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Foreclosure Activity for Judicial vs. Non-Judicial States Flip-Flopped
Depending on whether the data was based on a judicial or non-judicial state, foreclosure activity told different stories in RealtyTrac’s Foreclosure Market Report released today for February 2012.
When clumping states together based on foreclosure processes, February foreclosure activity in the 26 judicial states increased 24 percent from February 2011 and 2 percent from the previous month of January. For the 24 non-judicial states, the numbers moved in near opposite directions, with foreclosure activity decreased to 23 percent from February 2011 and down 5 percent from January, according to a RealtyTrac release.
Overall, foreclosure filings — default notices, scheduled auctions, and bank repossessions — were reported on 206,900 properties in February, down 2 percent from the previous month and 8 percent a year ago from February 2012, which is the lowest decrease since October 2010, according to RealtyTrac.
“The foreclosure and mortgage settlement filed in court earlier this week will help pave the way to a properly functioning foreclosure process by providing a clear roadmap for necessary foreclosures,” said Brandon Moore,CEO of RealtyTrac. “That should result in more states posting annual increases in the coming months. Not surprisingly, many of the biggest annual increases in February were in states with the more bureaucratic judicial foreclosure process, which resulted in a larger backlog of foreclosures built up over the last 18 months in those states.”
For metro areas, 10 of the nation’s largest 20 reported year-over-year increases in foreclosure activity in February, with Florida cities Tampa (+64 percent) and Miami (+53 percent) posting the highest increases.
Most of the metro areas with decreases were in the West, led by Seattle (-59 percent) and Phoenix (-43 percent), which
corresponds to a recent ForeclosureRadar report showing decreases in foreclosure filings in February for most West coast states.
The metro areas with the highest foreclosure rates were Riverside-San Bernardino in California (one in 166 housing units), Atlanta (one in 244), Phoenix (one in 259), Miami (one in 264) and Chicago (one in 302).
The metro areas with the highest number of foreclosure filings in February 2012 were Los Angeles (12,731), Chicago (12,587), Miami (9,333), Riverside-San Bernardino (9,057), and Atlanta (8,859).
While Nevada and California reached new lows in foreclosure activity and saw decreases in February, the two states still had the highest foreclosure rates despite signs of improvement. One in every 278 Nevada housing units had a foreclosure filing during the month, which is twice the national average, and one in every 283 housing units had a foreclosure filing in California.
With one in every 312 Arizona housing units with a foreclosure filing during the month, the state stood at number three.
Default notices were filed on 58,886 U.S. properties in February, up 1 percent from the previous month but still down 7 percent a year ago. Foreclosure auctions were scheduled on 84,180 homes down 2 percent from January and down 13 percent. REO properties totaled 63,834, a 4 percent decrease from January and down 1 percent from February 2011.
States with the greatest increase on a year-over-year basis for default notices were Hawaii (321 percent increase), Maryland (+157 percent), Connecticut (+64 percent), South Carolina (+58 percent), and Indiana (+37 percent).
Default notices were down on a year-over-year basis in several states including Nevada (-89 percent), Michigan (-72 percent), New York (-44 percent), Iowa (-28 percent), and Kentucky (-25 percent).
For Nevada, the major decrease in default notices has been credited to recent state legislation requiring lenders to file an extra affidavit before initiating the foreclosure process.
States with the greatest increase on a year-over-year basis for scheduled auctions were Kentucky (+190 percent), Illinois (+170 percent), Iowa (+98 percent), Pennsylvania (+95 percent), and Indiana (+92 percent).
REO activity increased at least 20 percent on a year-over-year basis in 17 states, including Massachusetts (+114 percent), North Carolina (+95 percent), Florida (+90 percent), South Carolina (+87 percent), and Georgia (+76 percent).
Foreclosures Spike in January: Is the Backlog Clearing?
Data through the end of January shows significant movement in both foreclosure starts and sales, and it has some market watchers saying the lull in foreclosure activity seen over the past year-and-a-half may very well be coming to an end.
Lender Processing Services’ (LPS) latest market report says foreclosure starts jumped 28 percent between December and January, and foreclosure sales soared 29 percent.
“While one month of data does not necessarily indicate a trend, this surge could suggest the backlogged foreclosure pipeline is beginning to move,” LPS said in its report.
The January data also shows that the percentage of repeat foreclosures hit a new all-time high, with 47 percent of all foreclosure starts during the month involving a mortgage that had been delinquent before, cured, and then fell back into foreclosure again.
LPS reports that the biggest pickups in foreclosure activity occurred in states where the foreclosure process is presided over by the courts. The company found that foreclosure starts in judicial states increased almost two times as much as in non-judicial states during the first month of 2012.
The January study shows foreclosure sales in non-judicial states continue to outpace those in judicial states by about three-to-one, but LPS says the surge in foreclosure sales is having a significant impact on pipeline ratios.
The company assesses each individual states pipeline ratio as the number of 90-plus day delinquencies and the number of foreclosures divided by the number of foreclosure sales for the month. The ratio for judicial states has been cut from its February 2011 high of 147 months down to 63 months as of January 2012.
LPS says new problem loan rates are still relatively low nationally at 1.4 percent, but pockets of trouble exist. The top five states for new seriously delinquent loans in January were Nevada, Florida, Mississippi, Arizona, and Georgia.
At 7.97 percent, the national delinquency rate is down over 25 percent from its peak of 10.97 percent in January of 2010, according to LPS. However, the industry’s foreclosure inventory – calculated as the percentage of loans in the process of foreclosure that have not yet reached the final stage of foreclosure sale – remains near historic highs.
Foreclosure inventory registered a reading of 4.15 percent of all active loans as of the end of January. To put that number into perspective, the foreclosure inventory was 0.48 percent in December 2005.
Nationally, LPS says over 40 percent of loans in foreclosure are more than 2 years past due.
The company’s latest report also includes an assessment of the administration’s proposal to launch a mass refinance program for borrowers with non-government backed loans. LPS says implementation will be key should the initiative actually take form. LPS estimates 27.6 million borrowers would be eligible, but only 6.8 million are “probable” to receive a refinance under the program.
Fannie Mae to Change LPI Practices for Servicers
Fannie Mae is looking to change the way insurance is applied to borrowers who end up with force-placed insurance due to gaps in coverage.
The GSE announced Tuesday that it has issued a request for proposals (RFP) inviting insurance companies to compete for Fannie Mae LPI business, which should lead to significantly reduced insurance costs.
“The changes will lower barriers for borrowers who want to cure
their delinquencies, while improving transparency and boosting competition in the LPI market,” the enterprise said in a bulletin.
By reducing insurance costs, homeowners, taxpayers, and Fannie Mae are all said to save money.
“To bring their loan current, a borrower must reimburse the servicer for the cost of the LPI policy. If the borrower defaults in mortgage loan payments and does not cure, Fannie Mae must reimburse the servicer for LPIpremium,” the GSE said in the bulletin, adding that expenses to Fannie costs taxpayers as well.
According to an FHFA statement, Fannie Mae and Freddie Mac have received about $180 billion in taxpayer support.
Fannie Mae also said it will provide servicers with new policy guidelines on when and how to secure LPI, as well as guidance regarding allowed reimbursable costs.
The GSE requires hazard insurance on all mortgages it owns, and if there is a gap in coverage and the homeowner fails to provide evidence of coverage, the servicer can automatically add insurance to the loan.
LPI tends to be more expensive and often include commissions and other administrative costs, as opposed to less costly insurance a homeowner would typically shop for and purchase.
Average rate on 30-year mortgage dips to 3.88 pct.
WASHINGTON — Fixed mortgage remain a bargain at the start of the spring-buying season: The average rate on the 30-year mortgage dipped this week, while the 15-year loan fell to a new record low.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan ticked down to 3.88 percent, from 3.90 percent the previous week. That’s slightly above the 3.87 percent average rate hit three weeks ago, which was the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage fell to 3.13 percent, from 3.17 percent a week ago.
Rates on the 30-year loan have been below 4 percent for three months. That has made home-buying and refinancing more attractive for those who can qualify.
The super-low rates are helping the housing market recover, albeit slowly. Home sales have been rising and the four-week average of home purchase applications was up in January and February, according to the Mortgage Bankers Association.
In recent months, other signs have emerged that suggest the troubled housing market could start to turn around this year.
Builders are more optimistic after seeing more people express interest in buying a home. Construction has picked up and builders are requesting more permits to build single-family homes. And the supply of homes on the market is falling, which could send home prices higher.
A key reason for the optimism is the improving jobs market. Employers have added an average 200,000 net jobs per month from November through January. That has helped lower the unemployment rate for five straight months to 8.3 percent, the lowest level in nearly three years.
Frank Nothaft, Freddie Mac’s chief economist, said a typical U.S. family now has more than double the income needed to purchase a median-priced home. That’s the first time that’s happened since records on home affordability were first recorded in the 1970s.
Still, home prices continue to fall. Millions of foreclosures and short sales – when a lender accepts less than what is owed on a mortgage – remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.
Economists say housing is years away from returning to full health.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fees for the 30-year and 15-year fixed loans were unchanged at 0.8.
For the five-year adjustable loan, the average rate fell to 2.81 percent from 2.83 percent, and the average fee was unchanged at 0.7.
The average on the one-year adjustable loan ticked up to 2.73percent from 2.72 percent, and the average fee was unchanged at 0.6.
Most Americans Want The Government To Combat Foreclosures: Poll
With no end in sight to the foreclosure crisis, a majority of Americans are calling on the government to do something about it.
Fifty-eight percent of people polled in a recent Gallup survey say they want the federal government to take direct action in response to rising foreclosure rates, compared to 34 percent of people who say the government should let the housing market take care of itself.
The Gallup poll arrives ahead of what many housing experts agree will be a massive wave of foreclosures in 2012, that is likely to weigh on home values and the economic recovery. At the moment, it takes so long for homes to go through the foreclosure process, that it could take decades in some states just to deal with the homes currently awaiting foreclosure. The real estate company RealtyTrac has estimated that the market needs to processanother 14 million properties before the foreclosure crisis can be considered over.
Many economists believe that foreclosures exercise a depressing effect on local property values, and that a broader economic turnaround is unlikely to happen until home prices begin rising again. The decline in housing values since 2006 has erased millions of dollars of homeowner wealth and may have made it harder for people to move to new towns to look for jobs.
But it’s not only ordinary Americans who disagree on how to address the foreclosure crisis, politicians have differing views on the best way to handle it as well. Republican presidential candidate Mitt Romney has said that the foreclosure market should be allowed to “run its course and hit the bottom.” President Barack Obama, meanwhile, has introduced a number of measures aimed at helping struggling homeowners, though not all have been popular and some have beenwidely perceived as failures.
Obama said in his State of the Union address this Tuesday that he intended to make it easier for homeowners to refinance their mortgages into more affordable terms, something that many people have struggled with in the current lifeless housing market.
Foreclosure Sales Outpace Modifications for January
During January, 73,767 homeowners received permanent loan modifications from mortgage servicers, according to modification data released by HOPE NOW, a voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors.
While the January numbers are a decrease compared to the previous two months, it was a record-breaking month for foreclosure sales.
For the first time since October 2009, foreclosure sales, which reached 78,734, outpaced loan modifications.
About 79,061 loans received modifications in December 2011, and 83,825 were modified in the previous month of November.
For foreclosure sales, the numbers were up compared to previous months, with 69,616 foreclosure sales in December and 70,626 in November.
Of the approximately 74,000 who received modifications, about 56,000 were non-government proprietary modifications and 17,992 were through the government’s Home Affordable Modification Program (HAMP), as reported by US Treasury Department.
Loan modifications with reduced principal and interest payments years or more, afor approximately 67 percent, or 37,547, of 5all proprietary modifications, down from the previous month’s figures at 82 percent, or 45,407.
Fixed-rate modifications, or those with an initial fixed period of 5 years or more, accounted for about 89 percent, or 49,845, of all proprietary modifications, up from the previous month, which stood at 81 percent, or 45,034.
“HOPE NOW and its members have charged full speed into 2012 in the ongoing collaborative efforts to assist at-risk homeowners,” said Faith Schwartz, executive director ofHOPE NOW in a statement. “Loan modifications continue at a steady pace and proprietary mods continue to show real signs of sustainability and affordability for homeowners. This is important to note, as these characteristics are vital to housing market recovery.”
Obama’s Housing Relief Plans for Servicemmebers and FHA Borrowers
President Obama is announcing two steps that will be taken to assist servicemembers and FHA borrowers, the administration stated in a release today.
For the first full news conference of the year, Obama’s agenda includes details on how support will be provided for those currently in and who previously served in the military.
One provision will have servicemen who were foreclosed upon since 2006 reviewed, and if any are found to have been wrongfully foreclosed upon, they can receive compensation equal to a minimum of lost equity, plus interest and $116,785. In addition to foreclosure reviews, servicemembers will be reviewed for interest rates to see if any were charged more than 6 percent after a request to lower the rate.
For veterans, $10 million will go into the Veterans Affairs fund to guarantee loans on favorable terms.
Plans for FHA borrowers include refinancing at a lower cost. The FHA current an up-front mortgage insurance premium of 1 percent of the loan balance and an additional 1.15 percent of the balance per year; the up-front premium will be reduced to .01 percent for loans originated prior to June 1, 2009. Annual fees for refinancing will be halved to .55 percent.
The administration estimates 2-3 million FHA borrowers will be eligible.
Obama Proposes Extending Tax Waiver on Mortgage Debt Forgiveness
Obama’s FY2013 budget proposal includes an extension of the Mortgage Forgiveness Debt Relief Act of 2007.
The Act ensures that homeowners who received principal reductions or other forms of debt forgiveness on their primary residences do not have to pay taxes on the amount forgiven.
Without the Mortgage Forgiveness Debt Relief Act, debt reduced through mortgage modifications or short sales qualifies as income to the borrower and is taxable. Under the act, up to $2 million in debt elimination can be tax-free.
In the Treasury’s Green Book, its summary explanation of the administration’s budget proposal, it calls for an extension of the tax break due to “the continued importance of facilitating home mortgage modifications.”
The administration is proposing an extension that would apply to any amounts forgiven before January 1, 2015.
At that point, the government would reassess the market and determine whether another extension is appropriate.
Homeowner Satisfaction Rate at 72%, Highest for Short Sale Purchasers
Seventy-two percent of homeowners say they are satisfied with homeownership, according to a recent survey of more than 1,400 homeowners conducted by HomeGain, a provider of online marketing programs that connect agents and brokers with home buyers and sellers.
Among the 28 percent who said they were dissatisfied, 63 percent cited price depreciation as the main reason for their dissatisfaction.
Other dissatisfied homeowners cited the costs of owning and maintaining a home as major reasons for their dissatisfaction.
HomeGain also assessed satisfaction levels by sales type and found that homeowners who purchased a home through a short sale were the most likely to be pleased with their choice.
Eighty-three percent of short sale purchasers were satisfied homeowners.
Homeowners who purchased foreclosed homes were the group next likely to be satisfied with owning a home. The group reported a 79 percent satisfaction rate.
Existing-home and new home purchasers were least likely to be satisfied, though a majority of these homeowners
were still satisfied. Seventy-one percent of existing home purchasers and 73 percent of new home purchasers said they were satisfied.
Homeownership satisfaction varied somewhat by region with the highest satisfaction rates in the Northeast – 77 percent – and the lowest in the Midwest – 68 percent.
The Southeast and West fell in between at 73 percent and 71 percent, respectively.
When comparing satisfaction among homeowners of different age groups, HomeGain found that satisfaction was greatest among older homeowners and least prevalent among the youngest homeowners.
Homeowners ages 18 to 25 were the only homeowner to report more than a 50 percent dissatisfaction rate.
Fifty-five percent of homeowners ages 18 to 25 were dissatisfied with homeownership, while 24 percent of those 55 and older expressed dissatisfaction with being a homeowner…..
Foreclosures for Sale: AVG 34% Off in 2011
Foreclosure homes sold for 34 percent less than the average price of a non-distressed home during the third quarter of 2011, according to new data released byRealtyTrac Thursday.
The average sales price of homes in the process of foreclosure or bank-owned was $165,322 over the July-to-September period last year.
RealtyTrac says third parties purchased a total of 221,536 residential properties classified as foreclosures or REOduring the third quarter of 2011, representing just 20 percent of all residential sales during that timeframe.
The third-quarter share of distressed sales activity is down from 22 percent in the second quarter and down from 30 percent of all sales in the third quarter of 2010. At that time, a year earlier, the discount on a home in foreclosure or REO was averaging 37 percent.
“While foreclosures continue to represent an excellent bargain-buying opportunity for many buyers and investors, foreclosure sales accounted for a smaller share of the total market in the third quarter,” commented Brandon Moore, RealtyTrac’s CEO. ….
Short Sale Solutions for Tennessee 