Indiana Default News

2008-09-12T11:17:00.000-05:00

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.

2008-08-30T15:25:00.003-05:00

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?

2008-08-15T12:30:00.001-05:00

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.

2008-08-06T08:52:00.000-05:00

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."

2008-08-05T21:18:00.000-05:00

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.

2008-08-03T07:51:00.002-05:00

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)

2008-07-31T21:32:00.003-05:00

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)

2008-06-21T15:19:00.002-05:00

FHA Lessons 90-Day Rule to Help Lenders Sell REOs
In another sign of the times..we are sure to continue to see FHA financing attempted to be used in the purchase of foreclosed properties. The problem that remains is that very few servicers we work with are doing any repairs, and very few homes that have sat vacant for the period of time most foreclosures do...and have had the damage often sustained in these situations will pass FHA muster. For the idea that thsi is anything more than the playing out of the old "I am from the government and I am here to help" reverse rationale, a few things are going to need to be considered:

1. Servicers decide to perform repairs so homes can be financed wiht FHA (unlikely since they are already taking huge financial hits in many ways)
2. Easing of the parameters involved in the fHA 203k program so a owner occupant buyer can make these repairs and rolling them into their loan. The problems with this program is it is so much work the people who have to put it together (mortgage brokers and Realtors) avoid suggesting it as an option to their clients.
3. Maybe a new type of mortgage financing is created. Something that eases up the FHA habitability guidelines, let the funds for repairs be set aside, create an original purchase money loan and then provide financing as in the 203K but acquire the home first. Maybe the buyer either has to prove the repairs are made or lose the FHA guarantee which would mean a principal reduction.

Sure option 3 will take some work to figure out..but when do the politicians really decide they want to understand this problem or just keep throwing headlines at it?

Here is the story from last week..
Kerri Panchuk 06.16.08
Lenders will no longer find themselves struggling with the Federal Housing Administration's (FHA) 90-day rule, which prevents sellers who have owned a property for less than 90-days from offloading a home to a buyer who intends to be insured by the FHA.

While the FHA implemented this rule to prevent the practice of flipping in the otherwise safe FHA-insured atmosphere, lenders who are trying desperately to remove distressed properties from their books have been unable to seize the day with qualified borrowers because of the three-month waiting period.

The FHA said Monday, “For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must be purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period.

”Officials with HUD and the FHA saw the transition as a necessary step in curtailing urban blight and property decay in areas greatly impacted by foreclosures.

"A glut of foreclosed and abandoned homes harms neighborhoods, frustrates homebuyers and delays a community's recovery," asserted Brian D. Montgomery, Assistant Secretary of Housing-Federal Housing Commissioner. "The action we take today will allow home buyers to purchase these homes in much greater numbers and ease the excess supply of unsold homes in neighborhoods across the country."

2008-02-13T17:19:00.002-05:00

Marion County Sheriff Sale Explodes!

I guess the state may have improved relative to other states but the number of defaults is just increasing like wildfire. Apparently the Marion County (Indianapolis) monthly sheriff sale increased 65% to 1,906 properties for January and February combined. The same period last year 1,154 foreclosed properties were offered for sale.

For all of 2007, the Sheriff processed 8,937 properties in Marion County. Annualized, the January-February rates would put the rate for 2008 at 11,436 ( a 28% increase). We know from experience that this is not a safe assumption as the last two months of the year are usually down..but mid year is often higher than the first of the year. Either way..the drop in rank for Indianapolis to 18th in the county should be looked at relatively.

2008-02-13T16:57:00.002-05:00

GM Cutbacks Are To Be Expected In The New Indiana Economy

Met with little surprize yesterday was the announcement the GM is offering buyouts to all of its 74,000 hourly union workers. In Indiana..what is the panic really all about? GM employs 10,000 workers compared to 40,000 in 1987. The state already has lost 75% of it's GM jobs. It is not clear how many of these jobs are going to be eligible for the buyout..and then how many workers will actually accept the opportunity. I think it is safe to say this could mark the moment when another 5000 GM jobs go away from the state.

The reality is that most people by now understand that Indiana is really as much a manufacturing state anymore..as it is a service state. The largest employer in the state (it use to be government)? Wal-Mart..yep...Sam Walton's company employs 36,000 Hoosiers. Indiana has lost 117,000 manufacturing jobs since 2000 according to the Bureau of Labor Statistics. So, we know some portion of these folks now work at Wal-Mart, or Target, or Burger King (though the later seems to be full of people who have never actually had a job).

How does this relate to our default rates? Manufacturing jobs pay on average 4 times what the service jobs pay. The only real hope in this process of converting the work force is education..and we struggle to excel at that. I found it amazing to learn that as many as 1.2 of our almost 5.5 million citizens are considered to have literacy skill levles below the minimum standard required for successful employment in a knowledge-based economy (Future Works). Almost 10% of our citizens do not have a high school diploma.

Now the good news..the state itself is increasingly becoming home to more companies in technology, health care, and bio-technology related fields. These types of businesses will require 222,410 workers with a post secondary degree over the next six years (IN Dept of Workforce Dev).

So, while today default may be the issue, in areas like Indianapolis the housing market will probably not be down long. Indianapolis metropolitan area is home to much of the state's knowledge based industry. Demand for housing will pick up again. A higher income, better educated worker, will probably relocate here due to our very affordable conditions.

In the meantime, the manufacturing workers options are limited. I expect more demands on government services as the majority of these workers refuse to adapt to the new world. With that, we will probably see the default industry to include the sad cases of those who just could not adapt. And no 30 day lender moratoriums are going to save the worker who was making $100k and now can work at Wal-Mart for $25k.

2008-02-13T14:11:00.001-05:00

Indy drops to 18th on U.S. foreclosure list
Indianapolis registers at No. 18 nationally for foreclosure rates according to the study being released today by mortgage research company RealtyTrac Inc. As recently as 2006, the California-based industry watcher had Indy ranked first among U.S. metro areas.

2008-01-30T23:03:00.000-05:00

Indianapolis Sales Data for 2007 Released!
The following is just in from MIBOR. Funny...I thought i heard some self-serving folks talking about what an exageration the media had put on the local housing slump. Anybody in real estate knew this was bunk and now the stats are out to prove it.

BLC™ data confirms decreased sales activity for the month, quarter and year with sales prices relatively flat for the year. In December, the average sales price decreased to $149,687, a 3.5 percent decrease over the same month in 2006. Year-end average sales price in 2007 decreased slightly to $152,028, down 1.8 percent from 2006.

Units sold during 2007 decreased to 29,334 units, down 9.8 percent from 2006, and decreased 19.8 percent during fourth quarter 2007 from the same period in 2006. The last month of the year produced 1,654 units sold, indicating a 25.9 percent decrease from December 2006.

New listings were on the rise across all reports. In December 2007, listings were up 22 percent to 3,715. This echoes the yearlong trend experienced in central Indiana last year – in 2007, listings were up 8.9 percent from 2006.

2008-01-17T21:37:00.000-05:00

Home Inventories Explode Throughout Central Indiana

The math used to calculate absorption rates is simple. Add up the number of homes on the market, and then find how many homes were sold in the past 30 days. (Homes taken off the market because they got offers) Take the total number of homes and divide by the number of offers made to get the absorption rate which is used to determine how long it will take for all the homes currently on the market to be absorbed by buyers, at the current rate of purchases. Absorbed really means sold. Based on the following article from the IBJ, using December sales (a traditionally slow month)and divide by total homes on the market and ..well let the story do the talking....

From the Indianapolis Business Journal:
Inventories of unsold houses exploded last year, according to figures compiled by an Indianapolis real estate brokerage.

A 13-county area anchored by Indianapolis overflowed with nearly a year's worth of inventory, Landrigan & Co. Realtors said today.

At the rate of absorption underway in December, the inventory existing as of the end of the year would be purchased within 11.9 months, Landrigan said. That's a huge increase from the 8 months of inventory available at the end of 2006.

There was no one factor that affected the entire market, said president G.B. Landrigan.

"It was so many different things coming from so many different angles at just the right time," Landrigan said.

In some areas, foreclosures were sparked by changes in adjustable mortgages. In other areas, spikes in property taxes cast a pall over the market. In still other areas, a soft economy hurt the market.

The figures do not include pended sales, which are sales that have been accepted but not closed.

As of Jan. 11, the 13-county region had 19,096 houses for sale.

Absorption rates varied widely by price range and location.

There was only 10.8 months of inventory for houses priced at $200,000 and below. At the other extreme, houses priced at $900,001 and above, there was 38.6 months - or more than three years- of inventory.

Boone County had the smallest inventory at 8.3 months.

Some counties were much more of a buyers' market. Shelby County, for example, had 14.2 months of inventory.

Following is the counties tracked by Landrigan and the months of available inventory.

-Boone: 8.3
-Hendricks: 9.9
-Montgomery: 10.6
-Madison: 10.7
-Hamilton: 10.8
-Johnson: 11.3
-Putnam: 11.8
-Morgan: 12.3
-Marion: 12.7
-Shelby: 14.2
-Brown: 18.0
-Decatur: 25.1

Landrigan said Decatur's inventory appears to be a fluke.

Had pended sales been included in his calculations, the county, where Honda Manufacturing of Indiana is building a $550 million car assembly plant, would have been more balanced. Apparently by chance, the county had accumulated a large number of pended sales in December.

2007-12-27T06:24:00.000-05:00

Short Sale Relief Bill Is Law!
For those who have considered using a short sale to solve their home selling equity shortfall, but backed away when advised of the tax liability on this shortfall, this concern has been eliminated.

Congress passed legislation to prohibit the IRS from demanding income tax payments from home sellers whose lenders write off a portion of the outstanding debt balance owed on the loan. The "Mortgage Forgiveness Debt Relief Act" zipped through the Senate and House in the final week of the Congressional session and was signed into law by President Bush December 20th. The final bill was passed only with the concession that the law expires January 1, 2010. So, this opens a two year window offering tax releif for strapped sellers. Of course, extensions can be offered up by future lawmakers.

Under the law as it stood until this bill was signed into law, if a lender chose to write off $50,000 of mortgage principal to facilitate a sale, federal rules required it to file a Form 1099 to the IRS to alert it to the home sellers' $50,000 debt relief "windfall." The IRS would then go after the sellers demanding income taxes on the debt forgiven along with penalties in some cases. The sellers would not have received even a dollar of actual income -- it was all phantom income -- but they would be hit with a tax bill at their full regular rates as if they had pocketed $50,000.

Now that tax burden is a non-issue -- at least until 2010-- home owners will avoid the financial losses inevitable in foreclosures-if they can sell their home with a short sale. This subject is left to another post but the second hurdle in considering a short sale is a pretty tough one also. Many loans are part of securitized mortgage note pools and changing the rules in these investments is almost impossible. Nobody has figured out a way to change these contracts..making it impossible to agree to receipt of a reduced principal balance. This topic is better left for another post..but for now realize that one hurdle in the default crisis has been lifted.

2007-12-20T15:57:00.001-05:00

Statewide Per Capita Home Foreclosure Rate Drops
Even with foreclosures nationwide climbing closer to record levels last month, Foreclosures.com reported last week that Indiana is experiencing a decline in foreclosures. Foreclosures year-to-date in Indiana are down more than eight-percent from the same time period one year ago. As of this November, there were 11.3 filings per 1,000 households for the year. That compares to 12.3 filings per 1,000 Indiana households in the first 11 months of 2006.

2007-11-29T17:06:00.000-05:00

Another Bad Idea on How To Solve The Foreclosure Crisis..

Straight from the outgoing City Administration, we have a request for the largest give away of property nce the old west expansion of the 1800's! To make matters worse, these folks actually think if the City can just give these houses away to groups and organizations (all run by honest, God fearing people I am sure) they will do a much better job than HUD can do finding new people to own these pieces of private property.

This is an amayzing development, similar to those seen in other areas of the country where politicians are requesting mortgage servicers to place moratoriums on foreclosure actions. I'm sorry but does nobody get this? I have empathy for people but this is America, and you borrow money understanding that you might lose what you borrowed it for if you don't pay. Never mind the simple fact that the reason HUD has these homes is a guarantee program they offer (funded by our taxes btw) that enables people to buy homes that could not do so if the private market is the only option.

To me this reeks of pure politically folly with zero chance of actually occuring. Maybe I am missing something. Please comment if you know what it is...

Wanted: foreclosed homes
Feds asked to give houses in 3 areas of Indy to local groups, which would rent them to families
By Ted Evanoff
ted.evanoff@indystar.com

November 29, 2007

The Indianapolis Housing Agency has asked the U.S. government for a moratorium on the resale of houses taken back as a result of loan defaults in three sections of the city.

Instead of the houses being resold, agency officials want the U.S. Department of Housing and Urban Development to give foreclosed homes in its possession to neighborhood groups and local civic organizations that agree to rent them to low-income families.

Local Housing Agency officials say a moratorium would help ease blight caused when buyers purchase the inexpensive homes and resell them to partners at inflated prices.

According to Housing Agency officials, partners involved in such schemes obtain a loan at the inflated value, pocket the cash and stop all mortgage payments. They then let the house decline as it goes through foreclosure, an 18-month process that turns the property over to the lender and makes it legally available for resale.

Rufus "Bud" Myers, Indianapolis Housing Agency executive director, has asked for an immediate sales moratorium in three Indianapolis ZIP codes that he says are prone to such activity. They are:

• 46201: Centered at North Sherman Drive and East 10th Street, home to 29,000 people.

• 46203: Centered at South Sherman Drive and East Raymond Street, home to 40,000 people.

• 46218: Centered at North Sherman Drive and East 30th Street, home to 34,000 people.

"What we're finding is there seems to be a pattern in who is acquiring these properties,'' Myers said. "The home turns over, and the new buyers are doing the same thing. They're not really upkeeping the property. They're just flipping it again for additional monies.''

Foreclosures have raked metropolitan Indianapolis, although it is not clear how many have resulted from such schemes and how many trace to subprime loans that tripped up lower-income buyers.

In 2003, an Indianapolis survey counted 7,000 abandoned houses in the city. It is not clear how many were traced to defaulted home loans insured by the U.S. government.

In the metro area, 6,600 houses entered foreclosure during July, August and September, an increase of 4.3 percent compared with the previous three-month period. At this rate, one of every 109 houses in the nine-county metro area was in foreclosure in September, ranking metro Indianapolis 24th in the nation in foreclosures. This is down from first place in early 2006, according to RealtyTrac, a California real estate company that reports on the trend.

Myers estimated at least 50 homes now on the market in three ZIP code areas were involved in the loan programs of the U.S. Department of Veterans Affairs, Fannie Mae and the U.S. Housing and Urban Development Department, or HUD.

He requested the moratorium in a letter sent last week to HUD Secretary Alphonso Jackson. The city agency manages a HUD program known as Section 8 that houses 7,000 low-income families with private landlords.

The waiting list for Section 8 housing has swelled to hundreds of families, Myers said, in part because the high foreclosure rate has reduced the city's supply of affordable homes.

In Washington, HUD officials said they have not yet seen Myers' letter.

2007-11-28T17:15:00.000-05:00

Study: Indy economy to smooth out
'08 growth is expected to outpace other regions as area's housing turmoil wanes
By Ted Evanoff
ted.evanoff@indystar.com
November 28, 2007
A new forecast shows metropolitan Indianapolis could have one of the steadier economies of any major urban area in the nation next year.
Market researcher Global Insight figures the economy in the 1.7 million-population Indianapolis area will grow 2.6 percent next year, outpacing the region's Midwestern peers and traditional Sun Belt hot spots such as Denver and San Diego.

The positive forecast from Massachusetts-based Global Insight isn't entirely about the drug-, insurance- and services-driven Indianapolis economy speeding up.

The study claims the fast growth rate in Sun Belt and coastal cities finally has slowed, snagged by a home foreclosure crisis that first struck Indiana, Michigan and Ohio, and hit especially hard more than a year ago.
While foreclosures and bankruptcies related to subprime loans continue to hobble the nine-county metro area, the report says the troubles here are not expected to be more severe in 2008 than in 2007.

"Indianapolis is not expected to see any more decline in economic growth due to this mortgage crisis,'' said Global Insight economist Jeannine Cataldi, co-author of the report. "They came to it earlier. They'll come out of it earlier.''

The study, commissioned by the U.S. Conference of Mayors and the Council for the New American City, was released Tuesday at the mayors group's annual meeting in Detroit.

Low interest rates and, in some cases, aggressive lenders led millions of buyers into the housing market. Many secured adjustable-rate mortgages they defaulted on when they lost jobs or the interest rates automatically reset to higher levels.

In the Indianapolis metro area, 6,604 foreclosures were filed in the quarter ending Sept. 30, down 8.2 percent from the same period a year earlier, according to mortgage analyst RealtyTrac. With that decline, the metro area fell from first place nationally in foreclosures, where it ranked in early 2006, to 24th.

Meanwhile, sky-high foreclosure rates have raked California, Florida and other fast-growth states.

Throughout the nation, home values are projected to decline by $1.2 trillion in 2008 compared with this year, a fall expected to be particularly severe where home values inflated rapidly. Now, the economy will slow in those cities, the report predicts.

As consumers cut back on spending, and banks on lending, the U.S. economy will lose out on $166 billion worth of goods and services that would have been produced if the housing slump had not happened. National output measured by GDP will fall to 1.9 percent, or 1 percentage point less. GDP refers to gross domestic product, or the total value of all goods and services produced in the nation.

San Diego, for example, is expected to grow by 2.1 percent, but that is almost one percentage point less growth than it otherwise would have experienced. That drop represents $1.5 billion worth of growth to be foregone by the San Diego economy, the study says.

Growth in this case is the gross metropolitan product, or GMP, the total value of all goods and services produced in a year in a metro area.
Denver's GMP is forecast at 2.2 percent, or 1 point less because of the housing crisis. Growth predictions for other cities: Cincinnati, 1.5 percent, off 0.5 percent; Columbus, Ohio, 2.5 percent, unchanged; Louisville, Ky., 1.7 percent, off 0.6 percent; Kansas City, 1.9 percent, off 0.7 percent.
No cities in Indiana are expected to experience further declines in GMP because of the housing slump, according to the study.

"Indianapolis and much of the Midwest already are in the throes of this,'' said Global Insight's Jim Diffley, lead researcher on the 16-page report.
Global Insight's report is more optimistic than the 2008 forecast prepared in November by Indiana University. IU's computer model called for the nine-county metro area to grow 1 percent to 1.5 percent next year. The IU report also calls for the region to shake off the housing slump in late 2008.
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2007-11-28T15:07:00.000-05:00

Bill Would Protect Tenants From Eviction in Foreclosures

As foreclosures of homes and small multifamily properties increase, banks — which aren't equipped to handle utility and water bills,maintenance and insurance requirements — are eager to get rid of tenants.

In most states and localities, tenants are entitled to 30 days’ notice when a property owner is facing foreclosure. For some tenants, this isn’t enough time to find another suitable place to live.

In response, tenants’ advocates and lawmakers are trying to pass laws that protect these tenants. For instance, new legislation in Illinois, which takes effect in January, will require that tenants get 120 days’ notice.

The U.S. House of Representatives recently passed legislation that would require new owners to honor leases of tenants for as long as six months after foreclosure.Source:

The Wall Street Journal, Kelly Evans (11/23/07)

2007-11-20T11:53:00.000-05:00

New Foreclosure Hotline to Help Homeowners Statewide
Raquel Bahamonde, Inside INdiana Business

As Indiana continues to be a state leading the way in foreclosures, the Indiana Housing & Community Development Authority is today launching a new website and hotline to assist homeowners before they are forced to lose their homes. The agency says homeowners seeking assistance will be paired with a counselor, who can connect them to a statewide network of agencies to provide one-on-one help.

Data from the Mortgage Bankers Association shows that Indiana is second only to Ohio in the rate of home foreclosures. Sherry Seiwert, director of the Indiana Housing & Community Development Authority, says the Indiana Foreclosure Network is comprised of public and private partnerships of government agencies, lenders, realtors and housing-related organizations.
Homeowners needing assistance can visit www.877gethope.org or can call 877-438-4673.

Press Release
In an effort to reduce the number of home foreclosures in Indiana, Lt. Governor Becky Skillman today announced the launch of a major statewide initiative to assist Hoosiers who are in danger of losing their homes. The announcement follows approval from both the Indiana Housing and Community Development Authority (IHCDA) Board of Directors and the Indiana Foreclosure Prevention Network.

Last spring, the Indiana State Legislature passed a bill authorizing IHCDA to establish a statewide program to provide free mortgage foreclosure counseling and education to at-risk homeowners. This bill outlines a multi-tiered solution that includes a targeted public awareness campaign, a telephone hotline available seven days a week, and a local network of qualified advisors. The toll-free number, 877-GET-HOPE, is available starting today.

“There are far too many Hoosier homeowners having trouble making ends meet. They need to know help is available,” said Lt. Governor Becky Skillman. “We want to encourage anyone who has fallen behind on their mortgage payments, or thinks they might, to call 877-GET-HOPE. The earlier homeowners reach out for help, the more options they have to avoid foreclosure.”

The confidential help-line will be available 12 hours a day, 7 days a week at no cost to the consumer. This service is operated by the non-profit organization Momentive Consumer Credit Counseling Service. It will be available daily from 8:00 a.m. to 8:00 p.m. beginning today. Whenever possible, counselors will assist homeowners over the phone. If more extensive assistance is needed, the counselor will refer the homeowner to a certified foreclosure intervention specialist. Also, the Web site www.877GetHope.org will be available 24 hours a day, seven days a week.

During the past year, IHCDA hosted a series of meetings with elected officials, government agencies, and industry leaders to discuss potential solutions for reducing foreclosures. The meetings resulted in the creation of the Indiana Foreclosure Prevention Network. This network is a public-private partnership of government agencies, lenders, community service and housing-related organizations.

“This network was formed more than a year ago to find ways to coordinate services so we can make sure homeowners are getting the help they need to avoid foreclosure,” said Skillman.

A marketing campaign, which was developed by Indianapolis-based Roman BrandGroup, uses the theme: “Don’t Let the Walls Foreclose in on You.” Brochures and posters are being distributed throughout the state to encourage Hoosiers to call the help-line or visit the Web site. A media campaign is expected to roll out early next year with targeted outdoor advertising, newspaper advertising and 60-second radio commercials in areas of the state that are experiencing high rates of foreclosure.

2007-11-20T11:50:00.000-05:00

Indiana Foreclosures Increase In Third Quarter...Rank Nationally Improves!!
On Tuesday, Nov. 6, The Indianapolis Business Journal reported that the state of Indiana had the nation’s ninth highest foreclosure rate for the third quarter of 2007. The publication sited the Irvine, California-based RealtyTrac as reporting the ranking which amounts to one foreclosure filing for every 196 households, matching the national average. The state ranked eighth in the prior quarter. The state's third-quarter filings are 10.2 percent higher than the year-ago period.

2007-11-04T11:10:00.000-05:00

Sellers waiting for recovery in Indianapolis area housing market

Indianapolis Business Journal
By Michael Dabney, Special to The IBJ

Melinda and Brooks Bertl know the ups and downs of the current real estate market-personally.

They started looking for a home to buy this spring and it took them only two weeks to find one they liked in Carmel. "I guess we knew what we wanted and found it. And the house had been on the market for some time," said Melinda Bertl, indicating the sellers were ready to make a deal.
They bought the house and moved into it. That was the up side. In March, the couple put their Castleton-area home on the market, where it has languished ever since. They've lowered the price 15 percent and recently installed new carpeting throughout the A-frame, tri-level house to make it more attractive to prospective buyers. Since listing the property, the Bertls have had two offers well below their asking price.

Behold the down side Recent data from the Metropolitan Indianapolis Board of Realtors show they're far from alone. The nine-county Indianapolis metropolitan area had 1,998 pending sales of single-family homes and condominiums in September, down 16.8 percent from the same month last year. Year-to-date, sales of single-family homes and condos are off 7.3 percent from the first nine months of 2006. "Central Indiana's housing market is continuing out of balance and inventory levels are still increasing slightly," said James Litten, president of F.C. Tucker Co.'s Residential Real Estate Services Division, which compiled the data.

Indeed, the more than 20,600 active listings in September were up 5 percent over the same month last year. What is worse is that inventory is taking an average of 8-1/2 months to sell, according to Dax Meredith of housing research firm MetroStudy. Anything over six months makes it a buyer's market, Litten said. Despite the delay-and the decline-Litten said the number of homes sold this year still could be the fourth most in Indianapolis history if the current pace continues. "In every market in the city, there are homes being sold," he said.

Hancock County saw a 20-percent increase in pending home sales in September compared to the same month last year, and a 1-percent increase in sales for the first nine months of the year compared with 2006. But Hancock's numbers are miniscule compared with those of the larger market-60 pending homes sales for September compared with 2,400 for the nine-county area. Such small successes don't necessarily represent a wider view of the region, MetroStudy's Meredith said. Fortunately, the same can be said for small counties that aren't faring well. Boone County, for example, had 43 pending sales in September, down 42 percent from the same month last year. Year-to-date homes sales were down 3 percent there. The picture isn't any better with new-home sales.

Permits for new single-family homes are down year-to-date, according to data from the Builders Association of Greater Indianapolis. "Home builders are appropriately cutting back on new supply to meet current market conditions and acting aggressively to offer great incentives to boost sales," BAGI CEO Steve Lains said on the association's Web site. While the housing market in Indiana is stronger than that of the nation as a whole, slow employment growth means the Hoosier state is likely to see widespread soft markets, said Bill Witte, co-director of the Center for Econometric Model Research at Indiana University. Indiana saw only a 0.6-percent increase in total payroll in September, Witte said. "That's not very good. We are in for another nine months of slow going."

Asked why people are not buying, Litten put the blame on poor consumer confidence. He said it is one of three factors that fuel home buying, along with interest rates and job stability. Mortgage rates are "very attractive" in the 6 percent range, he said, and at 4.5 percent, unemployment is low.

"The thing we cannot control is consumer confidence," Litten said. And when people worry, it has a ripple effect because they don't spend money.

That's something the Bertls know well. "It's not a conducive market right now for people selling their homes," Melinda Bertl said. "Just lowering the price doesn't entice people to buy."

Article ©
Copyright © IBJ Corp. 2007. All Rights Reserved

2007-10-24T14:28:00.000-05:00

Beazer Homes Says it Broke Rules

Beazer Homes USA confirms that it violated U.S. government rules to assist buyers of its houses in qualifying for federally guaranteed mortgages. A Beazer statement declined to elaborate on how exactly the home builder was guilty of wrongdoing, nor did it specify the number of mortgages involved. The statement did say that Beazer hopes to reach a settlement with federal regulators soon over the illegal practices, which reportedly relate to rules governing down payment assistance for buyers. Beazer recorded net new orders for 990 homes in its fiscal fourth quarter recently ended, a 52 percent dive from the same period a year earlier and down 80 from 2005 levels.

Source: The New York Times, Floyd Norris (10/12/07)

Beazer Homes is Indiana's largest home builder. If the actions resulted in many buyers qualifying with zero down and shaky credit..we have another source of new foreclosures in Indiana!

2007-10-24T11:20:00.000-05:00

RealtyTrac.com Identifies Best Foreclosure Deals

RealtyTrac.com, which supplies monthly mortgage statistics, also calculates the average discount-to-value by market — that is, how much foreclosed homes actually sold for compared to their estimated market value in their areas.

This information can help a bargain hunter get the best foreclosure deal.Nationwide, in the three months from June through August, 68,426 foreclosed homes sold in 2007 vs. 54,886 in 2006. The average sales price dropped from $271,000 to $239,000.The discount-to-market ratio increased slightly from 76.42 percent to 77.68 percent. This is the actual foreclosure sales price compared to the perceived market value of the home. So 77.68 percent means, on average, you'd get just over a 22 percent savings or "discount" on a foreclosure purchase. That's down from just over 23 percent a year ago.

These are the states with largest discount, including price and its average percent of market value:

Alabama, $133,834, 59.95 percent
Pennsylvania, $110,936, 61.68 percent
Indiana, $99,255, 63.5 percent
Ohio, $90,300, 64.7 percent
Missouri, $144,768, 67.25 percent

Here are the states with smallest discounts:

Hawaii, $657,211, 85.41 percent
Washington, $288,397, 83.68 percent
Virginia, $338,912, 83.48 percent
Massachusetts, $290,835, 83.03 percent
California, $437,813, 83 percent

Source: Dow Jones Business News, Jennifer Openshaw (10/16/2007)

Do you find that this is accurate? Can you buy foreclsoures at 63% of value? On average..I would say that is a bigger discount than we experience...

2007-10-16T13:28:00.000-05:00

State panel looks at foreclosure help for Indiana homeowners

Evansville Courier & Press
By Bryan Corbin, Evansville Courier & Press

INDIANAPOLIS - With Indiana ranking 10th in the nation in the number of home foreclosures last month, a committee of state lawmakers appeared eager Thursday to change state laws to discourage abusive practices in the mortgage-loan industry.
Members of the Interim Study Committee on Mortgage Lending Practices and Home Foreclosures were told unscrupulous mortgage brokers who made adjustable-rate loans to high-risk borrowers who had bad credit or were financially naive have contributed to the state's mortgage-foreclosure crisis.

The panel heard more than four hours of Statehouse testimony Thursday from federal and state housing officials, state police, banking experts and a group that assists foreclosed borrowers.
Witnesses painted a grim picture of unregulated mortgage brokers and lenders who extend subprime loans to borrowers who don't understand their monthly house payments may skyrocket as interest rates rise.

The witnesses told stories of loans for homes that were greatly overvalued, forcing borrowers into foreclosure when they couldn't keep up with payments. And they described unethical brokers who encouraged naive borrowers to get over their heads into debt, since the brokers got paid up-front.

Panel member State Rep. Woody Burton, R-Greenwood, who is also a Realtor, called the situation "a disaster waiting to happen."

Judith Ripley, director of the Indiana Department of Financial Institutions, said an estimated 32 percent of subprime adjustable-rate mortgages are scheduled next year to "reset," or revert to higher rates, putting some borrowers in dire financial situations.

Ripley urged lawmakers to pass several changes to state law in 2008, including:
Licensing and regulating first-mortgage lenders. Twenty years ago, Ripley said, most mortgage loans were obtained through banks or credit unions, which are regulated and examined. Now mortgage lending has shifted to largely-unregulated non-depository brokers and lenders, she said.

Requiring mortgage brokers and lenders (if licensed) to be bonded for more than the current $50,000. Intended to compensate borrowers if they are harmed by the broker's or lender's actions, such bonds should be at least $100,000, Ripley said.

Requiring all appraisers and mortgage brokers to undergo FBI background checks.

Requiring simplified one- or two-page disclosure forms for borrowers, available five days before closing, that spell out loan costs at various interest rates.

Adding "financial literacy" to the K-12 school curriculum. "Students leave high school with little or no understanding of basic financial transactions. College students are laden with high-cost credit-card debt. It is little wonder that so many people have been entrapped in the subprime and non-traditional mortgage crisis," Ripley told the committee.

Other possible changes lawmakers discussed included capping the top rate of adjustable-rate mortgages, consolidating the enforcement powers scattered among several different state agencies into one entity, creating a database of mortgage loans to more readily identify unscrupulous brokers and beefing up the civil and criminal penalties for mortgage fraud.
Sgt. Chuck Cohen of the criminal intelligence section of the Indiana State Police contended that mortgage fraud ought to be considered on par with crimes of violence.

"One thing I always to emphasize to prosecutors, juries and judges is that this is a serious crime. You can't see the bruises on the victims; but I've had victims whose marriages dissolved over this, who lost their homes, who lost their life savings," Cohen testified.

A total 4,430 Hoosier homes were in the process of foreclosure last month, or one for every 615 households, according to RealtyTrac a real estate information company. Florida, with 33,354 foreclosure filings or one for every 248 households, topped the monthly list, RealtyTrac reported.

At its next meeting, on Oct. 30, the committee will attempt to hammer out a recommendation that could be introduced as a bill in the 2008 session of the General Assembly.

Article © © 2007 The Evansville Courier Co.

2007-09-06T10:01:00.000-05:00

Bush Administration Plan-More Politics or Helpful?

I do not want to spoil or the love coming from this announcement, but in my 9 years of working with foreclosures..I just do not see many people who are going to be helped by this new FHA program. I have also not heard anybody else offering that this will really change the statistics. Reality is this will help a very small portion of the people losing their homes. I hate to be this pessimistic, but it seems that I do not see that many people who care enough to qualify..when they are missing payments. Most foreclosures seem to be part of a much deeper issue..personal crisis (divorce, death, job loss lead the pack) and in each of these cases it is not that a borrower can't handle the extra $300 per month. It is that nobody really cares anymore to make the payment and they can't sell the house for the mortgage balance. Simple enough problem which in Indiana, with our job loss issues and don't even get me started on what the property tax issue is going to do, we just are not going to fix the issue with a new FHA program.

For those who want the details..here is the press release:

BUSH ADMINISTRATION TO HELP NEARLY ONE-QUARTER OF A MILLION HOMEOWNERS REFINANCE, KEEP THEIR HOMES

FHA to implement new “FHASecure” refinancing product

President George W. Bush today (08/31/07) announced that HUD's Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing…

To read the entire press release, please visit: http://www.hud.gov/news/release.cfm?content=pr07-123.cfm

LENDERS PLEASE NOTE: FHA WILL PUBLISH A NEW MORTGAGEE LETTER WITH GUIDANCE ON THE NEW FHASecure PROGRAM ON OR ABOUT TUESDAY SEPTEMBER 4th, 2007 at: http://www.hud.gov/offices/hsg/mltrmenu.cfm AND
FHASecure Initiative information for HUD Housing Counseling Agencies:

The Federal Housing Administration (FHA) is pleased to announce a new initiative that will enable homeowners to refinance various types of adjustable rate mortgages (ARMs) that have recently “reset.”

Under FHASecure, borrowers that are delinquent on their mortgages as a result of interest rate resets will now be able to refinance using an FHA-insured mortgage. In many cases homeowners may be permitted to include mortgage payment arrearages into the new loan amount, subject to existing geographical mortgage limits and the loan-to-value limit shown below. Before today, only borrowers who were current on their existing loan were allowed to re-finance into an FHA-insured mortgage.

Highlights of the FHASecure Initiative:

1. The mortgage being refinanced must be a non-FHA ARM that has reset.
2. The mortgagor’s payment history on the non-FHA ARM must show that, prior to the reset of the mortgage, the mortgagor was current in making the monthly mortgage payments.
3. If there is sufficient equity in the home, under additional eligibility instructions provided below, FHA will insure mortgages that include missed mortgage payments.
4. Under certain conditions explained below, FHA will insure first mortgages where (1) the existing note holder writes off the amount of indebtedness that cannot be refinanced into the FHA insured mortgage; or (2), the FHA-approved lender making the new mortgage or the existing note holder may take back a second lien that includes closing costs, arrearages or previous secondary financing.
5. Lenders must determine, as part of the underwriting process, that the reset of the non-FHA ARM monthly payments caused the mortgagor’s inability to make the monthly payments and that the mortgagor has sufficient income and resources to make the monthly payments under the new FHA-insured refinancing mortgage.

Additional Information about the FHASecure Initiative:

What May be Included in the FHASecure Mortgage Amount: FHA will permit the inclusion of the existing first lien, any purchase money second mortgage, closing costs, prepaid expenses, discount points, prepayment penalties, and late charges. FHA will also permit arrearages (principal, interest, taxes and insurance) to be added into the new loan amount.
Subordinate Financing under the FHASecure Initiative: If the new maximum FHA loan is not enough to pay off the existing first lien, closing costs and arrearages, the lender may execute a second lien at closing to pay the difference. The combined amount of the FHASecure first mortgage and any subordinate lien may exceed the applicable FHA loan-to-value ratio and geographical maximum mortgage amount. If payments on the second are required, they must be included in qualifying the borrower. If payments are deferred, they must be so for no less than 36 months to not be considered in the qualifying ratios.

Educate Borrowers Regarding FHASecure: The FHASecure initiative will take effect almost immediately through administrative action. Counselors should understand this new opportunity and knowledgeably present it as a viable alternative for delinquent borrowers struggling to pay higher interest rates. HUD will soon publish a Mortgagee Letter providing additional and more detailed information regarding the new initiative.

2007-08-20T08:35:00.000-05:00

National Association of Realtors Releases Report on Indiana Foreclosure Rate

Ever hear of being an hour late and a dollar short? If you enjoy statistics and understanding history, the new report from NAR will help you understand why Indiana got into the mess we did with foreclosures. For the full report follow this link:

Indiana Foreclosure Report

Basically, this cart filled report makes the basic case that Indiana's job growth has been significantly under the US average and because of that, so has income growth. This particular news is not particularly unusual, how many of us can remember when our job growth exceeded US averages? If so, you must be a true senior citizen because I suspect you have to go back to the 1930's-1950's to have this state rank competitively. So, what is different this time? Well, up to 2000, we had slower job growth and lower price appreciation, but average (as compared to the entire US) foreclosure activity. I think what this report shows is that at the turn of the century, the new sub-prime mortgage products brought a whole new type of borrower into the world of mortgage financing. To make matters worse, these loans were even more of a stretch in Indiana and now the statistics bear this out when looking at default rates. In the first quarter of 2007, nationwide default rates on subprime mortgages were 5.1%. In Indiana, we were almost two times that level at 9.57%. Therefore, foreclosures are going to be more extreme.

The big factor that causes our delinquencies to be higher? Two reasons actually. One is the lack of job growth which can also translate into opportunity for higher paying jobs. Second, and a result of the low job growth, is a lack of appreciation. Nationally, many subprime borrowers were able to save themselves because their home values increased. Not the case in Indiana. To rub salt in the wound, due to our ample cheap land supply, new home builders from all over the country had saturated our markets with new homes-ultimately pricing them in such a way to compete with the resale inventory and causing such an excess of supply over demand that prices held firm or fell. If anybody doubts this to be true, just look at the fact that 2007 starts are down 49% versus 2006!

Interesting information that helps understand but does not really make a suggestion for improvement. Frankly, price appreciation is the best hope for solving the foreclosure issue and price appreciation begins with job creation and reduction of supply. Both are now occuring so it would appear that we are on a path to reduce the totals.

None of this addresses fraud. We talk about fraud frquently in this blog and its affect on foreclosures. Fraud occurred so often in this market due to lack of appreciation and the ease of subprime lending..so ultimately this issue is being addressed, in addition to the attention being paid by government and law enforecement, by the economic changes addressed above.

2007-07-18T16:56:00.000-05:00

UPDATE: Taxpayers to Pay Same Amounts As 2006 Bills!

Confusion ruled the roost earlier today when the announcement of the Indianapolis tax reassesment order came down from the Governor. The error in reporting occurred due to Indiana's arrears system of property taxes. The bills in dispute are the 2006 bills payable in 2007. When the original reports came out the distinction was not made and statements were made that taxpayers were to pay their 2006 bills as billed.

During the last few hours more clarification has been offered on this matter. The following press release added further clarification:

Earlier today, Governor Mitch Daniels ordered a complete reassessment of both residential and commercial property in Marion County. Daniels has also placed on hold the property tax increases that homeowners were billed for earlier this month. The governor has stated that homeowners will pay the same amount they paid on their 2006 bills. According to news reports as late as 5:00 p.m. Wednesday, the due date for bills remains July 27. Marion County taxpayers will receive bills with a new 2007 amount after the reassessment is completed and the tax rates certified, a process expected to take six to eight months. The status of rebates is not yet known, we will forward more information as it becomes available.

2007-07-18T11:13:00.000-05:00

Governor Orders Marion County Reassessment

Details are just coming out but it appears the ridiculous tax bills that were presented in the last two weeks will be put on hold. I have not had time to write about this, but as the tax records have been made available, it became increasingly apparent the assessors had grossly overvalued residential properties in particular. For example, a REO property we have listed for $9000 was valued at $54,500. The tax bills have paralyzed local investors and the public protest has been unlike anything seen in Indianapolis in my memory. There have been daily protests and marches against the tax bills. Many people were saddled with bills increasing over 300%.

More information on this developing story can be found as follows:

http://www.indystar.com/apps/pbcs.dll/article?AID=/20070718/LOCAL/70718030

Some interesting notes from the press release by the Governor:

Marion County residents will still be asked to pay their 2006 taxes and any adjustments will come later.

Local government in Indiana has remained fundamentally unchanged since the Civil War. Today, the state has approximately 2,730 local units of government and an estimated 10,746 elected officials with the authority to tax property. Only nine states have more government than Indiana. For instance, the Hoosier State has 1,009 townships while 31 states have no township offices at all.

Unfortunately, the affect of still having to pay these large bills will continue to stifle values for foreclsoure properties as investors have been iced from this market. Rents do not work with the tax levels on many properties, and resale is questionable until this matter is straightened out.

2007-07-08T06:27:00.000-05:00

Who Gets The Money???

The property tax rebates issued to homeowners this year may create additional confusion at closing. For homes sold in 2007, there may be disagreement over which party, buyer or seller, should receive credit at closing for the anticipated property tax rebate. In an attempt to help REALTORS® address the anticipated rebate with their clients, the IAR Legal Affairs Department has prepared a voluntary disclosure form, which may also be downloaded from under “What’s New” on the IAR website: http://www.indianarealtors.com.

2007-07-08T06:15:00.000-05:00

What Is The Cause Of These Increases and Is There Any Relief In Site?
(from the Metropolitan Indianapolis Board of Realtors "Members Only" publication.)

Property taxes are used to fund local government (counties, cities, towns, and townships) and the services they provide (schools, fire protection, police, roads, etc.). Taxes are collected twice a year and are used to pay for the services provided during the previous year.Property taxes are based on two main factors. One is the value of your home or your assessed value. Assessed values are market based assessments and are usually somewhat less than the market value.

The second factor is the tax rate. This is figured by combining the taxing units (county, city, school, library, etc.) within each taxing district. The tax rate is expressed in dollars per hundred dollar of assessed value. This amount is reduced by a state credit – Property Tax Replacement – and is automatically deducted from your tax bill. The tax rate is then combined with your assessed value to produce your actual property tax amount.To provide some relief, there are several deductions available to Indiana taxpayers. They include the homestead credit, mortgage deduction, over 65, blind/disabled, disabled veterans and geo thermal.

The “Perfect Storm”

So why are so many property taxes going up this year? Many have called it the “perfect storm” because so many factors are impacting the tax at the same time and many for the first time. Some of the factors causing the increase include:

Property Tax Replacement Freeze – In the spring of 2005, the General Assembly “froze” property tax relief in order to help balance the state budget. The state is still providing property tax relief but property owners are picking up the difference.

Elimination of business inventory taxes – Several years ago the state eliminated inventory taxes in order to help businesses and create jobs. Many counties did not fully eliminate the tax until this year. The loss of this tax was then shifted to homes and businesses without inventories.

Trending – Starting with the 2006 payable 2007 assessments, the assessment of property will be adjusted on an annual basis. For the last general reassessment of property in 2002, the assessment was based on 1999 market value-in-use. The 2006 payable 2007 assessments will now be adjusted from those 1999 market values to market values derived from 2004 and 2005 sales disclosure forms.

School funding – The General Assembly changed funding rules to allow schools to increase property taxes.

Juvenile correctional facilities – Counties are responsible for paying for half of the cost of committing juveniles to state correctional facilities.

Growth in local government spending – Counties, cities, towns, library boards, and other local taxing authorities are increasing their tax levies to pay for increases in insurance, bonds (typically to pay for expansion and renovations of facilities), fuel, police and fire pension funds, and other operating costs.

In order to provide some temporary relief from these increases the Indiana General Assembly authorized about $300 million in tax rebates that will go out to property owners after the November bills. It is still too early to know the amount of individual refunds. The issue of rebates will also cause some problems for real estate transactions over the next couple months.

2007-07-07T06:08:00.000-05:00

PROPERTY TAX INCREASE: THE IMPACT
Home values, sales could take hit
Some deals have fallen through; more foreclosures are feared
By Jeff Swiatek and Tim Evans
jeff.swiatek@indystar.com
July 7, 2007

The dramatic and widespread jump in Marion County property taxes threatens to depress housing prices or at least freeze the steady rise in home values that property owners have come to bank on.

"I see values coming down to adjust to buyers' ability to afford the home and the taxes that come with it," said Kevin Kirkpatrick, president of the Metropolitan Indianapolis Board of Realtors.

The tax hike averages 34 percent in Indianapolis, but increases of 100 percent or more are not unheard of in some older neighborhoods.

Kirkpatrick described as "maddening" the higher tax bills, which are arriving during the July 4 holiday week when many people are off work.

Real estate professionals say some sales are falling through as the impact of higher taxes pushes some properties out of reach for buyers. Others say the increases could result in even more foreclosures.

Tom Ellis and his wife had planned to sell their two-story College Park home, where they've lived for 30 years, and move into a newer one-story home in the area.
But now the Pike Township couple are holding off on putting their home up for sale and seriously considering moving out of state. "We had been counting on getting a certain amount out of our house, but there's too much stigma about the taxes to sell it now," Ellis said.
A retired property appraiser, Ellis estimates their house lost about 10 percent of its value, or $20,000, because of its higher tax load. The Ellis' annual property tax bill jumped from $2,200 to $3,352, or nearly $100 more a month.

Economist Morton Marcus, who has tracked economic activity in Indiana for 30 years, says higher taxes will cut into consumer spending as homeowners have less cash in their wallets.
Just how severe a blow it will deal to the city's already struggling residential real estate market is unclear. By many accounts, the arrival of the tax bills this week already has shaken a market that last year saw home sales drop by 1 percent from 2005.

Realtors report some closings of home sales have been abruptly called off, while offers are being renegotiated to reflect the unexpectedly higher tax bills. And some homeowners, particularly retirees on fixed incomes, may find they can't afford to stay in their homes as the new, higher tax bills come due in late July.

"If you think the foreclosure rate is bad now, just wait," said David Matters, mortgage consultant in Indianapolis for Nationwide Mortgage Funding. Indianapolis ranked third among U.S. cities in overall home foreclosures last year.

"Some people have got to come up with $6,000 (extra) by the end of July" to pay their new taxes and avoid foreclosure, said Pegg Kennedy, a Realtor for F.C. Tucker Co. in Indianapolis. "My voice mail is almost full from people saying, 'Help me, help me.' "

First Mortgage of Indiana called off one of its closings in the past week when the buyer no longer qualified for the loan covering the mortgage, taxes and insurance on the home. Once the new taxes were figured in, the sale "blew up," said Michael Strawn, a vice president at First Mortgage. Across the city, he said, the tax hike "is going to have an impact -- no ifs, ands or buts. It's going to make it harder to own a home."

The impact of rising assessments is likely to vary significantly in other Indiana counties, based on how much home values and tax rates changed. Residential assessments in Hamilton County, for instance, increased about 25 percent, but some of that sting was offset by lower tax rates in most townships.

In Hendricks County, newer custom-built homes took the biggest hit -- at least 20 percent in most cases -- prompting about 1,200 homeowners to file appeals.

Kurt Flock, vice president of Flock Real Estate Group, which primarily sells homes in and around Downtown, said his company represents a buyer of a house in the 1000 block of North Alabama Street, on which taxes have just soared from $2,574 a year to $12,388.
His buyers might lower their offer for the house to reflect the heavier tax burden they'll have to shoulder, he said. "This is the kind of nonsense we're running into," Flock said.
"If everybody is in the same ridiculous sinking boat, where's the life raft?" he asked. "It's going to have a chilling effect on the market for quite a while."

Jessica Hoffman, who's selling her Massachusetts Avenue condominium through Flock, said she wonders whether the closing will go through now that she's received word that the tax bill on the unit will jump to $1,800 a year from $600. "I'm hoping they (the buyers) are thinking it's OK," said Hoffman, who called herself "a little surprised" to get the tax notice.

State lawmakers have promised rebate checks averaging $240 to help offset the impact of higher property taxes statewide. "Everyone is laughing at the check" because it won't cover the rise in taxes for many Indianapolis homeowners, who face bigger increases than in rural counties, said G.B. Landrigan, president of Landrigan & Co. It sells residential properties, mostly in northern Marion County.

Marcus, the former Indiana University economist, said one silver lining in the issue is that tax revenue stays local and ends up being used to pay those who run or contract with the government, such as road-building companies and schoolteachers. "Government tends to buy labor, services and hire people. The possibility of more spending in the county could lead to more employment," he said. "I think it is possible that the positive may outweigh the negative in the big picture. People always tend to think about the negative, but if government spending makes the community more attractive, it will encourage more people to come here, and attracting more people tends to be a good thing."

2007-06-30T08:43:00.000-05:00

Kokomo Wanders If Delphi Reorganization Will Mean Major Job Losses

As Delphi prepares to leave bankruptcy, the plan calls for it to reduce its Kokomo plant employment by 2000 jobs. No timetable is set but it appears this community is on the verge of more major auto related setbacks.

Read the full story from the Indianapolis Business Journal.

2007-06-20T14:02:00.000-05:00

Foreclosures Hit 37-Year High

More home owners entered the foreclosure process during the first three months of 2007 than during the record-setting final quarter of 2006, according to a report by the Mortgage Bankers Association.

The MBA’s Chief Economist Doug Duncan predicts that delinquencies would continue to rise, peaking later this year. He also points out that the rate would have fallen if it weren’t for substantial increases in seven states."

The percentage of loans in foreclosure would be well below the average of the last 10 years were it not for Ohio, Michigan, and Indiana," Duncan says. "And the rate of foreclosures started nationwide would have fallen were it not for the big jumps in California, Florida, Nevada, and Arizona. Those states have special circumstances that do not reflect what is happening in the rest of the country."

Seasonally adjusted, 0.58 percent of loans entered the foreclosure process last quarter, compared with 0.54 percent in the fourth quarter of 2006 and 0.41 percent in last year's first quarter. The rates for the past two quarters are the highest in the survey's 37-year history.—

REALTOR® Magazine Online and The Wall Street Journal, Damian Paletta and James R. Hagerty (06/15/07)

2007-06-18T20:27:00.000-05:00

Indiana foreclosure numbers still high
As has been typical in recent years, Indiana had one of the highest foreclosure rates of any state in the first quarter of 2007, according to a survey conducted by the Mortgage Bankers Association.

Lenders in Indiana, Ohio and Michigan made 8.7 percent of the mortgage loans in the country, and those three states had 19.9 percent of the loans in foreclosure, the study says. Moreover, they had 15 percent of the foreclosures that were started in the first quarter of 2007.

The study cites the loss of manufacturing jobs in Indiana, Ohio and Michigan as an important cause behind the rising numbers. While some of those have been replaced by service jobs, they have not been as plentiful as the number lost. Nor has the pay equaled that found in manufacturing work, the study says.

2007-05-27T07:38:00.000-05:00

Fort Wayne Mortgage Broker Indicted

The United States Attorney’s Office in Fort Wayne, IN announced in a press release that JUSTIN L. STUCKEY, age 34, of Fort Wayne, Indiana, is charged in a five count Indictment with wire fraud on April 17, 2002 through June 21, 2002.

According to the Indy Star the case involves the procurement of 55 properties for a father and son. The indictment returned Thursday charges that Justin L. Stuckey, the owner of Maximum Mortgage in Fort Wayne, obtained fraudulent loans in 2002 for investors buying rental properties. Stuckey also faces a civil lawsuit over allegations that he was involved in some $5.5 million in mortgages that resulted in nearly 150 home foreclosures.

More details will follow shortly. These charges were filed as the result of an investigation by the Internal Revenue Service and the Federal Bureau of Investigation. This case has been assigned to and will be prosecuted by Assistant United States Attorney Lesley Miller Lowery, who can be reached at 260-422-2595 for any inquiries.

2007-05-23T16:44:00.000-05:00

Fort Wayne (Allen County) Experience 16% Decrease In Units Sold First Qtr 2007

From March 2006 to March 2007, the average sale price for a home in Allen County dropped 5.94 percent, from $115,734 to $109,244, according to Fort Wayne Area Association of Realtors statistics. Total dollar volume for Allen County home sales during that period decreased more than 57 percent, from $59.7 million to $38 million, according to the FWAAR data. As of March, the year-to-date number of units sold in Allen County dropped from 1,186 last year to 995 this year, a change of 16.1 percent.

"I am hopeful that this is just a slight market adjustment. The Midwest has been a stable real estate market historically," said Clay Weir of Century 21 Bradley Realty in Fort Wayne. "I believe that the branding initiative and the promotion of Fort Wayne is moving Fort Wayne forward. This is a great place to live."

2007-05-09T16:17:00.000-05:00

What Does Indianapolis Excel In Besides Football? Foreclosures...Of Course!!

For many years to come we will all remember what the success of the Colts have done for this thing called civic pride. We may have an increasing crime rate, we may be struggling with keeping our roads smooth and even our polls open on Election Day...but we got the Colts!!

We have struggled a great deal with housing. Interestingly, our housing problems are all inter-related. Whether it is the slow, steady 4% average appreciation, or the flight to suburbia where the new home builders are throwing in a free basement and paying all closing costs...it has all added up to a foreclosure rate that leads the nation regularly for the last three years. With foreclosure we have vacant homes, and subsequently a push down on values, and more urban flight.

Another factor that has hurt our economy is "brain drain." Ultimately, what hurts our economy hurts housing. Until the 1980s, Indy was known as the agricultural, distribution and manufacturing hub of America. It was a working-class, blue-collar town and people were not afraid to work hard and were rewarded with a wage that many times, in hind-sight, was more than fair. Unfortunately, a lot of the manufacturing jobs (think auto, steel, and major equipment) have been moved to places like Mexico, India and China. And while distribution and agriculture are still a big business in Indianapolis, service sector jobs such as retailing and insurance have taken the place of the old manufacturing jobs.

The problem in Indianapolis is that the blue-collar workers who lost their manufacturing jobs are not the people getting the insurance and retail jobs. (Ironically, a lot of foreigners are migrating from China, Korea and India to Indianapolis to fill those positions). And those blue-collar workers are the people feeling the pressure in the housing market. After all, when they no longer have a niche to fill in the local economy, they have been forced into the service sector. Despite all the retraining programs offered by all the major manufactureres, you can be trained to work with a computer but that does not make you a web programmer! Inevitably, after losing their jobs, moving into much lower paying jobs in the service sector, they file bankruptcy and finally lose their homes.

It's a vicious cycle. And it's one that has to change in the classrooms. Indianapolis has long suffered 'brain drain'. Less than 20% of all Hoosiers have a college degree. And of those that have graduated from an Indiana college or university in the last decade, 100,000 have left the state to pursue their career.

You can't have a vibrant economy when a large portion of your most qualified workers are moving out of state. Couple that with the well documented issues of loan fraud, urban sprawl, and just plain old aggressive lending, and you have the makings of an economy that leaves a lot of vacant homes and threatening neighborhoods.

So, the next time you hear the politicians discussing the horrible foreclosure problem, and how they are going to crack down on the lenders who created this mess....ask them what they have done to support the state's education standards and the effort to create jobs here at home? The kind of jobs that match the skills our university's are training and graduating young people to contribute in an economy somewhere. We have great universities...we are just not doing a great job keeping our college graduates here in state.

2007-05-05T07:12:00.000-05:00

New Legislation Keeps Real Estate Advocates Busy!

So, where have I been over the last month? It sure has not been updating this blog, though if any really big stories had been out there, I would of shared them. There was an interesting story in the Indy Star a few Sunday's ago on how mortgage fraud is perpetuated, and we will write more about that later. It had some good things but also I have some questions that I am trying to get answered regarding some facts of the story.

So, the Indiana Legislature closed up sho this week and...well depending on your leanings you are probably happy they have gone home or you wish they could stay all the time to just keep shaking the cages! Some interesting legislation passed regarding mortgage fraud. Most of it is just continuing effoorts by politicians to stick their chests out and say they are doing something about the foreclosure rate. I will continue to state that this is primarily a private market problem, and until the parties with the money on the table make real changes...most of what the public sector can do is for the cameras.

Case in point...read through these bills that passed the Indiana Legislature this session.

House Bill 1210 extended the life of the Homeowners Protection Unit of the Indiana Attorney General’s office. It provides a funding source for the Unit. In recent months, the Attorney General’s office has seen a surge in complaints against real estate professionals, and the function of this Unit is to weed out some of the “bad actors” in the profession.

Joels comment-Great idea until you own a real estate business and find that the AG's office does not really weed these complaints out. It is way to easy for somebody to complain (they won't return my earnest money!) and then we get to devote resources to a lengthy response process to the AG. BTW-you have no idea what has happened with the case..they operate on the "no news is good news" principle!

House Bill 1717 promotes coordination between local, state, and federal law enforcement agencies in investigation of violations of laws pertaining to mortgage lending and settlement procedures. This bill also provides for increases in licensing fees and stricter licensing measures for loan originators. It creates a study committee for mortgage lending practices and home loan foreclosures.

Joel-A study committee-is that not a way to develop some PR? How is a study committee going to improve what private lenders do? Wait-I know the answer and it really worries me! Recommend our Legislators pass some regulatory bills to make it difficult for the 95% of good legitimate real estate transactions to take place!

House Bill 1753 establishes a program to provide free mortgage foreclosure counseling and education to homeowners who have defaulted or are in danger of defaulting on their mortgage. It will create a central toll free number with trained counselors that homeowners can call to receive counseling.

Joel-Ugg!!! What a waste of taxpayer money!! Do these people just want headlines or do they even research these things before they pass these bills? Have they ever heard of the HOPE Initiative-a privately funded organization-in existence in Indiana andmost major foreclosure areas throughout America, funded by mortgage lenders to provide exactly this type of counseling. So now all defaulting homeowners have a choice...Big Brother or an organization supported by the private lenders...who just might have a better understandign of what the lender can do to actually help! Thanks again to the folks who are looking for PR as they spend my tax money!

House Bill 1821 allows the Indiana Professional Licensing Agency to immediately suspend the license of a real estate appraiser when the person is found to have, during a loan process, submitted at least three fraudulent appraisals.

Joel-I had to read this one three times to make sure I really understood it. So, here we have a legitimate function of government-licensing. And they decide it is OK for appraisers to submit not one falsified appraisal, not two, but when you submit the third one..that is it!! Your license is pulled! This is powerful legislation and just a wonderful example of how our government really, really, cares about stopping loan fraud at its root....I can hear the fraudsters now..."no we can't use Bob Jones appraiser on this deal because he already has 2 strikes against him and he says he can't provide another fraudulent appraisal or he is out of business!"

Maybe somebody has some information they would like to provide to this blog to clarify these issues?????

2007-03-27T12:42:00.000-05:00

Please Do Not Confuse the John Wagner's-there are 2 both in the Mortgage and Appraising Business!!

Please be aware that the recent conviction of a man in Indianapolis has led to another person being confused with the convicted man.

The man convicted on February 23, 2007 is John A. Wagner, DOB: 8/11/1960 . This has been confirmed in an email to this blog by the US DOJ.

He should not be confused with John M Wagner who is a Real Estate Appraiser in Indianapolis. I have reproduced part of an email from the innocent John M Wagner below.

Hello, My name is John M. Wagner and I am a Licensed Residential Real Estate Appraiser and a Mortgage Broker in Indianapolis, IN. I own Indy Appraisal Services and Monon Mortgage LLC. Recently there was a DIFFERENT John Wagner convicted and sentence to a Mortgage Fraud scheme in which he used inflated appraisals etc to perform his scam.

This story has been all over the local Indianapolis news and TV over the past several months and although there is no relationship or connection between myself and this other John Wagner, my businesses, since they are in the Appraisal and Mortgage Industries, have suffered almost to the point of putting me out of business…simply due to my having the same name as this criminal.

I have letters from the Indiana Professional Licensing Agency, one coming from the US Attorneys office and evidence from the IN Attorney Generals Office, as well as a Clarification written in the Indianapolis Star Newspaper clarifying that I am not this person however I am still suffering terribly from this unfortunate name recognition. Major Lenders will now not accept my appraisals virtually putting me out of business.

I have been an appraiser in Central Indiana for over 15 years and have never once had any legal issues with my license. I take great pride in my Profession and would never be involved in such a scheme however I am being punished as if it were me. If you google my name in Indianapolis and type “appraisal” nothing but the convicted criminal John Wagner comes up…my potential clients do take a minute to google potential new vendors and this is what they see…Is there anything I can get from your office verifying or clarifying in an article that I am not this person. I have evidence from the US Attorneys office and the IPLA and the news clarification article verifying this fact…plus I am not in jail, the other Wagner is, he is 46 years old, I am 42, he is a black male, I am a white male…

2007-03-11T10:59:00.000-05:00

Indianapolis mortgage broker given 24 months in flipping scheme
Friday, February 23, 2007 at 05:10PMThe Editor - Ian Shuter in Broker, Convictions, Flipping, Indiana

In the following press release Susan W. Brooks (pictured left), United States Attorney for the Southern District of Indiana, announced that FRANKIE LAMONT HOWARD, 38, Indianapolis, Indiana, was sentenced to 24 months imprisonment today by U.S. District Judge Larry J. McKinney following his guilty pleas to conspiracy to commit mail fraud and money laundering. This case was the result of a investigation by the Internal Revenue Service and the United States Postal Inspection Service.

HOWARD was a real estate investor operating in the Indianapolis, Indiana area. Between April and October 2002, HOWARD engaged in at least thirty-one (31) separate fraudulent mortgage loan transactions, obtaining loans of approximately $1,663,340.00 on properties which were actually only worth a total of approximately $439,300.00. This resulted in a loss to First Bank, the lender, of approximately $1,224,040.00. Howard ran or was involved with a number companies during this scheme including True Lady Investments and America Savings Mortgage.

HOWARD located residential properties for sale in the Indianapolis area, primarily in low-income neighborhoods. HOWARD purchased these properties at fair market value. A very short time later, he sold these properties for a greatly inflated price to buyers whom he had recruited. HOWARD then arranged for these buyers to obtain financing for the properties thru a mortgage broker who he knew would (and did) submit false and fraudulent loan applications and supporting documents to the lender. HOWARD assisted in creating false documentation for the loan applications which were submitted by the buyers. Falsely inflated property appraisals were also prepared and submitted to the lender to support the loan application. The lender relied upon the false appraisals, false loan applications, and false supporting documents in the loan packages to approve and disburse the loans for these properties.

HOWARD also “ fronted” the down payment on all of the properties to the buyers by obtaining cashier’ s checks showing the buyer as the remitter and submitting those cashier’ s checks for the closing on the property to make it appear that the buyers were actually making a down payment on the property. HOWARD was then reimbursed the down payment money from the illegal funds which he obtained as the seller of the properties at closing.

HOWARD and other co-conspirators shared these fraudulently obtained funds, with HOWARD retaining the bulk of the fraudulently obtained funds, as the seller of the properties. Subsequent to the closing of the properties, HOWARD paid a “ kickback” to the buyers of the properties, amounting to $5,000.00 for each of the properties which the buyers purchased. All of the thirty-one fraudulent loans went into foreclosure. Many of them were closed by Anchor Title Services of Anderson, IN.

Properties mentioned in the indictment are:
2410 Park Avenue, Indianapolis, IN
723 N. Concord, Indianapolis, IN
209 North Forest Avenue, Indianapolis, IN
717 N. Belleview Place, Indianapolis, IN
12613 Carrington Place , Carmel, IN

According to Assistant United States Attorney Susan Heckard Dowd, who prosecuted the case for the government, Judge McKinney also imposed 3 years supervised release following HOWARD’s release from imprisonment. HOWARD was also ordered to make restitution in the amount of $1,459,993.40.
Click here to read the press release. and also click here to read the indictment. Our thansks to the US DOJ for supplying a copy of the indictment.
Article originally appeared on Mortgage Fraud (http://www.mortgagefraud.org/).

2007-02-24T06:27:00.000-05:00

Update on Wednesday, February 21, 2007
On Wednesday February 21, 2007 Romeo Brice, 37, was sentenced to 87 months imprisonment by U.S. District Judge Sarah Evans Barker following his guilty pleas to conspiracy to commit mail fraud and money laundering.
Click here for the US DOJ press release.
Update on Friday, February 23, 2007
On Friday February 23, 2007 JOHN WAGNER, 46, was sentenced to 37 months imprisonment by U.S. District Judge Sarah Evans Barker following his guilty pleas to conspiracy to commit mail fraud and money laundering.
Click here for the US DOJ press release.

2007-02-24T06:19:00.000-05:00

Indianapolis mortgage broker given 24 months in flipping scheme
Friday, February 23, 2007 -Motgage Fraud News

In the following press release Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that FRANKIE LAMONT HOWARD, 38, Indianapolis, Indiana, was sentenced to 24 months imprisonment today by U.S. District Judge Larry J. McKinney following his guilty pleas to conspiracy to commit mail fraud and money laundering. This case was the result of a investigation by the Internal Revenue Service and the United States Postal Inspection Service.

HOWARD was a real estate investor operating in the Indianapolis, Indiana area. Between April and October 2002, HOWARD engaged in at least thirty-one (31) separate fraudulent mortgage loan transactions, obtaining loans of approximately $1,663,340.00 on properties which were actually only worth a total of approximately $439,300.00. This resulted in a loss to First Bank, the lender, of approximately $1,224,040.00.

HOWARD located residential properties for sale in the Indianapolis area, primarily in low-income neighborhoods. HOWARD purchased these properties at fair market value. A very short time later, he sold these properties for a greatly inflated price to buyers whom he had recruited. HOWARD then arranged for these buyers to obtain financing for the properties thru a mortgage broker who he knew would (and did) submit false and fraudulent loan applications and supporting documents to the lender. HOWARD assisted in creating false documentation for the loan applications which were submitted by the buyers. Falsely inflated property appraisals were also prepared and submitted to the lender to support the loan application. The lender relied upon the false appraisals, false loan applications, and false supporting documents in the loan packages to approve and disburse the loans for these properties.

HOWARD also “ fronted” the down payment on all of the properties to the buyers by obtaining cashier’ s checks showing the buyer as the remitter and submitting those cashier’ s checks for the closing on the property to make it appear that the buyers were actually making a down payment on the property. HOWARD was then reimbursed the down payment money from the illegal funds which he obtained as the seller of the properties at closing.

HOWARD and other co-conspirators shared these fraudulently obtained funds, with HOWARD retaining the bulk of the fraudulently obtained funds, as the seller of the properties. Subsequent to the closing of the properties, HOWARD paid a “ kickback” to the buyers of the properties, amounting to $5,000.00 for each of the properties which the buyers purchased. All of the thirty-one fraudulent loans went into foreclosure.

According to Assistant United States Attorney Susan Heckard Dowd, who prosecuted the case for the government, Judge McKinney also imposed 3 years supervised release following HOWARD’s release from imprisonment. HOWARD was also ordered to make restitution in the amount of $1,459,993.40.

Click here to read the press release.

2007-02-14T12:25:00.000-05:00

Kokomo spared from Chrysler cuts
Close to 7,000 employees at DaimlerChrysler's three transmission plants in Kokomo should be breathing a sigh of relief today as the company did not include them on a list of facilities that will be idled, The Star's Ted Evanoff reports today. The big automaker said 13,000 people will be laid off as part of its three-year recovery plan. Cuts will occur in Newark, Delaware, St. Louis, and Cleveland. Sean McAlinden, economist at the Center for Automotive Research in Ann Arbor, Mich., said he thinks the Kokomo jobs are probably going to be safe because the company needs the transmissions. Kokomo is the only center for transmission products in North America for the Chrysler group.

2007-02-08T11:28:00.000-05:00

Two men charged with ID theft - one alleged to have bought 5 properties
Thursday, February 1, 2007

In the following press release Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that ERICK RAMON ANDERSON, 30, Indianapolis, Indiana, was indicted by a federal grand jury sitting in Indianapolis for 7 counts of identity theft and 4 counts of bank fraud, following an investigation by the Indianapolis Metropolitan Police Department and the Federal Bureau of Investigation in Cincinnati, Ohio and Indianapolis. CHARLEY WALKER, 46, was charged by information with a single-count of identity theft.

The indictment alleges that ANDERSON purchased five Indianapolis properties and obtained or attempted to obtain two vehicle loans using the personal identifiers of three men, including their social security numbers. These men do not know ANDERSON and had not given permission for him to do this. The indictment additionally alleges that ANDERSON committed bank fraud by depositing $13,800 in funds from four different checks purportedly authorized by a fourth man into an account that ANDERSON controlled. The fourth man gave no such authority.. One of the vehicle loans, which was stopped by law enforcement, occurred on March 17, 2005, and involved ANDERSON and WALKER. ANDERSON allegedly drove WALKER to the Indianapolis bank where WALKER attempted to use a fictitious Wisconsin driver’s license to obtain a loan for $32,000.

The 5 properties bought with the stolen ID as mentioned in the indictment are:

5413 Greenfield, Indianapolis
5436 Burgess Avenue, Indianapolis
2277 West 67th Street, Indianapolis
2034 Cornell, Indianapolis
3016 Harlan Street, Indianapolis

All five properties were bought using the same stolen ID of a man who resides in Ohio. Please click here to read the indictment for Anderson.According to Assistant United States Attorney Gayle L. Helart, who is prosecuting the case for the government, ANDERSON and WALKER each face a maximum possible prison sentence of up to 15 years on each count of identity theft and a maximum possible fine of $250,000 for each count. ANDERSON faces an additional possible prison sentence of up to 30 years for each count of bank fraud charged in the indictment, and a maximum possible fine of $250,000 for each of those counts. An initial hearing will be scheduled before a U.S. Magistrate Judge in Indianapolis for each man. We are grateful for the assistance given to us by the US DOJ in Indianapolis.

Article originally appeared on Mortgage Fraud (http://www.mortgagefraud.org/).

2007-02-05T15:25:00.000-05:00

Subprime Loan Defaults Hit Decade High

Home owners with subprime loans are missing payments more often than any time in the last 10 years, according to a report by investment bank Friedman Billings Ramsey & Co.

The default rate on subprime loans that have been packaged into bonds to be sold to investors rose to 10.09 percent in November, up from 6.62 percent a year earlier. It's the highest default rate in a decade, exceeding the 10.05 percent level reached in November 2001 at the end of the last U.S. economic recession, the report says.

Defaults are rising as rates on many adjustable-rate mortgages reset and personal savings decline. The savings rate last year fell to negative 1 percent, the lowest since 1933, during the Great Depression, Commerce Department data show."There are no signs of pressure abating (in) the subprime arena, and there are some signs that problems are accelerating," says Angelo Mozilo, chief executive of Countrywide Financial Corp., the largest mortgage lender, on a Jan. 30 conference call.Source:

Reuters News (02/02/2007)

2007-01-30T15:10:00.000-05:00

FORMER IPD OFFICER AND TWO INDIANAPOLIS AREABUSINESSMEN LAST OF 16 DEFENDANTS TO BESENTENCED IN MORTGAGE FRAUD SCHEMES

PRESS RELEASE

Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that MICHAEL C. SMITH, 45, Indianapolis, Indiana, JOSEPH BRITTON, 47, Fishers, and MARK SPECKMAN, 48, McCordsville, were sentenced to federal prison on Tuesday and Wednesday of this week by U.S. District Judge Sarah Evans Barker following their convictions for conspiracy, wire fraud, and money laundering by a federal jury on September 22, 2006, following a two week trial.

Read the FBI Press Release by clicking here...

2007-01-26T19:50:00.000-05:00

Metro area foreclosures climb 36%
Lower wages, adjustable mortgages, bankruptcies, taxes are factors
By Ted Evanoff, Indianapolis Star
January 26, 2007

Metropolitan Indianapolis' sky-high pace of home foreclosures continued last year as lenders took back about 27,500 houses -- almost 36 percent more than in 2005.
Across the region, 4.3 percent of houses were in foreclosure last year, the nation's third-highest rate after the Detroit and Atlanta metro areas, industry watcher RealtyTrac reported Thursday.
Placing third was an improvement over Indy's first-place rank early in 2006. As the year wore on, weak economies and sagging housing markets emerged from Philadelphia to Los Angeles.

Nationwide, the number of houses in foreclosure soared 42 percent last year compared with 2005. Throughout the nation, 1.26 million foreclosures were filed last year.

In metro Indianapolis, the high foreclosure rate has persisted for years. Early in the decade, it was attributed to a weak economy. However, the economy has accelerated. Last month, 902,500 people were employed in the nine-county metro area, the most of any December ever and a gain of 38,000 jobs since recession year 2001. Experts say the housing market reflects the disappearance of high-wage factory work, as well as the lower pay offered in some new jobs.
While metro Indy wages and salaries average $38,312 for all employees, the region's 107,000 factory workers averaged $84,417 in 2004, a state report shows. Moreover, many homeowners get trapped by bankruptcy, high medical bills, fraudulent real estate deals and adjustable-rate mortgages. And aggressive lenders and builders can saddle buyers with higher-than-expected payments, particularly in new subdivisions.

Lawyers say many owners were not told before they bought their houses that taxes can shoot up when former farmland is revalued as residential real estate.
Then, property taxes can more than double for an owner of a newer house compared with taxes the same owner paid the first year in the home, when the taxes were geared to farm acreage.

As heavy as the pace of foreclosures is in the metro area, it is surging even more heavily across the state. Foreclosures in the 83 counties outside the metro area numbered 19,952, a 96 percent gain over 2005. Even so, metro Indy accounted for 58 percent of the 47,550 foreclosures recorded last year throughout the state, although the metro area contains only about 32 percent of the state's households.

2007-01-25T15:24:00.000-05:00

Indy drops in national foreclosure rank
Indianapolis Star report
January 25, 2007

Indianapolis has lost an unflattering title - dropping from first place to third nationally in 2006 among cities with the highest metro foreclosure rates. So says California-based RealtyTrac, which tracks foreclosure properties, in a report released today.

Indy finished behind Detroit and Atlanta. Indianapolis' total foreclosure filing foreclosures of 27,500 represented 4.3 percent of all households here, but that number decreased in the second, third and fourth quarters. Nationally, more than 1.2 million foreclosure filings were reported last year, up 42 percent from 2005. As a state, Indiana finished No. 6 nationally.More details: http://biz.yahoo.com/prnews/070125/lath048.html?.v=87

2007-01-24T13:43:00.000-05:00

Cop gets 57 months for fraud. Indy patrolman was a target of mortgage-scam task force.

Illicit schemes to get rich in Indianapolis real estate have blighted neighborhoods, helped make the metro area first in the nation in foreclosures and now have landed a city patrolman in federal prison.
Indianapolis Police Department veteran Michael C. Smith was sentenced Wednesday to 57 months in prison by U.S. District Judge Sarah Evans Barker for his role in a mortgage-fraud scheme
One of the longer prison terms given for mortgage fraud in the city, it follows a probe by a little-known federal task force set up in 2002 to look into Indianapolis' long rash of real estate scams.

Read More:

2007-01-04T18:19:00.000-05:00

Indiana Leads Nation In Jobless Claims Growth

Indiana led the nation last week in the increase of unemployment claims, as the number of laid-off workers filing claims for unemployment benefits shot up across the nation. Nationally, 329,000 newly unemployed workers filed applications for jobless benefits, an increase of 10,000 from the previous week.In Indiana, claims rose by 9,544, a gain attributed to layoffs in autos and other manufacturing companies.

2006-12-26T17:14:00.000-05:00

Fannie Mae releases November Mortgage Fraud Update

Fannie Mae recently released it's November Mortgage Fraud Update. Some of the key parts of the report are listed below:

Income misrepresentation (24%) is the most common single misrepresentation finding.
Credit-related misrepresentation (Credit, SSN and Liabilities) are the most common group (29%)
The Midwest currently contains the largest share of Fannie Mae loans with mortgage fraud findings.
The Southeast continues to contain a large share, followed by the Northeast and South Central.
The West and Mid-Atlantic continue to see their shares declining relative to prior periods.

Access the full report

2006-12-26T17:09:00.000-05:00

Licensing Initiative Aims to Slow Fraud
State banking and mortgage regulators are hoping an initiative to build a nationwide licensing system and database will help put a dig dent in mortgage fraud and force unethical loan officers out of the business.

2006-12-20T22:04:00.000-05:00

CRL Report: 2.2 Million Foreclosures Expected on Subprime Loans
Haley Settle 12.20.06DS News

A new report from the Center for Responsible Lending (CRL), which is based on the first nationwide study on millions of subprime mortgages originated from 1998 through the third quarter 2006, projects that 2.2 million borrowers with subprime mortgages will face foreclosure, causing a loss of $164 billion in homeownership wealth—much of which will come from minority borrowers.

According to the report, which is titled, "Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners," approximately 8 to 10 percent of all Latino and African American borrowers who took out subprime loans in 2005 will face foreclosure. Despite the fact that more subprime loans are given to white borrowers, Latinos and African American borrowers regularly receive more high-cost loans than any other group, according to data submitted annually be lenders under the Home Mortgage Disclosure Act. “Homeownership rates for minorities are up but so, too, is the cost of that homeownership,” said Wade Henderson, executive director of Leadership Conference on Civil Rights. “We need rules to curb predatory lenders, but we also need prime lenders to step up for this expanding market of borrowers.”

CRL’s report points to high-risk lending for the current “foreclosure crisis” and estimates that 19.4 percent of subprime mortgages from 2005 and 2006 will go into foreclosure. Risky lending practices encompass more than issuing loans that are high cost from the start. Subprime foreclosures are also resulting from borrowers who are given loans that are low cost in the beginning but blow up shortly thereafter. These 2/28 adjustable rate mortgages (ARMs), also known as “exploding ARMs,” are a primary reason many families find themselves unable to make their mortgage payments as little as two years into the loan. Other high-risk features endangering millions of borrowers in the subprime mortgage market include prepayment penalties, limited income documentation, and no escrow for property taxes.

“In the subprime sector, the most vulnerable borrowers are sold the most dangerous loans,” said Mike Calhoun, CRL president. “At $164 billion, the losses from foreclosures could pay for the college educations of four million kids. For families who lose their houses because their loans fail, savings and economic security will be way out of reach.”CRL expects the problem to surface in more areas at a rapid pace with the housing slump. The group says California, Arizona, Nevada, and the greater Washington, D.C., area are prime targets fpr such an upswing in foreclosure filings. As part of “Losing Ground,”

CRL makes recommendations for alleviating what they call one the worst foreclosure crises in American history. These include:

*Lenders ensure that every borrower is able to repay his or her loanwithout resorting to selling their property or refinancing under pressure.
*All parties involved operate in good faith and fair dealing to ensure a successful outcome. *Lenders, local governments, and community groups implement strong programs to help troubled borrowers keep their homes.

For more informaiton on CRL, visit www.responsiblelending.org. To view a detailed metropolitan statistical area chart with projected foreclosure rates, visit www.responsiblelending.org/pdfs/MSA-foreclosure-rates.pdf.

2006-12-20T21:57:00.000-05:00

Central Indiana pended home sales up slightly
Wednesday, December 20, 2006
IBJ Editorial Staff
Pended home sales in Marion and the surrounding eight counties increased 0.1 percent in November from a year earlier, according to Indianapolis-based F.C. Tucker.Only Hamilton and Hancock counties posted decreases-of 15 percent and 10 percent, respectively. The largest gain was in Morgan County, with 36.8 percent more home sales signed but not closed than the same month a year ago.

2006-12-14T20:57:00.000-05:00

Sluggish housing market trend proves true in Kokomo

Kokomo TribuneBy JOHN DEMPSEY, Kokomo Tribune business writer

The sluggish Kokomo housing market became even more evident last week after the release of a national housing study.The Office of Federal Housing Enterprise Oversite (OFHEO) released its third-quarter House Price Index and Kokomo ranked 270 of 275 Metropolitan Statistical Areas in terms of appreciation.The price of homes in the Kokomo area suffered a depreciation of 1.99 percent in the last year compared to a national increase of 7.7 percent. OFHEO noted that the national quarterly increase is the lowest since the second quarter of 1998."With U.S. house prices growing less than 1 percent during the third quarter, it provides more evidence that the long forecasted national deceleration in house prices is occurring," said OFHEO Director James B. Lockhard.

Kokomo has plenty of company from other areas that depend heavily on manufacturing - Anderson ranks last.The East North Central Region - Indiana, Illinois, Michigan, Ohio and Wisconsin - accounted for 18 of the 20 worst markets. Of those areas ranking 201 or lower, the region accounted for 41.Much of that, economists with OFHEO believe, is due to the loss of manufacturing jobs in the region."The loss of manufacturing jobs is probably also consistent with no inbound migration and small outward migration," OFHEO's top economist, Pat Lawler, said. "Household formation may be negative instead of positive and it is certainly going to be weak. "Incomes aren't growing rapidly either. The combination of those factors helps produce a weakness in housing markets."

Kokomo appraiser John Williamson of Lytle & Williamson Inc. noted the housing market has been especially tight since Delphi declared bankruptcy Oct. 8, 2005."That put people in hold mode at best," he said. "That plus all the foreclosures [affected the pricing]. One of four sales through the multiple list system were foreclosures."The large number of homes on the market in Kokomo and the drop in price "are synonymous.""When you get into a buyer's market where the inventory is unusually high and people are forced to sell, it creates lower demand and the value goes down," Williamson said.When the automotive economy is good, Kokomo's economy is good.

Kevin Hardie, owner of The Hardie Group and a Realtor in Kokomo for more than 20 years, pointed out. He sees indications things should improve."There's some good news in the local economy. Haynes International signed a big contract and Delphi will be making its temporary employees permanent," he said. "That will be a positive. I think people will feel more secure and invest in the Kokomo economy.""I've been in business a long time and I always try to remain very positive. I see this as temporary, hopefully, cycle change. I don't believe it will be long lasting."The large number of homes on the market, Hardie said, is not just a Kokomo phenomenon. "You're seeing that in many markets across united states."

The Housing Price Index comes out every quarter, Lawler said, with this report covering July through September. OFHEO is mandated by Congress to account for changes in the loan-to-value ratios of mortgages held or guaranteed by Fannie Mae and Freddie Mac.The Pacific Region - California, Oregon and Washington - led the report with a one-year increase of 11.31 percent.

2006-12-14T14:22:00.000-05:00

Foreclosures Expected to Increase

Late payments and foreclosures are likely to grow as another wave of adjustable-rate mortgages reset at higher interest rates, the Mortgage Bankers Association warned yesterday.Almost 14 percent of sub-prime borrowers with ARMs were behind on their payments last quarter, the highest rate since the start of 2003.That figure is all but sure to rise next year, when at least $1.2 trillion in ARMs will reset to higher rates. About half that amount is expected to be refinanced into lower-rate fixed or adjustable loans, the association calculates.

Bankers don’t think this will turn into a financial crisis. “Only 7 percent of all loans out there are sub-prime adjustable loans. We’re talking about a 12 percent delinquency rate on 7 percent of all home mortgages and the foreclosure rate is much lower than that,” says Doug Duncan, MBA’s chief economist.Others see a problem for the already economically beleaguered segments of the population. “This is really going to hurt the people that experience these delinquencies and foreclosures more-so than the aggregate economy,” says Matthew Moore, economic strategist at Banc of America Securities. (editor's note...huh?)

Source: Reuters, Lynn Adler (12/13/06)

2006-12-13T14:33:00.000-05:00

December Marion County (Indianapolis) REO Statistics

An exclusive feature of this site will be the posting of economic data that will keep the default professionals who have a need to understand the REO environment in Indiana informed. I have just completed my analysis of REO activity for Indianapolis Marion county for the 11 months ending in November. Currently, there are 795 active REO properties on the market in the county-representing 8.64% of all properties on the market. Through 11 months, 2222 REO properties have been sold, or 15.83% of all sold. These REO's have sold on average for 95% of list price. In addition, the REO inventory in Marion County have spent an average 71 days on the market, where all inventory in the county has averaged 81 days. Currently, properties that are on the market in Marion County have been on the market a remarkable 109 days. The REO inventory is averaging 65 days on the market.

Conclusions-the REO inventory has not significantly gorwn as a percentage of all sales during 2006. For the same 11 months in 2005, a similar 15.15% of all sales were REO properties. What does stand out is the increase in Days on Market for all properties in the county. It appears that aggressive REO pricing is keeping bank owned properties more attractive than other types of properties. Such a hugh disparity between Days on the Market for active properties of 44 days says that there is slowing in the market and that aggressive REO pricing will continue to be needed far into 2007.

For the full statistical report including a breakdown by township...please email me at joel@wilmothgroup.com.

2006-12-06T21:58:00.000-05:00

Anderson ranks last, Kokomo third from last, in Housing Appreciation

MARK OLEJNICZAK, Anderson Herald Bulletin

The release of the latest Office of Federal Housing Enterprise Oversight data has Anderson ranked dead last in year-over-year drops in the housing market across the nation.
According to the report, the Midwest has taken the hardest hit with Michigan occupying six spots on the top 10 list of the hardest hit metro areas. The top three on the list were Anderson finishing with -6 percent; Ann Arbor, Mich., was in second with -3 percent; and Kokomo recorded -2 percent tying for third with five other cities.

Dawn Jarvis, a local real estate agent at Howard Webb Insurance and Real Estate, attributes the numbers to the impact the automotive industry has had on the local economy. Jarvis has observed the increases in the foreclosure market, due to job losses in the automotive sector as one of the main contributing factors. "With people leaving Anderson with the General Motors transfers there has been an increase in the foreclosure market," Jarvis said. "The foreclosure market has increased since I started over 10 years ago."

Dennis Jackson is a licensed auctioneer and real estate agent in Anderson. He specializes in more of the alternative method of selling real estate through a public auction style. He said the reason the city of Anderson is hurting is that people just aren't moving into the local community. Jackson mentioned that he has noticed an upswing for Sept. 1 through Nov. 15 but the summer months have been the weakest months.

Bill Carter, broker and owner at RE/Max Real Estate Group in Anderson, pointed out the numbers shouldn't be a big surprise due to the amount of bank-owned and foreclosed properties in Anderson. Carter said Ohio, Indiana and Michigan have all been hard hit due to their dependence on the automotive industry. He is optimistic things will turn around locally with the recent announcements of businesses coming to Madison County.

"Don't turn the lights out on Madison County with the businesses and investments in the community coming," Carter said. "I believe we are going to be fine."

2006-12-06T13:24:00.000-05:00

Analysts: Stats Don't Reflect Falling Home Values
Editor Comments: As I have been saying, there are just too many ways Realtors can massage the numbers in order to disguise the true state of housing sales. It is in Realtor's best interest to not let their sellers know (for fear they will wait until later to sell) or buyers who will want to make ridiculous low-ball offers. Independent analysis of housing statistics should be considered to make assumptions for future default activity. The following is from today's New York Times:
-----------------------------------------------------------------------------
Statistics that say housing prices have continued to rise modestly or have fallen only slightly are deceiving, say some real estate analysts, because the stats don’t reflect houses that sit on the market for months because their owners refuse lowball offers.Real estate professionals report residential price drops of 10 percent to 15 percent in the Boston area, suburban New York City, Portland, Ore., and northern Virginia, among other markets.While these drops benefit buyers, economists are concerned that declining values leave homebuyers who bought at the peak underwater and are particularly damaging for those who bought with no down payment. Many more households will fall behind on their mortgage payments and won’t be able to bail themselves out by refinancing or selling their homes, says Mark Zandi, chief economist of Economy.com.At worst, this could be the start of something bigger, Zandi says. The housing slump of 2006 could be “the most significant threat to the global expansion” among current economic issues, he says.
The New York Times, David Leonhardt (12/06/2006)

2006-12-05T23:25:00.000-05:00

Can 200 Jobs Be Saved In Tipton County?
TIPTON - Steel Parts Corp., the second largest private employer in Tipton County, was sold Friday evening.Steel Parts was purchased from Jim Ashton and Dick Fagan for just under $8 million by Resilience Capital Partners, a Cleveland-based company that promotes its reputation for turning around companies in distress. Resilience purchased the company through the U.S. Bankruptcy Court Eastern District of Michigan. Steel Parts filed for Chapter 11 bankruptcy on Sept. 15. At stake were more than 200 jobs at Tipton County's third-highest taxed entity, according to Tipton County Auditor Suzanne Alexander. (more)

2006-12-05T17:19:00.000-05:00

Record Number of Sub-Prime Borrowers Can't Pay

The number of mortgage delinquencies has soared in the last three months, and 2006 is on track to be one of the worst ever for sub-prime loans, according to a survey by UBS AG.In October, roughly 80,000 borrowers were 60 days or more behind in payments on 3.9 percent of the sub-prime home loans packaged into mortgage securities this year, UBS found. That's nearly twice the delinquency rate on new sub-prime loans recorded a year earlier, making this one of the worst years ever for sub-prime lending.Soaring delinquencies are making some lenders more cautious, which is likely to put further pressure on the weak housing market.How much higher delinquencies climb will depend in part on the depth of the current housing slump, according to UBS. Mortgage delinquencies generally rise when the housing market cools because borrowers who are in financial trouble find it more difficult to sell their homes. In addition, if prices fall, they may not have enough equity in their homes to refinance their mortgage. Among those feeling the pain are investors in the sub-prime loan market.Source: The Wall Street Journal, Ruth Simon and James R. Hagerty (12/05/2006)

2006-12-04T18:26:00.000-05:00

Article published Nov 30, 2006

Former officer gets prison time
Carter guilty of role in statewide fraud scheme

From staff reports Marion Chronicle Tribune
Robert Carter, a former 13-year veteran with the Marion Police Department, was sentenced in federal court Wednesday morning to 10 months in prison and two years supervised release on two felony counts of money laundering in connection with a 2002 mortgage fraud scheme.
Carter pleaded guilty to the charges in September. In October, he was removed from the Marion Police Department, where he had been on unpaid administrative leave since March 2005.
Carter, 35, was one of 10 people named in a 101-count indictment in the U.S. Southern District Court of Indiana on Jan. 24, 2005.
The defendants were accused of perpetrating a $2 million mortgage fraud scheme in which homes were bought cheaply and sold at an inflated price before the owner defaulted on the mortgage. Federal prosecutors said doctored loan applications were used to persuade unsuspecting banks to lend more money than the homes were worth. After foreclosure, the proceeds were distributed to the participants in the scheme, prosecutors said.
The scheme allegedly took place in 2002 and involved more than 40 properties, 12 of them in Grant County. Investigators in the 31-month probe included representatives of the Internal Revenue Service, the FBI and the Postal Inspection Service.

11-8-06
THREE MORE SENTENCED TO FEDERAL PRISON IN MORTGAGE FRAUD CONSPIRACY

Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that three more people involved in the American Savings Mortgage fraud scheme were sentenced to federal U.S. District Judge Barker following their pleas of guilty to conspiracy to commit mortgage fraud and other charges within the last four days.
Yesterday, Judge Barker sentenced PAMELA MARTINEZ, age 37, of Minneapolis, Minnesota, to 40 months’ imprisonment following her pleas of guilty to conspiracy to commit wire fraud and money laundering. Martinez was the co-owner of American Savings Mortgage (ASM) with Kenneth McKinney. Martinez prepared the fraudulent loan application packages for 99 fraudulent loans and sent them to the victim bank. The bank lost more than 3.4 million dollars on the fraudulent loans brokered through ASM. Martinez assisted the government in the prosecution of others involved in the scheme by testifying at the trial of Joseph Britton, Mark Speckman, and Michael Smith, who were convicted by a jury on all counts following a two - week trial before Judge Barker in September 2006.
In sentencing MARTINEZ, Judge Barker stated that the mortgage fraud scheme had a serious and “corrosive effect on many institutions we trust in society” including the banking industry, real estate appraisal industry, and the economy in general. The judge noted the devastating effect that the epidemic of mortgage fraud has had on the community making neighborhoods where the houses that are sold in the schemes “ugly, deteriorating, health risks, and eye-sores.”
On Monday, November 6, 2006, Judge Barker sentenced DARRAL STANLEY, age 42, of Marion, Indiana, to 16 months’ imprisonment, 11 months’ of which were ordered to be served by home detention. STANLEY was a loan officer at ASM who assisted in preparing the fraudulent loan packages. Stanley pleaded guilty to conspiracy to commit wire fraud and also agreed to assist the government in the investigation.
Last Thursday, November 2, 2006, VALERIE MCNAIR, age 45, of Marion, Indiana, was sentenced to 33 months’ imprisonment following her pleas of guilty to conspiracy to commit wire fraud and money laundering. MCNAIR recruited persons to buy properties at inflated prices in exchange for paying them approximately $5000 per property they bought. The payment to the buyers was made through a kickback scheme in which the proceeds from the loans were distributed among the members of the conspiracy. MCNAIR also assisted the government in the investigation.
This case was the result of a four- year investigation by the Internal Revenue Service, Federal Bureau of Investigation, and the Postal Inspection Service working as a team on the United States Attorney’s Mortgage Fraud Task Force. Six more defendants are awaiting sentencing in the case.
According to Assistant United States Attorneys James Warden and Donna Eide, who prosecuted the case for the government, Judge Barker also imposed 2 years’ supervised release for STANLEY and MCNAIR, and 3 years’ supervised release for MARTINEZ following their release from prison. The defendants were also ordered to pay restitution in the following amounts: McNair: $1.4 million; Stanley, $1.4 million, and Martinez, $3.4 million.

10-11-06

INDIANAPOLIS MAN SENTENCED TO 7 YEARS IN PRISON AND ORDERED TO MAKE $3.4 MILLION IN RESTITUTION IN MORTGAGE FRAUD SCHEME
Two Sentenced to Prison

PRESS RELEASE
Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced today that KENNETH McKINNEY, 40, Indianapolis, Indiana, was sentenced to 84 months imprisonment late yesterday by U.S. District Judge Sarah Evans Barker following his previously entered guilty plea to conspiracy to commit wire fraud and conspiracy to commit money laundering. This case was the result of a four-year investigation by the Internal Revenue Service, U.S. Postal Inspection Service, and the Federal Bureau of Investigation,
According to Assistant United States Attorneys James M. Warden and Donna R. Eide, who prosecuted the case for the government, the evidence against McKINNEY established that McKINNEY was a licensed mortgage broker involved in a multi-million dollar mortgage fraud scheme that occurred in Indianapolis, Anderson, and other locations within the Southern District of Indiana, and elsewhere. The fraud scheme utilized inflated appraisals of real property, loan applications with false information to make borrowers appear more creditworthy, and kickbacks to participants.
MCKINNEY was president and co-manager of American Savings Mortgage (ASM) with co-defendant Pamela Martinez. ASM was a mortgage brokerage company doing business in Indianapolis, Indiana. ASM obtained financing for the purchase of residential properties in cities throughout Indiana, including Indianapolis, Marion, Fairmount, Kokomo, and Anderson, from various financial institutions, including First Bank, Inc., of Louisville, Kentucky.
ASM would prepare false loan application packages for buyers and submit fraudulent documents to mortgage lenders in support of the buyers’ loan application packages on the buyer’ s behalf. Relying on the inflated appraisals and false information in the loan applications, the lender, First Bank, would wire funds to Anchor Title in Anderson, Indiana. The transactions would close at Anchor Title. MCKINNEY and other co-conspirators would receive checks from the excess loan proceeds after closing the transactions.
MCKINNEY’ s role in the scheme was to bring together sellers, such as co-defendants Joseph Britton and Mark Speckman,(who were convicted on September 22, 2006, following a two-week trial) with the ultimate buyers of the real estate, who would pay an inflated purchase price based upon inflated appraisals procured by MCKINNEY. The sellers, Britton and Speckman, provided MCKINNEY a list of real property that they had available for sale which included the inflated values which needed to be used in order for Britton and Speckman to make a profit and for all the participants in the scheme to receive their kickbacks (called “ referral fees” by the participants). McKINNEY provided this list of properties, which set forth the inflated value for the properties, to the appraiser, James Spicer, who has pled guilty in the case and awaits sentencing.
For example, in June or July 2002, defendant Britton found property for sale located at 948 N. Oakland Avenue in Indianapolis, Indiana, intending to buy and then sell the property to a third person using an inflated appraisal and purchase price and share the proceeds from the inflated selling price. At the same time, other defendants recruited Richard Pollett to be the second buyer of this property. On or about July 10, 2002, MCKINNEY contacted James Spicer to falsely appraise the property located at 948 N. Oakland Avenue as being worth $60,000.00. Spicer provided the certified appraisal alleging that the property was valued at $60,000.00.
On or about July 11, 2002, Britton, doing business as Aspen Group, LLC, purchased the 948 N. Oakland Avenue property for its fair market value of $10,900. Pollett agreed to purchase the property at 948 N. Oakland Avenue in Indianapolis, Indiana for an inflated price of $48,000, which is 80% of the inflated value. Pollett received funds for his role as the purchaser.
In July 2002, in order to secure a loan for the inflated purchase price, ASM caused false information to be provided on behalf of Pollett to First Bank, Inc., for the purchase of the property. The false information included the inflated appraisal from Spicer and false information as to Pollett’ s income and employment, overstating his assets to make him appear more creditworthy.
On or about July 26, 2002, Britton purchased an official check from Union Federal Savings Bank in the amount of $7,029.18, to be used as Pollett’ s down payment for the purchase of the Oakland Avenue property, to further mislead the lender into believing Pollett would have equity in the property.
Based on false and fraudulent information provided to First Bank, Inc., that financial institution agreed to fund the loan to Pollett for the purchase of the Oakland Avenue property and, on or about July 26, 2002, caused funds in the amount of $46,532.22 to be wire transferred from First Bank, to the title agent, Anchor Title. After the loan closing at Anchor Title, the excess loan proceeds, that is, the difference between the fair market value of the property and the amount of the loan, were distributed in various amounts among the participants in the scheme as set forth herein.
On or about July 26, 2002, co-defendants Britton and Speckman sold a total of twenty-eight properties in Indianapolis to Pollett and co-defendant James McClung, via ASM. All of the loan closings included false financial information as described. A total of over $1.3 million dollars in fraudulently obtained loan proceeds was disbursed to three companies controlled by Britton and Speckman: Aspen Group, Pacific Group, and Home Source Investments.
After these funds were deposited into three separate accounts at Union Federal Bank, Britton and Speckman wrote 29 checks totaling approximately $430,000 to Senicure Investment Group to fund kickbacks to the other participants in the scheme. These checks were deposited into an account controlled by MCKINNEY at Bank One in the name of Senicure Investment Group. MCKINNEY then wrote a series of checks on the Senicure account from these proceeds to pay Martinez, McNair, Wilcox, himself, and indirectly, the buyers for their parts in the scheme. The Senicure account was used to hide the nature and source of these funds. MCKINNEY wrote himself a check for $71,000.
The scheme in which MCKINNEY participated involved a total of ninety-nine fraudulent loans, which resulted in a criminal loss figure of approximately $3,398,600.
Judge Barker also imposed 3 years supervised release following McKINNEY’s release from imprisonment. McKINNEY was ordered to make restitution in the amount of $3.4 million.
Susan W. Brooks, United States Attorney for the Southern District of Indiana, also announced today that PATRICIA WILCOX-McCLUNG, 40, Kokomo, Indiana, was sentenced to 37 months imprisonment late yesterday by U.S. District Judge Sarah Evans Barker following her previously entered guilty plea to conspiracy to commit wire fraud and conspiracy to commit money laundering. WILCOX-McCLUNG recruited buyers in the scheme acting through a company called VP Development, and provided false documentation that the borrowers had jobs earning income that was submitted to the lender to obtain the loans.
Judge Barker also imposed 3 years supervised release following WILCOX-McCLUNG’s release from imprisonment. WILCOX-McCLUNG was ordered to make restitution in the amount of $1,492,200.
Three defendants (Britton, Speckman and Michael C. Smith) await sentencing after their conviction at trial on September 22, 2006 in the mortgage fraud scheme. Seven more await sentencing following guilty pleas. Doris Walker Jones was sentenced to 21 months last week following her guilty pleas to conspiracy to commit wire fraud and money laundering in connection with the same scheme.

The Case as reprinted from press releases and the blog mortgagefraud.org:
Jan 26, 2005
Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that the following individuals have been charged by a federal grand jury sitting in Indianapolis in a 66-page, 101-count indictment for conspiracy, wire fraud and money laundering following a two-year joint investigation by agents of the FBI, Internal Revenue Service and United States Postal Inspection Service working as part of the Mortgage Fraud Task Force organized in 2002 by the United States Attorney’s Office:KENNETH MCKINNEY, 38, Indianapolis; PAMELA MARTINEZ, 35, Minneapolis, MN; JOSEPH BRITTON, 45, Indianapolis; MARK SPECKMAN, 46, Indianapolis; VALERIE MCNAIR, 43, Marion, Ind.; PATRICIA WILCOX-MCCLUNG, 37, Kokomo, Ind.; MICHAEL C. SMITH, 44, Indianapolis; JAMES MCCLUNG, 34, Indianapolis; ROBERT CARTER, 34, Marion, Ind.; DARRAL STANLEY, 40, Marion, Ind.

The indictment is similar to several such cases brought by the United States Attorney over the past three years, alleging a conspiracy to defraud lending institutions by “flipping” residential properties. The indictment alleges the purchase of inexpensive homes in Marion, Fairmount and Indianapolis, followed by fraudulent appraisals and loan applications designed to convince banks to lend far more money than the houses were worth for subsequent purchases, and a pocketing of the excess loan proceeds. Borrowers in the scheme would then quickly default on the mortgages and the bank would be left with virtually worthless collateral. First Bank, Inc., of Louisville, Kentucky, which million dollars in the scheme MCKINNEY and MARTINEZ are real estate brokers operating American Savings Mortgage (ASM). The indictment alleges that ASM transmitted fraudulent documents to lenders. WILCOX-MCCLUNG and MCNAIR operated V.P. Development in Marion and recruited buyer/borrowers to the scheme; BRITTON and SPECKMAN are Indianapolis real estate investors operating Aspen Group, Home Source Investment and Pacific Group, LLC. The indictment alleges they would purchase broken-down homes at fair market value and resell them after inflated appraisals, sharing in the proceeds of the illegally obtained loans. SMITH is a licensed real estate appraiser who is alleged to have provided fraudulent appraisals that were critical to the scheme; MCCLUNG and CARTER were buyer/borrowers who purchased the properties and received cash back after the closings from the excess loan proceeds.MCCLUNG is alleged to have executed 13 such purchases on the same day in 2002. SMITH and MCCLUNG are police officers for the city of Indianapolis; CARTER is a police officer for the city of Marion.

Further articles in the Indianapolis Star and Marion Chronicle Tribune report that three police officers where amongst 10 people indicted today in Indiana.
It is alleged that they were involved in a scheme to buy broken down homes and then resell them after inflating their value. The scheme, called ‘flipping” has caused the First Bank of Louisville, KY several millions of dollars. First Bank has since been taken over by Central Bancshares, the take over caused by losses in other mortgage fraud cases. Read that story here.The indictment contains 101 counts and is the result of an investigation by the IRS, FBI and Postal Inspection Services.

The officers named are: James McClung and Michael Charles Smith both described as members of the Indianapolis Police Department and Robert Carter of the Marion Police Department.
Update on Thursday, January 27, 2005

The Marion Chronicle-Tribune published more details today concerning the charges and other people involved. Those charged are:
Robert Carter, one count of conspiracy to commit wire fraud, eight counts of wire fraud; and two counts of money laundering.Darral Stanley, one count of conspiracy to commit wire fraud; and 31 counts of wire fraudValerie McNair, one count of conspiracy to commit wire fraud, 39 counts of wire fraud, 12 counts of money launderingOther defendants also charged in connection with the alleged scheme are:Kenneth McKinney; Pamela Martinez; Joseph Britton; Mark Speckman; Patricia Wilcox-McClung; Michael C. Smith and James McClungAn initial hearing is scheduled for 9:30 a.m. Feb. 8 before U.S. Magistrate Judge Kennard Foster. The defendants have been ordered to appear in court, but have not been arrested and will not be before their initial hearing.

Update on Friday, January 28, 2005
The Indystar carried further news about this story and discussed the blight that flipping schemes bring to the communities they affect. The story also lists all the Indianapolis properties involved in the indictement
Here is the list of properties
• 948 N. Oakland Ave. • 631 N. Temple Ave. • 804 N. Beville Ave. • 511-13 N. Parker Ave. • 940 N. Tacoma Ave. • 2156 S. Union St.• 31 N. Gladstone Ave. • 841 N. Keystone Ave. • 3318 E. St. Clair St. • 938 N. Parker Ave. • 3143 Bethel Ave. • 51 N. Gale St. • 1930 Olney St. • 427 Dearborn St. • 921 Parker Ave. • 808 Parker Ave. • 322 Bradley Ave. • 344 Spencer Ave. • 527 Lincoln St. • 461 Keystone Ave.• 3305 W. 10th St. • 723-725 Lynn St. • 727-729 Lynn St. • 743-745 Lynn St. • 932 Udell St. • 1121 W. 34th St. • 1138 W. 33rd St. • 4926-28 New York St. • 2749 Adams St.

2006-12-04T17:40:00.000-05:00

Harris (left) and Stanley Picture Courtesy of 6News

Two Marion County men to be subject of Grand Jury investigation of land contract scheme
In two separate video news reports 6News (The Indy Channel) investigators allege that two men, Joseph Stanley and Steven Harris, have been Marion County (IN) defrauding home sellers for the last 12 years. The scheme typically leaves the seller without the money for the house, unable to get into a property to get belongings and needed to obtain court orders to recover the homes.
The men are alleged to have entered into 22 separate land contracts to purchase properties from people and, despite either moving in or filling the properties with tenants, have never paid any money to the sellers. They would only leave the properties after lengthy eviction proceedings.
The two have been subject of 22 Civil Law Suits in Marion County, IN and have lost all 22 of them. They were both interviewed on camera by News6 and Stanley denied what he did was wrong.

Searches on the Marion County Court website reveal that there are indeed many law suits that have been filed. Click here to search yourself.

Click here to view the first Video Report

Click here to view the second Video Report

Click here to read the story on the 6News website

Report courtesy of MortgageFraud.org and The Prieston Group

2006-12-04T11:16:00.000-05:00

The map of Indiana above is a very interesting graphic illustration geographically of some of the state's economic issues. The map combines a percent distribution of bankruptcies and foreclosures across the state as of Sept 2005. Marion County contributed one-fifth of the bankruptcies and foreclosures, while the doughnut counties contribute a fair share as well.

Double click on the map to see it enlarged and in more detail.

2006-12-01T13:56:00.000-05:00

The October 2006 MLS statistics for the 13 county region known as Central Indiana is a tale of bad news amd a slowing market. Not as slow as many of the areas of the country that have enjoyed double digit appreciation numbers, but definitely not a rosy picture. The fact is, we are down just like most places. Not to the extent of most place, but because there has been so much appreciation over the last few years it seems worse than it is. In our area, the Board of Realtors has even been pressured by its members (of which I am one...but not one of the lobbyists) to invest its dues money on a campaign to air on TV telling local folks that things are just not so bad in Central Indiana...go out and buy a house!! Well these numbers, when reflected against the increases in Realtor membership nationally, paint a picture of a lot of hungry Realtors..no matter how you spin it. I am not going to go to the trouble of fact checking this...you will have to assume I know what I am talking about (which I do) but in or about 2002 the National Association of Realtors celebrated its membership passing the 750,000 level. This year, membership is almost 1.2 million!! No wonder the Associations are going to have to do something to convince Mr. and Mrs. HomeLooker to get out there and buy..if not our dues money will be significantly reduced!

So, here are the facts as they relate to Central Indiana. For the first 10 months of 2006, number of units sold in the 13 county area is down 1.1% over last year. Number of units pended, meaning accepted contracts, are down 1.3%. Now, these are not real huge numbers (approximately 350 properties less than last year). Now what seems really interesting is that the number of new listings in 2006 is actually even with the same 10 months of 2005, but 8% higher than 2004 (same period). So, sounds like to me plenty of people still want to sell there homes.

So, how are the builders doing? I think when you see homebuilding accurately reflect demand in this market, that is when you will start to experience declining default rates. Just a hunch, but suburban sprawl is a huge problem in Indianapolis, and coincidently, some of the top foreclosure markets in the country (Atlanta, Dallas are examples). For the 10 months ending in October, new construction listings are down 10.3% (a major contributor to the decrease in listings throughout the market). A year ago they were up 9.7% so this indicator could be the first one I look at when I project default in this market in approximately 2 years. Maybe even more startling is that new construction sales right now are down 20.2% for the year to date ending October. Ouch!! I would say the days of sprawl are at least on hold around here. It has been taken for granted for 15 years here, that if "you build it they will come." I guess we can say they have stopped coming!

So, ever wish you owned a home in one of those communities where housing appreciated 10% per year? Of course now it is decreasing 5% a year. I have heard so many people here in Indiana justify our lovely housing situation citing these numbers. Well, here is one that will make you sit up and take notice. For the 10 months ending October 2005, metro Indy housing prices were up 4.9%. This year, a whopping .5%. Makes me really glad I am not living in one of those places with all of those variations (do the math!).

Historically, days on market has always been a measure considered as a measure of a market's saleability. In 2004, Indianapolis metro was averagin 78 days on the market. In 2005 it crept up to 83 days and this year it is up to 86 days.average for the year about 85 days. But, more significantly, is that the average is affected by seasonality. In 2006, the worse month for days on the market were January and February which stood at 88 days. This was down from 91 days in 2005 when we had a much harsher winter. December 2005 was 84 days. The best months of this year have been May, June and July averaging 77 days in 2005 but up to 84 days in 2006.

What does it all mean? To me, it just means that the market is experiencing the downside of a normal economic cycle for this area. Having been involved in real estate for almost 20 years now, I can recall 90 day average turns and totally stagnant housing prices. Today, nothing seems as dramatic, other than there are just a lot more Realtors standing around complaining about it!