01 Feb 10 California Mortgage Defaults Drop

The number of California homes entering the home foreclosure process dropped again during 4th quarter 2009 amid signs that the worst may be over in battered marketing, while slowly spreading to more to the higher priced real estate. There are mixed signals for 2010: It’s unclear how much of the drop in mortgage defaults is due to shifting market conditions, and how much is the result of changing home foreclosure policies among mortgage lenders and loan servicers, a real estate information service reported.

While many of the refinance loans that went into default during fourth quarter 2009 were originated in early 2007, the median origination month for last quarter’s defaulted loans was July 2006, the same month as during the prior three quarters. The median loan origination month during the last quarter of 2008 was June 2006. This means the home foreclosure process has moved forward through one month of bad loans during the past 12 months.

01 Feb 10 SEC Charges 2 California Advisory Firms with Improper Short Sales

Two California investment advisory firms were charged with improper procedures for short sales today by the Securities and Exchange Commission.  Palmyra Capital Advisors LLC, which lists $21.7 million in assets in its ADV disclosure form, profited in three of its managed hedge funds by violating short-selling rules, the SEC alleged. The regulator claimed it found that the firm made California short sales in 2008 in advance of a public offering by Capital One Financial Corp., resulting in improper profits of $225,500.

AGB Partners LLC, which lists $10 million in assets, and its principals, Gregory Bied and Andrew Goldberger, allegedly netted thousands of dollars by shorting in advance of their purchase of stock in a secondary offering, according to the SEC.  Both firms agreed to settle the SEC’s charges without admitting or denying its findings.

Palmyra Capital consented to be censured and pay more than $330,000 in disgorgement and penalties. AGB Partners, Mr. Bied and Mr. Goldberger consented to be censured and pay more than $50,000 in disgorgement and penalties.  An attorney for Palmyra could not be reached for comment. ABB Partners’ attorney, Hardy Callcott of Bingham McCutchen LLP, declined to comment.

08 Jan 10 California Short Sales and Foreclosures Continue

Local realtors continue to report high activity for California short sales and foreclosures. California mortgage rates are starting to rise and many insiders are saying they will be continue to rise unless government extends low mortgage rate programs or starts new ones.  Unemployment is continuing to stay around 9% and there are more layoffs from 2 large companies this week and California is faced with more budget cuts to our already strapped state.

What does this mean for California homeowners? 

Well with more people losing jobs that will increase home foreclosures and bankruptcy filings that are for sure.  Which means home prices could either fall again with the flood of foreclosures or they will stay where they are.  We would anticipate them falling if the next round of foreclosures on the market if they are anywhere as big as 2007 and 2008.  California Short sales will continue to be strong, we will see about the same amount of standard home sales and as far as homeowners keeping their homes with loan modifications I just don’t have much faith in, I don’t think the amount of successful loan modifications will change that much.  Already hard hit areas like San Diego, Inland Empire, and Merced Counties could face more devastation with this news.  These areas have started getting better with buyers moving in to foreclosed houses and starting to bring communities back to life.

Minutes of the Fed’s December meeting showed a few members of the central bank’s policy committee thought additional mortgage loan buying might be desirable under more adverse conditions.

03 Nov 09 California Home Sales Drop on Foreclosures and Short Sales

California short sales, loan modification agreements and home foreclosures continue to have a significant impact on the California housing sector.  The good news was that mortgage refinance applications increased last quarter as a result of strong FHA financing and the Home Affordable Refinance Program that is sponsored by the government. A recent Bloomberg article reported that California home prices declined 7.3% in September from a year earlier, helping boost the number of houses sold, the state Association of Realtors said.   The median price for an existing detached house fell to $296,090 from $319,310 a year earlier, the Los Angeles-based group said today in a statement. The California home sales price rose 1.1% from August, the seventh consecutive month-on-month increase.  

Sales of foreclosed homes accounted for 42% of existing-property transactions in California in August, research company MDA DataQuick said Oct. 15. The Realtors said the number of existing houses sold climbed 2.1% last month from September 2008, boosted by lower prices and a federal tax credit for first-time homebuyers.  “The success of the federal tax credit is clear,” James Liptak, president of the California Association of Realtors, said in the statement. The group supports an extension of the credit through mid-2010 and the removal of its restriction to first-time purchasers.  

California, the most populous U.S. state, is on pace for 530,520 home sales this year, based on the rate of transactions last month, the association said.  “Efforts by the government to stimulate housing and the economy clearly are impacting the market,” Leslie Appleton- Young, the group’s chief economist, said in the statement. Sales have exceeded 500,000 homes on an annualized basis for 13 consecutive months, she said.

The median amount of time it took to sell a California house fell to 33.6 days in September from 46.2 days a year earlier, the association said. The group’s unsold inventory index for existing, single-family houses dropped to 4.2 months from 6.5 months a year earlier. The index shows the time needed to deplete the supply of homes on the market at the current sales rate.   The median price for a California condominium in September was $270,170, down 6.5% from a year earlier and up 3.8 % from August, the Realtors association said. Condominium sales rose 11% from a year earlier and 2.2% from August.

31 Aug 09 California Real Estate Agents Become Short Sale Specialists

California loan modification plans have slowed down short-sales in the state, but the volume of homes sold for less than the balance of the loans is still abnormally high.  Scores of delinquent home loans have grown much more dramatically than those falling into foreclosure in recent months, shifting the focus of California home buyers away from REO homes and toward short sales, complex deals in which a lender forgives most or all of the seller’s remaining mortgage balance. 

Listing agents have had to learn the ins and outs of such deals since prices began to slide in 2005, and some groups of agents have brought on agents with experience in short-sale negotiations. But the deals have become so cumbersome over the past year that many are ending up with specialists who do nothing but negotiate with lenders.  Homes are selling at a pace not seen in three years, thanks largely to lower home prices and tentative signs that the recession may be easing. At the same time, buyers and real estate agents say the buying process takes longer than at any point in memory, often six months or more in the case of short sales.

Such situations have grown more frequent in the past year, as many as two-thirds of all transactions for some real estate agents. Meanwhile, bank-owned properties’ share of completed sales in Southern California has fallen to about 43% from about 57% last summer, according to research firm MDA DataQuick.  Short sales have become more frequent in part because market prices are generally lower than at any point from 2003 to late 2008. Nearly 43 % of all mortgages in San Diego County exceeded the estimated values of those homes as of June 30, First American CoreLogic reported last month. In the two-county area of Riverside and San Bernardino, that figure was 57%.

Street Russell, director of enrollment at BGS3, a Louisville, Ky., company that negotiates with lenders on behalf of sellers, said California has come to account for about one-third of his company’s new clients. Sellers’ agents hire the company; it typically collects a fee of 1 % of the price when the sale closes. “You guys are going through such a difficult housing market compared to everyone else around the nation,” Russell said.

Such negotiators can be located in San Marcos, Calif., or San Marcos, Texas. It doesn’t matter because they focus on paperwork and phone calls to lenders, agents said. Negotiators’ selling point is that they free listing agents to focus on listing and showing properties. “I’m on the phone all day long,” said Karen Beer, a short-sale negotiator in Murrieta. Beer, who is also a real estate agent, relies on “co-listing” arrangements and splits commissions with the agent whom the buyer initially contacts. It’s one of several business models for short-sale negotiators and specialists.

Remerge Transaction Coordinators Inc. in Irvine uses the same model as Beer, said company owner Shelly Gorenstein. Remerge’s division of labor involves about seven people for a single short sale, Gorenstein said. One, for example, collects the sellers’ financial information and makes the case for a financial hardship.  Such hardships appear to have gotten markedly worse over the last year, while actual foreclosure numbers have risen more modestly, based on reports by CoreLogic. The portion of San Diego County mortgage borrowers whose homes are in foreclosure rose to 2.8 % in June 2009 from 1.8 %, while the Inland Empire’s rose to 5.9% from 3.8%.  But nearly 8% of San Diego County borrowers and about 16 % of borrowers in the Inland Empire are at least 90 days behind on mortgage payments without technically being in foreclosure, up from 5.1 % and 10.8 %, respectively. A short sale can be advantageous for such a borrower because it causes a somewhat smaller hit to the borrower’s credit score.

Short sales have always been more complicated and taken longer than other sales because lenders usually verify financial hardship and determine what an acceptable amount to lose on the property is.  In many cases, a second lender has loaned $50,000 to $100,000 on a property and is being asked to settle for $10,000 or less. Some lenders also demand that the borrower repay a portion of the remaining balance over several years after the deal closes. 

13 Apr 09 Are Short Sales Helping Homeowners

Lenders agree to let owners who can’t make payments sell their house for less than they owe.

Falling home prices are giving rise to a foreclosure alternative that can help people get out of homes they can’t afford.

When home prices were rising, people who lost a job or otherwise couldn’t pay their mortgage, could have sold and moved on. Declining home values mean some can’t sell for enough to pay off the loan. In those cases, short sales are an option.

In a short sale, the lender agrees to accept less than the mortgage balance as payment in full because it’s a less costly route than foreclosure. Both processes result in losses for lenders, but with foreclosures, they have the added costs of maintaining and selling properties. Short sales also spare homeowners the embarrassment of foreclosure and eviction.

A short sale will damage a person’s credit score, but Fair Issacs, keepers of the widely used FICO credit score, says the impact depends in part “on the composition of the individual’s credit profile.”

“We really think it is a much better experience for everyone concerned,” said David Knight, who handles short sales nationwide as a vice president with Wells Fargo & Co.’s mortgage servicing unit in Fort Mill.

The San Francisco bank, which recently bought Charlotte’s Wachovia, is one of the nation’s largest mortgage lenders and servicers. Knight declined to provide specific figures but said Wells’ short sales have “probably tripled” in the past 18 months as unemployment has risen and home prices fallen. They’re more common in former bubble markets, where prices shot up and fell harder than in areas such as Charlotte.

Short sales aren’t always advertised as such, so there’s no way to get a complete count. Unlike foreclosures, there also are no consistent indicators of short sales in public records. But local Realtors say they’ve seen an increase. Job loss, unexpected bills and job transfers, coupled with lower home prices, are all factors driving the use of short sales.

“They’re really coming on in this last year,” said Joe Clorite, a Realtor for 20 years, who is with Keller Williams Realty’s University office. “People are in over their heads.”

Nationwide, short sales are up about 20 percent in the past six months, said Mark Pearce, N.C. deputy commissioner of banks. That’s based on figures collected from mortgage servicers by a multistate foreclosure prevention group Pearce is part of. The group has not yet publicly released the data.

“Short sales are going up fairly significantly,” Pearce said. “They’re better than foreclosures.”

Homes losing value

Struggling to make their monthly mortgage payment, Meleta and Gerald Wideman called their lender for help.

“Once we got behind, they said we could do a short sale to get out of the loan,” she said.

The couple, with two children, moved to Charlotte in 2006 from Chicago after visiting family and deciding they liked the area. They bought a new house in Oakbrooke, a subdivision north of uptown. They paid about $140,000.

Their troubles began the first year. They were school bus drivers and couldn’t find summer work. She found a year-round job working with blood donors, but her overtime has been cut. They are Seventh Day Adventists, and say their faith prohibits work on Saturday. All the year-round jobs he’s been able to find require Saturday work.

Seeing no way around it, they listed the house for sale. The asking price, $99,900, is well less than what’s owed. Nearby homes have shed value, too. A foreclosed home across the street sold two years ago for $143,000. On Friday, its listing price was $92,700. Another foreclosure is listed for $117,900, down from the $140,000 paid less than two years ago.

Meleta Wideman says they’re looking for a place to rent in the Charlotte area.

“I’m scared to leave because the economy is so bad,” she said. “I’m working full time. We know we can eat.”

Closing can take longer

A big drawback of short sales is added red tape that means closing a deal can take months, a potential turn-off for sellers, buyers and Realtors.

Clorite has had a house listed in Oakbrooke since May. He went through the months-long process of finding a buyer, getting a short sale approved. At the last minute, the buyer’s financing fell through, so the house is back on the market.

“There is more cooperation, but they are still far behind,” Clorite said of lenders handling short sales.

The Oakbrooke owner he represents is a California investor who thought he got a good deal in 2006 when he paid about $155,000 for the new house.

The investor, who asked not to be named, said he has been unable to get a reliable tenant. He’s lost money, paying for extensive repairs as well as the mortgage, taxes and insurance. Now rents are going down. The house is listed for $120,000, likely to sell for less.

“It’s better to just cut the losses and dump the property,” the investor said.

Clorite believes he has another buyer, but again, he’s waiting on lender approval.

Short sales take time because everyone being short changed must approve the deals. That includes the mortgage holder, others with liens such as home equity loans and investors backing the mortgages. They may negotiate among themselves on how much of the loss each will accept.

Lenders have become more efficient, Pearce said, but the sluggish process can still turn away buyers.

“They’re not going to wait when there are so many homes being sold for lower prices these days,” he said.

See the original article written by Stella M. Hopkins.

Tags: bank-owner properties, foreclosure, mortgage lender, short sale

15 Mar 09 San Diego Home Values Hurting Local Homeowners

A recent analysis from DataQuick shows that more than one-quarter of all homes in the San Diego region are worth less than the owners owe on their mortgages.   Local inland San Diego communities generally were hit hardest by foreclosures last month. The ZIP code with the most foreclosures in the county in January was south Chula Vista’s 91911 with 66, a year-over-year increase of 32 %, DataQuick reported.

 

Home values in the San Diego area have fallen for six straight quarters. Since the third quarter of 2007, San Diego values are down almost 10%. San Diego values at the end of the fourth quarter of 2008 were at about the same level as the first quarter of 2005. Many real estate insiders believe that 2009 will see the bottom of the market which is good news for San Diego Housing.

 

San Diego Housing Buzz publishes new home sales, foreclosure sales and short sales reports.  Learn all about the buzz happening with the market in San Diego.

17 Feb 09 Foreclosures & Short Sales Dominate Home Sales

A recent CNN Money article reported that home values nationally had completely “collapsed” and sales of foreclosed and “underwater” homes now dominate many housing markets, according to a report released Tuesday.  The report, from Zillow.com, a real estate Web site, revealed that with foreclosures soaring, nearly 20% of the country’s home sales in 2008 were of bank owned properties that were repossessed in foreclosure or short sale. Another 11% were short sales, in which homeowners owed more in mortgage debt than their properties were even worth.  Madera, California, had the highest percentage of these distressed sales: 54.6% of all housing transactions were involving foreclosed homes and an additional 3.4% came from short sales.

In Merced, 53.4% of sales were home foreclosures and 4.8% were California short sales. In nearby Stockton, 51.1% were foreclosures and 5.4% were short sales.  “As more markets turn down and markets that were already down go deeper, the pace at which value is being erased from the U.S. housing stock is rapidly increasing,” said Stan Humphries, Zillow’s vice president in charge of data and analytics.   To give you ideas of just how fast home values are depreciating, a recent Zillow home value report indicated that “more home value was wiped out in the 4^th quarter of 2008 than was eliminated in all of 2007,” Humphries said.

About $3.3 trillion in home equity was erased in 2008, with $1.4 trillion of that wipeout coming in the fourth quarter alone, according to Humphries. More than $6 trillion in home equity has disappeared since home values hit their peak in 2005.  These home equity losses have buried many homeowners underwater, where they increase significantly for home loan default. Unfortunately these struggling homeowners do not have the option of cash out refinancing or taking out a home equity loan or second mortgage to raise capital needed to pay medical bills, credit cards and mortgage payments.  Bankruptcy, debt settlement and consumer credit counseling figures continue to soar.

A according to Zillow, 17.6% of all homes are now underwater in the United States.  Of those under-water homes, 41.2% of these mortgage loans came from homes purchased in the past 5 years.  The worst value stricken cities are located in the where the sun shines bright. In Las Vegas, 61.4% of all residential properties are underwater.  Because so many houses are worth less than their home loan balances, an increasing number have to be sold short. But short sale transactions still take a long time to close, because most lenders are unable to keep up with the rising demand of loan modification requests.   Mortgage lenders may not approve short sales for months. The deals cannot go forward without their approval, because the banks must agree to forgive the difference between what they are owed and what the sale brings in.   As the time it takes to arrange short sales lengthens, they become harder to complete. 

Les Christie wrote about one example of how home sales declines can also kill a short sale occurred recently in Phoenix. Curtis Johnson, a real estate broker there, worked with a health care worker whose hours were being cut and who could no longer afford her mortgage loan. She fell behind on her mortgage payments and decided to sell the home.  Johnson was able to find a home buyer willing to pay $183,000 and got a FHA loan approved by a lender. The owner confidently moved out, got a new place and started a new life. But the lender folded and the mortgage went to a new servicer, who took six weeks to approve the deal.  “Unfortunately, the buyers who were approved were no longer interested because the real estate market declined so rapidly,” Johnson said. “They wrote a new home sale offer, which was significantly lower than the original offer but it was time to punt and start over.”  See original article >

Tags: bankruptcy, debt settlement, FHA, home equity, home loan, loan modification, mortgage loan

03 Feb 09 California Home Prices Fell 42%

Bloomberg released a report revealing that California home prices plunged 42 % in December from a year earlier as the U.S. housing slump deepened and home foreclosures hit record levels. The median price for a single-family home in the most populous U.S. state dropped to $281,100 from $480,820 a year earlier, the Los Angeles-based California Association of Realtors said today in a statement. “The decline in California home prices has brought the cost of housing more in line with household income, improving affordability across the state,” Leslie Appleton-Young, the association’s chief economist, said in the statement. “This should be especially helpful for first-time buyers who can qualify for a home loan.” More than 236,000 homes, or 2.8% of California’s housing stock, were foreclosed on in 2008, MDA DataQuick said today. Foreclosed properties tend to sell at a discount of 25% or more, and California home sales rose 85 % in response to last month’s drop in prices, the Realtors association said.

Daniel Taub’s article indicated the number of existing single-family detached homes sold soared to 544,580 on an annualized basis from 294,520 a year earlier, the group said.   The median number of days it took to sell a property dropped to 46.1 days in December from 66.7 days a year earlier. The Realtors’ Unsold Inventory Index, which indicates the number of months needed to deplete the supply of homes on the market at the current sales rate, dropped to 5.6 months from 13.4 months a year ago.

Mortgage Loan Defaults

California mortgage defaults dropped 7.7 % in the fourth quarter after the state enacted a law to delay foreclosures, MDA DataQuick said in a separate report today. Homeowners in the state received 75,230 default notices in the fourth quarter, down from 81,550 a year earlier. Fourth- quarter defaults were down 20 % from the previous three months, according to the San Diego-based research company.  Kelly Media Group President, Jason Cardiff commented, “When borrowers are in line to renegotiate their mortgage, most lenders don’t report loan defaults even if the borrower is behind 6 months.” Cardiff continued, this means “We need to be extremely cautious when considering foreclosure data and housing reports.”

A law that requires mortgage lenders to discuss ways to avoid foreclosure with California borrowers before filing a default notice went into effect in September. Defaults plunged to 14,995 that month, and were back up to 39,993 in December. `No one expected defaults to stay at the much lower levels we saw immediately after the new law took effect,” MDA DataQuick President John Walsh said in a statement.

Tags: California Association of Realtors, California borrowers, foreclosure, Jason Cardiff, Mortgage Lenders

19 Jan 09 Southern California Home Sales up 50% but Most Are Foreclosures

California Short Sales continue to close at a rapid pace, while many home foreclosures have been slowed by the recent trend of loan modification plans.  Recent reports suggest that most mortgage lenders continue are accepting reasonable requests for home financing relief from loan modification companies and distressed homeowners.  In a recent Reuters article, Lisa Baertlein evaluates the significance of recent reports that December home sales in Southern California jumped 50.5 % from the year earlier. The DataQuick report also indicated that the median price fell 34.6 % to $278,000 as homebuyers snapped up foreclosed properties. 

 

The area’s median price, which reflects the midpoint of sale prices, hit $505,000 in mid-2007, DataQuick said.  A total of 19,926 new and resale homes and condominiums were sold and purchased last month in the 6-county region that is the most heavily populated area in the state of California.  The area, including such cities as Los Angeles, San Diego and Riverside, recorded 13,240 sales during December 2007.  The median price paid for homes sold in Southern California hit $278,000 in December, down from $425,000 in December 2007.  DataQuick said the drop in the median price “overstates the decline in home values” since more affordable homes in the foreclosure-hit inland markets accounted for a large portion of sales. The Southern California foreclosure sales accounted for 55.7 % of December’s re-sales, up from 24.3 % in December 2007.

 

California’s residential real estate market was one of the most expensive in the US during the years-long housing bubble. The state is now struggling with one of the country’s highest foreclosure rates after many buyers got in over their heads with debt Formerly sidelined buyers are rushing to snap up foreclosed homes, but many would-be buyers in expensive markets remain on the sidelines because financial institutions are reluctant to make so-called “jumbo mortgage loans required to pay for homes in California’s many high-price neighborhoods.  John Walsh, president of DataQuick said, “Mortgage interest rates last month were near record lows … It does look like the spigot is being opened a little bit, at least for reduced home purchases.”  Read the complete article. 

Tags: California short sales, DataQuick, home foreclosures, loan modification plans