Category Archives: FORECLOSURE/ REO

California lawmakers object to bulk REO-to-rental sales

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Nineteen members of California’s congressional delegation object to Fannie Mae and Freddie Mac selling foreclosed properties in their state to investors in bulk for conversion to rentals.

Fannie and Freddie’s federal regulator, the Federal Housing Finance Authority (FHFA), has said it will approve bulk sales only in markets where there’s a glut of properties on the market.

The first “REO to rental” sale of 2,490 Fannie and Freddie “real estate owned” (REO) properties will be limited to eight markets: Atlanta (572 properties); Los Angeles-Riverside, Calif. (484 properties); Phoenix (341 properties); Las Vegas (219 properties); Chicago (99 properties); Southeast Florida (418 properties); Central and Northeast Florida (190 properties); and Western Florida (167 properties).

“In California, there is no question that disposing properties through bulk sales will yield a lower return for (Fannie and Freddie) and taxpayers than through traditional disposition methods,” California lawmakers said last week in a letter to Edward DeMarco, FHFA’s acting director.

The California Association of Realtors welcomed the letter, saying lawmakers “clearly understand that this program may be a viable solution in states where there is a large inventory of unsold foreclosures. However, carrying out this plan in California would potentially further delay a housing recovery and, ultimately, result in greater losses for the taxpayer.”

 

 

 

Source: BY INMAN NEWS

Audit faults execution of program to aid homeowners

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A $7.6-billion federal program to help homeowners avert foreclosure set too few goals for the 18 participating states and didn’t do enough to make sure the nation’s biggest banks were on board, according to a government audit.

The audit criticized the Treasury Department for rolling out the Hardest Hit Fund with no advance notice in February 2010, then leaving the states to implement it on their own. The report by a special inspector general pointed out that it took seven months before the government met with the states, banks and mortgage giants Freddie Mac and Fannie Mae to make sure everyone was participating in the program.

 

 

Source: www.latimes.com

Buying a Foreclosed Property: What Homeowners Need to Know

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*Note: with so many distressed and bank owned homes out there you need an expert agent to help guide you through the maze.  360 Realty has the speciality agents you need when it comes to buying these homes.  Call us today! 800-399-9659

The housing market may still be struggling to gain solid footing—low interest rates and significantly-discounted prices make it a great time to purchase a home in most regions.

Housing prices are still below their peak in 2006, and another wave of foreclosed properties is expected to hit the housing market this year as banks unload their backlog—offering homes at low prices.

“Home prices will continue to be very fragile,” says Daren Blomquist, vice president at RealtyTrac. “We don’t expect prices to fall another 20% to 30%, but there won’t be a recovery until the distressed inventory has cleared.”

RealtyTrac estimates that home prices will start to increase once banks clear their 17-month inventory of foreclosed properties. The national average of prices for foreclosed (real estate owned or bank-owned) properties at $152,465 continues to be lower than the sales price for all properties (including foreclosure and non-foreclosure) at $203,779, according to RealtyTrac.

Areas experiencing the most discounts on housing include Philadelphia, St. Louis, Chicago, San Francisco and Atlanta, according to RealtyTrac. Washington, D.C. and New York have shown relative strength and have home prices at least 50% above 2000 price levels, but still below their peak.

While some housing markets started to recover, home prices started to fall again in all markets last quarter, according to Maureen Maitland, vice president at Standard & Poor’s Indices. “On a nominal basis, housing prices are the same as those in 2002 and 2003, having declined from their peak in 2006 due to the high number of foreclosures.”

According to the National Association of Realtors, all cash sales accounted for 33% of real estate sales in February.

“In February, 20% of closed sales were of foreclosures– they’ve been at comparable levels for some time,” says Walter Molony, senior public affairs specialist at the National Association of Realtors. “There’s competition in most market areas between cash investors and first-time buyers, with reports of multiple bidding on discounted foreclosures becoming more common.”

Nevada, California, and Arizona experienced the highest number of foreclosure filings at the end of February, according to RealtyTrac. They had between two and three times more than the nation, as one in every 637 homes in the nation, or 0.16% of homes, received a foreclosure filing, a notice that the foreclosure process will begin.

The number of foreclosure filings in a state can translate to that state having the highest percentage of foreclosure sales, as Nevada had 56%, California had 43%, and Georgia had 39% of all sales being foreclosed homes during the fourth quarter of 2011, according to RealtyTrac.

How to Finance a Foreclosed PropertyBuyers of foreclosed homes can take advantage of special programs offered by the Department of Housing and Urban Development when borrowing money. Private lenders fund Federal Housing Administration Section 203(k) loans that have mortgage insurance provided by HUD. Borrowers can take advantage of a 3.5% down payment and use a portion of loan proceeds to rehabilitate an owner-occupied house. When the buyer plans to rehabilitate a property, they can borrow up to an additional 10% of the house value as determined by appraisals and construction estimates.

Buyers planning to finance purchase with a conventional loan can take advantage of low interest rates. The national average commitment rate for a 30-year, conventional, fixed-rate mortgage was most recently at 4.08%, up from 3.89% in February, according to Freddie Mac.

When buying in these markets, experts recommend doing your homework. “Each individual area has many of its own individual markets,” says Erin O’Connor, real estate agent with RE/MAX Excalibur. “It’s crucial for homebuyers to become educated on their real estate market because it can be wildly different from the real estate market a few miles away and national averages. In areas where foreclosure inventories are low, the price gaps between a distressed sale, whether an REO or short sale, and a regular sale are rapidly closing.”

There are still pockets of the country that are slower to rebound. “This is an opportunity to buy low,” says Blomquist. “You won’t see your property value skyrocket overnight, but, in the long-term, you’re setting yourself up for a great investment. The property has a built-in discount because it’s a distressed sale.” When looking at a foreclosed property, he advises potential buyers to remember that the basic real estate mantra still applies—location, location, location!

Source: http://www.foxbusiness.com Written by Andrea Murad

Bidding Wars Erupt as U.S. Homes for Sale Drops

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Matthew and Carina Hensley offered $10,000 more than the asking price for a three-bedroom house in suburban Seattle, then lost out to one of seven other bidders.

Their $270,000 proposal last month came with a family portrait and a letter introducing the couple, their eight-month- old daughter, Harper, and their desire to build a family in the Renton, Washington, house with a yard backing onto a woody hillside.

Bidding wars, absent from most parts of the U.S. residential market since its peak in 2006, are erupting from Seattle and Silicon Valley to Miami and Washington, D.C. The inventory of homes hovers close to a six-year low, while an increase in jobs and record affordability are tempting more buyers. The number of contracts to buy previously owned homes jumped 14 percent in February from a year earlier, the National Association of Realtors reported yesterday.

“We understand there is going to be fierce competition in the offers made for your house but Carina and I both felt very strong about letting you know what it would mean to us if we were given the opportunity to live in your gorgeous and charming house,” wrote Matthew Hensley, 33, a credit union branch manager whose wife is a dental hygienist. Such letters from eager buyers were common during the housing boom.

While listings will probably rise as banks accelerate foreclosures and sellers gain confidence in the market, the U.S. metropolitan areas with the strongest economies may be ready to absorb the additional inventory, said Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester, Pennsylvania. Low values and interest rates have made buying a better deal than renting in 98 of the largest 100 metropolitan areas, according to Trulia Inc.

‘Better Times Ahead’

“The housing crash is finally giving way to recovery in an increasing number of markets across the country,” Zandi said in an e-mail. “The decline in unsold listings and vacant homes and the increase in rents presage better times ahead for single- family housing.”

The bidding wars seen in such places as Seattle aren’t found everywhere. In metropolitan areas including Atlanta and California’s Riverside and San Bernardino counties, housing remains weak as high unemployment and falling prices deter first-time and move-up homebuyers.

A contraction in supply hasn’t helped increase property values, which are down by a third from their July 2006 peak. Prices, hurt by discounted foreclosures and other distressed sales, will fall 2 percent more this year before rising 1.4 percent in 2013, according to a Moody’s Analytics projection.

Case-Shiller Index

Home prices dropped 3.8 percent in January from a year earlier, the S&P/Case-Shiller index of property values in 20 U.S. cities showed today. The measure is based on a three-month average, which means the January data were influenced by transactions in November and December.

A residential comeback would provide a boost to the U.S. economy. Housing will “contribute modestly” to the economy this year for the first time since 2005, according to Peter de Bruin, an economist at ABN Amro Group Economics in Amsterdam.

Rising demand for homes has cut into the supply, which is already low because many sellers — especially those with negative equity — are waiting for prices to increase before putting properties on the market.

Supply of Homes

About 2.43 million existing homes were listed for sale in February, the fewest for the month since 2005, the year U.S. home sales reached a record 7.08 million, the National Association of Realtors reported March 21. The number of listings rose by 100,000 from January, a seasonal bump that occurred every February since 2000 except for 2008, according to data collected by the Realtors.

The February supply of unsold homes listed for sale was down almost 50 percent from a year earlier in markets such as Miami, Phoenix and Oakland, California, according to Realtor.com, the National Association of Realtors’ official website.

The U.S. inventory of new homes stood at 150,000, a 5.8- month supply, in February, when new houses sold at an annual pace of 313,000, slower than analysts expected, the Census Bureau reported March 23.

The supply of new houses rose from 5.7 months in January “as builders put inventory in place for the spring selling season,” Stephen East, an analyst with International Strategy & Investment Group LLC in St. Charles, Missouri, wrote in a note to investors. “This is the fourth consecutive month inventory has remained below six months’ supply, which is broadly considered supply/demand equilibrium.”

The new-home supply peaked at 12.1 months in January 2009, forcing builders to book losses as the economy fell into recession. While the inventory has declined from that high, the housing market still has hurdles to overcome.

 

 

 

 

Source:  www.businessweek.com, By Prashant Gopal and John Gittelsohn

Important HAFA Program Changes

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The federal government’s flagship HAFA short sale program continues to evolve in hopes of more effectively addressing the needs of distressed homeowners for whom continued ownership is not longer a realistic option.  The most recent Supplemental Directive 12-02 was released on March 9, 2012; loan servicers are instructed to implement program changes effective immediately.  They include:

  •  There are no longer any occupancy requirements for HAFA eligibility.
    Previously, HAFA required that the property be occupied as the borrower’s primary residence at some point within the prior 12 months.
  • The amount a servicer may authorize the settlement agent to pay from gross proceeds to subordinate mortgage holder(s) in exchange for a lien release and full release of borrower liability is increased from $6,000 to $8,500.
  • Borrower relocation incentives will be limited to HAFA short sales or Deed-in-Lieu transactions where the property is occupied by a borrower or a tenant at the time of the Short Sale Agreement or DIL Agreement and who will be required to vacate the property as a condition of the sale or DIL.
  • Borrowers may now elect to remain current on the loan during the term of the Short Sale Agreement or DIL Agreement.
  • Credit bureau reporting of HAFA transactions are amended as follows:
    • If the real estate is sold for less than the full balance owed and the deficiency balance is forgiven, report the following Base Segment fields as specified:  Account Status Code = 13 (Paid or closed account/zero balance) or 65 (Account paid in full/a foreclosure was started), as applicable.
  • The deadline for HAFA has been extended. A borrower now has until December 31, 2013 to submit a Short Sale Agreement or a written request for a consideration for a Short Sale Agreement to be eligible for HAFA.

The stated intention of the program updates is to expand the availability of HAFA’s benefits to more struggling homeowners.  Certainly, the increase in the amount of gross proceeds available to settle junior liens should help.  This has been an area of particular concern, most especially in California where the implementation in 2011 of SB 457 barred
lien holders from reserving collection rights following short sales or, alternatively, from conditioning short sale approval from additional seller contributions.  Of course, as with all previous program changes, the proof will be in the pudding.  Stay tuned….

 

 

 

 

Source: http://www.brianaripley.com/2012/03/26/important-hafa-program-changes-announced/

 

Fannie, Freddie legal fees: $110 million and counting

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WASHINGTON (CNNMoney) — A watchdog agency said Wednesday that the legal tab for former leaders of mortgage finance giants Fannie Mae and Freddie Mac is at least $110 million.

And taxpayers have paid at least $47 million of it, according to an Office of Inspector General of the Federal Housing Finance Agency report.

And the total bill could be even higher since the inspector general report focused on only one particular legal case against Fannie Mae, and isn’t an exhaustive account of the housing giants’ legal bills, reportedly more than $160 million, according to a 2011 congressional hearing.

Yet, a whopping $99.4 million has been paid in legal bills to defend a 2004 case against three former Fannie Mae senior executives accused of inflating the firm’s publicly traded stock price to maximize their own bonuses. About $37 million of that has been picked up by the taxpayer.

For Freddie Mac, the overall legal tab paid by the taxpayers is $10 million, according to inspector general.

The Federal Housing Finance Agency inherited legal bills when it took Fannie Mae and Freddie Mac under conservatorship in 2008. The bills are for employees long gone but must be paid as a part of benefits packages agreed to by legal contract.

Office of Inspector General of the Federal Housing Finance Agency suggested that the housing agency take steps to limit legal expenses, in the report.

With taxpayer bailouts to the housing finance giants hitting $183 billion through the end of December, lawmakers have questioned the “appropriateness” of legal pay outs, the watchdog said.

“Given the significant amounts of taxpayer money involved and the issue’s high visibility, FHFA must continue to scrutinize intensively the enterprises’ advances in order to limit costs,” the report concluded.

The two companies were essentially taken over by the government in September 2008 when they were placed in conservatorship and given large cash infusions to cover mounting losses on the mortgages they owned and guaranteed.

Other efforts, such as the biggest source of money for the bailouts: the Troubled Assets Relief Program (TARP), had a larger initial price tag but the overwhelming majority of the $474.8 billion it gave out has been returned to Treasury.

Tougher lending standards have allowed the mortgage financiers to profit from more recent loans they purchased, even if they continue to suffer losses on loans made during the housing bubble. The two firms are now financing about two thirds of the mortgages being written in the United States.

In response to the inspector general report, the Federal Housing Finance Agency said it agreed with the watchdog’s suggestions about efforts to limit future legal fees, according to a response to the review by FHFA attorney Alfred Pollard.

The report noted that more legal bills are coming down the road, since the U.S. Securities and Exchange Commission just filed a lawsuit against six former senior officers at Fannie Mae and Freddie Mac

 

 

 

Source: By Jennifer Liberto www.CNNMoney.com

Money Woes Forced Half of O.C. Home Sales

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Half of all Orange County homes sold through a broker-run database in January were either bank-owned, a “short” sale or some other type of financially “distressed” home, figures from the California Regional Multiple Listing Service show.

The numbers show that even though there are fewer foreclosures and underwater homes changing hands, the housing market still struggles with high rates of financially troubled properties that remain a drag on home prices.

Distressed homes made up the biggest proportion of all residential sales in nearly a year.

Sales of financially troubled homes have spiked around the start of each year for the past three years, figures from the broker-run multiple listing service database show.

The California Regional MLS maintains an online network for homes for sale throughout much of Southern California, including all of Orange County. MLS deals made up 92% of all of January’s residential transactions in the county.

The MLS’s latest housing report shows:

”Distressed” properties made up 49.8% of the 1,727 homes sold through the MLS in January. Since builders tend to sell homes directly to the public, the bulk of homes in the MLS are resales.

That’s the highest proportion of distressed homes sold since February, when nearly 52% of the sales were troubled.

Of the 860 distressed properties sold in January, 490 – or 28.4% — were “short” sales, or sales of homes for less than is owed on the mortgage.

Another 303 homes sold in January – or 17.5% — were bank-owned properties that had been seized earlier through foreclosure.

Sixty-seven homes sold in January – or 3.9% — were classified as “other distressed.”

In 2009, the year following the global economic meltdown, high rates of distressed properties were more common. About half of all sales were distressed homes on average that year. In January 2009, nearly 64% of all sales were distressed homes.

But during the past two years, distressed properties made up just under 44% of all sales on average, MLS figures show.

 

 

 

 

 

Source: By JEFF COLLINS / THE ORANGE COUNTY REGISTER http://www.ocregister.com

Home Prices Hit New Lows

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A key gauge of home prices in the nation’s largest cities fell in December to its lowest level since the start of the housing crisis in mid-2006.

The Standard & Poor’s/Case-Shiller index of 20 American cities fell 1.1% from November to December and 4% from December 2010. Eighteen out of the 20 cities tracked by the index posted declines and Atlanta, Las Vegas, Seattle and Tampa,Fla., each saw average home prices hit new lows.

“In terms of prices, the housing market ended 2011 on a very disappointing note,” said David M. Blitzer, chairman of the index committee at S&P Indices. “While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.”

All of the California cities in the index posted declines from the prior month. Los Angeles, San Diego and San Francisco fell 1.1%, 0.7% and 0.8%, respectively. The drop continues a slide that began last year as sales weakened and the jobs picture remained bleak.

In December, Miami and Phoenix were the only two metro areas that posted monthly gains, up 0.2% and 0.8%, respectively.

A separate, national index published quarterly by S&P Case Shiller, also released Tuesday, showed deterioration in home values. The national composite fell by 3.8% during the fourth quarter of 2011 and was down 4.0% versus the fourth quarter of 2010.

The steep drops indicate that the housing market likely began 2012 in decline, as the broader economic recovery was not enough to lift home values. Home prices are now below their low hit in April 2009 — reached during the depths of the financial crisis.

[Updated 7:53 a.m., Feb. 28: Robert Shiller, a professor at Yale University and co-creator of the index, said in a conference call Tuesday he was slightly more optimistic about housing’s future than he was a year ago, “but not that optimistic.”

“We are in a situation where a lot of people think, long-term, this is great, home prices are low,” Shiller said. “But somehow they think in the short-run … we are still in a holding pattern.”

Karl E. Case, the other co-creator of the index and a professor at Wellesley College, said he was more optimistic that the housing market would begin to improve given that, according to Census data, more U.S. households are being created, meaning there will be more demand for housing. If demand remains high — and supply relatively low — the housing market should begin to improve, he said.

“There are some bright spots,” he said.

 

 

Source: www.latimes.com By Alejandro Lazo

Housing’s Dilemma: There’s Not Enough To Buy

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Last week I wrote about how fewer foreclosures up for sale in the housing market could actually mean lower overall home prices.

My reasoning is that foreclosures are in high demand right now, and organic, non-distressed sellers are still not coming back to the market. Without the foreclosures, there really is no competitive market.That may sound counter-intuitive, given that we always talk about how distressed sales deflate comparable home prices.

I hate to say, “I told you so,” but … today the National Association of Realtors reported that inventories of homes for sale in January fell to 2.31 million,the lowest supply since March, 2005. Rather than pushing home prices higher, they are still down, 2 percent, from a year ago.

The Realtors noted that 35 percent of all home sales were distressed (either foreclosures or short sales). Investor demand is high, they say, even claiming that a recent program initiated to sell the foreclosures of  Fannie Mae and Freddie Mac in bulk to investors is unnecessary.

“Based on the swiftness of how REO (bank-owned) properties are moving in the market, it may not be needed,” said NAR chief economist Lawrence Yun. He did admit that such a program would also take away thousands of potential listings from Realtors.

Banks are ramping up the repossessions, as the so-called “Robo-signing” foreclosure paperwork scandal is fading and a settlement with federal and state governments has been reached. But they are not going to flood the market with these properties, for fear of losing pricing power. That’s why we are now starting to see bidding wars in some of the hottest distressed markets.

Sales of existing homes in the West, which comprise the hardest hit states of Arizona, Nevada and California, jumped 8 percent in January month to month. More than half of sales out West are foreclosures and short sales. Demand is definitely rising, but only on the lower end.

If you look at sales distribution by price, 69.9 percent of homes sold in November were under $250,000. That moved up to 72.2 percent in January. Given that there is just a two month difference, seasonality, i.e, higher priced homes selling at different times of year, doesn’t apply.

As I wrote last week, organic, non-distressed sellers are making up less and less of the overall housing market. That does not a healthy housing market make. Without good, move-up homes available, the market cannot see real price appreciation.

“The main limit on sales volume now is willing sellers, not willing buyers,” says Glenn Kelman, CEO of Redfin, a real-estate brokerage.

 

 

 

Source: By: Diana Olick-CNBC Real Estate Reporter; http://www.cnbc.com/id/46482311

Foreclosed Homes Finally “Spreading Out” Across All 50 States

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Annual change in foreclosure volume, all 50 states. January 2012.

Want to buy a foreclosed home? Spring 2012 may be your best chance yet. A combination of legislation and low mortgage rates have left today’s foreclosure market ripe for value.

Bank REO Rising; Faster Foreclosures Coming

According to RealtyTrac, an Irvine, California-based foreclosure tracking firm, the number of foreclosure filings dropped 19 percent last month as compared to one year ago.”Foreclosure filing” is a blanket term comprising (1) Default notices on a home; (2) Scheduled auctions for a home; and, (3) Bank repossessions of a home.

All three foreclosure filing types showed dramatic improvement year-over-year. Default notices and scheduled auctions were down roughly twenty percent and bank repossessions — sometimes called Bank REO — fell 15 percent.

At first look, January’s foreclosure figures look great for housing. Fewer foreclosures means fewer homes sold “on the cheap” which, in turn, supports higher home prices from Marin County, California to Dade County, Florida.

When we look at the monthly foreclosure data, however, a different story emerges.

As compared to December 2011, January 2012′s foreclosure figures shows a market getting ready for more bank-owned homes.

  • Default Notices : Unchanged from December 2011
  • Scheduled Auctions : +1 percent from December 2011
  • Bank Repossessions : +8 percent from December 2011

This trend toward more bank REO should continue — especially because of the recent $25 billion mortgage servicer settlement. The settlement provides clear rules to banks and states on how the foreclosure process should work, and gives banks reason to “un-freeze” their respective foreclosure pipelines.

Expect more bank-owned homes for sale in 2012.

 

Nevada, California Still Dominate Foreclosures

Since 2007, when the foreclosure market became a “hot topic”, foreclosures have been geographically concentrated. Just a few states have accounted for the majority of the nation’s overall foreclosure activity.

That is still true today.

Nevada, California and Florida continue to dominate the foreclosure scene. Their dominance, however, is not as strong as it once was.

In looking at Foreclosures Per Capita last month, 13 states fared worse than the U.S. national average. This is a marked improvement over 2009 when just 6 states beat the national average. The data point suggests that foreclosures are “spreading out” nationwide; that they’re less concentrated by state.

Home buyers in every state, and in many towns, may witness more foreclosures for sale nearby this year. Foreclosures are a national occurrence.

 

Buying A Foreclosed Home? Don’t Buy A Defect.

Expect more foreclosures for sale in 2012. You may want to buy one, too. If you do, though, don’t confuse “cheap” for “value”. Although foreclosed homes can be deeply discounted, they’re often sold “as-is”. This means that the home may be sold with defects and damage that make it uninhabitable for humans.

Mold and absent plumbing are just two problems you may encounter. There are countless more.

When you buy a foreclosed home, make sure to work with an experienced real estate agent. You’ll want a professional to review your contracts and help with negotiations. If you go at it alone, you put yourself — and your household — risk.

CALL US TODAY!  360 Realty 800-399-9659

 

 

 

Source: Dan Green http://themortgagereports.com/7866/foreclosure-reo-50-states