msgbartop
California Short Sales, Foreclosures, REOs Los Angeles, San Diego, Riverside & Orange County Short-Sales Listings
msgbarbottom

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 4th 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: , , , , , ,

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: , , , ,

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: , , ,

06 Jan 09 Short Sales in California May Slow with Low Rates and Mortgage Relief

According to former Ditech executive Josh Emmons, “The increased consumer awareness of foreclosure prevention alternatives like loan modifications has reduced some of the short sale market-share.” Still many real estate evaluators expect a bumpy road for 2009 with property values forecasted to decline in double digits across the state. California short sales continue to dominate the Southern California housing market. However many believe we will see a turn of the tide for the mortgage business.

KMG President, Jason Cardiff remains optimistic of a possible rebound for the housing sector in 2009 because of the significant efforts from the mortgage powerhouses to lower interest rates and make credit more available for refinancing and new home financing.  In a recent Real Estate Related News article Jason Cardiff said, “2009 may see the housing sectors and home financing markets rebound after all.” He continued, “The Federal Reserve showed their commitment with record low rate cuts to fight deflation and many financial insiders believe the President Elect, Barrack Obama will be aggressive in an effort to stem the foreclosure mess.” Read the complete story > Jason Cardiff Remains Optimistic of 2009 Mortgage Rebound

Tags: , , , , ,

23 Dec 08 California Homebuying Frenzy

The LA Times. “We’ve pretty much blown through the first couple of stages of grief with regard to the Southern California housing bust. There’s no room left for denial now that home prices in the Southland are down 44% from their peak in 2007, and there’s not much use for anger. Now we’re bargaining.”

“Pretty typical is a one-bedroom, one-bathroom house on East 98th Street in South Los Angeles, near the intersection of the Harbor Freeway and Century Boulevard. Its listing calls the 738-square-foot house ‘great for a growing family.’ The seller wants $85,000 for the house, which sold in 2006 for . . . $365,000.”

“Throughout Southern California, real estate agents say and sales records confirm that attractively priced foreclosed houses sell quickly and does not mean prices will go back up any time soon. ‘I am absolutely positive it’s still going down,’ said Dennis Findly, 18-year veteran of Inland Empire real estate. ‘If you’re looking at a home like this for $250,000, it looks like a good deal, but a year from now it could be $220,000 or $230,000,’ he said.”  California loan modifications and foreclosure statistics continue to send shock waves through the Westen real estate communities.  Read the complete Housing Bubble article > A Bidding War For Buyers In California.

Tags: ,

01 Dec 08 FDIC Mortgage Modification Versus Private Loan Modification Companies

Many California homeowners are not aware of the State’s position on foreclosures.  The Golden State’s Governor continues to promote a Foreclosure Moratorium for California.  Legal Loan Relief reminds homeowners that “whether they are upside down with a home loan balance larger than their house value or if they simply need a lower, more affordable payment that they should consider a loan modification as one of the best foreclosure prevention methods.   Read Complete Article >  Mortgage Loan Relief Page.

Tags:

30 Nov 08 Home Foreclosures Hindering California Economy

In addition to the US Treasury Secretary’s policy reversals and changing rationales on how to stabilize the financial system, we now have further proof that Henry Paulson has no idea what he is doing. His statement yesterday that ‘Nothing is more important to getting through this housing correction than the availability of affordable home loan financing,’ is simply wrong. The problem is not that people can’t buy homes the problem is we can’t keep people in their homes. In other words, ‘It’s the foreclosures, stupid.’ Watch this video with California Governor Promoting Foreclosure Prevention Methods >

The colossal and continuing wave of home foreclosures caused the disintegration of numerous banks and financial institutions, destabilized the housing market, and have resulted in national and global financial chaos. In August of this year, California experienced 101,000 foreclosure filings, which equated to about one filing every thirty seconds. At the same time, our nation experienced about one foreclosure filing every ten seconds. Home loan defaults, short sales and all its consequences are causing the credit and liquidity crisis, not the other way around. Until we solve the foreclosure problem, we will continue to have credit and liquidity issues.

AIG, Citigroup, and numerous other financial institutions are collapsing because of defaults and loan modifications. Yet the Treasury Secretary continues to believe that a top-down approach where we continue to throw money at Wall Street will somehow solve the problem. Using hundreds of billions of dollars of taxpayer money to buy distressed mortgage securities from Wall Street firms does nothing to help distressed homeowners stay in their homes. None of the Treasury Secretary’s approaches are targeted at preventing foreclosures. That is a massive and unforgivable strategic and tactical error.

It is time to listen to FDIC Chair Sheila Bair, who since last year has repeatedly identified home foreclosures as the root cause of the economic crisis. Her foreclosure prevention policies of forcing Wall Street to accomplish home loan modifications to keep people in their homes is one of the few sensible solutions that will help our economic recovery begin.

24 Nov 08 Home Loan Defaults & Foreclosures Rise for Prime Rate Borrowers

Nationally, 3.07% of prime rate mortgage loans were in foreclosure or at least 60 days late in the 2nd quarter of this year, easily surpassing the previous record of 1.97% set in 1985. By this year, the bleeding housing market had drained the equity from Judy Jones’ home in Murrieta, but her life still seemed secure. She had a government job, after all, and a 30-year fixed-rate mortgage at 5.875%, unlike the shaky, variable-rate loans of many of her Inland Empire neighbors. Then her employer, the city of Corona, decided to deal with the economic slump by eliminating 112 positions, including Jones’ job as a code enforcer. Last month, at age 61, she joined a surge of once-solid borrowers who no longer could afford their mortgage loans. “Every week at church, somebody else is out of work,” Jones said. “I’ve been a homeowner a long time — the last 10 years as a single mother and I never missed a payment. Now look at me. And it could be you — any middle-class person who goes to work today could be walking out the door of a foreclosed house in a couple of months.” Jones’ concern is well-founded.

Although rise defaults on bad credit mortgage loans and other dicey mortgages are a well-known cause of the country’s financial crisis, delinquencies and foreclosures now are skyrocketing among “prime” borrowers — people with good credit histories who documented their incomes when applying for their relatively straightforward mortgages. Nationwide, 3.07% of prime home loans were in foreclosure or at least 60 days late in the second quarter of this year, the latest period for which the Mortgage Bankers Assn. has figures, easily topping the previous record of 1.97% set in 1985.

In California, with a jobless rate topping 8% and home prices down more than 40% from their peak and falling, the situation is significantly worse, with 4.15% of prime home loans seriously delinquent. That far exceeded peaks of about 2.6% reached in the recessions of the 1980s and 1990s. The epidemic of bad loans and lost homes among prime borrowers has only worsened since the second quarter ended, according to other, more recent data. By putting more foreclosed homes on the market, the trend is likely to further depress housing prices, intensify the mortgage-related news afflicting the financial system and exacerbate the recession most economists believe is already underway.

“We should be really worried,” said Stephen C. Levy, director of the Center for the Continuing Study of the California Economy, a private research firm in Palo Alto. And as home prices continue to fall, delinquent borrowers are more likely than ever to end up in foreclosure. “During the rising market, if you lost your job, got sick or your marriage failed you always had a parachute: Sell the house, pay off your mortgage and have something left to start again,” said consumer finance expert Elizabeth Warren, a professor at Harvard Law School. “Or sometimes you could use your home equity line of credit to get by.” But now, for most people, “that parachute has gone up in flames,” Warren said.

In California, foreclosures and delinquencies on prime rate mortgage loans could increase for years, said Christopher Thornberg, founder of consulting firm Beacon Economics in Los Angeles. One reason, he said, is that home lenders became so complacent during the housing boom that they did little to qualify borrowers besides having computers check a few facts. ” ‘Prime’ lost a lot of meaning in the insanity of the last few years,” said Thornberg, who was one of the first experts to foresee the housing downturn. To be sure, the damage has been greatest in sub-prime mortgage loans, the high-risk loans tapped heavily during the go-go years by borrowers with the worst credit, the heaviest debt loads or the lowest down payments (and sometimes all three of those).

In August, more than 43% of subprime loans nationally were in foreclosure or at least 60 days late in paying, a rate nearly double that of August 2007, according to First American CoreLogic’s LoanPerformance unit, which tracks 82% of all U.S. loans. But problems with prime loans are increasing as fast or faster. About 7.5% of prime jumbo mortgages — high-quality home loans too large to be sold to government-backed Fannie Mae and Freddie Mac — were at least 60 days late or in foreclosure, according to LoanPerformance. That was more than three times the level of a year earlier. As a result, prime loans account for a larger proportion of foreclosures than they did in August 2007.

Representatives of the mortgage lender called later that day with a better offer. Jones said late last week that she was working with Countrywide to finalize a deal that would lower her payments for three months — with an option for significant, longer-term loan modifications. Read complete article >

Tags:

20 Nov 08 FDIC Regulators Close Banks in California and Texas

FDIC Regulators closed down California based Security Pacific located in Los Angeles and Houston-based Franklin Bank last Friday, which brings the total number of failed federally insured banks this year to nineteen. The Federal Deposit Insurance Corp. was appointed receiver of Franklin Bank, which had $5.1 billion in assets and $3.7 billion in deposits as of Sept. 30, and of Security Pacific Bank, with $561.1 million in assets and $450.1 million in deposits as of Oct. 17. The co-founder and chairman of parent Franklin Bank Corp., Lewis Ranieri, is credited with inventing mortgage-backed securities two decades ago, but apparently was unable to save his own company from getting ensnared in the home-loan bust. The bank’s failure is a bitter irony because it is the mortgage securitization business of which Ranieri is known as a pioneer – the repackaging of home loans as bonds that are sold to investors – that was at the heart of the mortgage loan and credit crises. Last spring, the audit committee of the company’s board found in an investigation certain weaknesses in accounting, disclosure and other issues relating to residential real estate loans.

Franklin Bank Corp. just Sunday said it had received proposals for transactions to strengthen Franklin Bank’s capital position and was keeping regulators informed of the talks’ progress. The FDIC said all of Franklin Bank’s deposits will be assumed by Prosperity Bank of El Campo, Texas. Its 46 offices will reopen as branches of Prosperity Bank with their normal business hours, including those that open on Saturday. In addition to assuming Franklin Bank’s deposits, Prosperity Bank also will acquire about $850 million of the failed bank’s assets. Parent company Franklin Bank Corp. just Sunday said it had received proposals for transactions to strengthen Franklin Bank’s capital position and was keeping regulators informed of the talks’ progress.

Meanwhile, all of Security Pacific’s deposits will be assumed by Pacific Western Bank of Los Angeles. Its four offices will reopen Monday as branches of Pacific Western, a unit of PacWest Bancorp. (PACW) (PACW) In addition, Pacific Western will purchase around $51.8 million of Security Pacific’s assets. The FDIC will retain the remaining assets of the two banks for eventual sale. The agency said depositors of Franklin Bank and Security Pacific Bank will continue to have full access to their deposits, which will continue to be insured by the FDIC. The FDIC estimated that the resolution of Franklin Bank will cost the federal deposit insurance fund between $1.4 billion and $1.6 billion, while that of Security Pacific Bank will cost the fund $210 million. Regular deposit accounts are now insured up to $250,000 as part of the new financial rescue law enacted in early October. The limit on individual retirement accounts held in banks remains at $250,000. The 19 bank failures so far this year compare with three for all of 2007 and are more than in the previous five years combined. It’s expected that many more banks won’t survive the next year of economic tumult. The pressures of tumbling home prices, rising mortgage foreclosures and tighter credit have been battering many banks, large and small, across the nation.

The failures this year include that of Seattle-based thrift Washington Mutual Inc. in late September, the biggest bank collapse in history. It had $307 billion in assets. In July another big savings and loan, IndyMac Bank based in Pasadena, Calif., failed and was seized by regulators with about $32 billion in assets. The FDIC estimates that through 2013 there will be about $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank.

The FDIC remains a leading proponent for mortgage lenders to provide home loan modifications to distressed homeowners to prevent more foreclosures. The FDIC is raising insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $45.2 billion, below the minimum target level set by Congress and the lowest level since 2003. In addition, the FDIC may guarantee nearly $2 trillion in U.S. banks’ debt and deposit accounts in an effort to break the crippling logjam in bank-to-bank lending. Well over half of the roughly 8,500 federally-insured banks and savings and loans are expected to tap the FDIC’s temporary guarantees. The agency will provide as much as $1.4 trillion in insurance for more than three years for loans between banks, guaranteeing the new debt in the event the issuing bank fails or its holding company files for bankruptcy. Of the 8,500 FDIC-insured banks, 117 were considered to be in trouble in the second quarter – the highest level in about five years and up from 90 in the first quarter. The agency doesn’t disclose the banks’ names

19 Nov 08 Southern California Home Sale Prices Decline But Sales Level Increase from Foreclosures

With the median price of Southern California homes down more than 40% from its peak, the housing market has now slid further than most economists expected. The median sales price for homes in the region fell to $300,000 in October, a level not seen since 2003 and a 41% drop from the peak price set in the spring and summer of 2007, according to San Diego-based DataQuick. Los Angeles County’s median home sales price was $355,000, down 29% from a year ago. Home sales prices declined because of the California short sales and foreclosed homes that flooded the market. For the first time since the crisis began, repossessed properties in October accounted for more than half of residences sold. Low home prices did drive sales up 56% from a year ago.

In a recent article, Peter Y. Hong shows how the unemployment is rising and consumer spending is sputtering and of course this adds more to the foreclosure crisis equation because it becomes even more difficult to finance or refinance home loans. Just last year, several market analysts interviewed by The LA Times predicted that Southern California home prices would drop 15% to 25% from their peak. It took only until July for the median price to fall 25% below its 2007 peak of $505,000, and it has kept falling since.

The California governor continues to promote home foreclosure prevention by encourages lenders to offer better financing with loan modifications that enable the homeowners to keep the homes.


Barring a dramatic economic reversal, the median sales price is on track to slip below $300,000 when November sales are calculated next month. Thomas Davidoff, a UC Berkeley economist, said he and others underestimated the drop in value because it was tougher a year ago to know just how many people had mortgaged their homes for more than they could really afford. Those earlier forecasts proved off because “it was hard for people to get their arms around just how bad mortgage lending standards had gotten,” Davidoff said.

During the real estate bubble, banks and mortgage brokers offered mortgage loans that required little or no money down, minimal proof of income and “teaser” mortgage rates that lowered initial monthly payments but later jumped to a much higher rate. Last year, it was unclear how many of those loans would default. But much of that mystery has been solved by now, as massive numbers of homes have been repossessed. In October 2007, 16% of the homes sold in Southern California had been foreclosed, compared with 51% last month. Mounting foreclosures flooded the real estate market with discounted repossessed properties, further decreasing home values. The ripple effect from that put even more homeowners’ upside-down because in many cases their mortgage balances are greater than their home is actually worth. The declining house values continue to lead to more foreclosures. Now, “we’re probably seeing an over-correction” in the most depressed inland areas, Davidoff said. In communities overrun by foreclosures, “you couldn’t build a house for less than what [existing homes] are selling for,” he said.

Christopher Thornberg, principal of Los Angeles consulting firm Beacon Economics, is among those who predicted a 25% price decline last November, making him one of the more bearish forecasters at the time. By March, he was estimating a 40% decline. Now he predicts that prices will keep dropping throughout 2009, until they’ve fallen 55% from their peak. Owners of higher-priced homes may put off selling during the early phases of a downturn, causing more expensive homes to decline in value at a slower rate. But eventually many high-end owners have to sell at prices well below peak levels, Thornberg said. Last month’s Case-Shiller Home Price Index, which tracks home sales by price tiers, showed that Los Angeles-area homes priced in the bottom third of the market had fallen 42% from their peak prices by late last summer — but those in the top third had dropped 21%.

In Southern California, Orange County posted the smallest price decline, with October prices 27% below a year ago. San Bernardino County’s 39% decline in October from October 2007 was the largest price decline, MDA DataQuick reported. Nationwide, the National Assn. of Realtors reported Tuesday that home sales prices fell in 80% of U.S. metropolitan areas in the third quarter. Foreclosures accounted for 35% to 40% of homes sold in the quarter. The National Assn. of Home Builders also reported Tuesday that its index of builder confidence hit its lowest level since its 1985 creation. The index is based on a survey of builders’ views on sales conditions for new homes.

Tags: