both entities. Now the percentage has risen to almost three percent for Freddie Mac and nearly four percent for Fannie Mae.

Barclays Capital predicted that Fannie and Freddie will spend up to $200 billion out of the $400 billion reserved by the government for the two entities.

In the first 6 months of the year, Freddie and Fannie guaranteed almost 70 percent of all mortgages issued nationwide, an increase from 62 percent in 2008 and a significant jump from 33 percent during the boom years when lenders provided loans easily, causing a lot of foreclosed homes.

Repo Homes for Sale in Annapolis Show Home Price Declines

Ric DelVizo — Fri, 04 Sep 2009 07:11:07 GMT

The prices of repo homes for sale in Annapolis, Maryland have been falling as foreclosures and unsold inventories continue to push down prices.

The fact that no one made a bid among the prospective buyers in a court-supervised foreclosure auction held last week at the county courthouse in Annapolis showed that the minimum bid prices were too high for their budgets or too high compared to the market values of the foreclosed properties.

Another public showing of homes for sale in downtown Annapolis during the same week as the court auction showed that the housing downturn is not yet over in the city. A total of 13 new houses in the high-end Acton’s Landing development site were put up for discounted sale because the developer failed to sell them at their original asking prices of over $1 million for many of the properties.

Annapolis seemed insulated from the foreclosure crisis that clobbered a lot of cities, but in reality, the city has also been suffering from sharp home price declines.

The court originally set a public auction for 15 foreclosed houses, but some were canceled a few days before the auction, according to auction firm Alex Cooper. Apparently, some were able to delay the foreclosure sale through special deals with the lenders.

At this particular public auction, although there were investors and real estate agents in the audience, no one made a bid. Ultimately, all the foreclosure properties were sent back to the lender through absentee bids.

Millersville realtor Marcy Gaines said that the prospective buyers apparently surveyed the foreclosed properties and determined that they could not make a profit from the minimum bid prices set by the lender. She added that the Bay Ridge Avenue home was not worth the $145,000 set by the bank.

Meanwhile, the Acton’s Landing housing units are being shown to the public before it will be sold off in an auction later in the month. According to auctioneer Michael Russo, many of the units were already sold before the construction, but buyers backed out when the housing market collapsed even if it meant forfeiting their deposits.

The lowest opening bid is $249,000 and the higher-priced units start at $400,000 and $500,000.

The low auction prices show how sharply home prices have dropped in Annapolis. Condo residents who bought their units in 2007 at around $529,000 have been frustrated at how low the values of their condo units have fallen.

Atlanta Foreclosure Home Auctions to Sell 10,000 Units

Ric DelVizo — Thu, 03 Sep 2009 07:11:16 GMT

Nearly 10,000 residential units will be sold off in court-supervised foreclosure home auctions in 13 counties in the Atlanta region in September, according to an Alpharetta-based real estate firm.

The number of residential properties to be auctioned off this month is the third highest in the history of the Atlanta metro area. In 2008, the number of foreclosed homes for auctions never exceeded the 8,000 level. This year, all monthly totals surpassed 8,000 except one.

In August, the highest number of foreclosure filings occurred in Gwinnett County, with a total of 2,120. Fulton County had 1,929 filings; DeKalb County posted 1,571; Cobb County had 1,107 filings; and Clayton County posted 785.

To help stop the increasing number of foreclosures, Reverend Jesse Jackson and the members of his Rainbow PUSH Coalition carried out a protest prayer vigil at the Federal Reserve Bank in downtown Atlanta. They particularly denounced the foreclosure sales held by courts across the Atlanta metro area.

Jackson cited the billions of money given by taxpayers to big banks and expressed frustration at the failure of these banks to help these taxpayers during difficult times.

In July, Georgia ranked seventh in a chart of foreclosure filings provided by a real estate research firm. With one household out of 356 households notified with default or foreclosure, Georgia posted more than 11,000 foreclosures in July. More than 3,500 of these were already repossessed by banks while more than 7,600 were already posted for trustee sales.

Meanwhile, in a chart of 203 metro areas surveyed across the U.S., the metro area covered by Atlanta, Marietta and Sandy Springs was 35th based on foreclosure rate in the first 6 months of this year. More than 2 percent of all households in the metro area were in the foreclosure process, putting a total of 42,799 housing units in danger of actual foreclosures.

With one in 49 homeowners in the Atlanta area notified with delinquency or foreclosure in the first half of this year, the foreclosure rate of the area increased by nearly 11 percent from the rate in the previous quarter of July to December 2008 and nearly 11.5 percent from the rate in the same 6-month period in 2008.

According to Jackson, he and his group will continue to campaign against bank foreclosures. His group planned to meet with pastors nationwide to plan a strategy against foreclosures, starting with the Rainbow PUSH Coalition regional conference in Atlanta in October.

NY Foreclosed Homes for Sale Bought by Mortgage Holder

Ric DelVizo — Wed, 02 Sep 2009 06:48:53 GMT

Two neighboring high-end foreclosed homes for sale in the Town of Hamburg, New York was bought back by mortgage holder and seller John Russo and the firm Greenacres Inc. which was represented by lawyer Bruce Zeftel from a foreclosure sale held by a court in Erie County.

The two luxurious homes were purchased by Michael Wilson, a 22-year-old hedge fund trader based in Cleveland, in 2008 for $6.3 million. At the time, the purchase became the talk of the town as it pushed up the benchmark for residential real estate transactions in Erie County.

But Wilson was able to pay only slightly over $1 million for each mortgage loan. After Wilson failed to make the required payments this spring, Russo and Greenacres filed for foreclosure.

Greenacres is a company affiliated with the Russo family, who founded South Buffalo-based cheese producer Sorrento Cheese Co. The company was later sold to S.A. Perrier over 10 years ago. Today, Sorrento Cheese is still one of Buffalo’s top manufacturing companies.

Zeftel and Russo were the only bidders during the court-conducted foreclosure auction. Zeftel made a $1.9-million bid for the residential building at 6523 Boston State Road and made a $1.85-million bid for the neighboring building at 6553 Boston State Road. The bidding was largely a credit bid or a paper transaction because Greenacres and Russo held the mortgages on the properties.

According to Anthony Colucci Jr., the Buffalo lawyer chosen by the court to hold the foreclosure auction for the 6523 Boston State Road property, said that the foreclosure decision was easy to make because the defendant, Michael Wilson, clearly defaulted on the loans. It was lawyer Kenneth Case who handled the foreclosure sale for the 6553 Boston State Road building.

Court documents filed by Russo and Greenacres also listed real estate company Phantom One Holdings One LLC as defendant together with Wilson. The company was formed by Wilson to purchase the two homes.

Recently, the high-end residences were raided by FBI investigators looking for documents in connection with their investigation of hedge fund trader Wilson. Until now, however, Wilson has not been charged for anything.

The residence at 6553 was built in 1992 and has over 15,500 square feet while the residence at 6523 was built in 1995 and has 15,000 square feet. Both have indoor pools, in-home theaters and other luxurious amenities.

According to lawyer Zeftel, Wilson has left the residences. He also added that the Russo family will put back the houses on the market soon.

Stop Foreclosure Process, Tax Officials Are Urged

Ric DelVizo — Tue, 01 Sep 2009 11:09:28 GMT

Cities and counties are now being urged by housing advocates and homeowners to stop foreclosure process for homeowners who are delinquent in their property tax payments.

In the past, local governments have not been quick in foreclosing residential properties whose owners are delinquent in paying their real estate taxes. They have more consideration, giving time to homeowners to find ways to pay their arrears. Besides, they do not like seeing families being forced out of foreclosed homes.

But now that cities and counties are reeling from low revenues largely due to low tax collections, they are now forced to find ways to obtain cash to be able to continue funding essential public services and facilities such as public schools, police and fire departments.

Many local governments now are selling delinquent property tax bills to private investment firms, which have no qualms in foreclosing homes if homeowners are unable to pay their debts.

For instance, Lucas County, Ohio has sold over 3,000 unpaid tax bills to a private firm for $14.7 million. Because of the quick accumulation of interests and fees on the tax bills, many homeowners have been put into worse financial situations, with their $1,000 tax bills turning into several thousands in just a short time.

City and county officials say they are in a bind because they do not want residents to be forced out of their foreclosed houses and at the same time they want to obtain cash so they are able to continue operating. They also argue that payment of real estate taxes is a responsibility of any citizen of the country.

Community advocates however reiterate that the short-term gains from turning liens into cash are defeated by the social costs of homeless families and abandoned foreclosed properties.

Additionally, many homeowners assume that property taxes and insurance premiums are included in their monthly loan payments, according to housing advocates.

In 2008, the Federal Reserve required lenders to include real estate taxes and insurance premiums in monthly loan payments, but they imposed the rule only on subprime loans and limited it only to the first year of the home loan.

For other borrowers, the exclusion may mean flexibility in their personal budgets. But for many borrowers, the inclusion of insurance and tax bills in the monthly loan payments for at least five years can step up their ability to save their homes from tax foreclosures.

House Repo Sales in Greater Phoenix Fell, ASU Reported

Ric DelVizo — Mon, 31 Aug 2009 06:49:51 GMT

Total home resales and house repo sales in Greater Phoenix in July slowed down, according to the Realty Studies Unit of the Arizona State University Polytechnic Morrison School of Management and Agribusiness.

In July, a total of 11,500 existing homes were sold in the Phoenix metro area, a decrease from the 11,820 units sold in June and a substantial increase from the 8,165 units sold in July 2008.

With 4,200 foreclosure units sold in July, foreclosure sales comprised 37 percent of total home resales. A total of 7,300 units were traditional sales. Comparing foreclosure sales to traditional sales, about 46 percent of recorded sales were foreclosure properties.

The percentage of foreclosure sales declined in July, compared to the 51 percent share in February 2009 when 4,295 foreclosure properties were sold. Analysts explain that the decline resulted from various federal and state efforts to reduce foreclosures. Foreclosure filings did not immediately result into repossessions as lenders delayed actions to allow homeowners to apply for loan modifications.

In July 2008, a total of 3,470 units or 42 percent of total sales were foreclosures. In July this year, the share of foreclosure sales differed in several areas of the Valley. In Goodyear, 42 percent of total sales were foreclosures while in Mesa, 36 percent were foreclosure sales. In Surprise, 38 percent of total sales were foreclosure properties.

ASU analysts said that although the share of foreclosure sales declined, foreclosure properties still drove total home sales.

Jay Butler, director of the ASU Realty Studies unit, explained that the major participants in the current housing market are still the same as during the housing boom. He added that investors looking for cheap properties to profit from are still the main drivers of sales.

Until the share of foreclosure sales decline to around 3 to 5 percent, according to Butler, a housing market recovery cannot be established. He added that the market has recovered if it is primarily driven by sales of owner-occupant homes.

Butler also said that job losses and reduced income due to furlough programs and reduced salaries have blocked many potential home buyers despite historically low mortgage rates and low-priced homes.

Meanwhile, the median sales price for foreclosure homes across the Phoenix metro area in July was higher than the median sales price for traditional sales because of the rising number of higher-priced properties being foreclosed and sold. The median sales price for foreclosures in July was $148,045 while the median price for traditional sales was $135,500.

Bank Repo Homes Contributed to Problems of Taylor Bean

Ric DelVizo — Fri, 28 Aug 2009 06:21:25 GMT

The servicing of 180,000 Ginnie Mae-guaranteed home loans in the loan portfolio of Florida-based mortgage servicer and broker Taylor Bean & Whitaker has been assumed by Bank of America.

Taylor Bean filed for Chapter 11 bankruptcy in Jacksonville in the first week of August after the U.S. Housing and Urban Development started investigating its business practices and after business contracts with federal agencies were terminated.

TBW has been the country’s 12th biggest mortgage writer before it closed in the week covering August 8. It had $15.25 billion in total deposits and had 158 offices in the Tampa Bay region and operations in other states such as North Carolina. In the Tampa Bay region, TBW ranked first in the mortgage industry, having captured 20 percent of the market.

The lender was little known nationally, but it gained attention when it announced its plan of leading a bank consortium to save Colonial Bank from collapse. The deal however failed and the FDIC decided to close Colonial and sell it to BB&T.

Additionally, the North Carolina Office of the Commissioner of Banks has issued a cease and desist order against the servicer for its role in the continued rise in number of bank repo homes in the state despite its commitment not to proceed with foreclosures pending a state audit.

In the first week of August, the Federal Housing Administration told Taylor Bean to stop processing FHA home loans because of its submission of questionable loans.

Freddie Mac and Ginnie Mae soon followed, suspending the servicer’s authority to provide Ginnie – and Freddie – guaranteed loans. Because of the cancellations, Taylor Bean had to lay off around 2,000 employees.

Taylor Bean said that it will appeal the cancellations, but analysts wonder how the servicer can continue its normal operations. The following week, the Florida Office of Financial Regulation stopped the lender’s operations across the state. It specifically ordered the lender to stop foreclosure filings, stop assessing late fees and stop reporting delayed payments to credit bureaus.

In response to questions from the public, Taylor Bean issued a press release explaining that its problems may have arisen from various investigations on the collapse of Colonial Bank, which has been Taylor Bean’s primary bank for many years. The lender further explained that Colonial has frozen around 100 of Taylor Bean’s accounts and that this caused delays in the payment of borrowers’ real estate taxes and insurance premiums.

Sarasota Market Seeing Signs of Recovery

Ric DelVizo — Tue, 17 Mar 2009 14:56:00 GMT

As reported earlier, Sarasota home sales were up 18% in January. The February numbers are not out yet, but I can assure all who read this that we are definitely seeing the results of a dramatic market correction. Home buyer's continue to educate themselves and are understanding the value of the current market. With home prices low and interest rates at the lowest in decades, home buyer's are beginning to see the benefits of buying in today's market. Here at Coffey & Company Realty, we are even seeing the luxury home market begin to move as home buyers and investors liquidate their portfolios to a more secure investment like real estate. Buyer's need to be aware that there are some fantastic deals out there and once they spot one, time is certainly of the essence. I have personally been involved i several transactions lately where there are three, four, or five offers on the same property. To be successful at purchasing these homes, you need to be eduated, have a great realtor (like me) and move quickly with your highest and best that you have to offer.

Treasury Dept. Details Foreclosure Prevention

Ric DelVizo — Wed, 04 Mar 2009 16:16:00 GMT

Treasury Dept. Details Foreclosure Prevention
The Washington Post

The Obama administration gave details of its massive foreclosure prevention program this morning, releasing guidelines for the program for the first time.

The program has two major components: a refinancing program for homeowners with little equity in their homes, and a loan modification effort for borrowers at risk of losing their homes. It is expected to help up to 9 million homeowners lower their mortgage payments.

Democrats to Temper Mortgage Relief Bill
Washington Post

House Democrats have reached an agreement to narrow the impact of legislation allowing bankruptcy judges to modify troubled mortgages.

Under the current version of the legislation, a bankruptcy judge could cut the principal balance of a homeowner's mortgage, lower the interest rate and extend the terms.

Mortgage Bill Language Undermines Protections, Critics Say
The Washington Post

A quiet effort to pass legislation increasing protections for mortgage borrowers has provoked opposition from banking trade groups and members of Congress, who say the bill will have unintended consequences and that the idea deserves public debate.
The debate over the language is shaping up as an early skirmish in a long, loud battle to overhaul the nation's financial regulations. Democrats are determined to significantly expand the scope of financial regulations, close loopholes and increase enforcement powers

Former Countrywide Leaders Start Firm to Buy Bad Loans
The New York Times

CALABASAS, Calif. — Whether they deserve to be or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering.

So it may come as a surprise that a dozen top Countrywide executives now stand to make millions from the home mortgage mess.

The Geography of a Recession
The New York Times

Job losses have been most severe in the areas that experienced a big boom in housing, those that depend on manufacturing and those that already had the highest unemployment rates.

Check out the related article.

Banks Refusing To Take Back Foreclosed Properties
npr

Let's say you're one of the millions of Americans facing foreclosure. You made mistakes, borrowed more than you should have — or maybe you lost your job — and now have to walk away from your house. In some parts of the country, simply walking away isn't so simple — especially if the bank doesn't want your house.

At 8:30 nearly every Monday morning, employees from the Cuyahoga County Sheriff's Office stand in a windowless room in Cleveland's Justice Center to auction off hundreds of foreclosed houses.

U.S. Likely to Keep the Reins on Fannie and Freddie

Ric DelVizo — Tue, 03 Mar 2009 16:50:00 GMT

U.S. Likely to Keep the Reins on Fannie and Freddie
The New York Times

Despite assurances that the takeover of Fannie Mae and Freddie Mac would be temporary, the giant mortgage companies will most likely never fully return to private hands, lawmakers and company executives are beginning to quietly acknowledge.

The possibility that these companies — which together touch over half of all mortgages in the United States — could remain under tight government control is shaping the broader debate over the future of the financial industry. The worry is that if the government cannot or will not extricate itself from Fannie and Freddie, it will face similar problems should it eventually nationalize some large banks.

'Bad Bank' Funding Plan Starts to Get Fleshed Out
The Wall Street Journal

WASHINGTON — The Obama administration, filling in some of the blanks in its bank bailout, is considering creating multiple investment funds to purchase the bad loans and other distressed assets that lie at the heart of the financial crisis, according to people familiar with the matter.

The Obama team announced its intention to partner with the private sector to buy $500 billion to $1 trillion of distressed assets as part of its revamping of the $700 billion bank bailout last month. It's central to the administration's efforts to unglue credit markets, alongside a Federal Reserve program aimed at spurring consumer lending in areas such as credit cards and home loans that will be officially launched Tuesday.

Mortgage delinquencies up for 8th straight quarter
Associated Press, Google News

CHICAGO — The number of people who were late making their mortgage payments shot up 53 percent in the fourth quarter of 2008 from the same period in 2007, according to data provided by TransUnion LLC.

The credit reporting agency said its database shows delinquencies — or the percentage of mortgage holders at least 60 days behind on payments, considered a precursor to foreclosure — jumped to 4.58 percent nationally, from 2.99 percent for the 2007 fourth quarter.

Bernanke Urges More Government Action on Recession
The Washington Post

The government needs to continue moving aggressively to combat the recession and financial crisis, even as it takes steps to rein in the budget deficit in the longer term, Federal Reserve Chairman Ben S. Bernanke said this morning.

Testifying to the Senate Budget Committee, Bernanke said that more money may be needed to stabilize the financial system.

Government Finalizes New $200B Lending Program
The Washington Post

The Treasury Department and Federal Reserve today announced the final terms of a long-awaited program to jump start lending for automobiles, small businesses, education for students and credit cards.

The Term Asset Backed Securities Loan Facility was unveiled in November. But because of the complexities involved in establishing the plan, the agencies needed until today to finalize the details. The program will begin operating on March 25 and in its initial phase will deploy $200 billion. It could be expanded to $1 trillion in the future, and could eventually include commercial real estate lending and perhaps residential mortgages, government officials have indicated.

Index of Pending Home Sales Hits a Low
The Associated Press

WASHINGTON — The number of homebuyers who agreed to purchase an existing home sank to a low in January as economic woes turned them away from the staggering housing market, the National Association of Realtors said Tuesday.

The group’s seasonally adjusted index of pending sales contracts fell 7.7 percent to 80.4 in January from a downwardly revised December reading of 87.1.

Chief of Freddie Mac Resigns

Ric DelVizo — Mon, 02 Mar 2009 17:25:00 GMT

Chief of Freddie Mac Resigns
The New York Times

The struggling mortgage lending giant, Freddie Mac, said Monday that its chief executive, David M. Moffett, had resigned effective March 12.

The board, in a statement, said it was working with its regulatory overseer, the Federal Housing Finance Agency, to find a successor.

How Washington can prevent ‘zombie banks’
James Baker, Financial Times

Beginning in 1990, Japan suffered a collapse in real estate and stock market prices that pushed major banks into insolvency. Rather than follow America’s tough recommendation – and close or recapitalise these banks – Japan took an easier approach.
It kept banks marginally functional through explicit or implicit guarantees and piecemeal government bail-outs. The resulting “zombie banks” – neither alive nor dead – could not support economic growth.

A period of feeble economic performance called Japan’s “lost decade” resulted.

Plan to limit mortgage deduction draws fire
Alan J. Heavens, The Philadelphia Inquirer

Any effort to change the tax-deduction rules for mortgage interest, as President Obama has proposed in his budget, is guaranteed to bring the housing industry to its feet, shaking its fists.

The protests began in earnest moments after the president announced his budget plan Thursday.

State bills would offer extra foreclosure protection
The Indianapolis Star

INDIANAPOLIS — State lawmakers appear poised to give Hoosiers facing foreclosure an extra shot at working out a deal to save their homes.

At the midpoint of the 2009 legislative session, both the Republican-controlled Senate and the Democrat-controlled House have passed bills that would force lenders to meet with borrowers hoping to renegotiate the terms of their mortgages.

Wells Fargo and National Urban League Publish New Foreclosure Prevention Workbook

LOS ANGELES — Wells Fargo announced today that with the National Urban League it will co-sponsor a new edition of The Foreclosure Workbook: The Complete Guide to Understanding Foreclosure and Saving Your Home. The workbook, written by foreclosure author Carla Douglin, will be free-of-charge to at-risk customers across the nation through Wells Fargo’s Leading the Way Home® initiative.

“Our vision has long been to help our customers succeed financially by helping them achieve and sustain homeownership,” said Cara Heiden, co-president of Wells Fargo Home Mortgage. “We believe in doing what is right for our customers, and that includes working with them to find solutions to keep them in their homes when they face financial difficulties.”

Don't overregulate real estate
Doug Patterson

'm certainly not against regulation, and I'm not trying to defend the status quo. I'm against BAD regulation, and against government interference in free markets. I'm also opposed to CHANGE for the sake of itself. The discussion is good, but let's be sure we use our brains and THINK about the consequences of change.

MORE GOVERNMENT never helps anything because governments are not subject to, and therefore don't understand, free markets.

Distressed Properties: What Are They and When to Act?

Ric DelVizo — Mon, 02 Mar 2009 01:45:00 GMT

There are many terms that come to mind when we think about distressed properties. Foreclosures, Pre-Foreclosures, Short-Sales, Bank-Owned, REO’s, etc. It can be a bit confusing, but to summarize:

Foreclosures, Bank-Owned properties, and REO’s are all the same.

Pre-Foreclosures and Short-Sales are also both the same.

The term REO stands for “Real Estate Owned” by the bank that has already been foreclosed on. Foreclosure is a process by which the bank (lender) takes a property, or collateral, from a customer who has defaulted on their mortgage. The term REO is a term predominantly used by the banks to describe their bank-owned, foreclosed properties.

Most borrowers who are in default of their loans attempt to “Short-Sale” their property. This does not mean that the process is shortened by any means. It really just means that the borrower (now the seller) is attempting to sell their property or less than they owe on it in an attempt to avoid foreclosure. The bank must agree to the sales price, an if applicable, so does a secondary lender or the Private Mortgage Insurance company...or both. This time period of the short-sale process is called “pre-foreclosure”, so the two terms are used interchangeably.

According to Ric Del Vizo of Sarasota Foreclosures Now, the idea for a home buyer or investor is to maximize their equity or potential equity in one of these properties by obtaining them at the best possible price. Many of the best properties go fast, so the idea of waiting around to see what happens may not always be a good one.

You should look for an experienced agent who knows the process and knows how to protect your best interests when dealing with these lenders. The last place you want to find yourself is to be stuck in a contract on a property that is fast becoming a “money-pit”. There are a lot of great deals out there and once you find them, you are going to want an agent who can act fast in an intelligent and skillful manner.

25 People to Blame for the Financial Crisis

Ric DelVizo — Fri, 27 Feb 2009 18:33:00 GMT

25 People to Blame for the Financial Crisis
TIME Magazine

Who’s at fault? The good intentions, bad managers and greed behind the financial meltdown is exposed by TIME Magazine. View the list.

HUD Secretary, Congress Debate Foreclosure Plans
Washington Post

Against a backdrop of record-low new home sales and ballooning losses from foreclosures, Housing Secretary Shaun Donovan told lawmakers Thursday that the lending industry is set to launch the Obama administration's $75 billion foreclosure prevention program next week.

Final details will be released Wednesday, but Donovan said the plan will allow borrowers with big debts from car loans, credit cards and unaffordable mortgages to have their home loans modified to lower the monthly payment, even if they are not in default.

House of Cards: The Faces Behind Foreclosures
TIME Magazine

In the one-strike economy, it's not just the subprime suckers going down. Trouble stretches beyond the province of liar loans, condo-flipping and the collateralized debt obligations that no one fully understands. A hard rain now falls on the just as well as the unjust. Consumers have stopped spending, factories have stopped operating, employers have stopped hiring — and home values continue to fall. For millions of people, the margin between getting by and getting buried is becoming as thin and as bloody as a razor blade.

Citigroup is Bailed Out Yet Again by the American Government
The Economist

In a matter of weeks the nationalization of America’s banks has gone from taboo to talking point. Politicians on both left and right accept that America’s sickest banks may need to be taken over and restructured and their good parts returned to private ownership. On Friday February 27th Citigroup and the Treasury reached a deal that took a big step towards what would in essence be partial nationalization. Through conversions of preferred stock the government will end up with up to 36% of Citigroup, though the final figure will depend on how many preferred shares private holders agree to swap.

Calif. Offers Tax Break for New-home Buyers
San Francisco Chronicle

California is offering a big carrot to people who buy brand-new homes in coming weeks: a $10,000 state tax credit for new-home buyers who close escrow starting Sunday.

With the housing sector in near-collapse and construction starts at record lows, home builders hope the credit helps them clear out inventory and kick-start their beleaguered industry.

Bankruptcy Law May Be Modified

Ric DelVizo — Thu, 26 Feb 2009 22:20:00 GMT

Bankruptcy Law May Be Modified
Chicago Tribune

Congress is poised to give bankruptcy judges more power to modify primary home mortgages in an attempt to halt the foreclosure crisis, a move Democrats and housing advocates have been pushing for two years in the face of stiff opposition from Republicans and the mortgage industry.

The House of Representatives is expected to pass the legislation Thursday.

The measure would temporarily remove an oddity in bankruptcy law: Judges can reduce or cram down the principle on a vacation home, car, or boat, but they cannot do it to a mortgage for a primary residence.

CA Legislature Passes 90-Day Foreclosure Moratorium
Housing Wire

The California Legislature, as part of the recently-passed budget package, approved Friday, legislation SB2X-7 and AB2X-7, which provide for a 90-day foreclosure moratorium.

The bill, introduced by Sen. Ellen Corbet (D-San Leandro), covers owner-occupied homes where the first loan was recorded between Jan. 1, 2003 and Jan. 1, 2008. “Many people in our communities are facing the terrible specter of foreclosure,” Corbett said, according to the San Francisco Chronicle. “I’m just trying to find a way to help.”

Realogy Posts $1.9-billion Annual Loss
Los Angeles Times

Buyout firm Apollo Management agreed to invest as much as $150 million in Realogy Corp. after the real estate broker reported a 2008 loss of $1.91 billion.

Realogy, owner of the Century 21 and Coldwell Banker brands, said that Apollo would provide the "equity infusion" only if necessary and that it might not need the full amount. Realogy said it remained in compliance with debt agreements, according to a regulatory filing Wednesday.

New-Home Sales in U.S. Plunge to Record-Low — $309,000
Bloomberg

Sales of new homes in the U.S. plunged in January to a record low as soaring unemployment and mounting foreclosures drove buyers away.

Purchases dropped 10 percent to an annual pace of 309,000, the lowest level since data began in 1963, the Commerce Department said today in Washington. The median price decreased 13.5 percent, the most in almost four decades.

Moody’s May Downgrade More Subprime-Mortgage Debt
Bloomberg

Moody's Investors Service raised its loss estimates for $680 billion in U.S. subprime residential mortgage-backed securities issued between 2005 and 2007 and put them on risk for possible downgrade, the latest hit to the ailing financial system.

The ratings agency also said by the end of the year, one-third of subprime borrowers who are currently paying on their mortgages will become delinquent and eventually default, representing 19% of outstanding loans.

First-Time Homebuyer Tax Credit

Ric DelVizo — Thu, 26 Feb 2009 20:25:00 GMT

Are you going to be a first-time homebuyer this year? Then you may want to take advantage of the new $8,000 tax credit. There are some rules, so let me explain:

Some recent analysis indicates that the following rules may apply – albeit some changes could be forthcoming as we get the “weigh in” from tax professionals around the nation:

The deduction is worth 10 percent of a home’s value up to $8,000. This means that if you buy a $60,000 home – your credit will be $6,000. It also means that all homes purchased for more than $80,000 may qualify for the maximum credit amount of $8,000.

Income Limits for a full tax credit: A married couples’ modified adjusted gross income (MAGI) should be under $150,000 and; Single filers’ MAGI should be less than $75,000.

Partial tax credits may also be available for those who may more than the limits listed above. To be eligible for a partial tax credit, married couples must have a modified adjusted gross income (MAGI) over $150,000 but under $170,000; and single filers with incomes over $75,000 but under $95,000.

Married couples filing separately: Both claim 5 percent of the home’s purchase price on their tax returns. This means that for a home purchased at $80,000 or more, each can receive a $4,000 credit each.

Other Issues to Consider:

Unlike a tax deduction, this is a tax credit. That means the entire amount goes back to the first-time homebuyer! Deductions on the other hand, such as mortgage interest, are subtracted from gross income before tax is calculated and reduce you taxable income. If qualified for $8,000, the buyer gets $8,000; even if they would not owe that much in taxes otherwise.

The tax credit applies to homes purchased between Jan. 1, 2009, and Dec. 1, 2009.

The tax credit does not have to be paid back, providing the homebuyer keeps the property for at least 36 months and resides in the home.

To qualify as a first-time homebuyer, the purchaser cannot have owned a home within the previous three-year period. However, ownership of a vacation home or rental home does not disqualify the buyer.

If purchasing a new home, the effective date to receive the credit is the first day the homeowner actually lives in the house. If construction began in 2008, that buyer could still qualify. And if construction begins in 2009, but the owner does not take possession until 2010, the buyer would not qualify.

The tax credit can be claimed on 2008 income tax forms even though the purchase took place in 2009. A buyer could close on a home the same day that the President signs it into law, fill out their income tax forms the next day, and receive the tax credit fairly quickly.

The tax credit is not a down payment, but it could be used toward a down payment if first-time homebuyers plan ahead. U.S. taxpayers have money withheld from every paycheck for income taxes. If they owe more tax than the amount deducted, they pay the IRS; if they owe less, they get a tax refund.

By anticipating at least an $8,000 refund in early 2010 when they file 2009 taxes, these buyers could cut down on their tax withholding this year and save the money toward a down payment. There is one caveat, however: Should they not buy a home in the qualifying period, they would still owe the IRS the money, and reducing their withholding amount could result in a high bill at tax time.

This article is provided for informational purposes only. Always consult your tax professional or IRS for specific information regarding your taxes.

If you are interested in learning more about this tax credit or would like additional information on various options to purchase and finance your new home or investment property, please feel free to contact Ric Del Vizo at www. SarasotaForeclosuresNow.com

HOPE NOW: Deal or No Deal?

Ric DelVizo — Wed, 25 Feb 2009 20:03:00 GMT

Today's MBA Newslink featured a story titled HOPE NOW Enlists Celebrities to Target At-Risk Homeowners. The story describes how this new program, called Bringing Hope Home, is intended to raise awareness of HOPE NOW by featuring celebrities such as Queen Latifah, Wyclef Jean and NYC radio personality Angie Martinez in educational videos, radio spots and direct mail campaigns which will encourage distressed homeowners to contact their loan servicer and seek foreclosure prevention counseling.

While I salute the effort - anything that can help a homeowner avoid foreclosure is worth trying - it strikes me that they've picked the wrong celebrities. We really should be seeing Howie Mandel, or, for older homeowners, Monte Hall and Bob Barker. In fact, maybe HOPE NOW should consider putting someone like Howie, Monty or Bob in charge of the entire loan modification program, because they have a much better track record of making a deal work out.

HOPE NOW claims to have prevented 2.2 million foreclosures between July 2007 and November 2008, and to have modified 950,000 loans during that period. Unfortunately, according to the U.S. Comptroller's Office, some 53% of borrowers with loans modified in the first three months of 2008 and 51% of those with loans modified in the second quarter could not keep up with payments within six months. And, as anyone familiar with RealtyTrac U.S. Foreclosure Report already knows, foreclosure activity spiked by 81% from 2007 to 2008, when over 2.4 million households received at least one foreclosure notice. Obviously, the loan modifications, loan workouts and other deals being made with at-risk borrowers aren't working as planned. In fact, many borrowers complain that their monthly payments have actually gone UP after the loan modification process, which defies all logic, but is perfectly in synch with the level of dysfunction in the financial markets today. Other borrowers complain that they've tried desperately to reach their loan servicer to discuss short sale offers or re-work loan terms only to give up in frustration after either not being able to get in touch with anyone, or having their pleas fall on deaf ears.

Using celebrities to generate awareness and stimulate participation in the program is a good idea. But getting the deals right - modifying loans in a way that makes the monthly payments affordable and the principle balances more in line with current market prices - is what HOPE NOW member organizations really need to focus on if the initiative is going to succeed. Getting the deals right mean keeping borrowers in homes, keeping distressed properties out of inventory, and helping the financial industries clean up their balance sheets. Bad deals result in more foreclosures, more carnage in the real estate market and more of the economic devastation we're currently wading through.

I'll trade Queen Latifah for the loan restructuring program behind door number two, Monty. Deal, or no deal?

January Existing Home Sales Fall by 5.3 Percent

Ric DelVizo — Wed, 25 Feb 2009 19:19:00 GMT

Lawyer Outwits Banks in Foreclosure Battle
New York Post

While the Obama administration battles to keep people from losing their homes, one Florida lawyer said she has a better answer to the toxic mortgage epidemic sweeping the country — fight back against the loan servicers and banks that are improperly pressing the foreclosure actions.

In essence, Charney has forced scores of plaintiffs in foreclosure actions in Jacksonville to admit they don't have legal ownership of the securitized mortgage they are trying to foreclose upon - stopping the home takeover battle in its tracks.

January Existing Home Sales Fall by 5.3 Percent
The Associated Press

A real estate group says sales of existing homes took an unexpected plunge from December to January, falling to the lowest level in nearly 12 years as buyers waited for the government to boost the U.S housing market.

The National Association of Realtors said Wednesday that sales of existing homes fell 5.3 percent to an annual rate of 4.49 million last month, from 4.74 million units in December. It was the weakest showing since July 1997.

Recession Could End This Year, Fed Chief Says
Washington Post

The nation's top economic policymaker yesterday offered a sliver of optimism in a time of gloom, saying in carefully hedged comments that growth could return next year if the financial system is put in order.

In congressional testimony, Federal Reserve Chairman Ben S. Bernanke depicted an economy undergoing a "severe contraction." But Bernanke said the recession could end in 2009, paving the way for a "year of recovery" in 2010.

Links, Lawsuits and Privacy in the Age of Real Estate 2.0
Inman News

In an important case for bloggers and real estate sites in general, real estate aggregator BlockShopper got its hand slapped heavily this month for doing what many of us do ... that is, publishing and linking to publicly available sources on the Internet. (Read related article: BlockShopper Settles Suit With Law Firm).

BlockShopper, a site that was launched in 2006, was built to aggregate real estate data in a number of metro areas around the country. One of the main features on the site is a daily news summary of real estate transactions in each city. ("Italian anesthesiologist drops $1.3M in Riverdale" serves as an example.)

Renters Lose Edge on Homeowners
Wall Street Journal

The relative cost of owning versus renting is swinging back in favor of homeownership in some U.S. markets, buoyed by several quarters of sharp declines in home prices.

At the height of the housing boom, as home prices surged, demand for rentals started to rise as the gap between owning and renting widened significantly. Even after the housing market soured, apartment demand grew as former homeowners became renters, allowing landlords to push healthy rent increases.

Now, after two years of rapid home-price depreciation, the relationship between the cost of rental payments versus after-tax mortgage payments is tilting toward ownership in a number of metropolitan areas.