Recession Foreclosures

The foreclosure crisis continues on from its dark beginnings in 2007, yet as we near the end of the fourth year of the real estate market meltdown, there are plenty of positive signs – green shoots poking up from burnt soil – for investors, homeowners, and lenders alike heading into 2012.

You just have to know where to look.

Numbers released today, for example, show how the loan guaranty program run by the Department of Veterans Affairs is outperforming virtually every other loan or loan guaranty program in the country – even big-name, prime loan programs with strict credit requirements.

A VA loan is available to any veteran or eligible family member and offers the chance to purchase a home with no money down. This is contrast to the FHA loan program, which has a down payment of 3.5%, and conventional programs, which now almost-universally require 20% down.

One would think that a program that doesn’t require a down payment and is less strict than most programs out there today would be awash in foreclosures, but the 90-day delinquency rate is just 2.2% – compared to 4.5% for FHA. Part of the success stems from the close involvement in each loan from the agency itself, which considers itself as the ultimate advocate for its constituency: veterans.

That kind of notion – advocacy and representation in housing – is being attempted in at least two major cities. This week, the mayors of Chicago and Los Angeles – Rahm Emanuel and Anthony Villaraigosa – have announced developments in their cities’ efforts to purchase foreclosures in hard-hit neighborhoods, rehabilitate them, and sell them on the market.

Villaraigosa’s program in particular has already been underway and is steadily working to restore a few foreclosure-heavy neighborhoods in South Los Angeles. Emanuel’s program has not yet begun, but will aim to do virtually the same thing in Chicago.

Stabilization is the name of the game, both at the federal level and at the city level. More active intervention in the foreclosure market is required, as well as more of a relationship between the homeowner and the government – especially if the government is taking an active role in either guaranteeing the loan or developing the property.

Green Real Estate Shoots: What is Actually Working in the Foreclosure Market is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

Bank of America – the largest bank in the country by assets – has repeatedly made headlines over the past year due to the incredible number of foreclosures and other distressed properties it has on its books, the robo-signing scandal, and other dubious honors.

Today, the bank is making more news in the real estate world, involving both foreclosures and an ambitious real estate transaction that could see the corporation remove itself further from the real estate markets.

We all know that Bank of America is one of the main banks being targeted in a year-long probe by the federal government into the foreclosure quagmire that is the robo-signing scandal. The settlement is still pending; it could ultimately cost the five banks over $20 billion. The uncertainty also continues to wreak havoc with BoA’s stock price, which is why leadership in the bank want a settlement to be reached sooner rather than later.

The bank got a reprieve from New Jersey yesterday, freeing up the corporation to resume foreclosures in that state. BoA is also pushing for a resolution with not just the federal government, but also many of the 50 state attorneys general that have sought legal action against the bank as a result of the foreclosure scandal.

A previous deal worth $8.5 billion has yet to be approved by New York courts. Most of the exposure in this settlement and other cases stems from the beleaguered Countrywide Financial Corp and several toxic assets that this company – now a subsidiary of Bank of America – had on its ledgers.

To free up some cash to deal with this problem, Bank of America is contemplating selling approximately $1 billion worth of real estate to the Blackstone Group. Much of the property that would be sold includes commercial property, but a fair amount are residential properties from all over the world. This comes a week after the bank unloaded a credit card business from Canada for $8.6 billion – signs that the bank is trying to shore up its stock value by selling assets (and also to pay for the impending settlement).

It’s hard to read about some rotten part of real estate without coming across Bank of America’s name. The bank has had a deep presence in virtually every aspect of real estate in this country, and was rocked as hard as any other bank in the foreclosure crisis and collapse of the housing market. It is very possible that this spells the end of BoA’s involvement in real estate altogether; while it may continue to make mortgage loans, it has already sold $500 million worth of mortgages to Fannie Mae and can’t be eager to leap back into the business.

Will other large banks follow suit? Perhaps – and in the short term, at least, it may mean that local banks and credit unions will be the go-to sources for home loans for investors and homebuyers alike. That approach actually makes sense because these units are less likely to engage in robo-signing and other disputed practices like the big boys who, in many cases, had too many assets going bad all at once.

Bank of America Making Real Estate News Today is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

As August reaches its midway point, the foreclosure market continues, and investors, homebuyers, and sellers alike are all wondering what will happen next and where we will go from here.

Iowa Foreclosures Set to Increase in Near Future

For investors, homebuyers, and homeowners in Iowa, the future will probably mean more foreclosures.

In the Hawkeye State, analysts are expecting more foreclosures to enter the market over the next 12 months. This impending flood is described by some as a “dam that’s ready to break”, which is not an unfamiliar concept in the market today. Experts at the Iowa Legal Aid Foreclosure Defense Fund report the number of foreclosure assistance cases they handle is up significantly for August so far, and the rest of the year appears to be on the same trend.

While Iowa certainly isn’t near the top in terms of states that have been badly hit by the foreclosure crisis, its Attorney General, Tom Miller, is one of the key players in the foreclosure reform effort and lawsuit pending against Bank of America, Wells Fargo, JPMorgan, and other large lenders.

Fannie Mae Sued by Angry Michigan Officials

Nearby, in Michigan, state officials are incensed at reports that Fannie Mae has been encouraging foreclosures instead of loan modifications – at odds with the Obama administration’s purported emphasis on helping people stay in their homes.

Some in the industry in that state are not surprised, but others are railing against an agency that was doing something apparently at odds with its stated goals of pushing loan modifications as alternatives to foreclosure.

Michigan has been rocked by virtually every major economic crisis of the past 30 years – from the collapse of the domestic auto industry to the subprime mortgage crisis and now foreclosure. Detroit in particular is awash with acres of abandoned homes selling, in many cases, for pennies on the dollar.

It will be interesting to see what occurs between Fannie Mae and Michigan – and whether or not this issue will spread to other states who may have similar grievances. In any case, foreclosures will continue to enter the market, and investment opportunities will continue to proliferate in virtually every state, from the hard-hit (Michigan) to the relatively untouched (Iowa).

Foreclosure Snapshot: More Foreclosures Coming; Fannie Mae in Hot Water is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

The foreclosure market is widespread; virtually every state in the union has been impacted by it over the past five years. From Alaska to Florida, Maine to Hawaii, and everywhere in between, foreclosures have lowered property values and cost states billions in lost property taxes – and created the best buyer’s market in decades.

Now, each state has to struggle with its individual real estate market, including handling the waves of foreclosures that have come ashore over the past few years. By looking at two in particular – Washington state and Massachusetts – we can catch a glimpse of how states are dealing with the crisis.

Washington Takes On the Big Boys, Files Lawsuit

Today, it was announced that the state of Washington filed a lawsuit against the Bank of America (or one of its subsidiaries) over thousands of illegal foreclosures stemming from 2008.

In the lawsuit, the state alleges that BoA did not act in good faith as a neutral party in the foreclosure process, involving over 10,000 foreclosures from 2008 to 2011. Additionally, the BoA subsidiary misrepresented ownership of foreclosures and engaged in deceptive practices.

Although BoA disagrees, naturally, the state may have a case – especially since the state is a non-judicial foreclosure state. That means foreclosure trustees have more leeway in pursuing foreclosures – creating an opportunity for a bank to play fast and loose with the rules.

Foreclosure Rates Spike in Massachusetts

Meanwhile, on the opposite side of the country, Massachusetts saw its foreclosure rates spike in June from May by roughly 42%. The number of foreclosures for June came in at 931, which is the largest number since August, 2010. One ray of light is that the year-over-year numbers actually fell 29%, which suggests a long-term downward trend that may be picking up slightly.

Unfortunately for the state, this decrease is not thought to be because of the improving economy. Rather, it is likely that this is the same story as elsewhere – artificially slow foreclosure processing has resulted in a clogged pipeline that will more than likely start back up again soon.

Massachusetts has also had its legal issues with foreclosure companies and lenders. Back in January, the Massachusetts Supreme Court, in a surprise ruling, actually ruled against Wells Fargo and claimed that previous lawsuits against the bank were valid because the bank could not prove it actually owned the mortgages.

Since then, banks have had an uphill legal fight to prove they owned the foreclosures they initiated, a path that could soon be traveled by Washington.

By looking at these two states, it is clear that foreclosures will continue to stick around, and as a result of legal issues, foreclosures will be delayed again – meaning the buyer’s market will continue on, stronger than ever and primed for timely investments

A Tale of Two States: Washington, Massachusetts Deal With Foreclosures is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

One of the things which can delay legal cases, even foreclosure filings, is when the courts are having a hard time locating and serving the persons involved. But with social networking websites like Facebook, this particular problem has been resolved.

According to Facebook statistics, 30 percent of their 500 plus million users are in the United States and it is also currently the top social networking site beating Twitter and MySpace. It should thus be considered logical for lawyers or document servers to consider using it.

In 2009, the Australian Capital Territory Supreme Court granted a lawyer’s application to use Facebook to serve lien notices after several failed attempts of serving the documents in person and by e-mail. It was not even the first time the court has agreed to this as it previously allowed serving thru text messages and email.

Last March, a British lawyer was also allowed to serve court summons to a debtor via Facebook. It was the very first time a British court allowed this and many viewed it as the court’s way of embracing technology and making court processes efficient and effective.

It certainly looks as if more and more countries are adopting this practice of serving legal documents via Facebook. In the US, the practice has yet to be adopted and considering the growing trend among other countries, many people might be wondering if such practice will do more harm than good.

Privacy Concerns

When you hear news such as this, it is not surprising if your first thought would be about privacy concerns. For starters, Facebook is already under fire due to various issues concerning the privacy of their users and this could possibly be another.

But based on the previous cases when legal notices were served via the social networking sites, it would seem the main objective is to make sure the person is notified. If e-mail, text message, fax and even personal visits do not work, then why not consider Facebook? It can be a reliable and private method of serving foreclosure notices.

Of course, the problem is serving the RIGHT person. This part is a bit tricky and such burden will be shouldered by the lawyer, who will have to prove to the court the Facebook account holder is the person concerned.

Helping Lenders and Borrowers

Considering most banks are up in their eyeballs in terms of foreclosure cases, serving foreclosure notices via Facebook might help them move ahead. They could even utilize the social networking site to contact the borrower immediately after the missed payment. Lenders can ask for the borrowers Facebook account during mortgage application to ensure all avenues of communication are open.

Meet EForeclosureMagazine.com. Your most reliable source of foreclosure information.

Facebook – For Serving Foreclosure Notices? is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

Foreclosure homes for sale in various areas of the U.S. do not automatically get sold and their owners are not immediately turned out of their homes. On average, American homeowners are said to stay in their distressed houses for 18 months before they get evicted or their homes get sold as foreclosures. Within those months, majority of them do not bother paying their mortgages.

Housing industry analysts stated that a single family home or a townhouse for sale takes a long time to get sold at the current condition of the real estate market, leaving owners free to occupy these houses without payment for more than a year. This, in itself, sounds negative, but some economists claimed that this is actually benefiting the overall economy of the country.

According to them, empty and unsold bank owned houses do not do much for the economy, but a distressed home with occupants does have its benefits. Homeowners who have decided to stop paying mortgages and are staying in their distressed homes are usually able to rebuild their finances and spend the money that they would have used to pay their mortgages on other things. Consequently, this improves consumer spending all over the U.S. Consumer spending, economists explain, accounts for around 70% of the nation's economy and is the most important factor behind an economic recovery.

Economists also reported that the amount of extra income generated by the owners of foreclosure homes for sale who have stopped paying their loans and are currently staying in their unsold houses can reach up to $50 billion within 2011. This amount, they asserted, can provide consumer spending with a boost equal to 50% of the savings that can be generated from the payroll withholding cuts formulated in the bipartisan tax plan.

With a lot of homeowners living in their distressed homes free of rent, analysts stated that consumer spending can increase by around 2.8% this year. Moreover, the strategy is allowing a lot of homeowners to fix their financial situations and rebuild their credit records, which could help them purchase another home in the future. Deciding not to pay mortgages sounds bad, but some economists admit that it does help some homeowners save money and pay their other debts.

Economists stated that some live-in owners of foreclosure homes for sale have stopped paying their mortgages simply because they are unable to do so. Some have lost jobs, while others are facing financial emergencies. For others, particularly those with negative equity, the decision was consciously made.

Owners of Foreclosure Homes for Sale Contributing to Economy is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

The surge in the number of foreclosures in the whole U.S. resulted in record number of homeowners losing their homes, effectively eroding interest in homeownership and increasing people's fear over the idea of purchasing a residential property. It also drove Americans into rental housing which resulted in massive growth in the apartment and rental home sector.

Housing experts stated that, even with bank foreclosed dwellings and HUD houses for sale being offered at less than half their original prices, a lot of people are still staying away from home buying and are opting to rent instead. This caused housing prices to tumble and single family home sales to dwindle. Meanwhile, in the rental market, apartment rents are surging near-historic highs, while investors who were able to purchase multifamily properties and apartment units are raking in the benefits provided by the housing downturn.

Even among foreclosures auctions, realtors reported that multifamily units and apartment buildings are getting most investors' attention; more so than single family residential properties. Real estate investors know that the money is now coming from the rental housing sector, with rents in the whole country rising to an average of $991 per month compared with the 2006 average rate of $930. Real estate analysts predict that this average rental rate will rise to around $1,025 by next year.

Analysts also stated that further increases in rental rates are almost sure to happen, given that available units have dwindled, even when foreclosures purchased by investors for residential purposes have been converted into rental dwellings. The huge demand for rental houses and apartments can be seen in the continuous drop in the nationwide vacancy rate. As of the 2011 first quarter, vacancy rate among apartments in the U.S. was at 6.2%, declining from the 8% recorded in the 2010 first quarter.

Since nationwide foreclosures are predicted to increase even further in the coming months, analysts believe that more people will be entering the rental market, with a huge percentage of them comprised by former homeowners who lost their homes to foreclosure, while others will be those who were disillusioned by the concept of homeownership. Demand for rental dwellings is expected to remain strong for a number of years, analysts further added.

According to them, apartments and rental dwellings will continue to thrive as long as foreclosures are at elevated levels and the job market remains weak. In addition, most young adults who are leaving their homes to get set up on their own are opting for apartments and rental houses instead of purchasing a home.

Foreclosures Drove People into Rental Housing is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

The number of young adults in the U.S. conducting a nationwide foreclosure search or looking for new houses has risen in the past few months. According to housing experts, millions of younger people in the country are moving out of their old family homes to live on their own. Household formation, experts further stated, has never been higher in the country.

A lot of these going-independent youth are reportedly purchasing low-priced houses in foreclosure, although there are also those who have the ability to buy a newly-built home or a condo. Experts revealed that, as millions of young adults leave their parents' houses in droves, household formation in the country recorded its fastest rate ever since the year 2007.

With a lot of cheap bank owned repossessions and with interest rates at historic lows, a big percentage of these younger people can afford to buy a home for themselves. For others, renting is preferable to buying. No matter what form of living condition they prefer, analysts stated that they are creating a shadow supply of residents and homeowners that may eventually boost housing starts in the U.S. If the current pace of household formation continues, analysts stated that the nation is looking at a possible 50% increase in housing demand by 2012.

Based on home purchases and nationwide foreclosure search activities, analysts estimated that up to one million additional households will be formed within this year. During the 12-month period that ended in March 2010, only 357 new households were created in the U.S., representing the lowest total on record, based on data from the U.S. Bureau of Census. Most housing market observers predict that numbers will rise even further before the year ends as the job market gets stronger and more people find employment.

A lot of these new households are reportedly seeking information on how to find distressed properties and newly-built homes located in areas that cater to their professional and personal needs. Experts revealed that the surge in home formation will benefit, not just the housing industry, but almost all sectors, particularly those related to home supplies. They predict that housing starts or new home construction activities can reach as high as 648,000 in 2011 based on the current pace of household formation.

Although a big number of new households are busy conducting nationwide foreclosure search, a bigger percentage is said to be keen on new dwellings in good locations which could boost housing starts all over the country. By 2012, experts predict that housing starts will probably reach around 900,000.

More People Conducting Nationwide Foreclosure Search in the U.S. is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

The latest Standard & Poor's/Case-Shiller report showed that an oversupply of foreclosure homes for sale in the U.S. is still hurting prices of residential properties all around the country. The report covered 20 of the major cities of the U.S. and revealed that majority of them continue to experience tumbling prices.

With bank foreclosures and Freddie Mac foreclosures remaining elevated in majority of markets, the report from S&P did not surprise a lot of analysts. According to most of them, the presence of cheap distressed homes will likely continue to drag prices down for the rest of the year. In February, 19 of the 20 major city markets tracked by S&P showed month-over-month price declines. It also marked the seventh month in a row that the price index has fallen from the previous month.

Housing experts explained that plummeting housing prices are caused by several factors, including huge amounts of foreclosed and repo properties in the market, record levels of unemployment in various regions, difficulties encountered by potential homebuyers in securing financing and fear among would-be buyers that prices will decline further in the coming months. Experts also stated that what is even more worrying is that the U.S. housing market is set for another deluge of foreclosures.

According to them, foreclosure homes for sale are likely to surge in the coming months as lenders pour the distressed properties they are putting on hold into the market. Industry experts claimed that a lot of foreclosures and even non-foreclosed houses are still in the pipeline as some sellers are not putting them into the market in the hope that they will have a better chance of selling at higher prices in the coming months.

The report from S&P showed how much impact a list of bank owned properties for sale has on housing prices, analysts noted. The report revealed that in Atlanta, Chicago, Charlotte, Tampa, New York, Portland, Seattle, Miami, Phoenix and Las Vegas, prices have dipped in February 2011 to their lowest levels since the period 2006 or 2007. The report also showed that the biggest drops in prices between January and February of this year were recorded in the cities of Chicago, Miami, Minneapolis and San Francisco.

A survey from the University of Michigan further emphasized the impact of foreclosure homes for sale on prices and sales of regular houses. Around 90% of the respondents to the survey stated that right now is a bad time for home sellers.

Foreclosure Homes for Sale Continue to Hammer U.S. Residential Prices is a post from: Foreclosure Magazine – Read more about how does foreclosure work.

The number of vacant foreclosed houses and empty non-foreclosed homes has been estimated to be over three million. According to a report by Goldman Sachs, residential vacancy in the U.S. is way above normal seasonal figures. However, housing formation is showing signs of increasing, albeit at a very slow pace.

With so much single family and multi family homes for sale remaining unsold, housing market analysts stated that it is not surprising that vacancy levels have escalated in the past few years. The report from Goldman Sachs estimated that the number of vacant housing units in the country stands at around 3.5 million. Reports have revealed that the estimate was based on the data presented by the U.S. Census Bureau.

However, other reports put the estimate at a much lower number. According to several other reports, the number of excess vacant homes in the U.S. as of April 2011 stands between 1.45 million and 2.45 million.  Analysts who favor this lower estimate claimed that even with huge amounts of existing properties offered at foreclosure auctions, the housing stock of the nation will likely decline within a year since very few residential units will be added within 2011. They predict that excess stock of residences in the U.S. will dip within the range of 750,000 to 1.7 million by April of next year.

If the lower estimate is to be used as gauge, the U.S. will then be able to get rid of its excess supply of non-foreclosed and foreclosed houses by 2014 at the earliest and 2016 by the latest. Under the Goldman Sachs estimate, current stock is much higher, but the firm's report also provided a higher estimate when it comes to household formation.

According to the report, the recovery of the single family homebuilding sector will be very slow, owing mainly to the huge amount of distressed houses that are still in the market. However, housing starts is still expected to add another 600,000 by next year. The figure will be coming from the additional units of 475,000 recorded last year. Although housing starts are projected to increase, analysts believe that it will take years before they return to the healthy yearly average of 1 million units.

With foreclosed houses and bank-owned properties still at elevated levels, most housing market observers predict that normal conditions in home construction will not occur until 2015 or even 2016. They also asserted that the rest of 2011 will remain a difficult time for housing, with minor improvements expected in 2012.

Vacant Non-Foreclosed and Foreclosed Houses Estimated at Over 3M is a post from: Foreclosure Magazine – Read more about how does foreclosure work.