California Foreclosures Fall To Lowest Levels Since 2006

If California is a setter of future real estate trends -- as it has been in the past -- a report that foreclosures in the Golden State fell to the lowest level since 2006 is good news for the entire nation. According to San Diego-based DataQuick, the number of California homeowners pushed into the foreclosure process fell last quarter to the lowest level in six years, the result of rising home values, an improving economy and a shift toward short sales.

During fourth-quarter 2012 lenders recorded a total of 38,212 Notices of Default (NoDs) on California houses and condos. That was down 22.1 percent from 49,026 during the prior three months, and down 37.9 percent from 61,517 in fourth-quarter 2011, according to DataQuick.
Last quarter's number was the lowest since 37,994 NoDs were recorded in fourth-quarter 2006. New foreclosure filings (NoDs) peaked in first-quarter 2009 at 135,431. DataQuick's NoD statistics go back to 1992.

"Home values increased through most of 2012, and the rate of increase picked up toward the end of the year. That means fewer and fewer homeowners are underwater, where they owe more than their homes are worth. That in turn means they can sell and pay off the mortgage, or perhaps refinance at today's low interest rates. This trend alone suggests we'll see a continued decline in foreclosure rates this year. Another factor is the foreclosure-avoidance goals of various settlements between lenders and the government," said John Walsh, DataQuick president.

The median price paid for a home last quarter was $300,000 in California, up 22.4 percent from a year ago and 32.2 percent off the median's $227,000 bottom in first-quarter 2009, DataQuick reported.

Foreclosure resales accounted for 16.6 percent of all California resale activity last quarter, down from 20.0 percent the prior quarter and 33.6 percent a year ago. It peaked at 57.8 percent in the first quarter of 2009. Foreclosure resales -- properties foreclosed on in the prior 12 months -- varied significantly by county last quarter, from 5.0 percent in San Francisco County to 31.4 percent in Sutter County.

Short sales -- transactions where the sale price fell short of what was owed on the property -- made up an estimated 26.0 percent of statewide resale activity last quarter. That was down from an estimated 26.4 percent the prior quarter and up from 25.7 percent of all resales a year earlier. The estimated number (rather than percentage) of short sales last quarter rose 4.2 percent from a year earlier.

NoD filings fell in all home price categories last quarter. But mortgage defaults remained far more concentrated in California's most affordable neighborhoods. Zip codes with fourth-quarter 2012 median sale prices below $200,000 collectively saw 5.5 NoDs filed for every 1,000 homes in those zip codes. The ratio was 3.5 NoDs filed per 1,000 homes for zip codes with $200,000 to $800,000 medians, while there were 1.3 NoDs filed per 1,000 homes for the group of zips with medians above $800,000.

Most of the loans going into default are still from the 2005-2007 period: The median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for three years, indicating that weak underwriting standards peaked then.

The most active "beneficiaries" in the formal foreclosure process last quarter were Wells Fargo (6,611), JP Morgan Chase (4,275) and Bank of America (2,005).

The trustees who pursued the highest number of defaults last quarter were NDex West (mostly for Wells Fargo), Cal-Western Reconveyance (also Wells Fargo) and Quality Loan Service Corp (Bank of America).

On primary mortgages, California homeowners were a median eight months behind on their payments when the lender filed the Notice of Default. The borrowers owed a median $14,364 on a median $308,885 mortgage.
On home equity loans and lines of credit in default, borrowers owed a median $4,693 on a median $77,187 credit line. The amount of the credit line that was actually in use cannot be determined from public records.

San Diego-based DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

Although 38,212 default notices were filed last quarter, they involved 37,343 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit).
Of the state's larger counties, mortgages were least likely to go into default in San Mateo, Santa Clara and Marin counties. The probability was highest in Yuba, Madera and Tulare counties.

At formal foreclosure auctions held statewide last quarter, an estimated 42.0 percent of the foreclosed properties were bought by investors or others who don't appear to be lender or government entities. That was up from an estimated 39.2 percent the previous quarter and up from 31.2 percent a year earlier, DataQuick reported.

Sale of Existing Homes Falls 1% In December: Inventory Remains Low

Sales of existing homes slipped 1 percent in the month of December as strict mortgage lending standards and scant inventory restricted sales, according to data on the latest real estate market trends released today by the National Association of Realtors.

Total existing homes, including single-family homes, townhomes, condominiums and co-ops declined to a seasonally adjusted annual rate of 4.94 million, according to the association, but the pace 12.8 percent higher than that for December 2011.

Total existing home sales were 4.65 million in 2012, a year-over-year increase of 9.2 percent, according to the association, which tracks overall positive real estate market trends. Total sales volume for 2012 was the highest since 2007, when sales reached 5.03 million. The annual rate of increase is the strongest since 2004.

“Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales,” Lawrence Yun, chief economist for the association, said in a statement. Yun predicts sidelined buyers will continue to reenter the housing market as their financial situations stabilize and their confidence grows. Among positive real estate market trends for 2013, Yun said, “both sales and prices will be again high in 2013.”

The inventory of unsold homes is at the lowest level since January 2001 and 21.6 percent lower than a year ago, the association reported, while the median existing home price rose 11.5 percent year-over-year for the 10^th consecutive month of annual gains.

In other real estate market trends, the National Association of Home Builders yesterday reported that sentiment among members of the home remodeling industry has moved into positive territory. The associations Remodeling Market Index rose to 5 points to 55 in the fourth quarter. A reading above 50 indicates more remodelers perceive an increase rather than a decrease in remodeling activity.
The real estate market trends are driven by increased consumer confidence, David Crowe, the association’s chief economist, said in a statement.

California Real Estate Ends 2012 on a High Note

California’s median home price struck a four-year high for a December, indicating housing will probably continue to mend in the new year.

The statewide median popped 21.5% from December 2011 to hit $299,000, real estate research firm DataQuick reported Wednesday. Last month’s gain adds to a housing recovery that began in earnest last year after foreclosures declined, housing inventory plummeted, mortgage interest rates hit record lows and demand from investors surged last year.

Video: Experts discuss Southern California's housing market

“Prices are in the midst of bouncing off bottom right now, and nobody really knows what the trajectory of this bounce will be beyond this point,” DataQuick president John Walsh said in a news release announcing Bay Area housing trends. “So far, supply has been a bottleneck, but as prices go up, more homes will be put up for sale.”

It was the highest level of the state’s median home price since August 2008. The median is the point at which half the homes in the state sold for more and half for less. T

Home sales rose 6.1% from the prior month and were up 5.4% from December 2011 to total 39,760 newly built and previously owned houses and condominiums sold.

Helping prices along was a decline in the percentage of foreclosed homes sold. Out of all previously owned homes sold last month, only 15.5% were foreclosures, compared to 16.9% in November and 33.9% in December 2011.

Short sales, where a bank allows a homeowner to sell their home for less than the property is worth, made up an estimated 25.3% of existing homes sold last month. That was a drop from 26.1% the month prior and 25.5% in December 2011.

3 Tricks for Selling Your Home in 2013

After years of declining home values and a buyers’ market, 2013 could be the year of the seller.

Though the situation varies by region, we’ve seen a glimmer of hope for sellers and the housing market in general over the past six months. Homes that didn’t move for a year started getting activity as buyers came off the sidelines, their confidence in the housing market and their financial situations greatly improved. That confidence, coupled with record low interest rates and rising rents, has been the fuel the real estate market needed. Add to this the low inventory seen in many markets, and you’ve got buyers motivated to make a purchase.

If 2013 might be your year to sell, start planning, engaging professionals and doing as much of the legwork as soon as possible. You only have one chance to be “Just Listed” in this new market. More than ever, you’ve got to put your best foot forward when presenting your home to motivated buyers.

Here are three things you can do now to transition from homeowner to successful home seller:

1. Know the comps

One of the first people you’ll want to reconnect with is your real estate agent. They are your “feet on the street” and have their finger on the market’s pulse. Real estate agents generally pick up on trends or shifts in your particular neighborhood or market before the press or the bloggers.

So get on your agent’s radar as soon as possible. Start going to open houses to see what’s selling and to get a feel for values and how homes are being presented. Likely a home you see at an open house in February could sell by the time you list in May or June. Future buyers will probably use this home as a “comparable” sale. Having seen the “comps” yourself puts you in the buyers’ mindset. It enables you to get ahead of the curve or learn from the mistakes of other sellers.

2. Have your property inspected

The buyer, after they have a signed contract on a home, is supposed to pay for an inspection, right? While that’s true, you can beat them to the punch and know what needs to be repaired before you go on the market.

Imagine if you list your home and have a great offer from a solid buyer. But the buyer finds out through the inspection that the roof needs replacement and the deck has dry rot. That excellent offer may not seem so great if you have to negotiate thousands of dollars in credits with the buyer.

Having your property inspected months in advance will allow you time to make a plan to get the big (and small) things repaired. If you can identify the problems upfront, you can fix them for a lot less money than those repairs would get negotiated for down the road. Or, you can price your home factoring in the needed repairs. Plus, a home with a clean bill of health can be advertised as such. Many buyers are looking for a home in “move-in” condition, free of any needed repairs or fixes.

3. Hire a designer or stager

Your real estate agent should have a good designer or stager they like to work with -- someone who can help you start to view your home as a product to be marketed. This should be someone you reach out to once you have the place inspected and know the property’s condition.

Many people think a designer means big money or a wasted expense, but this isn’t always the case. Many designers charge by the hour. It could be as easy as hiring a designer for two hours to help you decide on colors to paint a room or two; a stager to help you declutter or decide which furniture to move out to make some rooms show better.

Based on your real estate agent’s feedback, you may decide to engage the designer on a minor kitchen or bathroom remodel. An old kitchen with linoleum countertops, knotty redwood cabinets and avocado-colored appliances can easily be updated with an inexpensive cabinet makeover and new stainless steel appliances.

You’ll save money in the long run

Like any major decision, selling a home takes a lot of planning, timing and consultation. Consulting with professionals and getting the facts in advance will help the process go a lot smoother, will help you make an informed decision and will most likely save you a lot of money when you sell.

If you’re a homeowner, transitioning to a seller mindset isn’t necessarily easy. The sooner you start that transition, however, the easier the process will be. But be aware there can be an unexpected, if ironic, outcome: Some would-be sellers do the fix-it work to their homes, clean up some rooms, or paint and update the entire place -- only to fall in love with their home all over again and decide to stay.

For more tips on home selling go to: http://www.localsantacruzrealestate.com

Or call (831) 426 0294

Short Sales Surpass Foreclosures in California

When housing prices first went off the cliff, most mortgage lenders refused to cut deals with homeowners, choosing instead to repossess homes on a grand scale.

Five years and billions of dollars in losses later, many banks can't cut those deals fast enough, writing off large chunks of mortgage debt and even paying homeowners to move out.

In recent months, short sales — in which banks allow homeowners to sell for less than they owe — have surpassed sales of foreclosed homes in California for the first time since the start of the housing crash in 2007, according to real estate research firm DataQuick. The transactions now represent about a quarter of the market, a surge driven by rising home prices, government crackdowns on foreclosures and banks' increasing capacity to process the deals.

Lenders have revamped short sale departments, streamlining paperwork, creating new software systems and enlisting newly formed companies as liaisons with borrowers. Some institutions are even paying homeowners sizable sums to move, similar to "cash for keys" arrangements used as an alternative to eviction in foreclosures. Bank of America pays up to $30,000 in relocation assistance for certain successful short sales. JPMorgan Chase will pay up to $35,000. Wells Fargo offers similar aid, though it declined to specify an amount.

When William Morrison asked Bank of America to approve a short sale on his Seal Beach condo, the lender obliged in October — letting him sell for about $192,000 and forgiving an additional $98,000 he owed on his mortgage, according to public records. The bank threw in enough relocation assistance to cover one month's rent and the deposit on a new place.
"They gave me $3,000," Morrison said. "And that is exactly what it cost me to secure a little studio apartment in Seal Beach, pretty close to the old place."

The surge in short sales stems in part from last year's national mortgage settlement with the nation's five largest banks. To avoid going to court over foreclosure improprieties, the banks agreed to certain levels of debt forgiveness for underwater homeowners. Short sales count toward those commitments.
But the trend also marks a triumph of economic common sense. Short sales have long been less costly to banks than foreclosures. Homeowners often remain in a property until a new buyer is found, which helps banks avoid maintenance costs and keeps out squatters and vandals. Moreover, many buyers of foreclosures expect a discount, whereas banks aim to get market value for short sales.
"In general, short sales produce less of a loss than if the property goes through foreclosure," Wells Fargo spokesman Gary Kishner said. "In addition, the property is usually conveyed in better condition, which ultimately benefits the neighborhood."

On hold for months
At the height of the housing crisis, short sales seemed like a misnomer: neither short nor resulting in a sale. Homeowners waited months for a bank response to a short sale offer — often a rejection — even as banks deployed robo-signing factories to rubber-stamp foreclosures by the thousands. Properties with multiple loans proved particularly difficult to short-sell because each lender had to agree to take write-downs. Frustrated buyers moved on.
But banks now embrace the transactions, if only as a necessary evil. Ben Salem, a real estate agent for Rodeo Realty who specializes in distressed properties, has seen much of his business shift to short sales this year.

"You are seeing a lot of people from the foreclosure departments going over to short sale departments," Salem said. "What is happening is a good thing."

Since the crisis, major investors, including banks and government-sponsored mortgage titans Fannie Mae and Freddie Mac, have eased their rules to make short sales easier. New government programs offer more incentives to borrowers and banks, prompting lenders to work with buyers to market properties instead of waiting for offers to arrive.

Kimberly Dawson, a short sale specialist with Bank of America, said banks have simply become more adept at the transactions, which were rare before the housing bust. When a homeowner agrees to one of the bank's proactive short sales, the bank typically makes a decision on an offer in five to 10 days, she said. And with home prices rising and inventory tight, banks can more easily approve a sale.

"What we are looking for is market value. It is obviously the best thing for our investors and the community," Dawson said.

Forgiving debt, repairing credit
The incentives for short sales are more than just economic. Banks face a slew of new regulations after revelations of improper foreclosures based on forged or faulty paperwork. Avoiding foreclosure also means avoiding the legal hassle and expense of home repossessions.

"If you go through a short sale and a homeowner signs off on it, there is no downstream worry of litigation," said Sean O'Toole, founder of ForeclosureRadar.

Short sales have also become more beneficial for consumers. Banks now typically approve short sales that include deficiency waivers, meaning debt is forgiven. These kinds of short sales are less harmful to credit scores, according to Fair Isaac Corp., which developed the nation's most widely used credit-scoring formula.

For homeowners with hardships, such as job loss or illness, agreeing to a short sale means a waiting period of two years before the possibility of getting a new home loan backed by Fannie Mae or Freddie Mac, compared with three years for a foreclosure. A homeowner without such circumstances can also get a new loan two years after a short sale with a 20% down payment, compared with seven years for a foreclosure.

Leonard Roth hopes to use those two years to repair his finances so he can buy another house. He's working with his bank to short-sell his home in Redlands because he can no longer handle the monthly payment, which doubled to $2,800 after five years because of a variable rate.
"Two years," he said, "should give me enough time to save."

Home Inventory Takes Center Stage As Foreclosures Fade

Last week, the Journal reported that U.S. home prices are on track to post a yearly gain for the first time since 2006, according to one closely watched national price index.

Behind these price gains—which come as good news to millions of homeowners counting on the value of their houses to carry them into retirement, or those looking to sell or borrow against their homes—is rising demand. Investors, first-time homeowners and move-up buyers alike are all re-entering the market as the economy slowly improves and interest rates remain low.

But another reason prices are climbing is that foreclosures are becoming less relevant in the market. CoreLogic reports that about 1.2 million homes, or 3% of all U.S. homes that have a mortgage, were in some stage of the foreclosure process as of November. This figure, known as the foreclosure inventory, is down 20% from a year ago, when 1.5 million, or 3.5% of all mortgaged homes in the country, were going through the foreclosure process.

Also down is the share of home sales that come from what is known as real estate-owned properties, or REO, which refer to homes that have been repossessed by banks through the foreclosure process. According to CoreLogic, the REO share fell from 19.6% to 11.5% between January and November of 2012. To wit: banks are selling fewer repossessed homes, which means less competition for sellers who are not in foreclosure, and eventually, rising prices.

There are two main reasons that the REO share, and foreclosures, are down. First, of course, is that delinquencies are down: LPS Applied Analytics reported last month that the mortgage delinquency rate fell from 7.83% to 7.12% between November 2011 and November 2012.

But more significantly, the foreclosure process has become longer and more arduous, chiefly in states where it is handled by courts. Banks slowed foreclosures after the “robo-signing” scandal emerged two years ago, revealing widespread abuses and sloppy practices in processing legal paperwork related to seizing homes with delinquent mortgages, and began to focus more on short sales and mortgage modifications. A slower foreclosure process and more short sales and loan mods has meant, over the last year, that fewer properties make it all the way through the foreclosure pipeline to REO status.

But the decline in REO share will be less dramatic in 2013, says Sam Khater, CoreLogic’s senior economist. That’s because in non-judicial states like California, Arizona and Nevada, where foreclosures are not always handled by the courts, the foreclosure pipeline has cleared much faster than in judicial states such as Florida, New York and New Jersey.

“The foreclosure crisis has shifted east, to the judicial states, where the pipeline is slow,” Mr. Khater said in an interview Thursday, and the pace at which delinquent loans become REO properties has settled at a fairly slow clip. “The big driver in 2012 in prices increases was the decline in REOs, but I think the big move-down has already happened. The driving prices in 2013 will be the tighter inventory.”