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

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.

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. 

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: , , ,

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.

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

12 Nov 08 Another Foreclosure Rescue Plan Announced

Once again, the government has offered another mortgage restructuring plan to help troubled homeowners. This loan workout plan focuses on Fannie Mae and Freddie Mac owned home loans. Fannie and Freddie own or guarantee nearly 31 million U.S. mortgages, nearly six of every 10 outstanding. But they have far lower overall delinquency rates than other lenders — under 2 percent.

 

Sheila Bair, chairman of the Federal Deposit Insurance Corp. (FDIC), said the plan “falls short of what is needed to achieve wide-scale modifications of distressed mortgages.”

 

With the government spending billions to aid distressed banks, “we must also devote some of that money to fixing the front-end problem: too many unaffordable home mortgage loans,” Bair said in a statement.

 

Democrats on Capitol Hill aren’t satisfied, either. “When the home loan is chopped up into a million pieces and any investor can block a modification from happening, a program like this will only scratch the surface of the mortgage crisis,” said Sen. Charles Schumer, D-N.Y.

 

Deutsche Bank estimates more than 80 percent of the $1.8 trillion in outstanding troubled loans have been packaged and sold in slices to investors worldwide. Most of those loans won’t likely be helped by the new plan.

 

The rest are “whole loans,” which are easier to modify because they have only one owner.

 

The new mortgage assistance plan was announced by the Federal Housing Finance Agency, which seized control of Fannie and Freddie in September and other government and industry officials. It takes effect on December 15, 2008. FHA officials say they hope the new approach will become a model for loan servicing companies that collect mortgage payments and distribute them to investors. These loan companies have been roundly criticized for being slow to respond to a surge in defaults.

 

A Step in the Right Direction

After more than a year of slow and weak initiatives, there now seems to be a serious effort among major retail banks to get at the heart of the credit crisis: falling U.S. home prices and record foreclosures.

 

Citigroup said Monday it is halting foreclosures for borrowers who live in their own homes, have decent incomes and stand a good chance of making lowered mortgage payments.

 

JPMorgan Chase & Co. last month expanded its mortgage loan modification program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The bank already has modified about $40 billion in home loans, helping 250,000 customers since early 2007.  Bank of America Corp. plans to modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with 11 states in early October.

Tags: ,