Short Sales to Overtake Foreclosures in 2013

Short sales are expected to overtake foreclosure in 2013 as the dominant workout solution for distressed homeowners.

Credit-rating agency DBRS attributed the change to “the record number of servicers that are using short sales as their primary loss-mitigation tool to prevent delinquent loans from entering foreclosure.”

HOPE NOW, an alliance of mortgage servicers, investors and non-profit counselors, reported this week that nearly 40,000 short sales were completed in August, bringing the total to more than 1 million since December 2009, when it began tracking statistics. Another 36,260 were completed in July.

“The increase of short sales has been significant and, for the first month since reporting on short sales, we estimate a high of 39,559,”

Short sales in recent years have lost their stigma as hundreds of thousands of homeowners have used it as the best solution to avoid foreclosure. Banks responded by creating massive departments and streamlinin g the process.

Why?

Because they net 12% to 25% more money in a short sale than a foreclosure. Is it any wonder why banks prefer a short sale over foreclosure? HOPE NOW Executive Director Faith Schwartz said in a release. “Short sales provide another tool to avoid the high cost of foreclosure for families, communities and investors.”

The Office of the Comptroller of the Currency reported earlier this year that 138,000 short sales were completed in the first half of 2012, and anecdotal evidence from the industry suggested that number would continue to increase in the second half of the year. HOPE NOW also reported foreclosure sales nationwide in August increased 12% to 71,149, up from 63,527 in July.

 And foreclosure starts increased 14% to 187,941, compared with 164,593 in July. In the West, foreclosure starts have been on the decline. California saw a 20.7% decrease in September from August, according to ForeclosureRadar, an online industry tracker. The number of starts dropped by as much as 40% in Nevada and Oregon. Regional foreclosure filings were down even more from the previous year. California dropped 48.1% from September 2011, while Nevada and Washington saw decreases of more than 70%.

Still, more than 14,000 foreclosure actions were filed last month in California. The recent foreclosure activity, along with the approximately 5 million homes in shadow inventory (homes 60-plus days behind or already owned by banks but not on the market), indicates the housing market has a long recovery ahead.

Short sales and loan modifications will play an integral role in putting the economy back on its feet.

Smart Real Estate Investing.com (800) 452-7627

WSJ- Courts Stall Housing Recovery

Even as the nation's foreclosure rate continues to fall, states with court oversight of the foreclosure process are lagging behind, potentially delaying their housing recoveries.

 The Mortgage Bankers Association said Thursday that 4.1% of mortgage loans on one-to-four-unit homes—about 1.9 million households—were in the foreclosure process at the end of the third quarter, down from 4.4% a year earlier and the lowest level in 3½ years. The national average, however, masks big differences between the states. Among the 12 states with foreclosure rates that exceed the national average, 11 of them require banks to take back properties by going to court.

Foreclosure rates stood at 6.6% in those "judicial" states in September, while they have dropped sharply to 2.4% in the "nonjudicial" states where banks face fewer hurdles to foreclosure. Foreclosures have always taken longer in states with judicial review, but in recent years, the sheer volume of cases has overwh elmed courts, and the "robosigning scandal" that hit lenders added to the delays. Judicial review may give troubled homeowners more time to work out problems, but critics of the system say the delays are postponing states' housing recoveries.

"The distinction between the judicial and the nonjudicial states is, if anything, getting sharper," said Michael Fratantoni, the MBA's vice president of research. The upshot is the housing recovery is likely to be "muted" in judicial states, said Mark Zandi, chief economist at Moody's Analytics. "Some markets are still going to suffer more price declines," he said.

Smart Real Estate Investing.com (800) 452-7627

Housing Crisis Information

If you are like most people, the news you hear about real estate can be very confusing. On the one hand, real estate has been one of the hardest hit sectors of the economy, and much of the news still reflects this. On the other hand, there are some reports about real estate being one of the most positive indicators of an economic recovery.

Here are some of the most important recent developments you need to know:
Homebuilder Confidence is rising – According to the National Association of Homebuilders, it’s the highest it has been since before the foreclosure crisis began in 2007. This is important because it means that professionals are optimistic about the housing market again. Now, because of how long it takes for homebuilders to ramp up their businesses, it will still be a while before we see a ton of new homes built, but this is definitely a positive sign.

Housing Starts have increased – 535k Single Family Homes were started in August. This is still lower than we need, however, and there is not enough inventory to cover the demand (especially with historically low interest rates). Existing home sales have also skyrocketed according to the National Association of Realtors. In fact, they have gone up almost 10% since this time last year.

Underwater properties are still a large part of the market – In fact, according to NAR, more than 1 in 5 of all home sales is a property that is either behind on their payments or in the foreclosure process.

　 The good news is that this market offers an opportunity for just about everyone. If you are underwater or in danger of losing your home to foreclosure then there have never been more opportunities than there are in today’s market to sell your home and find a dignified solution. If you are looking to buy a new home, this is quite possibly the most affordable time in history to buy a home.

I would love to discuss how today’s market fits your needs. Feel free to contact me
for a free confidential consultation!

Foreclosures Decline but Remain High and Prepayments Surge

A very insightful article by Krista Franks Brock of  DSNEWS.COM on October 3, 2012


Foreclosure inventory continues to decline but remains more than eight times what it was in the decade prior to the housing crisis, according to the latest report from Lender Processing Services (LPS).

Noncurrent loans make up 10.9 percent of all loans as of August, demonstrating a year-over-year change of -7.6 percent, according to LPS.

As of August, the delinquency rate stands at 6.9 percent, and the foreclosure rate is 4.0 percent.
There remains a large gap in the foreclosure rate between judicial states and non-judicial states. In fact, in judicial states the rate remains near an all-time high of 6.49 percent, while the foreclosure rate in non-judicial states is 2.28 percent.

The amount of loans 90 or more days delinquent is near half of its January 2010 peak. The majority of these loans are more than nine months delinquent. About 43 percent are at least 12 months delinquent.

The overall delinquency rate declined 2.3 percent in August. States ranking highest for non-current loans include Florida, Mississippi, New Jersey, Nevada, and New York. States with the lowest percentages of non-current loans include Montana, Alaska, South Dakota, Wyoming, and North Dakota.

LPS noted prepayment activity was up “significantly” in August, nearing levels last reported in 2005.
The annualized prepayment rate at the end of August was almost 25 percent, according to LPS’ findings.

Prepayment was highest among loans with higher combined loan-to-value ratios (CLTVs). For example, among loans with more than 120 percent CLTV, prepayment increased more than 65 percent year to date.

According to LPS, this trend is significant because prepayments are an indicator of refinance activity.
In August, 2011 vintage loans experienced a 23 percent increase in prepayments over the month. Loans with vintages from 2007 and earlier experienced a prepayment increase of just 9 percent, which LPS interprets as signs of a “refi burn out.”

“[I]t is also becoming evident that loans originated in 2007 and earlier have diminished prospects for conventional refinancing opportunities,” stated Herb Blecher, SVP of applied analytics at LPS.

“Fewer than 30 percent of these vintages remain both active and current, and on average, they are marked by larger negative equity positions and lower credit scores,” Blecher explained.