Foreclosure pace slows in August
Associated Press
Foreclosure filings in August increased 27 percent compared to the same month a year ago, a significantly slower pace than in previous months, according to data released Thursday. Indiana landed in the top ten states for foreclosures.
Nationwide, 303,800 homes received at least one foreclosure-related notice in August, up 12 percent from July, RealtyTrac Inc. said. That means one in every 416 U.S. households received a foreclosure filing last month.
August's increase, however, was smaller than the two prior months. June and July both had year-over year increases in foreclosure filings of 50 percent or more. Still, the total number of foreclosure filings is still the highest since RealtyTrac began issuing its report in January 2005.
Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 90,893 properties were repossessed by lenders nationwide last month -- up more than half from 43,141 in August 2007, the company said.
The top three states in foreclosure rates were Nevada, California and Arizona, in that order, RealtyTrac said. Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana rounded out the top 10, though Michigan, Georgia, Ohio and Colorado all reported rate decreases year-over-year.
Weak sales, sinking home values, tighter home loan lending practices and a slowing U.S. economy hamstrung by high fuel prices has left some homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan.
Banks and mortgage investors are also holding a glut of foreclosed properties and are slashing prices to get them off the books.
On Thursday, four Democratic senators urged the mortgage companies Fannie Mae and Freddie Mac to freeze foreclosures for 90 days on loans they hold. The troubled companies, seized by the government Sunday, should help struggling borrowers swap their mortgages for more affordable loans and stay in their homes, the lawmakers said.
An estimated 2.8 million U.S. households will face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value by the end of next year, predicts Moody's Economy.com.
James J. Saccacio, chief executive officer of RealtyTrac, said the lower percentage increase last month is due to a big spike in activity in August 2007. Last month, default activity was up 10 percent from a year ago and auction activity up 7 percent year-over-year, Saccacio said.
"The increases in default and auction activity could be slowing down partly as the result of new legislation passed in several states that is designed to give homeowners in distress more time before foreclosure proceedings are initiated," Saccacio said.
The next six months will be critical in terms of the housing crisis, noted Albert Saiz, assistant real estate professor at Wharton School of Business. Consumers and investors will be tracking volatile financial markets, judging the success or failure of this year's housing bill, monitoring the government bailout of Freddie and Fannie, and anticipating the impact of a new president, he said.
On the bright side, if home prices and sales stabilize or improve, the foreclosure situation could get better. But the slow economy, high unemployment and volatile financial markets present obstacles to improvement in the foreclosure situation, Saiz said.
Together, California, Florida and Arizona accounted for more than half of the nation's volume of foreclosure activity.
Last month, California's foreclosure activity increased more than 40 percent from July and more than 75 percent from August 2007. The California cities of Stockton, Merced and Modesto were 1-2-3 in top metro foreclosure rates. July's leader, the Cape Coral-Fort Myers, Fla., metro area, dropped to sixth. Las Vegas came in seventh.
Friday, September 12, 2008
Saturday, August 30, 2008
The Next Sign of Trouble..Bankruptcy Filings
While not a direct measure of possible increasing default activity, this weeks release of data that Indiana's personal bankruptcy filing totals placed its 8th in the nation (on a per capita basis) for the 12 months ending June 30 is an animous sign of future foreclosures. A bankruptcy will temporarily stave off the foreclosure machine as it places an automatic stay on the foreclosure action. This might delay the ultimate foreclosure 90 days, but ultimately the result is the same. In mmost cases, the mortgage lender has to show up at the first creditor meeting and request that the Judge release the stay on the foreclosure. Then, the default action picks up where it left off.
For many, the thought has become, file for bankruptcy leaving some extra time to figure things out (sell the house or catch up payments). The bad thing about bankruptcy is once it is filed, there really is no other option than to sell the house and you better have a full price offer also. If not, the mortgage company would just as soon take their chances than proceed with a short sale.
The 26.5% increase in bankruptcy filings over this 12 month period (both persoanl and business) is staggering. What is somewhat surprizing is they are actually less than the national average increase of 28.9%. In Indiana, it represented slightly more than 35,000 individuals and businesses in the 12 month period.
As usual, the blame for these increases falls everywhere but the actual party filing the bankruptcy. Bankruptcy attorneys tie the filing increase to the state's economic decline, rising taxes, home foreclosures, and falling home values. What really gets me is simply, in Indiana economic decline has slowed by most measures, taxes have fallen, and home values have not fallen like they have most places. Sure, Indiana is not the economic hot-bed of America right now (please let me know if you know of an economic hot-bed..the closest I know of is Texas and the metro areas of Dallas-Ft Worth, Austin, and Houston). What gets me is where is the discussion about personal financial responsibility?
Ask me sometime about how many big screen TV's get left behind in foreclosed homes. Bet they were paid for? Or included in a bankruptcy?
While not a direct measure of possible increasing default activity, this weeks release of data that Indiana's personal bankruptcy filing totals placed its 8th in the nation (on a per capita basis) for the 12 months ending June 30 is an animous sign of future foreclosures. A bankruptcy will temporarily stave off the foreclosure machine as it places an automatic stay on the foreclosure action. This might delay the ultimate foreclosure 90 days, but ultimately the result is the same. In mmost cases, the mortgage lender has to show up at the first creditor meeting and request that the Judge release the stay on the foreclosure. Then, the default action picks up where it left off.
For many, the thought has become, file for bankruptcy leaving some extra time to figure things out (sell the house or catch up payments). The bad thing about bankruptcy is once it is filed, there really is no other option than to sell the house and you better have a full price offer also. If not, the mortgage company would just as soon take their chances than proceed with a short sale.
The 26.5% increase in bankruptcy filings over this 12 month period (both persoanl and business) is staggering. What is somewhat surprizing is they are actually less than the national average increase of 28.9%. In Indiana, it represented slightly more than 35,000 individuals and businesses in the 12 month period.
As usual, the blame for these increases falls everywhere but the actual party filing the bankruptcy. Bankruptcy attorneys tie the filing increase to the state's economic decline, rising taxes, home foreclosures, and falling home values. What really gets me is simply, in Indiana economic decline has slowed by most measures, taxes have fallen, and home values have not fallen like they have most places. Sure, Indiana is not the economic hot-bed of America right now (please let me know if you know of an economic hot-bed..the closest I know of is Texas and the metro areas of Dallas-Ft Worth, Austin, and Houston). What gets me is where is the discussion about personal financial responsibility?
Ask me sometime about how many big screen TV's get left behind in foreclosed homes. Bet they were paid for? Or included in a bankruptcy?
Friday, August 15, 2008
Unemployment rate in Ind. jumps to 6.3%
By Tom Spaldingtom.spalding@indystar.com
Indiana's unemployment rate gained in July after more seasonal layoffs in the manufacturing sector than expected.
The state’s rate climbed 0.5 percent to 6.3 percent, the U.S. Bureau of Labor Statistics reported today. That continues a recent climb: In June the rate also jumped 0.5 percent to 5.8 percent.
The jump caused Indiana’s unemployment rate to again exceed the nation’s, which is 5.7 percent, though it remained lower than the jobless rate for neighboring states. For June, the national rate remained unchanged at 5.5 percent.
"There were more seasonal layoffs in the manufacturing sector than expected and that impacted the state’s employment numbers in July,” said Teresa Voors, DWD commissioner, in a statement. “Employment increased in the construction industry as workers repaired homes and businesses that were damaged in the June floods."
In June the state was hammered by layoffs in the auto and RV industries and a construction slowdown spawned by flooding.
By Tom Spaldingtom.spalding@indystar.com
Indiana's unemployment rate gained in July after more seasonal layoffs in the manufacturing sector than expected.
The state’s rate climbed 0.5 percent to 6.3 percent, the U.S. Bureau of Labor Statistics reported today. That continues a recent climb: In June the rate also jumped 0.5 percent to 5.8 percent.
The jump caused Indiana’s unemployment rate to again exceed the nation’s, which is 5.7 percent, though it remained lower than the jobless rate for neighboring states. For June, the national rate remained unchanged at 5.5 percent.
"There were more seasonal layoffs in the manufacturing sector than expected and that impacted the state’s employment numbers in July,” said Teresa Voors, DWD commissioner, in a statement. “Employment increased in the construction industry as workers repaired homes and businesses that were damaged in the June floods."
In June the state was hammered by layoffs in the auto and RV industries and a construction slowdown spawned by flooding.
Wednesday, August 06, 2008
360 mortgage brokerages don't cut it with state
Many across Indiana face sanctions by not responding to new rules on compliance by Tuesday's deadline
By Meagan Ingersonmeagan.ingerson@indystar.com
If the sluggish economy hasn't already forced them to close, the 360 Indiana mortgage brokerage companies that have failed to meet new state standards will face other sanctions.
Secretary of State Todd Rokita said about 40 percent of the state's 950 brokerage companies did not heed his warning to comply with state law by his Tuesday deadline.
But he noted that letters mailed to 79 companies informing them of their offenses had been returned as undeliverable, indicating they had gone out of business. Another 89 have voluntarily surrendered their licenses.
Mortgage companies across the country have closed or scaled back in recent months as the housing market has deteriorated.
Changes in Indiana law require mortgage brokerages to employ a principal manager who has passed a competency exam, but they have been slow to comply since the requirements took effect in July 2007. Last month, Rokita announced he would suspend the licenses of companies that didn't comply by Tuesday.
The law also requires loan officers to pass background checks and pay registration fees with the state.
Since Rokita issued his warning, more than 130 people have passed the competency exam. Rokita said the reforms should help legitimize an industry marred by the subprime mortgage crisis.
"This was an industry that was kind of operating the way I would envision a mortgage broker operating in the Wild West," Rokita said. "There are very good people in the industry, but there are a lot of bad apples, too."
Rokita said his office will begin to investigate any companies that may continue to do business without the proper credentials. Evidence of wrongdoing will be passed on to local prosecutors.
Matthew Symons, spokesman for the Marion County prosecutor's office, said a violator could face a felony charge punishable by up to three years in prison and a $10,000 fine.
"If the secretary of state's office has any reason to believe someone is doing that, we'll be happy to take a look at it and file charges," Symons said.
The process could take "a very long time," Rokita said. "We recognized this would be a monumental effort, and we're prepared for it."
Many across Indiana face sanctions by not responding to new rules on compliance by Tuesday's deadline
By Meagan Ingersonmeagan.ingerson@indystar.com
If the sluggish economy hasn't already forced them to close, the 360 Indiana mortgage brokerage companies that have failed to meet new state standards will face other sanctions.
Secretary of State Todd Rokita said about 40 percent of the state's 950 brokerage companies did not heed his warning to comply with state law by his Tuesday deadline.
But he noted that letters mailed to 79 companies informing them of their offenses had been returned as undeliverable, indicating they had gone out of business. Another 89 have voluntarily surrendered their licenses.
Mortgage companies across the country have closed or scaled back in recent months as the housing market has deteriorated.
Changes in Indiana law require mortgage brokerages to employ a principal manager who has passed a competency exam, but they have been slow to comply since the requirements took effect in July 2007. Last month, Rokita announced he would suspend the licenses of companies that didn't comply by Tuesday.
The law also requires loan officers to pass background checks and pay registration fees with the state.
Since Rokita issued his warning, more than 130 people have passed the competency exam. Rokita said the reforms should help legitimize an industry marred by the subprime mortgage crisis.
"This was an industry that was kind of operating the way I would envision a mortgage broker operating in the Wild West," Rokita said. "There are very good people in the industry, but there are a lot of bad apples, too."
Rokita said his office will begin to investigate any companies that may continue to do business without the proper credentials. Evidence of wrongdoing will be passed on to local prosecutors.
Matthew Symons, spokesman for the Marion County prosecutor's office, said a violator could face a felony charge punishable by up to three years in prison and a $10,000 fine.
"If the secretary of state's office has any reason to believe someone is doing that, we'll be happy to take a look at it and file charges," Symons said.
The process could take "a very long time," Rokita said. "We recognized this would be a monumental effort, and we're prepared for it."
Tuesday, August 05, 2008
Second Quarter Indiana Foreclosure Data
The Indiana Business Journal reported last Tuesday on the latest foreclosure numbers from RealtyTrac. According to the report, one of every 198 Indiana homeowners was in foreclosure in the second quarter of 2008, the 11th-highest rate among the 50 states but lower than the national average. The report defines the state’s 13,890 foreclosures as filings, default notices, auction sale notices and bank repossessions. The rate is down 0.3 percent from the first quarter but up nearly 60 percent from the year ago period. Nevada ranked first, with one foreclosure for every 43 homeowners. Nationally, one in every 171 homeowners was in foreclosure.
The Indiana Business Journal reported last Tuesday on the latest foreclosure numbers from RealtyTrac. According to the report, one of every 198 Indiana homeowners was in foreclosure in the second quarter of 2008, the 11th-highest rate among the 50 states but lower than the national average. The report defines the state’s 13,890 foreclosures as filings, default notices, auction sale notices and bank repossessions. The rate is down 0.3 percent from the first quarter but up nearly 60 percent from the year ago period. Nevada ranked first, with one foreclosure for every 43 homeowners. Nationally, one in every 171 homeowners was in foreclosure.
Sunday, August 03, 2008
Maybe Short Sales Might Start to Be A Realistic Alternative?
On Friday one of the more interesting developments in the recent default hysteria occurred when Freddie Mac made tangible incentives to their servicers to offer alternatives to their defaulting borrowers. Of course, Freddie is not sub-prime so this does not eliminate the mortgage security complications, but it is leadership that has not been previously seen.
The Wilmoth Group has always been interested in helping borrowers with defaults and short sale needs. We have just not found it possible to get servicers to respond and it became an exercise in futility that ultimately made us look bad to the borrower. I can only reaffirm our interest in helping servicers and borrowers and hope that the future offers many more possibilities of success!
Freddie Mac Gives Lenders Reason to Help
Freddie Mac is encouraging loan servicers to work with borrowers by increasing its rewards for successful mortgage workouts.
Beginning Aug. 1, Freddie is paying servicers $500 for each repayment plan and $800 for each loan modification on Freddie-owned mortgages. Servicers will receive $2,200 for each short sale.
Freddie also will reimburse a servicer up to $15 per mortgage for leaving a door hanger and up to $50 per mortgage for knocking on a door that results in the borrower contacting their servicer.
Freddie also will increase the time it gives servicers to negotiate with delinquent borrowers in Washington, D.C., and 20 states with fast foreclosure processes, Freddie Mac said.
Source: The Associated Press (07/31/2008)
On Friday one of the more interesting developments in the recent default hysteria occurred when Freddie Mac made tangible incentives to their servicers to offer alternatives to their defaulting borrowers. Of course, Freddie is not sub-prime so this does not eliminate the mortgage security complications, but it is leadership that has not been previously seen.
The Wilmoth Group has always been interested in helping borrowers with defaults and short sale needs. We have just not found it possible to get servicers to respond and it became an exercise in futility that ultimately made us look bad to the borrower. I can only reaffirm our interest in helping servicers and borrowers and hope that the future offers many more possibilities of success!
Freddie Mac Gives Lenders Reason to Help
Freddie Mac is encouraging loan servicers to work with borrowers by increasing its rewards for successful mortgage workouts.
Beginning Aug. 1, Freddie is paying servicers $500 for each repayment plan and $800 for each loan modification on Freddie-owned mortgages. Servicers will receive $2,200 for each short sale.
Freddie also will reimburse a servicer up to $15 per mortgage for leaving a door hanger and up to $50 per mortgage for knocking on a door that results in the borrower contacting their servicer.
Freddie also will increase the time it gives servicers to negotiate with delinquent borrowers in Washington, D.C., and 20 states with fast foreclosure processes, Freddie Mac said.
Source: The Associated Press (07/31/2008)
Thursday, July 31, 2008
New Housing Bill? What Difference Will It Make For Foreclosures?
Lets see, an election year combined with economic troubles. Guess it is time to turn to populist legislation. Yes..let me drop a storm cloud or two on the fabulous Fannie/Freddie bail out package and consider for a minute all the powerful ways this solves the issues that led us to the default/foreclosure problem of today.
I will keep this simple. Combine macroeconomic cycles that pushed housing prices up, and throw in natural market forces to find ways to allow people to buy this skyrocketing product, and pretty soon you have people buying that can't afford. Not being able to afford a house does not always mean you just can't mak th epayments, or that they exceed 45% of your income, it also flat out means you have no reserves to fix the roof, provide furnishings, or absorb a personal financial hiccup. So, what is the government going to do? Why..enable these borrowers who are in over their heads and do it on our dime..our tax dollar.
The Bush Administration once again continued to experience some of the worst luck of any executive branch in my lifetime. The Fannie/Freddie crisis, which put the Treasury Dept with their backs against the wall offering very few options but to offer more money to these Government Sponsored Enterprises, has to go to a Democratic Congress to approve the funding. So, like so many things in Congress, a lot of schlock that sounds really great, important, and helpful, got thrown in with the bailout. Of course, it is all designed to make Congress look like they have empathy for all the poor borrowers who two years ago were celebrating their real estate successes as they imagined they had doubled their equity in their homes at a nominal 5% borrowing cost. The reality is, in six months once all of these programs are a little tested, it will be appropriate to bring back a saying from a famous 1980's moment.."wheres the beef"? Oh, but wait, these recovery programs start on October 1, slightly a month before the election. So, all will be safe and reelected when the "wheres the beef" shout is raised.
The reasons all of this is just more bad money getting thrown in the well is that the mortgage market is not as simple as these markets portray. Banks are not going to gladly take a hit so their defaulted borrowers get to refinance into the wonderful new FHA. Why? It is not that they might really like to. In the world of mortgage securitiations, as discussed in other postings, there is no simple way to make this decision and approve the refinance at a loss.
Time will tell. I hope in many ways that I am wrong. I don;t think I am.
Finally, here is the press from the National Association of Realtors. Of course they have skin in this game as their membership continues to decline (disclosure-I am a Realtor member). Again, self serving legislation at a time when what was needed was a lifeline and a plan to privatize the mortgage investment market.
President Signs Housing Rescue Bill
President George W. Bush signed into law a bipartisan housing stimulus bill Wednesday that is expected to bring greater stability to housing markets nationwide.
The bill, strongly supported by the NATIONAL ASSOCIATION OF REALTORS®, will help some 400,000 home owners refinance into affordable, government backed loans and offer a temporary first-time home buyer tax credit, which is expected to serve as an attractive incentive to buyers and help reduce high inventories of unsold homes.
The temporary first-time home buyer tax credit would offer $7,500 for the purchase of any home and an be used for purchases between April 9, 2008, and July 1, 2009. The bill — H.R. 3221, the Housing and Economic Recovery Act of 2008 — also includes reform of Fannie Mae and Freddie Mac, FHA modernization, and permanent increases in conforming and FHA loan limits. "These are all designed to help the housing and mortgage industries and boost the U.S. economy,"
NAR President Dick Gaylord said in a statement. “NAR has been a leading advocate for many of these changes long before the current housing and economic downturn. We are pleased that the president and Congress worked together to enact meaningful legislation that protects and enables families in this country to continue to strive for and enjoy the dream of homeownership.”Source: NAR, Associated Press (7/30/08)
Lets see, an election year combined with economic troubles. Guess it is time to turn to populist legislation. Yes..let me drop a storm cloud or two on the fabulous Fannie/Freddie bail out package and consider for a minute all the powerful ways this solves the issues that led us to the default/foreclosure problem of today.
I will keep this simple. Combine macroeconomic cycles that pushed housing prices up, and throw in natural market forces to find ways to allow people to buy this skyrocketing product, and pretty soon you have people buying that can't afford. Not being able to afford a house does not always mean you just can't mak th epayments, or that they exceed 45% of your income, it also flat out means you have no reserves to fix the roof, provide furnishings, or absorb a personal financial hiccup. So, what is the government going to do? Why..enable these borrowers who are in over their heads and do it on our dime..our tax dollar.
The Bush Administration once again continued to experience some of the worst luck of any executive branch in my lifetime. The Fannie/Freddie crisis, which put the Treasury Dept with their backs against the wall offering very few options but to offer more money to these Government Sponsored Enterprises, has to go to a Democratic Congress to approve the funding. So, like so many things in Congress, a lot of schlock that sounds really great, important, and helpful, got thrown in with the bailout. Of course, it is all designed to make Congress look like they have empathy for all the poor borrowers who two years ago were celebrating their real estate successes as they imagined they had doubled their equity in their homes at a nominal 5% borrowing cost. The reality is, in six months once all of these programs are a little tested, it will be appropriate to bring back a saying from a famous 1980's moment.."wheres the beef"? Oh, but wait, these recovery programs start on October 1, slightly a month before the election. So, all will be safe and reelected when the "wheres the beef" shout is raised.
The reasons all of this is just more bad money getting thrown in the well is that the mortgage market is not as simple as these markets portray. Banks are not going to gladly take a hit so their defaulted borrowers get to refinance into the wonderful new FHA. Why? It is not that they might really like to. In the world of mortgage securitiations, as discussed in other postings, there is no simple way to make this decision and approve the refinance at a loss.
Time will tell. I hope in many ways that I am wrong. I don;t think I am.
Finally, here is the press from the National Association of Realtors. Of course they have skin in this game as their membership continues to decline (disclosure-I am a Realtor member). Again, self serving legislation at a time when what was needed was a lifeline and a plan to privatize the mortgage investment market.
President Signs Housing Rescue Bill
President George W. Bush signed into law a bipartisan housing stimulus bill Wednesday that is expected to bring greater stability to housing markets nationwide.
The bill, strongly supported by the NATIONAL ASSOCIATION OF REALTORS®, will help some 400,000 home owners refinance into affordable, government backed loans and offer a temporary first-time home buyer tax credit, which is expected to serve as an attractive incentive to buyers and help reduce high inventories of unsold homes.
The temporary first-time home buyer tax credit would offer $7,500 for the purchase of any home and an be used for purchases between April 9, 2008, and July 1, 2009. The bill — H.R. 3221, the Housing and Economic Recovery Act of 2008 — also includes reform of Fannie Mae and Freddie Mac, FHA modernization, and permanent increases in conforming and FHA loan limits. "These are all designed to help the housing and mortgage industries and boost the U.S. economy,"
NAR President Dick Gaylord said in a statement. “NAR has been a leading advocate for many of these changes long before the current housing and economic downturn. We are pleased that the president and Congress worked together to enact meaningful legislation that protects and enables families in this country to continue to strive for and enjoy the dream of homeownership.”Source: NAR, Associated Press (7/30/08)
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