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RealtyTrac: Fla. leads in 3Q foreclosures

October 15, 2014

foreclosure_stampIRVINE, Calif. – Oct. 15, 2014 – In the third quarter, Florida once again had the highest state foreclosure rate – default notices, scheduled auctions and bank repossessions – in the nation, according to RealtyTrac’s U.S. Foreclosure Market Report.

Still, Florida foreclosures declined both month-to-month and year-to-year, at 4 percent and 17 percent respectively. One in every 153 Florida housing units had a foreclosure filing – a total of 58,589 Florida properties.

By metro area, Orlando, Atlantic City and Macon, Ga., posted the nation’s top metro foreclosure rates in the third quarter.

With one out of every 117 housing units facing a foreclosure filing in the third quarter, Orlando posted the highest foreclosure rate among metropolitan statistical areas (MSAs) with a population of 200,000 or more. Orlando saw its foreclosure rate decline 1 percent since the second quarter, but it rose 16 percent year-to-year.

In Ocala and Palm Bay-Melbourne-Titusville, third quarter foreclosure activity decreased year-to-year. However, the two cities still posted the nation’s fourth and fifth highest overall metro foreclosure rates in the third quarter.

The remaining five metro areas with top 10 foreclosure rates were all in Florida:

* Miami at No. 6 (one in every 137 housing units with a foreclosure filing)
* Jacksonville at No. 7 (one in every 140 housing units)
* Tampa at No. 8 (one in every 148 housing units)
* Lakeland at No. 9 (one in every 158 housing units)
* Port St. Lucie at No. 10 (one in every 175 housing units).

Florida also remains one of the top states for the length of time it takes to complete a foreclosure, ranking second at 951 days. Only New Jersey (1,064 days) foreclosures take longer. Hawaii (937 days), New York (902 days) and Illinois (889 days) round out the top five states.

National foreclosures

Nationally, RealtyTrac reports that third quarter foreclosures were down 16 percent year-to-year but up 0.42 percent quarter-to-quarter. Looking at just September, U.S. foreclosure activity decreased on a year-over-year basis for the 48th consecutive month.

“September foreclosure activity was back to pre-housing bubble levels nationwide, in large part thanks to a continued slide in bank repossessions,” says Daren Blomquist, vice president at RealtyTrac. “However, a recent rise in scheduled foreclosure auctions in many markets across the country shows lenders are continuing to clean house of lingering delinquent loans. This rise in scheduled auctions foreshadows a corresponding rise in bank repossessions and auction sales to third party buyers in the coming months.”

© 2014 Florida Realtors®

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Debt collectors can call years after a foreclosure

October 15, 2014

Cara-menghadapi-debt-collectorWASHINGTON – Oct. 15, 2014 – Thousands of Americans who lost their homes to foreclosure years ago have moved on and rebuilt their finances, only to find that their past problem isn’t staying in the past.

In more and more cases, mortgage lenders are contacting these homeowners and attempting to collect the debt forgiven as part of a short sale or foreclosure.

“Using a legal tool known as a ‘deficiency judgment,’ lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come,” Reuters reports. (Effective July 1, 2013, the lender has one year on residential properties to initiate the process.)

“Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. Some of the biggest banks still feel that way. But the housing crisis saddled lenders with more than $1 trillion of foreclosed loans, leading to unprecedented losses. Now, at least some large lenders want their money back, and they figure it’s the perfect time to pursue borrowers: many of those who went through foreclosure have gotten new jobs, paid off old debts and, in some cases, bought new homes.”

Mortgage giant Fannie Mae is one of the most aggressive in pursuing deficiency judgments. Of the 595,128 foreclosures the government-sponsored enterprise was involved in through owning or guaranteeing the loan, it has referred 293,134 to debt collectors for possible deficiency judgment, according to a report by the Inspector General, reflecting the time period from January 2010 through January 2012.

Some of the largest mortgage lenders – JPMorgan Chase, Bank of America, Wells Fargo & Co., and Citigroup – say they don’t usually pursue a deficiency judgment, but they do reserve the right to do so.

“We may pursue them on a case-by-case basis, looking at a variety of factors, including investor and mortgage insurer requirements, the financial status of the borrower, and the type of hardship,” says Wells Fargo spokesman Tom Goyda.

Many borrowers may be surprised to learn that their years-old foreclosure isn’t really behind them. For example, former homeowner Danell Huthsing thought she was in the clear after a foreclosure in 2008 on a home she shared with her boyfriend. But this summer, she was served with a lawsuit demanding $91,000 for the amount of mortgage still unpaid after the home was foreclosed and sold.

Huthsing plans to appeal, but if she loses, the debt collector who filed the lawsuit will be able to freeze her bank account, garnish up to 25 percent of her wages, and seize her paid-off car, Reuters reports.

“For seven years, you think you’re good to go, that you’ve put this behind you,” said Huthsing. “Then wham, you get slapped to the floor again.”

Source: “Americans Face Post-Foreclosure Hell as Wages Garnished, Assets Seized,” Reuters (Oct. 14, 2014)

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Fla. home sale prices up 11.4% year-to-year in Dec.

January 24, 2014

ORLANDO, Fla. – Jan. 23, 2014 – Florida’s housing market reported higher median prices, more new listings, fewer days on the market and the continued stabilization of inventory in December, according to the latest housing data released by Florida Realtors®. Closed sales of single-family homes statewide totaled 19,497 last month, up 8.6 percent over the December 2012 figure.

“Florida’s housing market continues to demonstrate its recovery,” says 2014 Florida Realtors President Sherri Meadows, CEO and team leader, Keller Williams, with market centers in Gainesville, Ocala and the Villages. “December marked over two years – 25 months – of consecutive gains in statewide median sales prices, year-over-year, for both single-family homes and for townhouse-condo properties. The rising prices, along with the renewed strength of the state’s housing market, are encouraging more homeowners to list their properties for sale. Statewide, new listings for single-family homes increased 23.8 percent in December, while new townhome-condo listings rose 8.1 percent. The rising prices mean increased equity, which is another reason people are listing properties.

“Properties also are taking less time to sell, another trend that is sparking sellers’ interest,” Meadows added. “In December, the median days on market (the midpoint of the number of days it took for a property to sell that month) was 50 days for single-family homes and 51 days for townhouses and condos. That means 50 percent of homes on the market in Florida sell in less than two months.”

The statewide median sales price for single-family existing homes last month was $172,630, up 11.4 percent from the previous year, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in December was $137,500, up 17 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in November 2013 was $196,200, up 9.4 percent from the previous year; the national median existing condo price was $197,400. In California, the statewide median sales price for single-family existing homes in November was $422,210; in Massachusetts, it was $316,500; in Maryland, it was $257,677; and in New York, it was $229,000.

Looking at Florida’s townhome-condo market, statewide closed sales totaled 8,364 last month, down slightly (2.5 percent) compared to December 2012. However, the closed sales data reflected fewer short sales and cash-only sales in December: Traditional sales in Florida rose 23.3 percent for single-family homes and 6 percent for condo-townhome properties. Closed sales typically occur 30 to 90 days after sales contracts are written.

“Florida’s market exhibited all the signs of the annual holiday lull,” said Florida Realtors Chief Economist Dr. John Tuccillo. “Because of things like the reduced number of workdays and the presence of other important things to do, the statistics at this time of year don’t necessarily give a good read on where the market really is. Three continuing trends to note, however, are rising inventories, declining cash sales and the lessening presence of distressed property sales.

“The first two are indicative of reduced investor activity and thus a return to a more normal market. The last is a product of rising values that have increased market sales relative to short sales and foreclosures.”

Inventory was at a 5.5-months’ supply in December for single-family homes and at a 5.8-months’ supply for townhouse-condo properties, according to Florida Realtors.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.46 percent in December 2013, up from the 3.35 percent average recorded during the same month a year earlier.

To see the full statewide housing activity reports, go to Florida Realtors Media Center under Latest Releases, or download the December 2013 data report PDFs under Market Data.

© 2014 Florida Realtors®

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Higher Home Prices Cool Buying Frenzy

June 6, 2013

Daily Real Estate News | Thursday, June 06, 2013

The recent rise in home prices has more investors concerned that it will be increasingly difficult to turn a profit from their rental investments. Nearly half of U.S. real estate investors say they expect to purchase fewer rental homes in the next year, according to a recent survey conducted by polling firm ORC International.

Just 10 months ago, the percentage of investors who said they intend to buy fewer homes stood at 30 percent—compared to 48 percent today. Only about 20 percent of the investors surveyed say they plan to buy more homes in the next year—a drop from the 39 percent who reported they intend to buy more homes last August.

More than half of the investors surveyed who own rental properties say they plan to hold them for at least five years or more, and 33 percent plan to hold them for 10 years or more.

“Higher prices are reducing returns on investment and investors are responding by cutting back on their purchasing plans until conditions sort out,” says Chris Clothier, a partner in MemphisInvest.com and Premier Property Management Group. “Fewer foreclosures, rising property values, and competition from hedge funds are making it tough to find good ideals on distressed sales. On the other hand, investors are planning to hold onto their rental properties for at least eight to 10 years and realize the benefits of rising rents and low vacancy rates. Cash flow is much more important than appreciation.”

Source

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A Primer on Real Estate’s Shadow Inventory

April 3, 2013

By Sarah Parr

The real estate industry and the consumer economy have some recent, positive news. CoreLogic published a report last week indicating that the shadow inventory of homes is down 28 percent from when it peaked in 2010. CoreLogic determined the shadow inventory figure by calculating the number of very delinquent homes, properties in foreclosure and homes held as REOs (real estate-owned) by mortgage servicers, but are not yet listed on multiple listing services (MLS).

As of January 2013, the shadow inventory includes 2.2 million housing units, or in real estate terms, nine months of supply. Florida currently has 16 percent of the total shadow inventory in the United States.

Defining the shadow inventory

In real estate, the shadow inventory refers to all of the homes held by banks, but not offered for sale, and homes that people are waiting to put on the market when prices increase even more. Vacant houses in some stage of foreclosure, known as “zombie foreclosures,” also comprise about half or more of the shadow inventory. Many homeowners anticipate foreclosure and move out of the house, leaving it vacant for a period of time.

What creates the shadow inventory?

The finalization of the National Mortgage Settlement in April 2012 caused the shadow industry to grow because of a 59 percent spike in properties in some stage of foreclosure, according to RealtyTRAC. Because of the settlement, banks have been required to work with homeowners on loan modifications, and their homes are kept off the market. The states in which the shadow inventory grew are mostly judicial process states since these states are more prone to having court backlogs of foreclosure cases. Foreclosure cases in these states typically take much longer to process.

The effects on real estate

Real estate professionals> initially feared properties in the shadow inventory would be listed all at once and depress surrounding property values. Reuters reported that properties in the shadow inventory have been listed in miniature spurts, though, and the small inventory has actually caused an increase in prices in some areas. Investors have also helped mitigate potential flooding of the market by buying up some of the shadow inventory, according to a TIME article. These investors are a part of firms that buy out distressed real estate when it first hits the market. They often beat individual buyers with cash offers, sometimes before properties are listed.

All the same, a shadow inventory can create ambiguity for homeowners looking to sell their homes and for predicting when a local market can expect full recovery in the housing market. The shadow inventory can also affect overall housing inventory data.

Sarah Parr is a Central Florida-based writer who blogs about foreclosure issues for Altamonte Springs foreclosure lawyers.

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Big discounts on foreclosures fading

March 12, 2013

NEW YORK – March 12, 2013 – Homebuyers may not get as great of a deal on a foreclosure as they once did, according to Paul Diggle from Capital Economics in a new report.

Foreclosure starts are falling and the inventory of foreclosures has been decreasing, which has caused the discount on foreclosures to lessen.

The discount on foreclosed homes compared to other homes has fallen to a 12 percent average, according to Diggle. That was about the same percentage prior to the housing crash, he says. Last year the foreclosure discount averaged about 30 percent.

“Ultra-low mortgage interest rates and steady, if not spectacular, job creation could mean that the delinquency rate and foreclosure start rate are falling quickly,” Diggle writes.

Source: “Those Amazing Deals on Foreclosed Homes Are Disappearing,” Business Insider (March 7, 2013)

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Many improving their bad credit as economy improves

March 4, 2013

FORT LAUDERDALE, Fla. – March 4, 2013 – Melvin Montesino endured the full brunt of the Great Recession: A lost job, then foreclosure and even bankruptcy.

Since then Montesino has been on the rebound, working two jobs while improving his damaged credit. “It wasn’t easy. Some banks even turned me down for a prepaid credit card,” he said.

But his efforts have paid off. Despite the foreclosure and bankruptcy, he will close on a three-bedroom, two-bath home in Coral Springs later this month. “It’s pretty spacious,” he said.

The South Florida housing market is filled with thousands of others trying to start over after the recession left them with severe dings to their credit. Many are making good progress. In fact, South Florida is second only to the Los Angeles metro area in the number of people who have improved their once sub-prime credit scores in the year that ended Sept. 30, according to Equifax, the national credit reporting agency.

Some 40,000 people in Broward, Palm Beach and Miami-Dade counties raised their credit scores to 620 or above in a year, removing them from the Subprime/Risky category that meant they had to pay the highest interest rates – if they could get credit, Equifax found. That netted a 3.6 percent decline in the number of South Floridians with bad credit, a substantial improvement.

“People are getting back on their feet and improving their credit,” said Howard Dvorkin who founded the Fort Lauderdale-based nonprofit, Consolidated Credit Counseling Services. More people are optimistic about starting over – calls for help in improving low credit scores are up about 25 percent from just a year ago, he said.

In January, consumers in the three counties had an average credit score of 645, just three points below the national average, the consumer website CreditKarma.com reported.

Many South Florida lenders are trying to help out. Deerfield Beach senior mortgage specialist Adam Cohn said his company, The Mortgage Firm, provides free counseling to help people improve their credit scores so they can better qualify for a home loan.

Cohn, who helped Montesino get a loan for his Coral Springs house, said some South Floridians just need a little nudge, such as encouraging them to pay off credit cards with balances less than $500 to boost their credit score.

One woman took his advice and recently raised her score 30 points to 650. That got her a conventional loan for a home in Davie, Cohn said, a loan she otherwise would not have been eligible for.

Cohn said he also was able to help a man qualify for a loan on a Boynton Beach house after improving his credit score despite filing for bankruptcy five years ago.

“He’ll be closing in the next couple of weeks,” Cohn said.

Some who were forced into bankruptcy or a short sale of their home because of extenuating circumstances beyond their control – and not because of overspending – can qualify for a mortgage in as little time as 24 months, said secondary lender Freddie Mac spokesman Brad German. Those who are foreclosed on have to wait longer – at least three years – to get a Freddie Mac loan, German said.

In Parkland, contractor Ken Viviano sees his recent truck loan from Miramar-based Tropical Financial Credit Union as the start toward rebuilding his damaged credit and eventually buying a new home. He now is trying to short sale his Parkland home that he can’t afford.

“Life was good for many years. Then someone flipped the switch,” Viviano said. Large construction companies could not even pay his company for assignments already finished, Viviano said. “That wiped out my savings and caused me to go into bankruptcy,” he said.

But now the economy is better, he said. Viviano said he and his workers are concentrating on individual homeowners’ kitchen and bathroom remodeling projects.

He is grateful Tropical Financial gave him a chance.

Credit union staffers are aware of the financial trauma that South Florida went through and are willing to take a risk on members who are working again and have the money to pay on debts, said Tropical Financial’s chief lending officer, Helen McGiffin. “We’ll look at their alternate payments, such as utility bills, to see if they have been paying.”

To get a mortgage on the Coral Springs house, Montesino said he was able to improve his credit score to above 700. His break: A bank agreed to give him a prepaid credit card. He said he paid that and other bills faithfully and in the last two years was able to get other credit.

“It was pretty rough in 2008,” said Montesino who has since gone on to work in air conditioning and as a courier. “But you keep working hard.”

Credit score levels

A credit score reflects your creditworthiness to lenders. Increase your score by paying bills on time; using no more than 30 percent of your available credit; obtaining your credit report and disputing errors. Here’s what the scores mean:

720-850 (Excellent) – Earns the best financing terms.
700-719 (Very Good) – Favorable financing.
620-699 (Average) – Qualifies for most loans at higher interest rates
500-619 (Subprime/Risky) – Highest interest rates, credit uncertain.

Copyright © 2013 the Sun Sentinel (Fort Lauderdale, Fla.), Donna Gehrke-White. Distributed by MCT Information Services. Staff writer Richard Burnett contributed to this report.

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Investment firms buying up Florida foreclosures

February 19, 2013

EW YORK – Feb. 19, 2013 – Hedge funds and investment firms are buying up Florida foreclosures, beating out homebuyers and local flippers, while steering the state into what some fear is another real estate bubble.

The companies, including New York-based Blackstone Group and Lake Success Rentals, a partner of Toronto-based Tricon Capital Group, purchased an estimated 5,300 Florida homes last year that were in some stage of foreclosure, according to a report from RealtyTrac.

In Palm Beach County, RealtyTrac measured 425 purchases by firms buying multiple properties out of foreclosure and usually with the intent to rent them out until increasing property values can offer a substantial return on investment.

RealtyTrac Vice President Daren Blomquist said the buying trend accelerated around the second quarter of 2012 after billionaire business magnate Warren Buffett said he would buy up “a couple hundred thousand” single-family homes if he had a way to manage them.

But Blomquist warned that prices jacked up by the increased competition could lead to an artificial inflation.

“There is some potential for locally based housing price bubbles because of this almost frenzy on the part of these big-money folks to purchase as many properties as they can,” he said. “They’re paying cash, so it shouldn’t result in a lot of foreclosures, but it may be that down the road, they decide the gamble isn’t paying off and flood the market with properties.”

Florida’s biggest buyer last year was Malibu, Calif.-based American Homes for Rent, with more than 260 purchases, according to RealtyTrac. The Blackstone Group-related company THR Florida, LLC, had more than 160 purchases.

But both of those companies focused their efforts mostly in areas outside of South Florida.

Heavy hitters locally include Lake Success Rentals, based in Fort Lauderdale, and Southeast Florida Rental Housing (Sfrh SF Rental), which shares the same Fort Lauderdale address as Lake Success.

In July, Tricon Capital Group announced its partnership with Lake Success in an aggressive push to buy more distressed real estate. Tricon, which says it has $1.2 billion of assets under management, provides financing to local companies to buy the homes.

“I expect Miami to be one of the fastest-growing cities in the next decade, and the opportunity to purchase homes for rental housing in the surrounding areas at a fraction of peak prices and replacement cost was very attractive to me,” said Lake Success co-founder Barry Bergman in a news release announcing the partnership.

Last month, Tricon announced the purchase of 550 homes in Charlotte, N.C., for $26 million.

Blomquist said RealtyTrac’s study compared active foreclosures against sales deed data and may not include all bulk buyers in an area.

Don Cameron, a real estate investor who owns a South Florida franchise of We Buy Ugly Houses, said he bought more than 100 homes last year, many of which were at foreclosure auction, but he is not included in RealtyTrac’s report.

Also not included is a Greenwich, Conn.-based company called SRP SUB, LLC, which has bought about 40 Palm Beach County homes at foreclosure auction since November.

Cameron said he noticed an increase in competition from the big-time investment firms and hedge funds about eight months ago. His company buys homes, renovates them and then sells them. He said he’s lost out on homes because the larger firms pay asking price, or higher.

“They just have loads of money and are paying maximum dollars for the properties then renting them out,” Cameron said. “Some people are really inflating the market right now.”

Copyright © 2013 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services.

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Is real estate really on the mend in Florida?

February 18, 2013

ORLANDO, Fla. – Feb. 18, 2013 – Given the improvement in local and state residential real estate demonstrated by last week’s 2012 Florida Realtors statistics, there’s a lot of positive buzz, and possibly a bit of wishful thinking taking place among would-be sellers, Realtors, mortgage brokers, appraisers, developers and contractors.

But a reality check still shows a murky future: Up to a tenth of Florida homes, and almost a fifth of Manatee-Sarasota area homes are in some state of distress, raising concerns that a tsunami of bank sales could increase inventory, depress prices and lengthen closing times for residential sales in 2013 or even longer.

That view is “overly pessimistic,” said Florida Realtors chief economist John Tuccillo. But, he concedes, Florida has “a third of the nation’s ‘shadow inventory,’ a term used to define homes more than 90 days delinquent, or already in foreclosure, and that is very, very high.”

After the misery and displacement of the Great Recession, everyone, including President Obama, wants to believe that a broad-based real estate recovery is well and truly under way. In his State of the Union message, Obama announced that “the housing market is finally healing from the collapse of 2007. Home prices are rising at the fastest pace in six years, home purchases are up nearly 50 percent and construction is expanding again.” So far, so good.

But then, Obama put his finger right onto the tricky bit when he said, “Even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected. Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it.”

Banks and mortgage lenders – many of whom received federal assistance to the tune of $700 billion in the controversial 2008 Troubled Asset Relief Program (TARP), which was designed to address the subprime mortgage crisis – are simply not lending to would-be buyers.

And maddeningly, sellers, frequently the very same banks themselves, clearly prefer cash buyers to avoid burdensome, messy and uncertain mortgage applications, and all-but-frozen secondary mortgage markets.

In fact, the big banks and other financial institutions that, in the heyday of mortgage madness, shoveled money out the door to “anyone with a heartbeat who could also fog a mirror,” are today part of the obstacle to a sustained real estate recovery, says Jack McCabe, CEO of McCabe Research & Consulting, a Florida-based real estate and economic analyst.

He pointed to the February 2012 joint state-federal settlement with the country’s five largest mortgage servicers Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo, in which roughly $25 billion in relief was earmarked for distressed borrowers and various local and federal jurisdictions.

“Since the lawsuit has been settled, those banks are no longer holding back on foreclosures, which is one reason why real estate inventory levels were limited, and why prices rose in 2012,” said McCabe.

‘Best guess’

“Of the 475,000 completed Florida foreclosures since 2006, banks, realty funds and other financial players still hold an estimated 200,000 housing units,” said McCabe. That is roughly equivalent to the total number of 2012 statewide single-family home sales as reported on Monday by the Florida Realtors.

“There are currently 377,000-plus open foreclosures in Florida state courts, and 80 percent of them will become distressed transactions in the coming two to three years,” McCabe estimated. “The remainder will likely get loan modifications and possibly some relief from the lenders.”

But that is the tip of the iceberg, says McCabe.

“Another 550,000 additional Florida homeowners are 90 days-plus delinquent and thus subject to future foreclosure filing,” he said. “Taken together, there are 1.1 million distressed residential properties in the state.”

Given that the U.S. Census shows Florida has 9 million housing units in total, that means about 11 percent of the state’s housing stock is experiencing some level of distress.

The 11 percent distressed figure sounds “entirely plausible” to Anne Ray, Florida Housing Data Clearing House manager at the Shimberg Center for Housing Studies at the University of Florida, the official repository for state housing data. Ray estimated more than 320,000 open foreclosures statewide, close to McCabe’s figure.

Ray also pointed out that the Manatee-Sarasota MSA, one of the state’s best performers in sales increases, “had a foreclosure rate of 13.77 percent as of September 2012, and a ‘pending’ rate of an additional 3.36 percent.” Taken together, it means more than 17 percent of the area’s homes are in some state of distress.

But Florida Realtors argue that those statewide figures might be double-counted.

According to Sept. 30, 2012, estimates from CoreLogic, a leading provider of real estate and financial data, 562,664 homes have mortgages delinquent by 90 days or more, 389,149 are in foreclosure and 36,284 are REO (Real Estate Owned) loans, property in the possession of a lender as a result of foreclosure, says Florida Realtors research economist Brad O’Connor.

“Loans that are counted in foreclosure and REO estimates can also be counted in the 90-day plus delinquency estimate, so it would be erroneous to add them together to obtain a count of distressed loans,” O’Connor said. “Unfortunately, the statistics we receive from CoreLogic do not provide us with any counts of how many loans are both 90-plus delinquent and in foreclosure/REO status.”

Worlds apart

One reason many banks are not lending is that with undigested and often unsavory inventory in their bellies, many may be at or near the regulatory threshold for the portion of their portfolios dedicated to residential lending, said McCabe.

Charles “Charlie” Brown III, chairman and CEO of Insignia Bank, a Sarasota-based community bank which includes Manatee in its core market, says “there’s a big difference between what the large institutions may be contemplating, and what’s going on at locally owned and operated community banks, where I’m seeing a flood of portfolio lending nationwide.”

“Insignia is making portfolio loans, typically five- to 15-year fixed mortgages, has excess capacity and could double its current mortgage portfolio on top of its total of $113 million, 200-plus loan portfolio,” Brown said.

A portfolio mortgage is one that the bank itself holds to maturity, as opposed to secondary mortgages that are usually sold to government-sponsored enterprises, including mortgage giants Fannie Mae, Freddie Mac and others. That secondary market is where the squeeze, and most of the money and problems are, says Brown. He’s in a position to know, since he recently completed his second two-year term as one of 14 members of the Federal Deposit Insurance Corp.’s Community Bank Advisory Board in Washington, D.C.

Brown said that getting loan approvals in the secondary market where the GSE’s set the base standards is an ever-shifting and increasingly difficult process.

“They are continually tightening, tweaking and revising performance standards,” Brown said. “It’s very difficult to get a ‘conforming’ GSE mortgage and many banks have thrown up their hands altogether. I’m sensing both tension in the GSEs, as well as political pressure.”

But real estate attorney Anne Weintraub of Sarasota’s Band Weintraub says the larger banks are tired of being sued and are starting to cooperate with homeowners.

“They are tired of spending monies on attorneys to fight borrowers and realize owning a home is not ideal,” she said. “Most homes are abandoned, left in a state of disarray and the volume of abandoned homes is so enormous some banks don’t even realize they own the homes.”

In either scenario, banks can be both lenders and sellers, and typically hire the appraiser.

“Until the banks get the foreclosures off their books, they are sellers who want to get the best possible prices,” McCabe said. “Due to the legal wrangling, foreclosure sales in 2012 were basically ‘on the shelf’ while banks saw prices increasing, so now, after the settlement in a ‘perceived recovering market,’ I’d expect foreclosure filings and bank sales to accelerate this year and next.”

Bank-retained private appraisers also can be part of the problem, he contends, if their low valuation compared to the contract sales price inhibits lending.

Uncertainty surrounds issues

Additional flies in the recovery ointment are state and federal issues that may have adverse impacts on sustainable realty recovery.

In Tallahassee last week, a bill designed to speed up the foreclosure process passed the Florida House Civil Justice Subcommittee on a 10-3 vote. Foreclosure monitoring service RealtyTrac reported that “House Bill 87 allows third-party lienholders to start foreclosure proceeding and rushes final judgment of foreclosure if a homeowner doesn’t file a defense. The bill aims to streamline and expedite the foreclosure process.” RealtyTrac termed the bill a controversial piece of legislation in Florida – the state that leads the nation in foreclosure filings.

Immediately, more than a half-dozen law firms and attorneys aligned to defeat the bill, including St. Petersburg’s Matt Weidner, Mark Stopa and Charles Gallagher, a member of Florida Consumer Justice Advocates, a self-funded consumer lobbying group.

“Our fear is the current due-process rights of homeowners are being further diluted by the provisions of HB 87 and if passed, this bill would further handicap homeowners from defending their foreclosure and provide banks with little judicial resistance from the speedy foreclosure of their homes,” said Gallagher.

Tuccillo, the Florida Realtors’ chief economist, says the bill has “its pros and cons, and while I’m not a raving fan of HB 87, I would like to see it passed.” He called the slow judicial process a primary contributing factor to the huge build-up of the state’s shadow inventory.

“It’s been a long, long time” that banks have held onto the troubled mortgages, and “it’s time to get all this garbage out of the way,” he said.

In Washington, the Consumer Financial Protection Bureau – the agency that holds primary responsibility for regulating consumer protection with regards to financial products and services in the United States – is viewed by some as part of the problem.

The CFPB, in its attempt to protect consumers, is creating a “bigger mess” as compliance and risk escalate with every new rule they put out, Charlie Brown says. CFPB sends out revised guidelines “almost every 30 days that are scaring off mortgage lenders due to litigation and compliance risk.” The situation with the secondary market and the CFPB is “extremely difficult, and very much worries me,” said Brown.

It could get uglier.

“About 40 percent of Floridian mortgage holders who are current on payments are nonetheless underwater,” meaning that their current mortgage balance is greater that the market value of their property, says McCabe. That portends an expanding horizon of potentially distressed properties coming onto the market.

Veteran Florida real estate analyst Lewis Goodkin agrees.

“There used to be a stigma attached to foreclosures, but no more,” Goodkin said. “I know people making good money, professionals, whose homes are underwater and they have decided to simply stop making payments and put the money into the bank instead.

“In one case, fully 21 months after not getting payments, the bank finally foreclosed. When banks unload property, they are so leery of mortgage availability that they only take cash offers, which means they sold at prices 20 percent lower than they normally could have,” he said.

Those buyers are either large specialized Wall Street funds that have been snapping up distressed property, or foreign buyers.

“Over half of the (2012) transactions in the Miami market were cash-only deals, which means that a normal person with a steady job is unable to compete, or even to buy at all,” Goodkin said.

So what do the numbers mean?

“Bottom line is that, if you only pay attention to Realtor data, everything looks great,” summarized McCabe. “However, if you remove the blinders and consider underlying financial market activity and data, there’s still trouble in paradise and it’ll take another two to three years to achieve a normal healthy real estate market.”

Goodkin echoes that time frame.

“It’s not a very dynamic situation and we’re not out of the woods yet, and probably won’t see a normally functioning market until mid-2014, unless we have a depression, God forbid,” he said.

Realtors and hopeful sellers and buyers who cheered 2012’s rose-tinted Florida housing report as an indicator of better things to come in the short term are “smoking Hopium,” said McCabe, adding tongue-in-cheek that he “trademarked the term” for the duration of the Great Recession.

© 2013 The Bradenton Herald (Bradenton, Fla.), Stephen Frater, The Bradenton Herald. Distributed by MCT Information Services

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4.3 Million Foreclosure Victims Offered Independent Case Reviews With Focus On Proper Processes

November 10, 2011


While I’m not so sure I agree with the word “victims” in this article title I still think it holds some merit and deserves to be shared. So many people have either already been kicked out of their homes or are in the process of being given the boot. I agree that improper processes need to be identified and addressed.

Here is the article from yesterday’s NotaryBulletin presented by the National Notary Association.

In what is being considered the first meaningful response to the foreclosure crisis, the federal government has ordered 14 mortgage lenders involved in the “robo-signing” scandal to send letters to 4.3 million consumers who may have been victimized by foreclosure errors and misconduct, paving the way for a massive number of individual case reviews and potential compensation.

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