Krista Franks Brock from DSNEWS brings us an article that
will brighten the day for real estate professionals. She reports that banks are loosening their
credit standards which will open up money for people to purchase homes. My only question is, “How loose?” Will these standards come back to haunt us
the way the lenders lending practices from yesteryear have hurt us? What do you think?
News Article
Housing Crisis to End in 2012 as BanksLoosen Credit Standards
Capital Economics expects the housing crisis to end this year,according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required toattain a mortgage loan is 700. While this is higher than scores required priorto the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found creditrequirements in the fourth quarter were consistent with the past threequarters.
However, other market indicators point not just to astabilization of mortgage lending standards, but also a loosening of creditavailability.
Banks are now lending amounts up to 3.5 times borrowerearnings. This is up from a low during the crisis of 3.2 times borrowerearnings.
Banks are also loosening loan-to-value ratios (LTV), whichCapital Economics denotes “the clearest sign yet of an improvement in mortgagecredit conditions.”
In contrast to a low of 74 percent reached in mid-2010,banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, somepotential homebuyers are still struggling with credit requirements. In fact,Capital Economics points out that in November 8 percent of contractcancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement incredit conditions won’t be significant enough to generate actual house pricegains,” and potential ramifications from the euro-zone pose a threat to futurecredit availability.
Tuesday, March 13, 2012
Short Sale or Foreclosure????
Carrie Bay from DS News brings us an article that documents
the cold . hard facts regarding foreclosures and short sales. Ms. Bay reports that, “Pre-foreclosure
short sales and sales of foreclosed REOs totaled 907,138 for the 2011 calendar
year, RealtyTrac reported Thursday. These foreclosure-related transactions made
up 23 percent of all residential sales in the U.S. last year, with short sales
accounting for 9 percent and REOs accounting for 14 percent of 2011 home
sales.”
While this is an astonishing stat, what is even more
astonishing is the disparity in short sale prices and foreclosure (REO)
prices. To quote Ms. Bay,
“RealtyTrac says pre-foreclosure short sales went for an average of
$184,221 in the fourth quarter. The average sales price of a pre-foreclosure
home in the fourth quarter was 21 percent below the average sales price of a
non-foreclosure home, similar to the discount of 22 percent on pre-foreclosure
purchases for the entire year. REOs sold
for an average of $149,686 in the fourth quarter, 36 percent below the average
sales price of a non-foreclosure home, while the average discount on bank-owned
homes for the entire year was 40 percent.”
So the “bank” aka the investor that owns the note is taking a
25% discount )on average) when they foreclose!
What doesnt come out in this figure is the money the “banks”
pay to insure the foreclosed house, maintain the house, fix the house etc etc
for an average of 175 days after foreclosure!
Who in their right mind would EVER knowingly stand in the
way of a short sale!
News Article
Foreclosure-Related Sales in 2011 = 907,138
Pre-foreclosure short sales and sales of foreclosed REOs
totaled 907,138 for the 2011 calendar year, RealtyTrac reported Thursday. These
foreclosure-related transactions made up 23 percent of all residential sales in
the U.S. last year, with short sales accounting for 9 percent and REOs
accounting for 14 percent of 2011 home sales.
During the last three months of the year, third parties
purchased a total of 88,303 pre-foreclosure homes that were in default or
scheduled for auction, according to RealtyTrac. That tally represents a
decrease of 5 percent from the previous quarter but is up 15 percent compared
to the fourth quarter of 2010.
Pre-foreclosure sales increased more than 20 percent on a
year-over-year basis in several states, including Michigan (103 percent),
Georgia (59 percent), Arizona (48 percent), Washington (36 percent), Nevada (29
percent), Oregon (27 percent), Illinois (26 percent), Ohio (25 percent),
California (23 percent), and Texas (22 percent).
RealtyTrac says pre-foreclosure short sales went for an
average of $184,221 in the fourth quarter. The average sales price of a
pre-foreclosure home in the fourth quarter was 21 percent below the average
sales price of a non-foreclosure home, similar to the discount of 22 percent on
pre-foreclosure purchases for the entire year.
Pre-foreclosure homes that sold in the fourth quarter of
2011 took an average of 308 days to sell after starting the foreclosure
process.
Third parties purchased a total of 115,777 bank-owned
REOhomes in the fourth quarter, down 10 percent from the previous quarter and
down 12 percent from the fourth quarter of 2010.
Despite the nationwide decrease, RealtyTrac says REO sales
increased 20 percent or more on a year-over-year basis in several states,
including Minnesota (65 percent), Wisconsin (23 percent), Washington (21 percent),
and Illinois (20 percent).
REOs sold for an average of $149,686 in the fourth quarter,
36 percent below the average sales price of a non-foreclosure home, while the
average discount on bank-owned homes for the entire year was 40 percent.
REOs that sold in the fourth quarter took an average of 175
days to sell after completing the foreclosure process.
“Sales of foreclosures in the fourth quarter continued to be
slowed by questions surrounding proper foreclosure paperwork and procedures,”
said Brandon Moore, RealtyTrac’s CEO. “Even so, foreclosures accounted for
nearly one in every four sales during the quarter and for the entire year.”
Moore says his firm expects to see foreclosure-related sales
increase in 2012, particularly pre-foreclosure short sales, as lenders start to
more aggressively dispose of distressed assets.
“We continued to see a shift toward pre-foreclosure sales,
or short sales, and away from REO sales in the fourth quarter,” Moore said.
“Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO
sales decreased 12 percent.”
Moore says short sales outnumbered REO sales in several
bellwether markets, including Los Angeles, Miami, and Phoenix – all metros
where REO sales had outnumbered pre-foreclosure sales a year ago.
“That trend will likely show up in more local markets in
2012 as lenders recognize short sales as a better option for many of their
non-performing loans,” according to Moore.
Among metro areas with at least 500 short sales during the
fourth quarter and where short sales increased at least 5 percent from a year
ago, the San Francisco-Oakland-Fremont metro in California posted the biggest
short sale discount at 41 percent.
Among metro areas with at least 500 REO sales during Q4 and
where REO sales rose by at least 5 percent from the year-ago period,
Wisconsin’s Milwaukee-Waukesha-West Allis metro saw the biggest discount.
There, bank-owned properties sold for 58 percent less than non-foreclosure
homes.
Combined, short sales and REOs accounted for 56 percent of
all residential sales in Nevada in the fourth quarter, the highest percentage
of any state.
the cold . hard facts regarding foreclosures and short sales. Ms. Bay reports that, “Pre-foreclosure
short sales and sales of foreclosed REOs totaled 907,138 for the 2011 calendar
year, RealtyTrac reported Thursday. These foreclosure-related transactions made
up 23 percent of all residential sales in the U.S. last year, with short sales
accounting for 9 percent and REOs accounting for 14 percent of 2011 home
sales.”
While this is an astonishing stat, what is even more
astonishing is the disparity in short sale prices and foreclosure (REO)
prices. To quote Ms. Bay,
“RealtyTrac says pre-foreclosure short sales went for an average of
$184,221 in the fourth quarter. The average sales price of a pre-foreclosure
home in the fourth quarter was 21 percent below the average sales price of a
non-foreclosure home, similar to the discount of 22 percent on pre-foreclosure
purchases for the entire year. REOs sold
for an average of $149,686 in the fourth quarter, 36 percent below the average
sales price of a non-foreclosure home, while the average discount on bank-owned
homes for the entire year was 40 percent.”
So the “bank” aka the investor that owns the note is taking a
25% discount )on average) when they foreclose!
What doesnt come out in this figure is the money the “banks”
pay to insure the foreclosed house, maintain the house, fix the house etc etc
for an average of 175 days after foreclosure!
Who in their right mind would EVER knowingly stand in the
way of a short sale!
News Article
Foreclosure-Related Sales in 2011 = 907,138
Pre-foreclosure short sales and sales of foreclosed REOs
totaled 907,138 for the 2011 calendar year, RealtyTrac reported Thursday. These
foreclosure-related transactions made up 23 percent of all residential sales in
the U.S. last year, with short sales accounting for 9 percent and REOs
accounting for 14 percent of 2011 home sales.
During the last three months of the year, third parties
purchased a total of 88,303 pre-foreclosure homes that were in default or
scheduled for auction, according to RealtyTrac. That tally represents a
decrease of 5 percent from the previous quarter but is up 15 percent compared
to the fourth quarter of 2010.
Pre-foreclosure sales increased more than 20 percent on a
year-over-year basis in several states, including Michigan (103 percent),
Georgia (59 percent), Arizona (48 percent), Washington (36 percent), Nevada (29
percent), Oregon (27 percent), Illinois (26 percent), Ohio (25 percent),
California (23 percent), and Texas (22 percent).
RealtyTrac says pre-foreclosure short sales went for an
average of $184,221 in the fourth quarter. The average sales price of a
pre-foreclosure home in the fourth quarter was 21 percent below the average
sales price of a non-foreclosure home, similar to the discount of 22 percent on
pre-foreclosure purchases for the entire year.
Pre-foreclosure homes that sold in the fourth quarter of
2011 took an average of 308 days to sell after starting the foreclosure
process.
Third parties purchased a total of 115,777 bank-owned
REOhomes in the fourth quarter, down 10 percent from the previous quarter and
down 12 percent from the fourth quarter of 2010.
Despite the nationwide decrease, RealtyTrac says REO sales
increased 20 percent or more on a year-over-year basis in several states,
including Minnesota (65 percent), Wisconsin (23 percent), Washington (21 percent),
and Illinois (20 percent).
REOs sold for an average of $149,686 in the fourth quarter,
36 percent below the average sales price of a non-foreclosure home, while the
average discount on bank-owned homes for the entire year was 40 percent.
REOs that sold in the fourth quarter took an average of 175
days to sell after completing the foreclosure process.
“Sales of foreclosures in the fourth quarter continued to be
slowed by questions surrounding proper foreclosure paperwork and procedures,”
said Brandon Moore, RealtyTrac’s CEO. “Even so, foreclosures accounted for
nearly one in every four sales during the quarter and for the entire year.”
Moore says his firm expects to see foreclosure-related sales
increase in 2012, particularly pre-foreclosure short sales, as lenders start to
more aggressively dispose of distressed assets.
“We continued to see a shift toward pre-foreclosure sales,
or short sales, and away from REO sales in the fourth quarter,” Moore said.
“Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO
sales decreased 12 percent.”
Moore says short sales outnumbered REO sales in several
bellwether markets, including Los Angeles, Miami, and Phoenix – all metros
where REO sales had outnumbered pre-foreclosure sales a year ago.
“That trend will likely show up in more local markets in
2012 as lenders recognize short sales as a better option for many of their
non-performing loans,” according to Moore.
Among metro areas with at least 500 short sales during the
fourth quarter and where short sales increased at least 5 percent from a year
ago, the San Francisco-Oakland-Fremont metro in California posted the biggest
short sale discount at 41 percent.
Among metro areas with at least 500 REO sales during Q4 and
where REO sales rose by at least 5 percent from the year-ago period,
Wisconsin’s Milwaukee-Waukesha-West Allis metro saw the biggest discount.
There, bank-owned properties sold for 58 percent less than non-foreclosure
homes.
Combined, short sales and REOs accounted for 56 percent of
all residential sales in Nevada in the fourth quarter, the highest percentage
of any state.
More Help for underwater mortgages
Tallahassee, FL -- March 12, 2012 --
Attorney General Pam Bondi today announced that she, 48 other attorneys general, the District of Columbia and the Department of Justice filed a complaint and proposed consent judgments requiring the nation's five largest mortgage servicers to comply with comprehensive new mortgage loan servicing standards, to provide substantial direct consumer relief and monetary payments, and to submit to an independent monitor, as part of a $25 billion national mortgage servicing joint state-federal settlement.
Florida was one of only two states that obtained a guarantee from Wells Fargo, JP Morgan Chase, and Bank of America to ensure that at least $4 billion in relief under the settlement is provided to Floridians. This guarantee is similar and in proportion to the one provided to California.
However, Florida’s guarantee is unique in that it includes not only principal reductions and other financial relief to financially troubled consumers, but it also guarantees refinancing relief to borrowers who are current on their mortgage payments but are stuck in higher interest loans that exceed the value of their homes. If the banks fail to meet the guarantee, they are subject to stiff penalties.
“Today’s filings pave the way for court orders that will provide substantial relief to Florida’s homeowners, hold banks accountable and reform the mortgage servicing industry,” stated Attorney General Pam Bondi. “We are one of the states on the monitoring committee, and we will ensure that banks comply with this agreement and that they are held accountable.”
Attorney General Bondi has obtained the following for Floridians:
The total value of the settlement nationally is more than $25 billion in credits and $32 billion in total dollar value; Florida will receive a total value of more than $4 billion in credits and $8 billion in total dollar value. Florida’s share is broken down as follows:
At least $3.1 billion will go toward assisting Florida’s financially troubled borrowers with loan modifications, including reducing principal loan balances, forgiving amounts in forbearance, and providing other loss mitigation (e.g. short sales and deficiency waivers).
More than $309 million will go to providing refinancing relief to eligible Florida borrowers whose loans are currently underwater. “Underwater” loans are loans where the principal balance exceeds the market value of the home. To be eligible for refinancing, a borrower must be current on mortgage payments, have a loan-to-value ratio in excess of 100 percent, and have a current interest rate over 5.25 percent. Eligible borrowers will receive notices from the banks in the mail. If you have questions about your eligibility or about the program, you may contact your bank at the contact numbers listed below.
Approximately $171 million in payments will be available to Florida borrowers who have already lost their homes, as partial payment for injury a borrower suffered as a result of improper servicing or a defect in the foreclosure proceeding.
Qualifying borrowers are expected to receive payments in the range of $1,800 to $2,000.
To be eligible, borrowers must have had a loan serviced by the settling banks and must complete a simple application and screening process.
Borrowers who receive a payment under this settlement may still be eligible for relief under the Office of the Comptroller of the Currency review process, which is currently ongoing (for more information, see www.IndependentForeclosureReview.com). However, any sums received in the OCC review process or under a separate settlement or legal action may be reduced by any payment received under the state-federal settlement.
Florida will receive a payment of approximately $334 million to help fund housing-related and foreclosure prevention programs within the state and provide for civil penalties.
Today’s complaint and consent judgments against Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial, Inc. follow a joint federal-state investigation. Allegations included that the servicers' misconduct "resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members' and other homeowners' rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds."
Once court orders are issued, the settlement that was first announced February 9 will be finalized. It is the largest joint state-federal settlement ever obtained.
National Settlement: $25 billion
• Servicers must provide a minimum of $20 billion in benefits directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Servicers will likely provide up to an estimated $32 billion in direct homeowner relief through a complex system of settlement credits. Servicers also fund an underwater mortgage refinancing program for current, but underwater borrowers.
• Under an enhanced agreement with Bank of America, the company will write down principal on a large number of underwater homeowners to market value, which is in addition to its existing principal reduction obligations under the settlement.
• Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government). • Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards (see below). Servicers will implement the new standards in phases over the next six months.
• Service members receive new protections that go beyond the Service members Civil Relief Act (SCRA). • An independent monitor will ensure mortgage servicer compliance (see below).
• States preserve the right to pursue all criminal prosecutions and many civil claims, including claims regarding the packaging of mortgage loans into securities.
• Borrowers and mortgage investors can pursue individual, institutional or class action cases without restriction.
New Mortgage Servicing Standards
The five mortgage servicers will implement extensive new servicing standards, which take effect in three phases over the next two to six months:
• Stop many past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork through new mortgage servicing standards.
• Require strict oversight of foreclosure processing, including of third-party vendors.
• Impose new standards to ensure the accuracy of information provided in federal bankruptcy court, including pre-filing reviews of certain documents.
• Make foreclosure a last resort, by requiring servicers to evaluate homeowners for other loan mitigation options first.
• Restrict banks from foreclosing while the homeowner is being considered for a loan modification.
• Set procedures and timelines for reviewing loan modification applications, and give homeowners the right to appeal denials.
• Create a single point of contact for borrowers seeking information about their loans and adequate staff to handle calls.
National Monitor Begins Work
Independent settlement monitor Joseph A. Smith, Jr. will oversee the terms of the finalized agreement and will help ensure compliance. A monitoring committee comprised of state attorneys general, the U.S. Department of Justice, and the U.S. Department of Housing and Urban Development will oversee the monitor, who will prepare quarterly compliance reviews.
The U.S. Department of Justice and state attorneys general can enforce through the court process compliance with the servicing standards and the banks' financial obligations. A federal judge may assess civil penalties for violations of the consent judgments.
Participating Mortgage Servicer Consumer Numbers
Bank of America: 1-877-488-7814
Citigroup: 1-866-272-4749
Chase: 1-866-372-6901
Ally/GMAC: 1-800-766-4622
Wells Fargo: 1-800-288-3212
More information will be made available as settlement programs are implemented. The mortgage servicers are required to complete 75 percent of their consumer relief obligations within two years and 100 percent within three years.
To view the filings, please click here:
http://www.justice.gov/opa/opa_mortgage-service.htm
For More Information:
www.MyFloridaLegal.com
www.NationalForeclosureSettlement.com
www.HUD.gov
Attorney General Pam Bondi today announced that she, 48 other attorneys general, the District of Columbia and the Department of Justice filed a complaint and proposed consent judgments requiring the nation's five largest mortgage servicers to comply with comprehensive new mortgage loan servicing standards, to provide substantial direct consumer relief and monetary payments, and to submit to an independent monitor, as part of a $25 billion national mortgage servicing joint state-federal settlement.
Florida was one of only two states that obtained a guarantee from Wells Fargo, JP Morgan Chase, and Bank of America to ensure that at least $4 billion in relief under the settlement is provided to Floridians. This guarantee is similar and in proportion to the one provided to California.
However, Florida’s guarantee is unique in that it includes not only principal reductions and other financial relief to financially troubled consumers, but it also guarantees refinancing relief to borrowers who are current on their mortgage payments but are stuck in higher interest loans that exceed the value of their homes. If the banks fail to meet the guarantee, they are subject to stiff penalties.
“Today’s filings pave the way for court orders that will provide substantial relief to Florida’s homeowners, hold banks accountable and reform the mortgage servicing industry,” stated Attorney General Pam Bondi. “We are one of the states on the monitoring committee, and we will ensure that banks comply with this agreement and that they are held accountable.”
Attorney General Bondi has obtained the following for Floridians:
The total value of the settlement nationally is more than $25 billion in credits and $32 billion in total dollar value; Florida will receive a total value of more than $4 billion in credits and $8 billion in total dollar value. Florida’s share is broken down as follows:
At least $3.1 billion will go toward assisting Florida’s financially troubled borrowers with loan modifications, including reducing principal loan balances, forgiving amounts in forbearance, and providing other loss mitigation (e.g. short sales and deficiency waivers).
More than $309 million will go to providing refinancing relief to eligible Florida borrowers whose loans are currently underwater. “Underwater” loans are loans where the principal balance exceeds the market value of the home. To be eligible for refinancing, a borrower must be current on mortgage payments, have a loan-to-value ratio in excess of 100 percent, and have a current interest rate over 5.25 percent. Eligible borrowers will receive notices from the banks in the mail. If you have questions about your eligibility or about the program, you may contact your bank at the contact numbers listed below.
Approximately $171 million in payments will be available to Florida borrowers who have already lost their homes, as partial payment for injury a borrower suffered as a result of improper servicing or a defect in the foreclosure proceeding.
Qualifying borrowers are expected to receive payments in the range of $1,800 to $2,000.
To be eligible, borrowers must have had a loan serviced by the settling banks and must complete a simple application and screening process.
Borrowers who receive a payment under this settlement may still be eligible for relief under the Office of the Comptroller of the Currency review process, which is currently ongoing (for more information, see www.IndependentForeclosureReview.com). However, any sums received in the OCC review process or under a separate settlement or legal action may be reduced by any payment received under the state-federal settlement.
Florida will receive a payment of approximately $334 million to help fund housing-related and foreclosure prevention programs within the state and provide for civil penalties.
Today’s complaint and consent judgments against Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial, Inc. follow a joint federal-state investigation. Allegations included that the servicers' misconduct "resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members' and other homeowners' rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds."
Once court orders are issued, the settlement that was first announced February 9 will be finalized. It is the largest joint state-federal settlement ever obtained.
National Settlement: $25 billion
• Servicers must provide a minimum of $20 billion in benefits directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Servicers will likely provide up to an estimated $32 billion in direct homeowner relief through a complex system of settlement credits. Servicers also fund an underwater mortgage refinancing program for current, but underwater borrowers.
• Under an enhanced agreement with Bank of America, the company will write down principal on a large number of underwater homeowners to market value, which is in addition to its existing principal reduction obligations under the settlement.
• Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government). • Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards (see below). Servicers will implement the new standards in phases over the next six months.
• Service members receive new protections that go beyond the Service members Civil Relief Act (SCRA). • An independent monitor will ensure mortgage servicer compliance (see below).
• States preserve the right to pursue all criminal prosecutions and many civil claims, including claims regarding the packaging of mortgage loans into securities.
• Borrowers and mortgage investors can pursue individual, institutional or class action cases without restriction.
New Mortgage Servicing Standards
The five mortgage servicers will implement extensive new servicing standards, which take effect in three phases over the next two to six months:
• Stop many past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork through new mortgage servicing standards.
• Require strict oversight of foreclosure processing, including of third-party vendors.
• Impose new standards to ensure the accuracy of information provided in federal bankruptcy court, including pre-filing reviews of certain documents.
• Make foreclosure a last resort, by requiring servicers to evaluate homeowners for other loan mitigation options first.
• Restrict banks from foreclosing while the homeowner is being considered for a loan modification.
• Set procedures and timelines for reviewing loan modification applications, and give homeowners the right to appeal denials.
• Create a single point of contact for borrowers seeking information about their loans and adequate staff to handle calls.
National Monitor Begins Work
Independent settlement monitor Joseph A. Smith, Jr. will oversee the terms of the finalized agreement and will help ensure compliance. A monitoring committee comprised of state attorneys general, the U.S. Department of Justice, and the U.S. Department of Housing and Urban Development will oversee the monitor, who will prepare quarterly compliance reviews.
The U.S. Department of Justice and state attorneys general can enforce through the court process compliance with the servicing standards and the banks' financial obligations. A federal judge may assess civil penalties for violations of the consent judgments.
Participating Mortgage Servicer Consumer Numbers
Bank of America: 1-877-488-7814
Citigroup: 1-866-272-4749
Chase: 1-866-372-6901
Ally/GMAC: 1-800-766-4622
Wells Fargo: 1-800-288-3212
More information will be made available as settlement programs are implemented. The mortgage servicers are required to complete 75 percent of their consumer relief obligations within two years and 100 percent within three years.
To view the filings, please click here:
http://www.justice.gov/opa/opa_mortgage-service.htm
For More Information:
www.MyFloridaLegal.com
www.NationalForeclosureSettlement.com
www.HUD.gov
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