Existing Homes Shadow Inventory :: The Construction Management Pro

Foreclosure Settlement

March 30, 2013

In January 2013, an agreement between 11 mortgage servicers and the Federal Bank regulators was reached. That agreement ended the independent Foreclosure review program.

Parties to the agreement included Aurora, Bank of America, Citibank, JPMorgan Chase, HSBC, MetLife Bank, PNC, Sovereign, SunTrust, US Bank, Wells Fargo and their affiliates or acquired loan servicing companies.

The agreement stipulates that borrowers whose mortgage loans were serviced by any of the participating entities and were involved in a foreclosure proceeding between January 1, 2009 and December 21, 2010 will receive compensation even if a request for review form was not submitted by the December 21, 2010 deadline.

Eligible borrowers should have been to be contacted by the Paying Agent, Rust Consulting, Inc., by March 31, 2013 with payment details. Borrowers can call the Paying Agent at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement’s amendments.

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Foreclosure Bills Released From Committee

August 10, 2012

Source: NJ Builders Association

Two NJBA strongly supported bills were released by the Senate Economic Growth Committee. NJBA CEO Timothy Touhey testified in support of bills and warned that an excess inventory of foreclosed homes or distressed properties will only continue to be a drain on the housing market, depress home values and delay an economic recovery.

S2156 (Lesniak) would establish an expedited foreclosure procedure for vacant and abandoned property in uncontested matters. This bill would give the Courts the tools necessary to handle not only the existing backlog of pending foreclosures, but also the large number of expected foreclosures now that the judicial moratorium has been lifted.

S2157 (Lesniak) would establish the “Foreclosure Relief Corporation” as a temporary entity within the New Jersey Housing and Mortgage Finance Agency (HMFA). Its mission will be to act as a clearing house for foreclosed residential properties and to work with municipal governments, housing non-profits and qualified investors to effectively address the excess inventory of foreclosed residential properties in an expedited fashion.

The Senate bills are likely to be referred to the Senate Budget and Appropriations Committee. The companion Assembly bills are likely to be introduced in the near future.

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Mortgage Servicer’s turn to Short Sales

September 8, 2011

Mortgage servicer’s contending with attorney general investigations and extended foreclosure delays turned more to short sales in the past year according to industry reports.

In August 2009, short sales accounted for only 8% of all liquidations of distressed properties. That number grew to 25% by the middle of 2011, according to research from Moody’s Investors Service.

Meanwhile, the time it took from a borrower default to eventual REO liquidation grew from an average 14 months in early 2009 to 24 months by the summer of 2011. Part of the added time was a result of servicers having to halt the foreclosure process in October 2010 to correct forged documents and mishandled foreclosures as part of the robo-signing scandal. New regulations from federal agencies and ongoing negotiations between the state AGs have left servicers turning to an early sale of properties before filing foreclosures. The increased time to foreclose has resulted in higher losses on the eventual sale of those properties.

“To reduce their expenses and mitigate the high loss severity on liquidated loans, servicers are increasingly opting to bypass the foreclosure process and liquidate properties more quickly through a short sale,” Moody’s analysts said.

Researchers at Deutsche Bank said servicers are using the transactions to also cut into the shadow inventory of properties stuck somewhere in the foreclosure process. Standard & Poor’s said the market actually cut into the shadow inventory during the second quarter for the first time since 2009.

Deutsche Bank found short sales actually take less time to complete than REO sales because of the documentation problems.

The average REO took 17 months to sell in the middle of 2011, compared to just under 12 months for short sales completed in that time, according to Deutsche Bank.

Loss severities dropped as well. Servicers experienced a 70% loss rate on REOs sold in the middle of 2011, compared to less than 60% for short sales.

These transactions also do less damage to a borrower’s credit score, dropping it between 50 and 200 points compared to an REO sale, which can slash the FICO score for the borrower as much as 400 points.

Borrowers who manage a short sale can buy a new home between one and two years as well, according to researchers. Those whose homes sell through REO must wait between five and seven.

However, short sales continue to be a struggle as investors often squabble over whether or not to approve the transaction.

“Short sales, like other servicer loss mitigation strategies, may stir a fierce ‘class warfare’ between investors in different parts of the deal capital structure,” Deutsche Bank researchers said.

Moody’s analysts said short sales steadied loss severities over the past year, as foreclosure problems continue to plague the recovery.

“We can attribute the stabilization of average loss severities in part to a rising number of liquidations through short sale, which by reducing liquidation timelines, foreclosure expenses, and legal costs, can reduce the losses incurred on defaulted loans,” Moody’s said.

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Foreclosure Rental Bill Introduced in House

August 2, 2011

The House of Representatives is considering a bill that would authorize FDIC-member banks, Fannie Mae, and Freddie Mac to enter into five-year lease agreements to rent REO properties back to the foreclosed homeowner or another individual.

The Neighborhood Preservation Act (H.R. 2636) was introduced by Rep. Gary Miller (R-California) and reportedly has bipartisan support. The legislation would address two key issues; it would give families a chance to remain in their homes while stabilizing home values by reducing the number of distressed properties on the market. According to the National Association of Realtors, distressed home sales accounted for 30 percent of single-family home sales in June. However in Los Angeles County they accounted for nearly half of all sales. “Something must be done to reduce the inventory of available homes and stop the further decline in home prices,” Rep. Miller said.

News surfaced last month that the administration was considering such a policy for Fannie and Freddie. Now, Rep. Miller wants to enact it with legislation. It’s not the first time Miller has pushed for a foreclosure rental policy. He championed a similar bill in the 111th Congress (H.R. 2529), which passed the House by a bipartisan voice vote, but was never acted on by the Senate. The Neighborhood Preservation Act is cosponsored by House Financial Services Committee Chairman Spencer Bachus (R-Alabama), Ranking Member Barney Frank (D-Massachusetts), and Rep. Carolyn McCarthy (D-New York).

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5 causes of foreclosures and supply?

June 16, 2011

What is the cause of foreclosures?  Economy, mortgage meltdown, other?  The answer is all of the above and more.  There is a 2nd wave of foreclosures coming as delinquent mortgages have increased tremendously in 2009 vs 2008.  While this is unfortunate for many homeowners, this is incredible for investors who can cherry pick from the tremendous supply of properties for sale.

1.       Negative Equity – Many homeowners are underwater or they owe more than the property is worth.  This problem could get worse when the 2nd wave of foreclosures hits, interest rates increase and banks continue to be tight with lending.  Loan modifications are helping, but very few qualify.

2.       Unemployment – Unemployment and the economy have caused many to lose or take substantial income reductions making it hard for people to pay there mortgages and bills.

3.       Subprime FICO – It not only takes excellent credit but high income, plenty of cash and assets and strong debt to equity ratios to get a loan.  People without one of these have a really hard time getting a loan, refinancing and often lose their home.

4.       Mortgage Reset – Interest only resets and ARMs are raising mortgage payments when homeowners often cannot pay their mortgage at the existing rate and payment.  More mortgages will become delinquent and foreclose due to this reason.

5.       Shadow Inventory – How many people do you know that want to sell but cannot or will not because they will not get what they owe or what they want?  Once the real estate market stabilizes, homeowners will flood the market with their homes that they wanted to sell for years.  This inventory has been building up for a few years and may continue for 3-5 more years vastly increases supply of for sale properties.

Real Return Real Estate™ for years has bought property at extreme discounts, sells and rents with tremendous cash flow. We also provide FREE tips, articles, guides and Educational Webinars.  Visit our site http://www.realreturnrealestate.com for all the helpful resources.

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Ryan Moeller -
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Helping Small Businesses Grow and Create New Jobs

May 9, 2011

President Obama visits Buffalo, NY where he speaks to business owners and workers about the steps the Administration is taking to create conditions that will allow small businesses to thrive and hire new workers. May 13, 2010.
Video Rating: 4 / 5

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Existing Home Sales and Prices All Over the Map Currently

April 14, 2011

The real estate roller coaster seems to be traveling along just fine in the beginning of 2010. While there have been some very dramatic dips over the past year, this year seems to be a mixture of ups and downs so far.

While real estate sales have dipped down over 7 percent across the nation since December, it is important to note that buying rates are still 11 ½ percent higher than at the same time last year. However, home prices have not all suffered the same fate everywhere you go across the nation; on the west side of the US the home sales have dropped very little and it is the Northeast US that seen the largest drop over the December to January range. The substantial change in home buyers in the North-eastern states is less daunting, however, when taken in context of the strong recovery that it has seen in the past year. Areas that have had modest recoveries have, at least, only seen modest dips in the number of homes sold.

The prices of homes across the nation have seen an inverse relationship to incidence of homes being bought and sold. Home prices in the west dropped far more than prices in the North-east; this trend is possibly part of the reason that more homes were purchased on the west side of the nation than in the north-eastern states.

As we get closer to the end expiration of the home buyers tax credit, it is likely that we will see home buying pick up somewhat; home prices may rise in response to the greater public interest for real estate but only time will tell if that interest will drop off again after the tax credit program expires.

The backlog of inventory currently available across the nation is down to almost an eight month supply of homes, but many experts believe that banks have been holding back a shadow inventory of homes in order to keep the prices of homes for sale from sliding down even further than the levels that they’re at now. However, once the new homes hit the market, it is likely that there could be another slide in prices.

The lack of stabilization is making some experts concerned about real estate recovery. There are still many government programs that are being reworked and revised to help out home owners and buyers; the results of these programs is likely to throw another variable into real estate recovery for some time yet.

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Veronica Hicks -

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