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Is D-DAY coming to some Banks? More rows of shadow inventory…

Is D-DAY coming to some Banks? More rows of shadow inventory…


Foreclosure Filings on Track to Hit 3 Million Homes. Repos Expected to Reach 1 Million in 2010

by Jann Swanson Mortgage News Daily

Default notices, auction sale notices, and actual bank repossessions were received  on a total of 1,961,894 homes, or one in every 78 households,  during the most recent six month period according to the Mid-Year 2010 U.S Foreclosure Market Report issued by RealtyTrac.

These findings represent a 5 percent decline in filings from the last half of 2009, but an increase of 8 percent from the first half of last year.  Perhaps the good news is that the year-over-year change was almost totally due to a jump in bank repossessions, which were up five percent while default and auction notices were down 10.4 percent since the first half of last year.

In June there were a total of 313,841 filings, a decrease of nearly 3 percent from May and down nearly 7 percent from the previous June.  It was the sixteenth straight month where the total number of properties with foreclosure filings exceeded 300,000.

RealtyTrac’s report incorporates documents filed in all three phases of foreclosure, unfortunately the mid-year review did not break down the data into individual categories (but we’re building our own spreadsheet).

  1. Notice of Default (NOD) and Lis Pendens (LIS). This is the first legal notification from a lender that the borrower on a mortgage loan has defaulted under the terms of their mortgage and the lender intends to foreclose unless the loan is brought current.
  2. Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); If the borrower does not catch up on their payments the lender will file a notice of sale (the lender intends to sell the property). This notice is published in local paper and contains information pertaining to the date, time and subject property address.
  3. Real Estate Owned or REO properties : “REO” stands for “real estate owned” and typically refers to the inventory of real estate that banks and mortgage companies have foreclosed on and subsequently purchased through the foreclosure auction if there was no offer higher than the minimum bid.

During the second quarter of 2010 there were foreclosure filings on 895,521 properties, down from 932,234 in the first quarter, a decrease of 4 percent.  This is 1 percent more filings than in the second quarter one year earlier.

“The second quarter was a tale of two trends,” said James J. Saccacio, chief executive officer of RealtyTrac. “The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009.

The midyear numbers put us on pace to exceed 3 million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions,” Saccacio continued. “The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continue to sit just below the surface, threatening the fragile stability of the housing market.”

As usual, Nevada, Arizona, Florida, California, and Utah topped the list of states in foreclosure activity.  In Nevada, one in 17 housing units (6 percent) received at least one foreclosure filing in the first six months of the year, down 6.2 percent from a year earlier and 13 percent from the last half of 2009.  In Arizona there were filings posted against one in 30 housing units, down 1.6 percent from the second half of 2009 and 1.88 year over year.  Florida follows with one in 32 homes in some stage of foreclosure, a decrease of 8.61 from the most recent half year and an increase of 3.4 percent from one year ago.

Other states with foreclosure rates ranking among the nation’s 10 highest were California (1 in 39 units), Utah (1 in 52), Georgia (1 in 56), Michigan (1 in 58), Idaho (1 in 59), Illinois (1 in 62), and Colorado (1 in 72.)

These were the thoughts MND shared regarding the May data. They are still very relevant…

Plain and Simple: The good news is it seems like the worst is behind us in terms of new defaults. Plus the modest decline in newly scheduled auctions helps out housing on the excess supply front as banks are choosing to hold onto their inventory instead of flood the market with distressed supply (which would drive prices even lower). Perhaps this is a factor of the expiration of the homebuyer tax credit? Now for the bad news. Over the past year, to give HAMP a chance to “work its magic” (which servicers have little incentive to do ) and to reduce the cost of maintaining the condition of foreclosed properties, banks were delaying the foreclosed home liquidation process. This allowed delinquent borrowers to stay in their houses and also allowed banks to avoid asset value write-downs. Unfortunately, with HAMP running out of qualified borrowers, that trend is starting to reverse course. Bank balance sheets are beginning to balloon with REO, shadow inventory is being converted to actual inventory!

This is a negative for two reasons. First it implies more people are being put out of their home and onto the street and second, at some point, the distressed homes banks are adding to their balance sheets will need to be put back up for sale. Once the housing market starts to pick up recovery momentum, banks will begin to slowly liquidate their inventory of foreclosed properties. Hopefully they will do so in a manner that does not greatly disrupt local supply/demand and push prices even lower (which would hurt their own cause). Growing “shadow inventory” is one of two reasons why the housing recovery will likely be a very long process (the other being long term unemployment).

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in Bank Owned, foreclosure, foreclosures, shadow foreclosures, STOP FORECLOSURE FRAUDComments (0)

Threat of Shadow Inventory Diminishing: Barclays

Threat of Shadow Inventory Diminishing: Barclays


Imagine what your value will be worth after all these “shadow inventory” is finally released. Again, I hold a real estate license and can tell you I have access to some of this shadow inventory and it is not pretty to look at. Barclays report below is only one source!

In Michigan they are demolishing homes like you cannot imagine…But I may know exactly why…”Greece” is a hint.

BY: CARRIE BAY DSNEWS.com

Analysts at Barclays Capital say the industry’s ominous shadow inventory is close to topping out.

New research published by the firm says the supply of homes nearing REO status, defined as 90 or more days delinquent or in the process of foreclosure, will peak this summer and then begin falling gradually as the market becomes stable enough to absorb 130,000 distressed properties a month.

“While we expect REO levels to remain elevated, the trickle of homes from foreclosure into REO implies moderate levels of inventory reaching market,” Barclays said in its report.

The company estimates the current REO supply to be 478,000 and expects it to rise to 536,000 by late 2011.

Barclays’ delinquency pipeline snapshot shows that as of February, there were 2.4 million mortgages at least 90 days past due and 2.1 million more already winding through the foreclosure process, which combined makes up a shadow inventory of 4.5 million.

It’s a daunting tally and could grow larger as foreclosure alternatives are exhausted, but Barclays’ model forecasts 4.7 million distressed sales over the next three years, with 1.6 million coming in 2010, 1.6 million in 2011, and 1.5 million in 2012.

The research firm notes, however, that an orderly liquidation of shadow inventory will require both “more robust household formation and job growth.”

Some market indicators, though, are looking favorable. This week, Fannie Mae reported only a minor increase in its March serious delinquency rate – 5.59 percent versus 5.51 percent in February. RealtyTrac also reported a 12 percent month-to-month decline in default notices for April.

Barclays says this data supports its forecast that the industry is only a few months away from reaching peak levels of shadow inventory.

Posted in fannie mae, foreclosure fraud, scamComments (0)

High-End Homeowners Falling Into Foreclosure Trap: CNBC

High-End Homeowners Falling Into Foreclosure Trap: CNBC


I can say having a Real Estate license, that nearly every home I have sold in the last few years have or are heading in default status. They know for a fact that the equity they have lost will take too long to recover and they will not see a glimmer of hope in their lifetime. With all the shadow foreclosures out there not listed (believe me there is too many to count) and the current 7.4 Million in default… Does it make any sense to continue? With the reports that it is stabilizing…I disagree 125%. Do they mention…who these so called “EXPERTS” work for? Exactly who are buying these homes?? It’s not you or me as individuals but corporations and banks buying them in pools, lots or “TAPES”. Once again do not believe that it is heading back….it will take many years! If it was that easy then I will suspect fraud is involved. Think about it, It took a home from the 50’s 60’s 70’s & 80’s to see a 50%-100% increase in the 2000’s. So now you are telling me that it will take 2 years for these homes that lost value in the neighborhood of 50-75%??? to come back this quick?? I DON’T THINK SO! This is my opinion.

The American Dream Has Quickly turned into an American Nightmare!

Published: Friday, 7 May 2010 | 9:32 AM ET

By: Joseph Pisani
CNBC News Associate

Heated pools, ocean views and media rooms are not what most people would expect to find in a foreclosed property, but more high-end homes—priced over a million dollars—have been falling into the hands of banks this year.

Photo credit: Stephen Scott
This foreclosed home in Fort Mill, S.C. is currently listed at $1.148 million.

Foreclosures of homes worth over $1 million began increasing at the end of 2009, according to exclusive data provided by foreclosure tracking website RealtyTrac. Foreclosures reached a high in February 2010, the last month data is available, when 4,169 homes were somewhere in the foreclosure process; either having received a foreclosure notice, had an auction scheduled or the lender took ownership of the property. That’s a 121 percent increase from a year ago.

The deterioration comes just as housing experts say that foreclosures in the low- and mid- ends of the housing market are showing signs of stabilization.

“They were able to stave off foreclosure longer,” says independent real estate analyst Jack McCabe, CEO of McCabe Research and Consulting in South Florida. “Lower-end homeowners were the first ones to see the escalating foreclosures because they generally do not have the cash reserves or credit available that the luxury homeowners do. They had the ability to take their credit cards and pull out thousands of dollars while the lower end buyers were already tapped out.”

McCabe expects to see foreclosures in the high-end market to increase into 2011.

Though the RealtyTrac data is not available on a regional or metropolitan basis, anecdotal evidence indicates the problem is cropping up across the country. Of course, the high-end and luxury categories vary widely from market to market. In some suburban areas of the Northeast and California, for instance, million-dollar homes are fairly common, but nationwide, they represent only 1.1 percent of the overall housing stock.

“We have seen an increase, in the million-plus range, of the number of foreclosures and short sales in the greater Chicago area,” says Jim Kinney, vice president of luxury home sales at Baird and Warner.

He says that of the 295 million-dollar, single-family properties sold in the January-April period this year, 37 were either a foreclosure or short sale (when a bank and homeowner agree to sell the home for less than the loan is worth). During the same period a year ago only 10 of 231 fell into those categories.

In the Fort Myers, Fla. area, a second-home market for the wealthy, Mike McMurray of McMurray and Nette and the VIP Realty Group, says he has seen a few foreclosed homes on the market compared to none last year. He’s currently showing a 4,800 square-foot, $3. 65 million home on Captiva Island, where foreclosures are usually very rare. The bank-owned home has five-bedrooms and access to 150-feet of Gulf coast beachfront.

“There are more we see coming down the pipeline,” McMurray says.

Data shows that that may be the case around the county. The 90-day delinquency rate on home loans worth over a million dollars hit a high in February at 13.3 percent, higher than the overall rate of 8.6 percent, according to real estate data firm First American CoreLogic. Foreclosure proceedings generally begin to start after a homeowner has been at least 90 days late on a mortgage payment, experts say.

One difference in the high-end market is that lenders are willing to do more to head off a foreclosure by either renegotiating the loan or accepting a short-sale transaction, which is essentially a last-ditch effort.

Captiva, Fla. Home
Photo credit: McMurray and Nette of VIP Realty Group
This five-bedroom, beachfront home in Captiva, Fla. is now bank owned and on the market for $3.65 million.

“Lenders are far more likely to go the short sale route,” says Andrew LePage, an analyst at real estate research firm DataQuick. “There’s a lot more money at stake, and maintenance can be high if a foreclosure just sits there.”

$1.15 -million condominium in Chicago in the landmark Palmolive Building started was initially offered as a short sale but , after a buyer did not materialize, is now owned by the bank , says Janice Corley, founder of Sudler Sotheby’s International Realty who’s currently listing it. The condo has lake views and a long list of luxury-building amenities including a steam room, doorman and gym.

The rise in foreclosures has one Las Vegas real estate agent flying prospective buyers into the city via private jet for free. Luxury Homes of Las Vegas and JetSuite Air teamed up to offer the complimentary trip for buyers flying from Los Angeles to view three foreclosed homes priced between $4.9 and $6.1 million.

Agent Ken Lowman said he gave three tours over a one-week period and hopes to expand the offer to buyers from other West Coast cities.

There’s just too much competition, says Lowman. “It takes an innovative approach like this to get results.”

© 2010 CNBC.com

Posted in foreclosure, million dollar listing, Real EstateComments (0)

Los Angeles to Pull Investments from Foreclosure-Heavy Financial Firms…will others follow?

Los Angeles to Pull Investments from Foreclosure-Heavy Financial Firms…will others follow?


Los Angeles to Pull Investments from Foreclosure-Heavy Financial Firms
Monday, March 8th, 2010, 2:59 pm by JON PRIOR

As the distressed housing market in the City Of Angels continues to grow, the entity that oversees operations, the City of Los Angeles, is its pulling investments and deposits out of financial institutions it deems are not cooperating with local, state and national foreclosure prevention efforts.

The Los Angeles City Council instructed the city attorney to draft a new ordinance, called the Responsible Banking Initiative, that would require banks looking to do business with the city to submit a report on investments in local communities. The “report cards” would give insight to policy makers on the bank’s investment in the city. The city currently holds almost $30bn in investments, including savings and pension funds.

According to the real estate data provider, RealtyTrac, the Los Angeles metropolitan statistical area (MSA) had the 32nd highest foreclosure rate in the country in 2009 as foreclosures remained concentrated the sand states. There, one in every 25 homes received a foreclosure filing, a 37% increase from 2008. California leads all states with the most permanent modifications under the Home Affordable Modification Program (HAMP), according to the US Treasury Department.

The motion was introduced by Councilmember Richard Alarcón. His original proposal came in February 2009. It pertained to bank cooperation with foreclosure prevention, but after a hearing in September, the council widened the scope. Before the city makes an investment, it would examine bank location in the city, how many small business loans are offered and whether or not the bank re-negotiates on foreclosures.

“The City of Los Angeles has an obligation to ensure that not only are our taxpayers dollars spent properly, but that they are also invested in a way that gives the greatest benefit to our City, and the report card created by the Responsible Banking Initiative will give us the information we need so we can invest smarter,” said Councilmember Richard Alarcón. “A slightly lower interest rate isn’t much of a deal, if the same bank is taking advantage of homeowners, refusing to issue small business loans or not opening branches or ATMs in low-income areas.”

Los Angeles would be the biggest city in the US to create reporting requirements for banks looking to do business with the city.

Write to Jon Prior.

Source: HousingWire.com

Posted in Mortgage Foreclosure FraudComments (0)


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