Foreclosures in Santa Clara, San Mateo counties take nearly a year to complete

Banks foreclosed on hundreds of homeowners in Santa Clara and San Mateo counties in March, even as thousands more are stuck in a foreclosure process that is now taking nearly a year to complete -- the longest time since the housing crisis began.

The slow pace has added to a backlog of more than 14,000 homes in the foreclosure process in the two counties, according to a report on March foreclosure activity released Tuesday by a real estate research service.

That represents a huge number of homes that are either empty and have been taken over by lenders or where owners have stopped making payments.

The foreclosure process at every step continues to be slowed by a "robo-signing'' scandal last year that was recently settled by major lenders, said Sean O'Toole, chief executive of ForeclosureRadar, the Discovery Bay information service. Lenders had stopped most foreclosure activity to investigate charges they were skipping important legal steps in the foreclosure process.

The seemingly never-ending foreclosure crisis acts as a damper on the housing market, depressing prices in neighborhoods where banks are selling the homes on the courthouse steps or owners are selling their homes for a loss.

"It's bad for the industry, bad for neighborhoods that have homes sitting vacant for that long, and bad for local governments that don't get that local revenue for a significant period of time," said Dustin Hobbs of the California Mortgage Bankers Association.

A lengthy loan-modification process also is soaking up more time, real estate professionals say, with some homeowners ending up in foreclosure after failing to get lenders to lower their payments.

Banks "can spend a significant part of that total time trying to help somebody with a modification, and yet it still doesn't happen," said Joe Alderese with Alain Pinel in Morgan Hill.

The figures don't include homeowners who are behind on their payments. "There's another group that aren't making payments that haven't entered the foreclosure process," O'Toole said.
"At the end of the day, we're still dragging our feet on dealing with this problem. There's no easy solution," he said.

In the two counties and the state, foreclosures are taking more than 300 days, which a mortgage banking group calls "worrisome."

How to Avoid Foreclosure

When the homeowners do not make payment to the lenders, foreclosure takes place. It really is that simple. The reason for why home owners may not be able to make the payments, however, can be anything but simple.


The worst thing home owners can do when they cannot make their home loan payments is to ignore the problem and to ignore the lender. In many cases, lenders will be more eager to help you through the problem than to foreclose on your home. The truth is most lenders do not want to take your home from you. Foreclosure is a cost to them and it reduces the profits they can realize from a home loan.

It cannot be said enough: Do not ignore the problem if you are unable to make your mortgage payments. It will become harder for your lender to work with you if you miss more payments. There will come a time (should you ignore the lender for too long) when foreclosure will be the only remedy.

You should contact your lender as soon as you know that you cannot make your payments. As mentioned above, most lenders do not want your home. Most lenders have programs available to help you out if you contact them soon enough, but many of these programs are time sensitive and must be triggered before certain cutoff dates arrive.

You should not ignore the mail from your lender if you have missed any payment. You might be surprised at how many people simply do not open their mail when they know they have missed a payment. Ignoring the mail will not make the situation any better.

In most of the cases, you will get information on foreclosure prevention options and payment options, when you first receive the first notices from the lender. If you ignore thesYou should also understand your mortgage rights. You should find your loan papers and read them to learn exactly what the contract states, along with timelines. It would also be a good idea to learn about foreclosure laws and timeframes in your state. Keep in mind that every state is different so be sure you read the laws for your state.


Although there are several options available for an individual who finds themselves in financial trouble, it is the individual who has to take the right steps so that they would be able to prevent foreclosure of their home. Home owners may be surprised at how many programs are available to help them as they get through this trying period of time, but they should keep in mind that ignoring the problem will only make it worse. One of the best ways to prevent foreclosure is to get to work with the lender as quickly as possible

California real estate: 'Distressed sales' are 51% of market in March

The real estate market in the Golden State was less dominated by "distressed sales" in March than the month before, the California Association of Realtors reported Wednesday.


Foreclosures and short sales -- transactions for less than the value of the mortgage on a home -- accounted for 51 percent of the market last month, down from 56 percent in February and flat from March 2010.

"Consistent with the state as a whole, nearly all the counties for which we have data also experienced an improvement in distressed sales," association President Beth L. Peerce noted in an email. "However, distressed sales in most of the counties were higher than a year ago, as the market continues to work through large numbers of troubled mortgages," Peerce said.

Meanwhile, the number of pending home sales -- deals with signed contracts but which haven't closed -- was up 15.2 percent from the month before, but dropped 0.3 percent from March 2010, when California's real estate market was still benefiting from tax credits for many homebuyers. The association's reports are based on information from local chapters and multiple listing services.

Also Wednesday, the National Association of Realtors reported a 3.7 percent seasonally adjusted increase in existing-home sales in March from the month before. However, sales volume nationwide was down 6.3 percent from March 2010. The median home price dropped 5.9 percent year over year to $159,600.


"Existing-home sales have risen in six of the past eight months, so we're clearly on a recovery path," Lawrence Yun, the association's chief economist, said in a news release. "We project moderate improvements into 2012, but not every month will show a gain -- primarily because some buyers are finding it too difficult to obtain a mortgage."

California Mortgage Defaults Drop Again

The number of financially distressed California homeowners who were dragged into the formal foreclosure process declined again last quarter, the result of turmoil and policy changes within the mortgage industry as well as shifts in the economy, a real estate information service reported.

A total of 68,239 Notices of Default (NoDs) were recorded at county recorders offices during the January-to-March period. That was down 2.2% from 69,799 for the prior quarter, and down 15.8% from 81,054 in first-quarter 2010, according to DataQuick. The San Diego firm tracks real estate trends nationally via public property records.

Last quarter's activity was the lowest since 53,493 NoDs were recorded in the second quarter of 2007. It was just over half the record 135,431 default notices recorded in the first quarter of 2009.

"Lenders and servicers have put various temporary holds on foreclosure filings while they work on procedural issues and respond to regulatory and legal challenges. It's unclear how much of last quarter's decline can be attributed to market factors and strategic decisions, and how much can be attributed to the formalities of the foreclosure process," said John Walsh, DataQuick president.

Most of the loans going into default are from the 2005-2007 period: the median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for two years, indicating that weak underwriting standards peaked then. Most of the loans made in 2006 are owned and/or serviced by institutions other than those that made the loans.

The most active "beneficiaries" in the formal foreclosure process last quarter were JPMorgan Chase (JPM_)(9,634), Wells Fargo(WFC_) (8,329) and Bank of America (BAC_) (7,158).

The "servicers" (or the Trustees in the formal foreclosure process) that pursued the highest number of defaults last quarter were ReconTrust Co (mostly for Bank of America and MERS), Quality Loan Service Corp (Bank of America), California Reconveyance Co (JPMorgan Chase), NDEx West (Wells Fargo) and Cal-Western Reconveyance Corp (Wells Fargo).

California's priciest zip codes collectively saw mortgage defaults buck the market-wide trend again and rise slightly quarter-to-quarter, while their defaults fell less on a year-over-year basis than in the overall market. The state's 80 zip codes with median sale prices of $800,000 or more last quarter posted a 5.8% quarter-to-quarter increase in default notices and a 4.7% year-over-year decline.

Home Prices Down in Southern California

Southern California home sales turned in another lackluster month in March, the result of a fussy mortgage market, slow job growth and a continued wait-and-see attitude among potential buyers and sellers. There were signs, however, that the market was a little less dysfunctional than in recent months, a real estate information service reported.


A total of 19,412 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March. That was up 35.1% from 14,369 in February, and down 5.2% from 20,476 in March 2010, according to DataQuick. The San Diego firm tracks real estate trends nationally via public property records.

Sales always increase from February to March. Last month's sales count was 21.4% below the 24,706 average for all the months of March since 1988. Sales so far this year are 20% below the norm. During the last half of 2010 sales were 25-30% below average.

Sales of newly built Southland homes totaled 1,144, the lowest March in DataQuick's statistics, which go back to 1988. The peak March was in 2006 with 7,205 sales. The March new-home average is 3,661.

The median price paid for a Southland home last month was $280,500, up 2.0% from $275,000 in February, and down 1.6% from $285,000 for March a year ago.

The median's low point for the current real estate cycle was $247,000 in April 2009, while the high point was $505,000 in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially inland foreclosures .

"As an indicator of upcoming trends, the month of March is actually pretty reliable. We got off to a slow start with sales this year and it doesn't look like that will change anytime soon. Two of the likely game changers in the short run would be a surge in job creation or another round of price corrections," said John Walsh , DataQuick president.

"The foreclosure issue is going to be with us for a good while. But mortgage availability, or rather the lack thereof, is key. If a well-crafted home loan program comes down the pike, it's going to make some lending institution the dominant player, at least for a while," he said.

 Foreclosure resales - properties foreclosed on in the prior 12 months - made up 36.4% of resales last month, down from a revised 37.0% in February and down from 38.3% a year ago. Foreclosure resales hit a high of 56.7% in February 2009 and a low of 32.8% last June.

Short sales - transactions where the sale price fell short of what had been owed on the property - made up an estimated 18.5% of Southland resales last month. That was down from an estimated 19.6% in February but up from 18.0% a year earlier and 12.2% two years ago.

House Hears Debate Over 20% Down Only for Home Purchases

U.S. regulators “must be mindful of the trade-off” between borrower equity and access to credit as they consider new rules for mortgage risk-retention, Acting Federal Housing Administration Commissioner Bob Ryan said.

Higher down payments won’t necessarily reduce default risk and could keep creditworthy consumers from buying homes, Ryan said at a House Financial Services subcommittee hearing on mortgage risk retention. “This definition has the potential to create false- positive situations,” Ryan told lawmakers.

The Financial Services capital markets panel is reviewing a proposal calling on homebuyers to have a 20 percent down payment and unblemished credit to qualify for so-called qualified residential mortgages that would be exempt from regulations requiring lenders and securitizers to retain a stake.

The Department of Housing and Urban Development, FHA’s parent, and five other federal agencies are seeking comment on a rule mandated by the Dodd-Frank Act that would require lenders and securitizers to keep a 5 percent stake in loans they sell.

Lawmakers crafted the risk-retention rule with the stated goal of discouraging the originate-to-sell incentives that led to a flood of poorly underwritten subprime loans before the 2008 financial crisis. The measure could affect all asset-backed securities, including bonds backed by credit-card balances, auto loans, commercial real estate and student debt.

Many factors can predict loan performance, Ryan said, pointing to his agency’s track record. FHA-insured loans with a 5 percent down payment from borrowers with poor credit perform “significantly worse” than low down-payment loans to those with better credit, he said.

Broad Opposition
The mortgage exemption as written is opposed by a broad coalition of affordable-housing advocates, consumer watchdogs, real estate agents, banks and home builders. The groups say the plan would unfairly restrict credit and put homeownership out of reach for responsible borrowers. They want regulators to shrink the size of the down payment.

“Well-underwritten low down payment home loans have been a significant and safe part of the mortgage finance system for decades,” the coalition said in a study criticizing the draft rule. Rather than discouraging bad lending, the proposal “penalizes qualified, low-risk borrowers.”

Foreclosure Settlement Muddies Outlook for Mortgage Relief

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The foreclosure-abuse settlements announced yesterday by federal regulators may make it harder for state attorneys general and the Obama administration to force banks to reduce loan balances for more troubled U.S. homeowners. The 14 largest U.S. mortgage servicers, including JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC), agreed to review all foreclosed loans from 2009 and 2010, and pay back losses in cases that were mishandled. They also will improve procedures by hiring staff, upgrading document-tracking systems and assigning a single point of contact for each borrower.

While the attorneys general proposed many similar terms last month, banking regulators didn’t include any requirements for lowering mortgage debt. That may hinder Iowa Attorney General Thomas J. Miller as he leads a group of state officials working with the administration to require lenders to evaluate loan cuts for some borrowers whose homes are worth less than their mortgages.

The settlements, which include yet-to-be determined monetary penalties, also prohibit banks from seizing homes for which borrowers have negotiated a trial or permanent loan modification. The attorneys general proposal goes a step further, freezing the foreclosure process even while borrowers are being evaluated for workouts.


Divided Views
The agreements stem from reviews of the mortgage-servicing industry by the Office of the Comptroller of the Currency, the Federal Reserve, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. The banks didn’t admit or deny regulators’ findings.
The loan-reduction rules are the most divisive part of Miller’s bid to get servicers to settle with all 50 states on allegations of abusive foreclosure practices. In the past month, at least seven state attorneys general rejected the proposal, and Brian T. Moynihan, chief executive officer of Bank of America Corp. (BAC), said widespread principal cuts were bad policy.

Miller has pushed for such relief as one of the best ways to bolster the housing market by reducing foreclosures, which drive down property values for homeowners who continue to pay their mortgages.

Rewarding Default

“The Obama administration and the state attorneys general are committed to ensuring the banks are held accountable in a way that helps to strengthen the housing market and helps American families stay in their homes,” he said yesterday in a statement. Opponents of mandatory loan writedowns, including the Office of the Comptroller of the Currency and dissenting attorneys general, say they reward borrowers for failing to meet their obligations and could cause additional defaults as homeowners stop making payments so they can qualify for help.

“There’s very little incentive for the banks to accept any deal that’s going to require them to forgive significant amounts of principal for underwater borrowers,” said Jaret Seiberg, a financial-policy analyst for Washington Research Group, a Washington-based unit of broker MF Global Holdings Ltd. “It’s one of those slippery slopes where once you start, you don’t know where you’ll end.”

Related articles

• Banks Forced to Pay Foreclosure Victims as Talks Continue (businessweek.com)
• Bank regulators poised to announce mortgage pacts (reuters.com)
• Government To Lenders: Reimburse Homeowners Or Else! (BAC, C, JPM, WFC) (benzinga.com)

Mortgage Rates Inch Higher

Mortgage rates continued to rise this week, with the benchmark conforming 30-year fixed mortgage rate rising to 5.08 percent, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.41 discount and origination points.

The average 15-year fixed mortgage inched to 4.27 percent, and the larger jumbo 30-year fixed rate moved up to 5.57 percent. Adjustable rate mortgages were slightly lower this week with the average 5-year ARM slipping to 3.87 percent and the 7-year ARM dropping to 4.21 percent.

Mortgage rates moved higher, but not very much, as investors looked past global concerns and took in a better-than-expected jobs report. The employment news validated other improving economic data and interest rates moved higher in response. Mortgage rates are closely related to yields on long-term government bonds. Even though mortgage rates have increased in each of the past three weeks, they’ve remained in a narrow range since late February, owing to a tug-of-war between better economic news and worries about rising oil prices and overseas events that could upend the economic recovery.

The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 5.08 percent, the monthly payment for the same size loan would be $1,083.44, a difference of $158 per month for anyone refinancing now.

SURVEY RESULTS
30-year fixed: 5.08% — up from 5.01% last week (avg. points: 0.41)
15-year fixed: 4.27% — up from 4.25% last week (avg. points: 0.43)
5/1 ARM: 3.87% — down from 3.89% last week (avg. points: 0.42)

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the ratesare headed over the next seven days. More than half of the panelists, 56 percent, predict rates to increase further. Of the remaining panelists, 38 percent think that rates will remain more or less unchanged and the remaining 6 percent forecast a decline in mortgage rates over the next seven days

Related articles

• Bankrate: Mortgage Rates Continue to Rise (prnewswire.com)
• Will mortgage rates continue to rise this week? (ctebockhorst.wordpress.com)
• 30-year fixed-rate mortgage ticks higher (marketwatch.com)

March Housing Scorecard Reflects Stagnant Marketplace

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The March edition of the Obama Administration's Housing Scorecard again remarks on the fragility of the U.S. housing market and the need to continue efforts to help homeowners stay in those homes. The Scorecard, issued jointly by the Departments of Treasury and Housing and Urban Development (HUD) is largely a recap of data released by other sources such as the Census Bureau, S&P Case-Schiller, RealtyTrac and the National Association of Realtors.

The fragility is demonstrated by a decline in the numbers of both new and existing houses and home prices and an increase in homes available for sale. Sales of new homes totaled 20,800 in February compared to 25,100 in January and existing home sales dropped from 450,000 to 406,700. The number of first-time buyers also declined from 237,500 to 213,800. The inventory of existing homes for sale increased from a 7.5 month supply to 8.6 months and new homes from 7.44 months to 8.9 months while the number of vacant units that are not on the market for a variety of reasons increased from 3.56 million to 3.6 million.

The delinquency rate for prime mortgages was up one basis point to 4.8 percent but subprime delinquencies declined from 36.2 percent to 35.1 percent and FHA mortgages from 12.8 percent to 12.2 percent. The numbers of "underwater" borrowers, those who owe more on their mortgages than the market value of the home, increased from 10.78 million to 11.09 million.


"There's no question that this month's figures show a troubling dip in home sales and housing prices," said HUD Assistant Secretary Raphael Bostic. "While we should not ignore the real impact that the Obama Administration's programs are having for millions of homeowners and borrowers, these statistics clearly show that housing markets across the country continue to struggle to regain stable footing. We must remain steadfast in our efforts to support homeowners and communities in ways to help advance market stabilization and a transition towards health."

Related articles

• Housing Market Fails to Find Bottom Despite Every Attempt to Make Sure it Doesn't (reason.com)
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Has the Residential Real Estate Market Bottomed Out?

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Whether you consider your home an investment, real estate is still a big part of many individuals' financial lives. Although home equity levels have dropped substantially amid the housing bust, home ownership remains a substantial component of net worth in many households. And even for those who no longer have mortgages, property taxes and housing-related upkeep are often some of the largest line items in household budgets.

The Best-Laid Plans

Several buyers noted that the ongoing housing bust had affected their own plans to relocate. "About 16 months ago, I thought I was being very smart in buying a new condo in Orlando, Fla., at what I felt was a significantly reduced price, more than 40% below the asking price and about 10% less than the original buyer had paid two years prior. My thinking was with such a good deal on the 'buy side,' I could then market my current (and much larger) single-family house for up to two years and still come out ahead.

"Well, those 24 months are quickly ticking by and despite the fact that I have priced my house competitively in relative terms (and reduced the price three times), I have only had one ridiculous lowball offer in the last year and half. Lots of showings, lots of positive feedback, but everyone still seems to be looking for a deal (that is, a steal). I don't think the Orlando real estate market (much less the rest of Florida) is seeing much recovery yet. With an overabundance of foreclosures and short sales still in inventory, I just may be watching a well-thought-out plan turn sour."

DebbieTrice is also downbeat about the Florida market, noting that Sarasota, Fla., remains hard-hit and could well stay that way, in her view: "Due to a combination of fraud and rampant speculation, more housing units were built at ever-increasing prices in Sarasota during the boom than could have been absorbed in a reasonable time frame. The bust has further increased the unsold inventory because now-unemployed construction workers have moved away. And, of course, foreclosures and short sales on the market have depressed prices even more. This is one of the worst housing markets in the United States, and I suspect it will get worse before it gets better. My guess is the local market will return to normal about two years after baby boomer retirees feel flush enough to buy second homes in Florida. I am one of those boomer retirees who had planned to downsize, but I won't put my house on the market while it has to compete with foreclosures."
"No Good News"

Judging from the downbeat sentiment of many home buyers, those who have been anxiously awaiting a recovery will have to keep on waiting.
Bargain-Shoppers Holding Off, Sellers Unrealistic?
The sentiment among would-be buyers, meanwhile, corroborates that the worst may not be over in some markets. They're looking for bargains that haven't yet materialized.







Bargain-Shoppers Holding Off, Sellers Unrealistic?


The sentiment among would-be buyers, meanwhile, corroborates that the worst may not be over in some markets. They're looking for bargains that haven't yet materialized.

Related articles

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