Here are the April 2010 housing stats for Riverside County, California:
Notice of Defaults-Over the last 120 days=10,122
Notice of Trustee Sales, last 120 days, Currently Scheduled=12,976
Actual Trustee Sale-Over the last 120 days=6,275, Now bank owned
In San Bernardino County:
Notice of Defaults-Over the last 120 days=7,903
Notice of Trustee Sales Currently Scheduled=10,427
Actual Trustee Sale-Over the last 120 days=5,224
In Sacramento County
Notice of Defaults-Over the last 120 days=5,406
Notice of Trustee Sales Currently Scheduled=5,520
Actual Trustee Sale-Over the last 120 days=3,485
In San Joaquin County
Notice of Defaults-Over the last 120 days=2,833
Notice of Trustee Sales Currently Scheduled=3,303
Actual Trustee Sale-Over the last 120 days=1,729 *Information is available for your individual City or zip code, throughout California- Source, Foreclosure Radar
HELP’s April Report On Housing & Finance
Not All Predictions Come True
The fact that the sky did not fall when the Fed’s stopped buying mortgage backed securities and Citi’s issuance of securities for Jumbo loans went very well recently, is a very positive sign. With so much mixed news coming from too many different sources, it is difficult to get an actual read on whether or not we will have major problems in 2011. Elizabeth Warren, Harvard Law Professor and Congressional Oversight Chairwomen for TARP, has expressed her concerns about the Commercial mortgage markets and Residential mortgage markets having adjustments at the same time beginning in 2011 through 2014. It shall be interesting to witness just how motivated folks are to pay on assets that have significantly less value than the market value.
Some Homeowners Just Aren’t Listening
It appears there are a small number of homeowners who are actually following the lead of the Mortgage Bankers Association (They short sold their commercial building for an approximate 30 million loss to the lender) and other industry leaders when it comes to parting company with a depreciating asset, especially, if they are financially struggling.
The quarterly Chicago Booth/Kellogg School Financial Trust Index shows “a marked increase” in the number of homeowners willing to default even if they can pay the mortgage if the value of their house is underwater.
In March 2009 only 22% of foreclosures were deemed “strategic,” in March 2010 it increased to 31%.
This change represents a risk that growing numbers of homeowners may walk away from their mortgage.
Other factors including new federal initiatives are negatively affecting borrowers. The likelihood of strategic default increased by 23% if homeowners learn their neighbor with negative equity in the house received loan forgiveness.
That probability goes up to 29% if homeowners can find alternative financing for a new home. Source- National Mortgage News
An Opinion That Actually Matters To Our Elected Leaders
Alan B. Krueger
Assistant Secretary for Economic Policy & Chief Economist
The housing downturn, financial market crisis, and job losses were major setbacks for U.S. households. On net, household wealth fell by about $17 trillion, or 26 percent, from its peak of $66 trillion in the second quarter of 2007 through the middle of 2009, as home values tumbled and equity markets plunged. Recently, however, consumer finances have shown signs of improvement. Rising stock prices and stabilizing home prices have helped lift household net worth by nearly $6 trillion since the first quarter of 2009 to a little over $54 trillion in the fourth quarter. By the end of 2009, household wealth as a share of disposable income had risen to 490 percent from a low of 451 percent at the start of the year, boosted by increases in stock prices and stabilizing house prices. The ratio is back above its 1955 to 1995 average of 472 percent. Household debt has fallen steadily for nearly two years, as households have pared back their use of consumer credit and taken on less mortgage debt. Debt as a share of disposable income has declined from a record high of 131 percent in the first quarter of 2008 to 123 percent in the fourth quarter of 2009.
People Continue To Get Scammed
Modification scams are just as prevalent, but now they are claiming to just be “filling out the paperwork”. I have called these companies as a homeowner in trouble and they assure me that I qualify for government assistance and they have “special relationships” with the banks. Depending on my circumstances and my loan size, they charge between $600 and $5,000!!!
We must do more community outreach.
Another regular scam is to abuse the Bankruptcy laws and delay foreclosures. Or, transfer property into trust and attempt to cloud the Title. Here is the outcome for one man who was doing this on a large scale:
…”The lengthy sentence imposed (16 years) in this case reflects the damage this defendant did to dozens of banks, including the now-failed Omni National Bank, as well as his abuse of U.S. Bankruptcy Courts in three states from his fraudulent filings designed to delay property foreclosures,” said U.S. attorney Sally Quillian Yates.
Even if you believe a homeowner should use the law to their advantage, be careful here. Being right, doesn’t necessarily mean you will have the financial resources to prove it in court, or defend yourself from an over aggressive lender.
Short Sale Scams have become the rage and people are paying money upfront to facilitators who promise folks they can remain in their home during the short sale and buy the property back in two to three years, but they need to pay money upfront for this option. Since most lenders require an addendum signed prohibiting this, this can be very costly to a borrower and usually does not have a happy ending. Further, it is a crime against a Federally Chartered Institution, which means the FBI will get involved.
Not all of these circumstances are scams. If there is no money upfront AND, the lender does not require an addendum to be signed in the short sale agreement, perhaps you might have a legitimate investor and transaction. Be careful here and check with the HELP program or your local HUD Approved Counseling agency, or an attorney that is familiar with real estate law.
A second Credit Report for All Borrowers
After June 1, 2010, Fannie Mae will require a second credit report pulled just before the loan closes to avoid fraud in which a borrower applies with two different companies for a loan in the hopes the one lender will not be aware of the other lenders action and thereby allowing the borrower to run off with the funds. This is called “shotgunning” and it is not all that un-common.
This will actually hurt many borrowers as they learn the hard way that buying the new bedroom set, prior to closing escrow, may have affected their ratios or credit score enough to stop the loan from funding.
California, you’re No Longer Number 1! Florida Is the Worst
Amy Heinz, director, mortgage fraud program, at Fannie Mae said recently at the Mortgage Bankers Association Conf, in Chicago, that Florida has surpassed all other States when it comes to committing fraud.
What had been loan modification fraud is turning into short sale fraud, because scammers can make more money in a shorter period of time. In 2009, short sale activity at Freddie Mac increased by 250% from the previous year. In the first three months of 2010, it has increased 65%.
CEO’s Of Rating Agencies VS. Former Employees
In a recent hearing, the CEO’s of Moody and Standard & Poors, defended themselves against allegations that they gave positive ratings to maintain market share. Former employees testified that they were discouraged, they said, from raising questions about the credit quality of some loans backed by mortgages. Eric Kolchinsky, a former director of Moody’s derivatives group, testified that in October 2007, days after the firm downgraded $33 billion in subprime bonds, he was reprimanded by e-mail because quarterly market share fell to 94%, from 98%. Ouch. E-mails never go away, never. Source- National Mortgage News
No One Is Exempt From An Audit
By an overwhelming majority and with strong bipartisan support, the Senate voted in favor of a measure that would require the government to conduct an unprecedented one-time audit of the Federal Reserve. The 96-0 vote was meant to make “it clear that the Fed can no longer operate under the kind of secrecy it has been operating under,” said Sen. Bernie Sanders, the measure’s author. The Fed will also be required to release the names of institutions which received in total more than $2T in loans during the financial crisis. Source – WSJ
Citigroup mortgage analyst Robert Young believes…
…there are three million mortgages in “suspended animation” with troubled borrowers living in homes and who haven’t made a payment for six months or more.
“It seems like all the actions the banks and government have taken is to avoid this fire sale,” he said. Despite the carrying costs, “the government and the banks are managing liquidations to avoid a fire sale.”
As a result, home prices may remain relatively stable for several years. But there is a “trade-off,” Mr. Young said. “We aren’t going to see a rebound (in prices) either.”
Very Interesting
The Senate voted 63 to 36 to add an amendment from Sens. Jeff Merkley of Oregon and Amy Klobuchar of Minnesota that would effectively ban yield-spread premiums.
The Merkley provision would require a mortgage originator ensure a borrower’s ability to repay a mortgage for five years based on verifiable income documentation such as tax returns or other financial documents. Regulations implementing the standard would be left to the consumer protection bureau to write and enforce.
Mixed News For Those Who Want To Know Too Much
A total of 103,762 properties received default notices in April, a decrease of 12% from March and down 27% from a year ago, according to RealtyTrac. Even with these substantial drops, the number of properties now part of real estate owned hit a record monthly high for the report with a total of 92,432 properties repossessed by lenders, up 1% from the previous month and up 45% from April 2009. RealtyTrac expects a similar pattern to continue for most of this year “with the overall numbers staying at a high level and ripples of activity hitting the various stages of the foreclosure process as lenders systematically work through the backlog of distressed properties.”
In total, foreclosure filings were reported on 333,837 properties in April, a 9% decrease from March and down 2% from April 2009. Of this, foreclosure auctions were scheduled on 137,643 properties in April, a decrease of 13% from March. Nevada posted the nation’s highest state foreclosure rate for the 40th straight month. A 57% monthly increase in REO activity pushed the state’s overall foreclosure activity up 10% from March. Arizona saw a decrease of 15% from the previous month, but the state’s foreclosure rate moved from third highest in March to second highest in April thanks to an even bigger decrease in California. The state reported 69,725 properties with a foreclosure filing, although that total was down 25% from March and 28% a year ago. Florida activity was down 18% from the previous month and down 25% from April 2009, but the state still documented the nation’s second highest state foreclosure activity total, with 48,384 properties receiving a foreclosure filing during the month. Metro areas in the sand states of Nevada, Florida, California and Arizona continued to account for all of the top 10 foreclosure rates among metropolitan areas with a population of 200,000 or more, but foreclosure activity decreased on a year-over-year basis in nine of those top 10 metros.
Making Home Affordable Servicers Report through April 2010
Wall Street Journal- Nearly a quarter of the 1.2M homeowners offered help through the government’s mortgage-modification program have dropped out of the program so far, according to a newly released report. Those who are weeded out of the program often end up worse off than if they had never participated in the first place, having exhausted their savings and delayed taking actions that could have given them fresh starts in more affordable homes.WSJ
Perhaps it is due to running a large banking company and having an acute awareness of the lack of underwriting that was rampant in the industry, but I have been lamenting for two years that too many people are in homes they cannot afford and to offer false hope by suggesting banks are going to do things that are counterintuitive to their survival and profits, well, it’s just silly.
From 1940 to 2000 we averaged 56% homeownership in America; in 2006 we congratulated ourselves on reaching nearly 70% homeownership. Isn’t it interesting if one takes the difference between the two figures, 14%, that this is almost the number of homeowners that Goldman Sachs and the Center for Responsible Lending predict will fall behind over the next three years?
If Treasury is coming out aggressively with a short sale program and Fannie Mae and Freddie Mac re-wrote their guidelines to make it easier for one to buy after a short sale, it has been done after careful consideration from the top lenders; BofA, Wells Fargo, Chase and Citi. What is the message? It’s okay to short sale and in fact if you can’t truly afford your home, it is encouraged. The banks would rather get your property back and deal with it today, then get it back in the future. (Note, I said deal with it, not put it on the market)
Here is the most recent HAMP report, note the cancellations, this is disconcerting:
http://www.financialstability.gov/docs/April%20MHA%20Public%20051710%20FINAL.pdf
According to Fitch
They have recently downgraded some Residential Mortgage Backed Security pools;
“…The projected mortgage losses reflect a home-price assumption of approximately another 10% decline in national home prices from the first quarter of the year, reflecting a total peak-to-trough assumption of approximately 36%. Fitch believes home prices will ultimately be negatively affected by an increase in distressed-property liquidations as servicers identify a greater number of borrowers unwilling or unable to have their loans successfully modified.” Source-Mortgage Orb
Good News from BofA
Bank of America has completed about 56,400 permanent mortgage modifications under the Home Affordable Modification Program (HAMP), and has now completed a total of more than 600,000 modifications through all available programs since January 2008, the company says.
The bank was able to convert almost 24,000 loans from trial modifications to permanent modifications in April, completing the process for more borrowers than in any previous month, says Jack Schakett, Bank of America Home Loans’ credit loss mitigation strategies executive.
It Has Taken Longer Than Anyone Wanted It To, But Fannie Came Through On This One
Fannie Mae is pleased to introduce Workout Evaluator™, a new Web-based technology tool that automates key functions required of servicers to evaluate borrowers for the Home Affordable Modification Program (HAMP).
Workout Evaluator offers the following key features and benefits:
- Assists Fannie Mae servicers with HAMP eligibility determinations by automating the net present value (NPV) test and the modification “waterfall” methodology (the steps used to bring a borrower’s housing payment down to 31% of the borrower’s gross monthly income, as required by the program).
- Generates key data required for HAMP reporting via Fannie Mae’s HomeSaver Solutions® Network (HSSN) and via the U.S. Treasury Department’s HAMP Reporting Tool.
- Provides a streamlined and affordable HAMP automation option for Fannie Mae loans, without requiring large technology investments, and reduces the resources needed for manual HAMP calculations.
- If this saves time for struggling homeowners, like it should, then it is a God send.
Speaking of Fannie Mae…
Fannie Mae economists expect the second quarter will be the high point for single-family originations this year before fundings fall below the $300 billion mark in the fourth quarter.
Closing
Be sure and join us on our free Webinar call June 16, with a fantastic panel consisting of the CA DRE, the IRS, a CPA and a highly regarded real estate attorney. WE will be discussing HAFA, Short Sale Scams and Cancellation of Debt arising from a modification, short sale or foreclosure. You won’t want to miss this important free call. Click here to register: http://www.freehomeownershiphelp.org/training_home_buying.php
Chris Sorensen, Founder 909-262-0452- Cell
