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

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, 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 >

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10 Nov 08 California Brokers Get Caught up in Loan Modification Scheme

The Justice Department is gearing up to probe potential scams targeting distressed homeowners in San California.  Last week, Rep. Dennis Cardoza, D-Modesto, urged Attorney General Michael Mukasey to investigate mortgage-loan modification schemes now being marketed through the Valley. For an upfront fee, homeowners are being told, their monthly mortgage payments can be negotiated with loan modifications.  At best, the homeowners may end up paying for work that’s available for free. At worst, they’ll pay for work that isn’t done at all.  “People need to be very careful who they send their money to,” Cardoza cautioned Friday.  

The mortgage-reduction schemes are just one of the housing-related problems now confronting law enforcement officials. As the market melts down, the investigations are heating up. Two weeks ago, Modesto-based FBI agents assured Cardoza’s office they were forming a task force to zero in on mortgage-related frauds.  In his letter Friday, Cardoza told Mukasey that it was “imperative” that law enforcement authorities “crack down on these foreclosure scams quickly and comprehensively.” He called San Joaquin Valley residents “particularly vulnerable” because of the region’s foreclosure crisis.

The questionable solicitations come in different ways. Phone calls offering mortgage negotiation services have been ringing through the San Joaquin Valley for several months. Sonia Neal, a Realtor and volunteer counselor with the Community Housing Council of Fresno, added that sometimes “they will even just show up at the door.”  Official-looking letters are arriving in Valley mailboxes, some citing congressional bill numbers or phone numbers for a “loss mitigation department.” And on Thursday, in Modesto, some homeowners attended a workshop in which they were asked to pay $3,500 for getting their mortgage woes resolved.

Typically, the companies are offering to renegotiate the mortgage in exchange for an up-front fee amounting to one month’s mortgage payment, or more.  “We called some of these companies back; they don’t even have Web sites, and they seem fly-by-night,” Cardoza said. “When they found out we were a congressional office, they stopped responding.”

Even before Cardoza’s encouragement, federal investigators began pouring more resources into mortgage-related cases. The FBI reports having 1,569 pending mortgage fraud investigations open as of August; the number of new mortgage-fraud causes opened annually doubled between 2003 and 2007.  The FBI now has 42 separate mortgage fraud task forces and working groups currently established nationwide. A Justice Department official could not be reached to comment Friday afternoon.

For the scammers and investigators alike, the Valley is a target-rich environment. Stockton, Modesto and Merced top the foreclosure rankings among cities nationwide, and Fresno is not far behind. As house prices have dropped and adjustable-rate mortgages have risen, more homeowners have found themselves on thin ice.  Neal noted a number of companies offering so-called “loan modification” services have consequently popped up throughout California. While she acknowledged “there are some legitimate” companies offering the legal loan-modification services, she joined Cardoza in stressing caution.  “Some people will get desperate and pay the money,” Neal said, “and then nothing happens.”  Some of the scams appear to be an unexpected byproduct of the Hope for Homeowners Act passed by Congress earlier this year. The bill expands the ability of eligible borrowers to get better terms. For instance, homeowners must be spending more than 31 % of their monthly incomes on their mortgages. Distressed homeowners who heard about the bill, but don’t know its details, could be particularly vulnerable to fleecing.

The non-profit Community Housing Council of Fresno and the affiliated group No Homeowner Left Behind will do for free what the loan-modification companies do for money. The non-profit counselors will help homeowners prepare applications for modified mortgages; the lenders are not obliged to change the terms, but sometimes they do.  The foreclosure prevention counselors further advice consumers to be wary of businesses that call themselves a “mortgage consultant” or “foreclosure service,” or businesses that contact people whose homes are listed for foreclosure, or that collect a fee before providing any mortgage-related service.  A foreclosure-prevention workshop, co-sponsored by Cardoza’s office and No Homeowner Left Behind, will be held Saturday starting at 9 a.m. at the Stanislaus County Agriculture Center.

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