Friday, April 13, 2012 — A federal-state program aimed at helping homeowners in states hardest hit by the mortgage crisis is falling far short of its goals, a federal watchdog said in a report released Thursday.
In the report, the Special Inspector General for the Troubled Asset Relief Program (TARP) said that just 3% of $7.6 billion available in the Hardest Hit Housing Markets program — available for 18 states and the District of Columbia — had been tapped as of Dec. 31.
The money has gone to help 30,640 homeowners, or about 7% of the 458,000 homeowners officials estimated would be helped by the end of the program in 2017, according to the watchdog.
More than 75% of the program funds has gone to prop up state unemployment programs that pay mortgages of the unemployed — not efforts such as mortgage modifications or principal reductions that would force banks to take a hit, according to the report.
Christy Romero, the Special Inspector General for the Troubled Asset Relief Program, said the hardest hit fund has largely served to help the unemployed.
“It was supposed to be an innovative program intended to reach the unemployed and underwater homes,” Romero said in an interview with CNNMoney. “It is important to reach the unemployed, but it’s not reaching underwater homes like it was intended.”
Treasury defended the hardest hit program. The program gives states the opportunity to “leverage their unique understanding of the conditions in their communities to create effective, locally tailored programs,” Assistant Secretary for Financial Stability Timothy Massad said in a letter to Romero.
Silver lining in weak jobs report – underemployment
TARP is the $700 billion bailout program that Congress passed at the height of the financial crisis in the fall of 2008. In addition to keeping the big banks afloat, TARP gave money to programs to help struggling homeowners.
Wednesday, April 18, 2012
Flood of foreclosures are coming soon - don't wait until it's too late
Tuesday, April 17, 2012 — The golden age for foreclosure squatters may soon be coming to an end now that the $26 billion mortgage settlement has been approved.
The settlement, agreed to by the nation’s five largest mortgage lenders, is expected to speed up the foreclosure process by providing stricter guidelines for the banks to follow when repossessing homes.
The banks involved include Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citibank (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial.
Many foreclosures have been in limbo since fall 2010 following the so-called robo-signing scandal, when banks allowed employees to sign off on thousands of foreclosure documents a month with little verification.
Lenders hit the pause button on foreclosures because they “were afraid that anything they did would be under a microscope,” said Eric Higgins, a professor of business at Kansas State University.
As a result, borrowers who were seriously delinquent on their loans have been able to stay in their homes for months or even years without making a single payment. Nationwide, the average time it takes to foreclose on a home — from the first missed payment to the final bank repossession — stretched to 370 days during the first quarter, almost twice as long as it took five years ago, according to Daren Blomquist, the marketing director at RealtyTrac.
Foreclosure free ride: 3 years, no mortgage payment
In some states, delinquent borrowers have been squatting in their homes much longer. In Florida, the average time was 861 days, and in New York it was 1,056 days — close to three years.
“Perhaps a million foreclosures could have been pursued last year but weren’t,” said Rick Sharga, executive vice president for real estate investment company, Carrington Holdings.
But that’s all about to change, he said. “We’re going to see an increase in the speed of foreclosures and a higher number of foreclosure starts.”
The settlement, agreed to by the nation’s five largest mortgage lenders, is expected to speed up the foreclosure process by providing stricter guidelines for the banks to follow when repossessing homes.
The banks involved include Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citibank (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial.
Many foreclosures have been in limbo since fall 2010 following the so-called robo-signing scandal, when banks allowed employees to sign off on thousands of foreclosure documents a month with little verification.
Lenders hit the pause button on foreclosures because they “were afraid that anything they did would be under a microscope,” said Eric Higgins, a professor of business at Kansas State University.
As a result, borrowers who were seriously delinquent on their loans have been able to stay in their homes for months or even years without making a single payment. Nationwide, the average time it takes to foreclose on a home — from the first missed payment to the final bank repossession — stretched to 370 days during the first quarter, almost twice as long as it took five years ago, according to Daren Blomquist, the marketing director at RealtyTrac.
Foreclosure free ride: 3 years, no mortgage payment
In some states, delinquent borrowers have been squatting in their homes much longer. In Florida, the average time was 861 days, and in New York it was 1,056 days — close to three years.
“Perhaps a million foreclosures could have been pursued last year but weren’t,” said Rick Sharga, executive vice president for real estate investment company, Carrington Holdings.
But that’s all about to change, he said. “We’re going to see an increase in the speed of foreclosures and a higher number of foreclosure starts.”
Foreclosure prevention scams up 60% in 2012
Fraudulent foreclosure prevention providers are coming out of the woodwork to take advantage of today's loss mitigation culture, according to the Homeownership Preservation Foundation.
The nonprofit group, which helps distressed homeowners through the group's HOPE hotline, says the number of mortgage foreclosure scams grew nearly 60% in 2012. The scammers, they say, are able to capitalize on the hype surrounding homeownership preservation as federal programs are being modified to help more and more borrowers.
"Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification," said Colleen Hernandez, CEO of HPF. "Most of these scams involve individuals supposedly offering mortgage foreclosure avoidance assistance that trained HPF counselors provide at no cost. Sadly, with most scams, no meaningful services are ever provided."
HPF said it's unknown whether all of the reported instances were truly fraudulent, but the agency still forwarded all of the complaints to the appropriate regulators and law enforcement agencies.
About half of the scams involve an attorney or individual claiming they can offer special legal services to distressed borrowers. HPF says, in fact, the services they offered are already provided by nonprofits for free.
"Sadly, with most scams, no meaningful services are ever provided," said Hernandez.
HPF put out a warning nationwide, saying no one searching for a home-saving remedy should pay upfront fees to a firm offering assistance.
Click here for article
The nonprofit group, which helps distressed homeowners through the group's HOPE hotline, says the number of mortgage foreclosure scams grew nearly 60% in 2012. The scammers, they say, are able to capitalize on the hype surrounding homeownership preservation as federal programs are being modified to help more and more borrowers.
"Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification," said Colleen Hernandez, CEO of HPF. "Most of these scams involve individuals supposedly offering mortgage foreclosure avoidance assistance that trained HPF counselors provide at no cost. Sadly, with most scams, no meaningful services are ever provided."
HPF said it's unknown whether all of the reported instances were truly fraudulent, but the agency still forwarded all of the complaints to the appropriate regulators and law enforcement agencies.
About half of the scams involve an attorney or individual claiming they can offer special legal services to distressed borrowers. HPF says, in fact, the services they offered are already provided by nonprofits for free.
"Sadly, with most scams, no meaningful services are ever provided," said Hernandez.
HPF put out a warning nationwide, saying no one searching for a home-saving remedy should pay upfront fees to a firm offering assistance.
Click here for article
Tuesday, April 3, 2012
Foreclosures Still Effect Buyers and Sellers
Marcie Geffner from Bankrate.com brings us an article which discusses, full circle, the effect that foreclosures have on buyers and sellers. She starts off by stating what I believe to be true…..the foreclosure crisis is far from over. The shadow inventory is building. When these homes are released for sale, the low prices (average discount of 36% to retail) can only put downward pressure on surrounding home prices.
Ms Geffner does a very nice job of breaking down her expectations (from buyer and sellers perspective) of how foreclosures will effect both parties. Rather than me paraphrase, it’s worth a read on your part.
*****************************************************************************************
News Article
How foreclosures affect buyers and sellers
Overview of a subdivision of single family homes in San Marcos, Calif. The nation’s banks own more than 600,000 single-family homes, according to RealtyTrac.
By Marcie Geffner, bankrate.com
If anything is certain about the foreclosure crisis, it’s that it isn’t over. That fact has important implications, not only for people losing their homes, but also for those planning to sell or buy a home this year.
As of January, about 3 million properties were in foreclosure, headed that way or already owned by banks, according to CoreLogic, an information, analytics and business services company in Santa Ana, Calif.
Approximately 1.6 million of those homes were believed to be within the so-called shadow inventory, a supply of foreclosure properties not yet listed for sale. It’s a major stumbling block to a housing recovery, says Mark Fleming, chief economist of CoreLogic.
“It puts downward pressure on home prices, which hurts home sales and building activity,” Fleming said in a statement.
Given that prelude, here’s what sellers and buyers can expect.
Price
Foreclosures and short sales have widened the gap between sellers’ and buyers’ perceptions of prices. Sellers “think their home is worth more than it really is” and buyers “think the prices are too high,” says Louis Cammarosano, general manager at HomeGain, a real estate information website in Emeryville, Calif.
One cause of that gap is realty brokers’ tendency to scrub foreclosures and short sales from comparable sales data used to set sellers’ asking prices. While sellers might feel a moral justification for that approach, Cammarosano says it’s “disingenuous” because the status of the seller’s mortgage isn’t important to buyers.
“(Just because) you happen to be paying your mortgage, that doesn’t mean the buyer has to step into your shoes and pay your inflated price,” he says.
Interest rates
Traditionally, mortgage rates have been something of a wild card for homebuyers. But that’s not the case today because the Federal Reserve has announced its intention to keep rates low at least through late 2014. That’s not a guarantee, but it has taken some of the urgency out of homebuying and put more buyers into a wait-and-see pattern.
“The perception that prices could go lower, a lot of foreclosures in the pipeline and (the expectation) that rates will remain low — that’s certainly keeping some people on the sidelines,” Cammarosano says.
Location
Buyers might be reluctant to purchase a home in a neighborhood plagued by foreclosures and short sales. But Stephen Israel, president of Buyer’s Edge Co., a real estate brokerage in Bethesda, Md., says buyers can take a clue from real estate investors who are looking at areas that have been hard hit, yet might be prime for a turnaround.
“Investors are interested in neighborhoods that were beat up by foreclosures and that have other redeeming features that they then believe will be the first to bounce back,” he says.
Those redeeming features might include easy access to public transportation, well-regarded schools, attractive shopping centers and other positive infrastructure elements. Neighborhoods that have such amenities can be “really interesting pockets, where there could be some very good values,” Israel says.
Condition
Foreclosure and short sale homes are often, though not always, in worse shape than other homes on the market. That’s especially problematic for buyers if a home has been vacant a long time because neglect can result in problems in plumbing, heating, cooling, electrical and other systems.
“There is a big difference,” Israel says, “between a property that has been vacant a few weeks and one that has been vacant a year or more.”
A home that’s in poor shape might not be a bad buy if the buyer understands the risks, he adds.
Sometimes, though, those risks can be difficult to assess if the term of vacancy isn’t known or the water, sewer, electricity and gas have been shut off. The utilities not being in service is “an interesting part of this equation that people miss all the time,” Israel says.
Buy or sell
The bottom line for buyers is that they need to “buy smart,” to use Israel’s term, researching neighborhoods and being aware of a home’s actual condition beyond its cosmetic appearance.
The bottom line for sellers, Cammarosano says, is that they need to get serious about pricing, cleaning, decluttering, staging and improving the value and desirability of their home.
“That’s getting real,” he says. “And if that’s not what you want, don’t sell it.”
Ms Geffner does a very nice job of breaking down her expectations (from buyer and sellers perspective) of how foreclosures will effect both parties. Rather than me paraphrase, it’s worth a read on your part.
*****************************************************************************************
News Article
How foreclosures affect buyers and sellers
Overview of a subdivision of single family homes in San Marcos, Calif. The nation’s banks own more than 600,000 single-family homes, according to RealtyTrac.
By Marcie Geffner, bankrate.com
If anything is certain about the foreclosure crisis, it’s that it isn’t over. That fact has important implications, not only for people losing their homes, but also for those planning to sell or buy a home this year.
As of January, about 3 million properties were in foreclosure, headed that way or already owned by banks, according to CoreLogic, an information, analytics and business services company in Santa Ana, Calif.
Approximately 1.6 million of those homes were believed to be within the so-called shadow inventory, a supply of foreclosure properties not yet listed for sale. It’s a major stumbling block to a housing recovery, says Mark Fleming, chief economist of CoreLogic.
“It puts downward pressure on home prices, which hurts home sales and building activity,” Fleming said in a statement.
Given that prelude, here’s what sellers and buyers can expect.
Price
Foreclosures and short sales have widened the gap between sellers’ and buyers’ perceptions of prices. Sellers “think their home is worth more than it really is” and buyers “think the prices are too high,” says Louis Cammarosano, general manager at HomeGain, a real estate information website in Emeryville, Calif.
One cause of that gap is realty brokers’ tendency to scrub foreclosures and short sales from comparable sales data used to set sellers’ asking prices. While sellers might feel a moral justification for that approach, Cammarosano says it’s “disingenuous” because the status of the seller’s mortgage isn’t important to buyers.
“(Just because) you happen to be paying your mortgage, that doesn’t mean the buyer has to step into your shoes and pay your inflated price,” he says.
Interest rates
Traditionally, mortgage rates have been something of a wild card for homebuyers. But that’s not the case today because the Federal Reserve has announced its intention to keep rates low at least through late 2014. That’s not a guarantee, but it has taken some of the urgency out of homebuying and put more buyers into a wait-and-see pattern.
“The perception that prices could go lower, a lot of foreclosures in the pipeline and (the expectation) that rates will remain low — that’s certainly keeping some people on the sidelines,” Cammarosano says.
Location
Buyers might be reluctant to purchase a home in a neighborhood plagued by foreclosures and short sales. But Stephen Israel, president of Buyer’s Edge Co., a real estate brokerage in Bethesda, Md., says buyers can take a clue from real estate investors who are looking at areas that have been hard hit, yet might be prime for a turnaround.
“Investors are interested in neighborhoods that were beat up by foreclosures and that have other redeeming features that they then believe will be the first to bounce back,” he says.
Those redeeming features might include easy access to public transportation, well-regarded schools, attractive shopping centers and other positive infrastructure elements. Neighborhoods that have such amenities can be “really interesting pockets, where there could be some very good values,” Israel says.
Condition
Foreclosure and short sale homes are often, though not always, in worse shape than other homes on the market. That’s especially problematic for buyers if a home has been vacant a long time because neglect can result in problems in plumbing, heating, cooling, electrical and other systems.
“There is a big difference,” Israel says, “between a property that has been vacant a few weeks and one that has been vacant a year or more.”
A home that’s in poor shape might not be a bad buy if the buyer understands the risks, he adds.
Sometimes, though, those risks can be difficult to assess if the term of vacancy isn’t known or the water, sewer, electricity and gas have been shut off. The utilities not being in service is “an interesting part of this equation that people miss all the time,” Israel says.
Buy or sell
The bottom line for buyers is that they need to “buy smart,” to use Israel’s term, researching neighborhoods and being aware of a home’s actual condition beyond its cosmetic appearance.
The bottom line for sellers, Cammarosano says, is that they need to get serious about pricing, cleaning, decluttering, staging and improving the value and desirability of their home.
“That’s getting real,” he says. “And if that’s not what you want, don’t sell it.”
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