Tag Archives: foreclosure

Real Estate

Foreclosures Reach Lowest Level Since 2007

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Foreclosure filings dropped again in July, marking the 10th straight month for year-over-year declines and reaching their lowest level since November 2007, RealtyTrac reports. But analysts are still mostly attributing the drop to banks’ processing delays as they take more time to take action against delinquent home owners.

For July, about 212,764 homes received a foreclosure filing — which is a notice of default or auction sale or completed foreclosure — that’s down 4 percent compared to June. Filings were 35 percent lower than July 2010, according to RealtyTrac, and bank repossessions were down 33.6 percent from its peak in September 2010. Also, initial notices of default dropped 39 percent year-over-year to fewer than 60,000, which could be an indication that fewer borrowers are falling behind on their mortgage payments or that lenders are not filing notices as promptly in the past.

“The downward trend in foreclosure activity has now taken on a life of its own,” says RealtyTrac CEO James Saccacio. “It appears that processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts, may be allowing more distressed home owners to stave off foreclosure.”

Las Vegas continued to have the highest rate of foreclosures in the country — a filing for every 99 homes. Overall, for states, Nevada had the highest foreclosure rate of any state (one filing for every 115 homes), followed by California (one in every 239 homes), and Arizona (one in every 273 homes).

Source: “Foreclosure Filings Fall for 10th Straight Month,” CNNMoney (Aug. 11, 2011)

 
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Real Estate

FHA Gives Jobless Homeowners One-Year Break

 

Beginning Aug. 1, the Federal Housing Administration will extend the period for unemployed homeowners to miss mortgage payments from four months to a full year, providing qualified homeowners with more time to find employment before the foreclosure process begins.

Making sense of the story

  • The new Special Forbearance program falls under the FHA’s Loss Mitigation program, which FHA-approved servicers must participate in.
  • The extended grace period only applies to FHA-backed loans and homeowners in the government’s foreclosure prevention program, the Making Home Affordable Program (MHA).
  • In addition to extending the forbearance period and removing the up-front hurdles for borrowers, the FHA also reemphasized its requirement that participating servicers conduct a review at the end of the forbearance period to evaluate the borrower for all additional, applicable foreclosure assistance programs and notify the borrower in writing whether or not he/she qualifies for any other available option.
  • If the borrower does not qualify for any foreclosure assistance option, the servicer must provide the borrower with the reason for denial and allow the borrower at least seven calendar days to submit additional information that may impact the servicer’s evaluation.
  • Housing and Urban Development, which oversees FHA, hopes private lenders and government-controlled Fannie Mae and Freddie Mac will adopt a similar policy.
  • For additional information on the program, including eligibility and requirements, please visit Read the full storyThinking of buying or selling?
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Real Estate

Foreclosure Sales Drop, But Inventories Swell

Even with continuing foreclosures, how many are started and just hang there?  I know of several people who have been in their home for six months to a year and the banks have not finished the foreclosure proceedings. The market is flooded with foreclosures, so maybe they are hanging back on some of them.  Here’s a related article:

“Foreclosure sales continue to drop, but foreclosure inventories remain high in many markets across the country. By the end of May, the number of mortgages that were 90 or more days delinquent, combined with the foreclosure inventory, outpaced foreclosure sales by 50:1, Lender Processing Services Inc. reports.

The biggest drop in foreclosure sales occurred in East Coast states. For example, foreclosure sales plummeted 96 percent in Washington, D.C., 80 percent in Maryland, and 79 percent in New York, according to Lender Processing Services’ monthly mortgage monitor report.

Mortgages that are 90 days or more delinquent, combined with the foreclosure inventory, totaled more than 4 million in May. Foreclosure sales at the end of May totaled 78,676.

The average time a home owner spends in foreclosure continues to get longer. More than 33 percent of home owners in foreclosure have not made a mortgage payment in more than two years.”

Source: “Foreclosure Sales Plummet in May,” RISMedia (July 5, 2011)

 

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John J. O’Dell Realtor® GRI
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Real Estate

Foreclosures Backlogs – California 2 Years – New York – 62 Years

Photo courtesy of Reef Point Realty
Photo courtesy of Reef Point Realty

Nationwide, new foreclosure cases and repossessions have dropped by a third since last fall as banks, as greater scrutiny over banks’ foreclosure procedures and more home owners fighting back in court has slowed the pace. Banks, already facing huge backlogs of foreclosures they’ve already repossessed, also may be reluctant to add on more to their inventory, experts say.

For example, In New York, experts estimate it would take lenders 62 years at their current pace to repossess the 213,000 houses now in severe default or foreclosure, according to LPS Applied Analytics, a real estate data firm. New York boasted the longest foreclosure backlog in the nation. Following behind, in New Jersey it would take 49 years, and in Florida, Massachusetts, and Illinois it would take 10 years to handle the supply of foreclosures at the current pace.

States where courts must review each foreclosure tend to have the longest delays. But in the 27 states without that requirement, foreclosures are much quicker. For example, as comparison, in California, the foreclosure backlog is three years, and in Nevada and Colorado, it’s two years.

“If you were in foreclosure four years ago, you were biting your nails, asking yourself, ‘When is the sheriff going to show up and put me on the street?’” Herb Blecher, an LPS senior vice president, told The New York Times. “Now you’re probably not losing any sleep.”

However, the banks say they is no strategy in delaying foreclosures. “Any suggestion that we have a strategy to delay foreclosures is baseless,” a spokesman for Bank of America said. Instead, one bank blamed delays in state laws governing foreclosures while others said the decline in foreclosures is the product of an improving economy.

Source: “Backlog of Foreclosures Giving Some a Reprieve,” The New York Times (June 19, 2011)

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John J. O’Dell Realtor® GRI
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Real Estate

Three Banks Penalized For Loan Modification Failure

Bank of America Nevada City Photo by John J. O'Dell
Bank of America Nevada City Photo by John J. O'Dell

Three major banks have lost federal mortgage modification incentives in delivering a foreclosure relief program until they make big changes to improve their practices.

Obama administration officials have told Bank of America, JPMorgan Chase & Co., and Wells Fargo & Co. that they must make “substantial improvements” to the way they administer the Home Affordable Modification Program, and they will not receive any more federal money from the program until they do so. For example, officials noted that banks need substantial improvement in correctly evaluating borrowers’ incomes, which is a critical component for determining eligibility for the program. Some of the banks also need to improve how they identify and contact borrowers for the program.

Last month, the banks received $24 million in payments through HAMP, but no more payments will be made until servicers improve their performance, officials warned.

While Bank of America agreed that it needed to improve its practices in the program, JPMorgan Chase and Wells Fargo say they disagree with the poor evaluation. Wells Fargo, in fact, says they plan to contest the administration’s evaluation of how well it’s done with administering HAMP. The review, which examined all 10 servicers who administer the program, found that all 10 were performing below its benchmarks.

This marks the first time the Obama administration has taken major punitive action against banks in the HAMP program, which has been under attack in recent months from some lawmakers and critics who say the program has not done enough to help save home owners from foreclosure. Republicans in the House of Representatives voted to end the program earlier this year. However, the measure has yet to pass the Senate and the White House already has threatened a veto.

Source: Los Angeles Times (June 10, 2011)

John J. O’Dell Realtor® GRI
O’Dell Realty
(530) 263-1091
jodell@nevadacounty.com

Real Estate

Financing Foreclosed Homes

Foreclosure properties, especially those with the water and power turned off, may not qualify for standard financing, but would-be owner-occupants may qualify for a federally insured 203(k) loan.

 

  • Would-be owner-occupants who do not have enough money to purchase a foreclosure home using cash, may qualify for the federally insured 203(k) loan, which allows borrowers to roll projected rehab costs into the loan.
  • According to one real estate expert, most foreclosure properties are sold as is, and, oftentimes, heat, plumbing, and electric are turned off, making it unlikely a lender will lend money on the home.
  • To qualify for a 203(k) loan, buyers generally hire an independent consultant hired by the Federal Housing Administration to review contractor cost estimates and architectural plans for things like whether the work will bring the property up to minimum standards, while not going overboard on improvements.
  • Buyers should be aware that not all foreclosure properties are eligible.  For instance, a partially built house that has never had a certificate of occupancy requires a construction loan of the kind that a commercial developer would use.
  • The interest rate on a 203(k) loan is approximately a quarter of a percentage point higher than on a standard FHA-insured loan, and a buyer also can expect to pay 1 or 2 points.
  • Also, as with other FHA-backed loans, down payments may be as low as 3.5 percent, and loan limits apply.  Currently, most FHA loans are capped at $729,750.

Read the full story

For all your real estate needs, call or email:

John J. O’Dell Realtor® GRI
O’Dell Realty
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jodell@nevadacounty.com

Real Estate

Miss a Mortgage Payment, Your Credit Score is Drastically Affected

 

Missed mortgage payments, short sales, and foreclosures can all drastically bring down a credit score.

Lenders use credit scores to measure how well a person handles debt. Credit scores range from 300 to 850, with 650 and below considered poor credit. A mortgage makes up a big part of a person’s credit score and often is the most important part of a person’s credit profile.

And just missing a single mortgage payment by 30 days can ruin a credit score, say FICO and VantageScore, which have studied the impact mortgages can have on credit scores. For borrowers, that can be nearly as destructive as a foreclosure to a credit score, according to the companies.

On the other hand, loan modifications, which is when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, Sarah Davies, the senior vice president for analytics at VantageScore, told The New York Times.

A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.

How a Credit Score Is Affected

FICO evaluated three various scenarios of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower (680) — in a study it conducted last month. Here’s the impact FICO found:

? 30 days late on a mortgage payment: The 780 credit score borrower has her credit score fall to 670-690. The 720 credit score borrower has his fall to 630-650. The 680 credit score borrower falls to 600-620.
? Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
? Foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.

Source: “Fallout From a Poor Credit Score,” The New York Times (April 24, 2011)

 

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John J. O’Dell
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O’Dell Realty
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Real Estate

Chase Bank Accused of Breaking and Entering

A couple is accusing banking giant Chase of locking them out of their home and removing their personal property before a foreclosure was finalized.

Banks across the country have faced similar accusations. Lenders have argued they have the right to “secure” vacant properties they’ll soon own, but lawyers say it’s trespassing or breaking and entering when home owners still own the title of the property and the banks don’t yet.

In this most recent case, the Florida couple says they arrived home one night to find the locks had been changed and a sign posted on the window that said the home was being managed by Chase Home LLC. The couple, who said the house was to be sold in a foreclosure sale in a few weeks, say the bank didn’t give them a warning or notice of eviction.

The couple has accused the company’s representatives of removing the home’s appliances and the air conditioning unit as well as some of their personal belongings. Chase says the stove, refrigerator, and air conditioning unit were already missing when their representatives entered the house.

The couple’s mortgage has been in default since 2007, but court cases have prolonged the foreclosure since the couple filed for Chapter 7 bankruptcy in 2009.

Chase spokeswoman Nancy Norris says that Chase authorized “a vendor” to change the locks on the home after it “determined” the house was vacant.

“Before the property was secured we confirmed that the home was empty,” Norris told the Miami Daily Business Review. “The utilities were turned off … we took photographs on the day we secured the property and the home was in disarray.”

Source: “Chase Accused of ‘Breaking and Entering’ Couple’s Home; Banks Claim They Have Duty to ‘Secure’ Collateral,” Miami Daily Business Review (March 24, 2011)

For all your real estate needs, call or email:

John J. O’Dell
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Real Estate

Equity Loans Can Follow You After You Sell Your Home

Are you facing foreclosure?  Has someone advised you to do a short sale in lieu of foreclosure? Well, be careful, there could be a lot of problems down the road for you if you took out an equity loan to pay off debts or buy goods such as a car, boat, furniture or other such items.

Whereas California is a nonrecourse state, meaning lenders cannot pursue borrowers for unpaid balances on home-purchase loans. However, home loans not used for the purchase – home equity lines of credit and second loans taken out after purchase – are recourse loans, which means lenders are legally entitled to collect the unpaid balance. Depending on the type of loan, they have four to six years to pursue borrowers.

Refinanced mortgages do become recourse loans, but in California a nonjudicial foreclosure – the most common kind – eliminates the borrower’s liability to the lender that carried out the foreclosure, which is generally the main lender. A second lender for a nonpurchase loan, however, still has “recourse,” or the right to pursue the borrower.

The problem becomes that in the normal course of business, when you take out an equity loan, you sign a promissory note.  That note is a promise to pay the lender, regardless if your property is sold as a short sale or sold in foreclosure.  In short you may be stuck to pay off your note that you signed when you got your equity loan. This is what is called a recourse loan. Ouch, it can hurt.

Millions of borrowers do have recourse loans that they took out after purchase, which means lenders have a legal right to pursue them for unpaid balances.

In California during the boom real estate years – 2005 to 2007 – homeowners took out 2.88 million home equity lines of credit and 1.18 million nonpurchase second loans, according to First American CoreLogic, which tracks loan data. The total was 4 million such recourse loans totaling $485.3 billion.

Some experts think lenders may pick whom to pursue by probing defaulted borrowers’ net worth.

Rick Harper, director of housing at Consumer Credit Counseling Services of San Francisco, which staffs the federal HOPE for Homeowners hot line, said his workers tell borrowers who are considering default that their second loans could make them liable to debt collection.

“Depending on what the holder of that note wants to do, it can make their (the borrowers’) life miserable,” he said. “Most of the (lenders) do an asset test to see if there’s anything there. They can run credit reports, use investigative services, get their hands on the applications they used when they applied for a loan.” Applications for loan modifications and short sales also require disclosure of assets.

Most of this story was taken from an excellent article in the San Francisco Chronicle.

To read the full story Click Here”

John J. O’Dell GRI, SFR
Real Estate Broker
Looking for property in Nevada County? Click Here

Real Estate

Extreme Makeover:Home Edition Family Faces Foreclosure

Wofford's Home
Wofford's Home

The team from ABC’s heartwarming and popular reality series “Extreme Makeover: Home Edition” may give worthy families a whole new house. But yet another family who appeared on the show learned that they don’t guarantee you’ll keep that house forever.

 The Wofford family of Encinitas, California, got their house from the show five years ago, but now claim that after struggling for two years to pay their bills, they’re facing foreclosure . Dr. Brian Wofford, a widower and father of eight, explained the crisis, telling 10News: “A lot of people think when you get the house, you get the mortgage. Well, you don’t.”

Wofford’s wife, Theresa, died in 2000, and the new home helped the family move on.

“It’s been a great, great blessing,” said Wofford

 For the past two years, the Woffords have been fighting just to live in their home.

The family — 8 kids and dad, Dr. Brian Wofford — is still happy despite the prospect of losing their home.

 

However, the blessing turned into a nightmare two years ago when the mortgage crisis that crippled millions of Americans also hit the Woffords. Their mortgage adjusted and Wofford’s chiropractic clinic was not making enough. 

The Woffords aren’t the first family featured on the show to face serious financial problems after their home makeover. The Harper family of Atlanta, who received the show’s biggest house to date, along with the money to pay taxes on it for 25 years, famously faced foreclosure last year after taking out an ill-advised $450,000 loan using the house as equity. And at least four other “Extreme Makeover” recipient families have had to sell or lose the homes they won on the show. ABC is probably considering changing the show’s rules (maybe the houses don’t need to be quite so lavish, for example) to help avoid such disasters in the future.

 However, there’s still hope for the Woffords. Loan modification papers are being promised by their bank, OneWest, next week. If they don’t go through, the house will be auctioned by the bank in two weeks, but Dr. Wofford is optimistic about his family’s future: “If I have my family and I live in a tent, I’m in good shape. Better be a big tent though.