Realtor Coaching & Training: bank repossessions
Foreclosure Firestorm Ahead.
Just in case any of you were actually believing the housing markets where anywhere near bottom……..
NEW YORK (Reuters) – U.S. foreclosure activity for May ebbed from April’s record, but mortgages still failed at a staggering pace as President Barack Obama’s rescue programs had not had time to fully take root, RealtyTrac said on Thursday.
Foreclosure filings dipped 6 percent in the month but increased 18 percent from May 2008, marking the third highest month on record.
“There were almost one million foreclosure filings in a three-month period, and that’s simply unprecedented,” Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.
Temporary freezes on foreclosure activity ended in March. Failures of many seriously delinquent loans that were put on hold during those moratoria have been thrust back into the foreclosure cycle.
Realtors, there are 2 kinds of agents…those who know how to easily list and sell short sales (and are making a fortune) and those who refuse to learn anything new…struggle to stay afloat…and will probably not be in real estate for much longer. What kind of agent are YOU? Watch the FREE Agent Short Sale Secrets video then download the FREE Agent Short Sale Secrets book. Don’t wait, don’t procrastinate….FINALLY take action and learn how to become one of the agents who is THRIVING in this market.
One in every 398 households with loans got a foreclosure filing in May. Filings, which include notices of default and auctions, were reported on 321,480 properties last month.
Stemming foreclosures is seen critical to bolstering home prices, consumer confidence and the recessionary U.S. economy.
Bank repossessions, known as real-estate owned or REOs, rose in May and should spike in coming months because the moratoria ended, RealtyTrac said.
OBAMA PLAN NEEDS TIME
The administration’s plans to ease loan modifications and refinancing were detailed in early March and haven’t been implemented long enough to derail foreclosures.
The hurdles are high. Unemployment reached a nearly 26-year peak in May and mortgage rates have leaped a percentage point from their spring lows to more than 5-1/2 percent.
“One of the cures to this problem is enough buying activity to eat up the inventory of distressed properties,” Sharga said. “If mortgage rates go up to where people decide to wait out the market again, that’s just going to add to the inventory numbers and put more downward pricing pressure on all homes.”
RealtyTrac forecasts about 4 million foreclosure filings will be made this year on about 3.1 million households with loans. Last year, there was a record 3.1 million filings on about 2.4 million households.
In a more typical year, Sharga said there would be around 800,000 filings on 550,000 households.
“When you have a glut of inventory and downward pricing pressure that does tend to push properties into foreclosure,” said Sharga.
States where sales and prices soared most in the five-year housing boom earlier this decade remained the hardest hit.
Nevada stayed at the top of the foreclosure rate rankings by state, with one in every 64 housing units getting a foreclosure filing. California, Florida and Arizona, Michigan, Georgia, Colorado, Idaho and Ohio were the other states with the highest foreclosure rates.
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Ten states, led by California, accounted for almost 77 percent of total number of foreclosure actions in May.
“We need to give the administration’s programs a little bit of time to gain traction,” Sharga said. “If unemployment continues to worsen, all bets are off on foreclosure rates.”
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Next Up: McMansion REOs!
HREU Students, many of you who sell in higher end areas are now experiencing the full blunt of the housing crash. Here is a great article from Bloomberg.com that describes what is going on in two of the countries most prestigious places to live…Newport Beach California and The Hamptons.
Chuck Dayton put down a quarter of the $950,000 purchase price when he bought his house in Newport Beach, California, in 2004. He was making $500,000 a year with his drywall company and he expected home values to keep rising.
Then the mortgage market collapsed, new construction stopped and builders no longer needed his services. Dayton, 43, went into default four months ago because he couldn’t afford payments on the three-bedroom home, located within a block of the Pacific Ocean. He hopes his lender will agree to sell the seven-year-old house for less than he owes to avoid a foreclosure.
“It’s just wait and see right now,” Dayton said.
Borrowers such as Dayton, whose 2004 compensation was almost 10 times the median U.S. household income, are becoming trapped by the same issue facing the poorest subprime homeowners: falling home prices erase equity and make it impossible to sell or refinance without losing money.
The number of U.S. homes valued at more than $729,750, the jumbo-loan limit in the most affluent areas, entering the foreclosure process jumped 127 percent during the first 10 weeks of this year from the same period of 2008, data compiled by RealtyTrac Inc. of Irvine, California, show. The rate rose 72 percent for homes valued at less than $417,000 and 78 percent for all homes, RealtyTrac said.
‘Trickle Up’
“It’s the trickle-up effect,” said David Adamo, chief executive officer of Luxury Mortgage Corp., a home-loan bank in Stamford, Connecticut. “Just like homeowners in smaller homes, these homeowners anticipated being able to refinance mortgages to continue making payments and at a future date sell for a gain and put it toward their next home. That strategy backfired when the market for jumbo mortgages dried up.”
Jumbo loans are larger than what government-controlled Fannie Mae and Freddie Mac will buy or guarantee, currently $417,000 in most areas. Jumbo lending slowed in the fourth quarter to $11 billion, or 4 percent of the mortgage market, the lowest quarterly figure since Inside Mortgage Finance, a Bethesda, Maryland-based trade publication, started tracking the data in 1990.
Subprime loans were made available to borrowers who never proved they could make monthly payments on time. The loans accounted for more than 20 percent of the U.S. mortgage market in 2005, up from less than 8 percent in 2003, according to Inside Mortgage Finance.
Subprime Implosion
Defaults by subprime borrowers began rising in 2007. Since then, financial institutions that had bet on earning cash flow from home loans packaged into securities have announced credit- market losses and writedowns of almost $1.4 trillion, data compiled by Bloomberg show.
Among all homeowners, 21.8 percent were underwater in the first quarter, Seattle-based real estate data service Zillow.com said in a report today. At the end of the fourth quarter, 17.6 percent of homeowners owed more than their original mortgage, while 14.3 percent had negative equity three months earlier.
Property values dropped 14 percent from a year earlier in the first quarter, reducing the median value of all U.S. single- family homes, condominiums and cooperatives to $182,378, Zillow said. The gain in underwater homeowners will lead to more bank repossessions, the company said.
The U.S. government has lent banks $392 billion to stem the losses through its Troubled Asset Relief Program. Another $12.4 trillion was spent, lent or guaranteed by the government and the Federal Reserve to stop the longest recession since the 1930s.
Loan Losses
About $500 billion of prime-jumbo mortgages are bundled into bonds, according to Memphis, Tennessee-based FTN Financial. In February, JPMorgan Chase & Co. analysts John Sim and Abhishek Mistry in New York almost doubled their projections for losses on those mortgages to as much as 10 percent because of increasing defaults.
Foreclosures have come to the Hamptons, the beach towns about 100 miles east of New York City on Long Island, where homeowners have included Blackstone Group LP Chief Executive Officer Stephen Schwarzman, hedge fund manager John Paulson and Goldman Sachs Group Inc. CEO Lloyd Blankfein.
Almost 90 borrowers entered the foreclosure process in the towns of East Hampton and Southampton in the first 10 weeks of 2009. That compared with 109 in the same period last year and 73 in the first 10 weeks of 2007, according to the Real Estate Report in West Islip, New York.
Hamptons Sales Fall
Home sales in the Hamptons fell 67 percent in the first quarter from a year earlier, the most since records were first kept in 1982, according to Town & Country Real Estate of the East End LLC. The median sale price slid 28 percent from a year earlier.
Rule changes spurred by rising defaults now require lenders to work with delinquent New York homeowners before beginning the foreclosure process, said Pat Ammirati, president of the Real Estate Report.
“There was this unrealistic view that the crazy financing was limited to subprime when of course it was across the board,” said Andrew Laperriere, Washington-based managing director at research firm International Strategy & Investment Group. “A lot of jumbo mortgages were nothing down with high debt-to-income ratios.”
Short Sale?
Dayton said he financed the purchase of his home, 40 miles south of Los Angeles in Orange County, with a payment-option adjustable-rate mortgage now serviced by JPMorgan’s Washington Mutual. The option allowed him to pay less each month than the interest on the loan, with any unpaid amount added to his debt.
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Dayton refinanced in February 2007 with a $1 million loan from Washington Mutual, and used some of the proceeds for business expenses, said Robin Milonakis, his agent at Altera Real Estate in Dana Point, California. He also took out two private mortgages and now has a balance of $106,000 on those loans, she said.
Dayton went into default on Jan. 29 and owes $46,584 in delinquent payments and penalties, according to First American CoreLogic, a Santa Ana, California-based mortgage data firm. Dayton said he’s found a buyer willing to pay $950,000.
The foreclosure process typically takes about a year. That means jumbo-loan defaults, which are climbing at the fastest pace in at least 15 years, will increase over the next year, according to LPS Applied Analytics in Jacksonville, Florida.
Goodbye Jumbo
President Barack Obama’s Homeowner Affordability and Stability Plan has no provision to help jumbo mortgage borrowers. The plan focuses on shoring up home loans eligible to be bought by Fannie Mae and Freddie Mac, also called conforming loans.
“The government has thumbed their noses at people who have jumbo mortgages,” said Steve Habetz, president of Threshold Mortgage Co. in Westport, Connecticut.
The share of U.S. homes in the foreclosure process that are valued at more than $729,750 increased to 2.83 percent this year through March 10 from 2.21 percent in the same 10 weeks of 2008, according to RealtyTrac. In the same 10-week period, the share of homes valued at $417,000 or less in foreclosure fell to 87 percent from 89.7 percent in 2008, RealtyTrac said.
Price Slump
California is hardest hit by luxury-home foreclosures. More than 1,500 borrowers with properties in the state that once sold for more than $1 million defaulted on their mortgages in February, said Mark Hanson, managing director of the Field Check Group, a real estate company in Palo Alto, California.
About 3 percent, or 254,745, of the state’s 8.5 million houses are assessed for more than $1 million by county assessors, according to San Diego-based MDA DataQuick, a real estate monitoring company.
While sales for all homes in the state increased 2.5 percent last year from 2007, sales of homes valued at more than $1 million declined 43 percent to the lowest since 2003, MDA DataQuick reported. Part of the reason is falling prices as California’s median home price dropped 41 percent in February to $247,590, according to the state’s Association of Realtors.
Another explanation may be stricter lending guidelines, Hanson said.
“You have to have income of $250,000, a 20 percent down payment and near perfect credit to buy a $1 million home now, so the number of buyers isn’t what it was,” Hanson said. “There just aren’t enough buyers to sop up supply. We’re seeing the collapse of the high-end market.”
‘What to Do’
Values have taken longer to decline in more affluent areas, taking some homeowners by surprise, said Philip Tirone, president of Los Angeles-based Mortgage Equity Group Inc.
“People are coming to me to do a refinance or buy another property, and what they thought they had in the equity of the home they don’t have and they don’t know what to do,” Tirone said.
Delinquencies are caused by people who owe more on their mortgages than their houses are worth, said James McLauchlen, a broker and appraiser in Southampton, New York, for James R. McLauchlen Real Estate Inc. and Hamptons Appraisal Service Corp.
“They throw their hands up and say I’m not going to kill myself trying to take care of this debt,” McLauchlen said. “Some folks work hard to make payments. Others just can’t pay. They offer a deed in lieu of foreclosure and off they go.”
Dayton said he doesn’t know when he’ll restart his drywall business, which he shut down in November for lack of work.
“This market is not even close to bottoming out, in my opinion,” Dayton said. “It continues to drop.”
Source: Bloomberg
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Las Vegas Forclosures Spiking
Great information from the Las Vegas Sun.
In Vegas foreclosure sales outpace regular sales by a wide margin. For any of you wondering why we have been telling every agent (EVERY AGENT) to learn how to become a Short Sale Specialist and a REO Listing Agent….well, here is why.
Remember, its not too late for you to become a REO Listing Agent. Across the country banks are looking for agents to list their REOs. Watch this FREE Video now to learn exactly how to become a REO Listing Agent…and grab your FREE Agent REO Secrets Book while you are there.
When Nevadans started to realize they were at the epicenter of a full-blown foreclosure crisis in 2007, riding a rising wave of loan defaults that eventually turned into auctions and bank repossessions, they didn’t really understand what was in store for the real estate market. In the valley today, foreclosure sales largely outpace regular sales, and they drive the median price of single-family homes down considerably — by roughly $25,000 in February.
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From RealtyTrac
:
RealtyTrac has released its U.S. Foreclosure Market Report for February:
Foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 290,631 U.S. properties during the month, an increase of nearly 6 percent from the previous month and an increase of nearly 30 percent from February 2008. The report also shows one in every 440 U.S. housing units received a foreclosure filing in February.
“The increase in foreclosure activity from January to February is somewhat surprising, given that many of the foreclosure prevention efforts and moratoria in place in January were extended through most of February as well,” said James J. Saccacio, chief executive officer of RealtyTrac. “There were some notable exceptions to this: a 45-day voluntary moratorium in Florida expired at the end of January, and foreclosure activity there was up 14 percent from the previous month; and many New York foreclosure
proceedings delayed by a new law for an extra 90 days appear to have hit the system in February, when the state’s foreclosure activity increased 23 percent from the previous month.”
Which states have the highest foreclosure rates?
1. Nevada: 1 in 70 homes
2. Arizona: 1 in 147 homes
3. California: 1 in 165 homes
4. Florida: 1 in 188 homes
5. Idaho: 1 in 358 homes
6. Michigan: 1 in 360 homes
7. Illinois: 1 in 369 homes
8. Georgia: 1 in 389 homes
9. Oregon: 1 in 446 homes
10. Ohio: 1 in 451 homes
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Just when you thought it was safe to go back into the water….
Realtor REO Coaching Students….and especially Realtor Short Sale Coaching students…read this now..
New foreclosure filings are through the roof. No government bail-out…intervention plan…is going to help….
The greatest number of foreclosures is still coming…probably in late 2009 to early 2010. Plenty of time to become a REO (bank owned homes) listing agent. Take the first steps and grab this free book Agent REO Secrets..instant free download.
Foreclosure activity in October rose 25 percent from a year earlier, although filings in California fell by double-digit percentage points for the second consecutive month due to a state law slowing the foreclosure process, according to a monthly report by RealtyTrac.
Foreclosure filings — default notices, auction sales notices and bank repossessions — rose by 5 percent from September to 279,561 in October, according to Irvine, California-based research firm RealtyTrac.
That means one in every 452 U.S. housing units received a foreclosure filing in October, the firm said in its report released on Thursday.
This good intention California law that required a 90 day moratorium on foreclosures has proved to have little effect. The idea was that borrowers and lenders would pow-wow and do a loan modification. But, it seems that millions of California home owners have decided that they don’t want to keep a house…even at a more affordable payment..for a house they are upside down on ny 20-40%. As we have been saying for nearly 2 years now…the problem isn’t the payment!
Oh, one more thing. Expect their to be a national 90 day foreclosure moratorium once the President Obama takes office….thus, the failed California policy may become the failed national policy.
“An economic downturn is traditionally a precursor to foreclosures, even in a normal foreclosure cycle,” Sharga said. “This is not a normal foreclosure cycle by any means.”
Moreover, California’s law will likely not prevent most of the state’s homes which are teetering on the brink of foreclosure from falling off the cliff, Sharga said.
Previous experience with similar laws in Maryland and Massachusetts attests to such laws’ inability to make a material difference.
“For most homeowners, these laws just delay the inevitable,” he said.
The markets that once lead the housing boom topped the foreclosure list in September.
Nevada posted the nation’s highest foreclosure rate for the 22nd consecutive month in October, with one in every 74 housing units, or 14,483, receiving a foreclosure filing during the month — more than six times the national average.
Arizona registered the second-highest state foreclosure rate. Filings were reported on 17,507 Arizona properties, an increase of 35 percent from the previous month and 176 percent from October 2007.
In Florida, one of every 157 units received a filing during October, the nation’s third-highest state rate. A total of 54,324 Florida properties received a foreclosure filing during the month, an increase of 13 percent from the previous month and nearly 80 percent from last year.
Is this gloom and doom for Realtors?
No way. Opportunity in them-there hills! Learn the skills that this market demands and you will help more people and make a fortune. Realtors, WE ARE THE SOLUTION. Realtors are the bailout. Realtors are the front line soldiers who are in the unique position to work hand-in-hand with troubled homeowners. Fellow agents, there will be NO GOVERNMENT BAILOUT that will turn this market around. You are the bailout for your community. Accept this, embrace the opportunity and the rewards will be never ending.
Mandatory: Download this FREE BOOK. Agent Short Sale Secrets. Instant Free Download now.
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