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Friday, June 22, 2012
Tuesday, May 22, 2012
DSNews - Default Servicing In Print and Online
Home Prices Show Strongest Gain in 6 Years: NAR
05/22/2012 By: Mark Lieberman, Five Star Institute Economist
Existing-home sales rose to 4.62 million (seasonally adjusted annualized rate) in April from a downwardly revised March rate of 4.47 million, the National Association of Realtors (NAR) reported Tuesday. Economists had forecast the April sales pace would be 4.66 million.
The median price of an existing home climbed 10.1 percent to $177,400 from $161,100 in April 2011, the strongest year-to-year gain since January 2006. The median price in April reached its highest level since July 2010 when it was $182,100.
The inventory of homes for sale in April rose to 2.54 million, the highest level since last November, bringing the months’ supply of homes on the market to 6.6.
The 10.0 percent yearly gain in the sales rate was the strongest since October when sales were up 14.0 percent year-over-year.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011, the NAR said. Foreclosures sold for an average discount of 21 percent below market value in April (compared with an average discount of 19 percent in March), while short sales were discounted 14 percent in April compared with 16 percent in March.
The months’ supply of existing homes for sale remains well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories as tracked by the NAR are 20.3 percent below their year ago level. However, anecdotal evidence suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.
Regionally, existing-home sales rose in April in every region of the country led by a 5.1 percent month-to-month increase in the Northeast where sales were up19.2 percent over April 2011. Sales rose 4.4 percent over March in the West (a 7.3 percent year-year gain), 3.5 percent in the South (6.5 percent year-year) and 1.0 percent in the Midwest (14.4 percent year over year).
The median price of an existing home rose month-to-month and year-to-year in all four regions. At $256,600, the median price of an existing home reached its highest level since August 2010. The median price of an existing home in the South rose to $153,400, the highest level since July 2010 and the median price of an existing home in the West rose to $221,700, also the highest since July 2010.
The year-to-year price gain in the West, 15.9 percent, was the strongest since November 2005. The year-to-year price increase in the Northeast was the first since last June.
From: http://ping.fm/Rj6gh
05/22/2012 By: Mark Lieberman, Five Star Institute Economist
Existing-home sales rose to 4.62 million (seasonally adjusted annualized rate) in April from a downwardly revised March rate of 4.47 million, the National Association of Realtors (NAR) reported Tuesday. Economists had forecast the April sales pace would be 4.66 million.
The median price of an existing home climbed 10.1 percent to $177,400 from $161,100 in April 2011, the strongest year-to-year gain since January 2006. The median price in April reached its highest level since July 2010 when it was $182,100.
The inventory of homes for sale in April rose to 2.54 million, the highest level since last November, bringing the months’ supply of homes on the market to 6.6.
The 10.0 percent yearly gain in the sales rate was the strongest since October when sales were up 14.0 percent year-over-year.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011, the NAR said. Foreclosures sold for an average discount of 21 percent below market value in April (compared with an average discount of 19 percent in March), while short sales were discounted 14 percent in April compared with 16 percent in March.
The months’ supply of existing homes for sale remains well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories as tracked by the NAR are 20.3 percent below their year ago level. However, anecdotal evidence suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.
Regionally, existing-home sales rose in April in every region of the country led by a 5.1 percent month-to-month increase in the Northeast where sales were up19.2 percent over April 2011. Sales rose 4.4 percent over March in the West (a 7.3 percent year-year gain), 3.5 percent in the South (6.5 percent year-year) and 1.0 percent in the Midwest (14.4 percent year over year).
The median price of an existing home rose month-to-month and year-to-year in all four regions. At $256,600, the median price of an existing home reached its highest level since August 2010. The median price of an existing home in the South rose to $153,400, the highest level since July 2010 and the median price of an existing home in the West rose to $221,700, also the highest since July 2010.
The year-to-year price gain in the West, 15.9 percent, was the strongest since November 2005. The year-to-year price increase in the Northeast was the first since last June.
From: http://ping.fm/Rj6gh
Wednesday, May 16, 2012
Judicial States Continue to Skew Foreclosure Statistics
by Jann Swanson
Judicial States Continue to Skew Foreclosure Statistics
May 16 2012, 12:39PM
There were substantial improvements in delinquency rates during the first quarter of 2012 according to the National Delinquency Survey for the period released this morning by the Mortgage Bankers Association. At a conference call for media accompanying the release, Jay Brinkmann, MBA's Chief Economist and Senior Vice President of Research and Education said that the combined percentage of loans in foreclosure or at least one payment past due was 11.33 percent, a 120 basis point (bp) decrease from last quarter and 98 from one year ago. This was the lowest that this measure has been since 2008.
This improvement was driven by a 62bp decrease in the rate of loans that were 30 days or more delinquent. Brinkmann said that the first quarter generally experiences a decline in 30-day delinquencies for seasonal reasons but this year the decrease was even larger and that rate, in fact, has returned to historical norms at 3.13 percent.
There was also a decrease in seriously delinquent loans, down 29bp, and this was not accompanied by an increase in foreclosure starts which, in fact, decreased 3bp on a non-seasonally adjusted basis. Brinkmann said, looking at the two figures together leads to the assumption that a lot of very delinquent loans are being resolved in a manner other than foreclosure.
The overall delinquency rate decreased to a seasonally adjusted rate of 7.40 percent, down from 7.58 percent in Q42012 and 8.32 percent in the first quarter of 2011. Loans 90+ days delinquent were at a rate of 3.06 percent versus 3.11 and 3.62 percent.
Nationally the percentage of loans in foreclosure rose slightly but Mike Fratantoni MBA's Vice President of Research and Economics said the top-line figure covers up a couple of trends. "First, the percentage of loans in foreclosure is up for prime and FHA loans. The percentage of subprime loans in foreclosure continues to fall as the subprime loans age and the problems loans are resolved one way or the other. However, the percentage of loans in foreclosure for both FHA loans and prime fixed-rate loans are climbing and are just below all -time records."
"The problem continues to be the slow-moving judicial foreclosure systems in some of the largest states," Franantoni said. While the rate of foreclosure starts is essentially the same in judicial and non-judicial foreclosure states, the percent of loans in the foreclosure process has reached another all-time high in the judicial states, 6.9 percent. In contrast that rate has fallen to 2.8 percent in non-judicial state, the lowest since early 2009."
The difference in the rates is even more disturbing in certain states. In Florida the percent of loans in foreclosure is now 14.31 percent. New Jersey and Illinois are trailing Florida substantially but still have rates of 8.37 percent and 7.46 percent and, Brinkmann said, their rates are increasing. Ten judicial states have rates above the national average of 4.39 percent. On the other hand, among the 29 states using a non-judicial process, only Nevada has a higher rate of loans in foreclosure (6.47 percent) than the national average.
Five state now account for over 52.4 percent of all foreclosures in the country while accounting for only 32.1 percent of the loans services They are Florida, California, Illinois, New York, and New Jersey.
This judicial/non-judicial dichotomy is beginning to play out with FHA loans as well. The foreclosure inventory for FHA loans is 3.83 percent, an increase of 29bp from the previous quarter. The rate in judicial states, however is 5.59 percent compared to 2.69 percent. Fratantoni indicated that this was somewhat the case for VA loans as well. "You have to ask yourself, " he said, "who is going to bear the costs of this differential foreclosure rate? They are being passed on to all FHA borrowers in the form of higher across-the-board increases in insurance premiums, and ultimately to the taxpayers if the FHA insurance fund develops a shortage.
Another problem FHA is encountering is the result of the sharp increase in loan volume they experienced in the 2008-2009 period when other credit dried up. Those loans are now entering the period in their life cycle most when delinquencies commonly occur. Right now, while that vintage of loan accounts for 15 percent of all delinquent loans but represents 47 percent of FHA delinquencies.
In answer to a question during the conference call, Brinkmann said that he had seen little impact from the recent settlement agreement with servicers from five major banks. He said the foreclosure inventory might have built a bit in anticipation of it, but "we know it didn't affect the 90 day bucket." Any impact now that the agreement has been signed might not be noticed as it would have to differentiate itself from everything else that is going on in the system and it would also be felt largely on a state by state basis rather than nationally.
Brinkmann summed up the NDS report saying, "Overall it has good news about where we are going but the bottom line is we are still dependent on the economy." As the job situation has improved so have delinquency figures and as long as this continues and there are no serious problems, such as a melt-down in Europe, we should see more of the same.
From: http://ping.fm/vpiav
Judicial States Continue to Skew Foreclosure Statistics
May 16 2012, 12:39PM
There were substantial improvements in delinquency rates during the first quarter of 2012 according to the National Delinquency Survey for the period released this morning by the Mortgage Bankers Association. At a conference call for media accompanying the release, Jay Brinkmann, MBA's Chief Economist and Senior Vice President of Research and Education said that the combined percentage of loans in foreclosure or at least one payment past due was 11.33 percent, a 120 basis point (bp) decrease from last quarter and 98 from one year ago. This was the lowest that this measure has been since 2008.
This improvement was driven by a 62bp decrease in the rate of loans that were 30 days or more delinquent. Brinkmann said that the first quarter generally experiences a decline in 30-day delinquencies for seasonal reasons but this year the decrease was even larger and that rate, in fact, has returned to historical norms at 3.13 percent.
There was also a decrease in seriously delinquent loans, down 29bp, and this was not accompanied by an increase in foreclosure starts which, in fact, decreased 3bp on a non-seasonally adjusted basis. Brinkmann said, looking at the two figures together leads to the assumption that a lot of very delinquent loans are being resolved in a manner other than foreclosure.
The overall delinquency rate decreased to a seasonally adjusted rate of 7.40 percent, down from 7.58 percent in Q42012 and 8.32 percent in the first quarter of 2011. Loans 90+ days delinquent were at a rate of 3.06 percent versus 3.11 and 3.62 percent.
Nationally the percentage of loans in foreclosure rose slightly but Mike Fratantoni MBA's Vice President of Research and Economics said the top-line figure covers up a couple of trends. "First, the percentage of loans in foreclosure is up for prime and FHA loans. The percentage of subprime loans in foreclosure continues to fall as the subprime loans age and the problems loans are resolved one way or the other. However, the percentage of loans in foreclosure for both FHA loans and prime fixed-rate loans are climbing and are just below all -time records."
"The problem continues to be the slow-moving judicial foreclosure systems in some of the largest states," Franantoni said. While the rate of foreclosure starts is essentially the same in judicial and non-judicial foreclosure states, the percent of loans in the foreclosure process has reached another all-time high in the judicial states, 6.9 percent. In contrast that rate has fallen to 2.8 percent in non-judicial state, the lowest since early 2009."
The difference in the rates is even more disturbing in certain states. In Florida the percent of loans in foreclosure is now 14.31 percent. New Jersey and Illinois are trailing Florida substantially but still have rates of 8.37 percent and 7.46 percent and, Brinkmann said, their rates are increasing. Ten judicial states have rates above the national average of 4.39 percent. On the other hand, among the 29 states using a non-judicial process, only Nevada has a higher rate of loans in foreclosure (6.47 percent) than the national average.
Five state now account for over 52.4 percent of all foreclosures in the country while accounting for only 32.1 percent of the loans services They are Florida, California, Illinois, New York, and New Jersey.
This judicial/non-judicial dichotomy is beginning to play out with FHA loans as well. The foreclosure inventory for FHA loans is 3.83 percent, an increase of 29bp from the previous quarter. The rate in judicial states, however is 5.59 percent compared to 2.69 percent. Fratantoni indicated that this was somewhat the case for VA loans as well. "You have to ask yourself, " he said, "who is going to bear the costs of this differential foreclosure rate? They are being passed on to all FHA borrowers in the form of higher across-the-board increases in insurance premiums, and ultimately to the taxpayers if the FHA insurance fund develops a shortage.
Another problem FHA is encountering is the result of the sharp increase in loan volume they experienced in the 2008-2009 period when other credit dried up. Those loans are now entering the period in their life cycle most when delinquencies commonly occur. Right now, while that vintage of loan accounts for 15 percent of all delinquent loans but represents 47 percent of FHA delinquencies.
In answer to a question during the conference call, Brinkmann said that he had seen little impact from the recent settlement agreement with servicers from five major banks. He said the foreclosure inventory might have built a bit in anticipation of it, but "we know it didn't affect the 90 day bucket." Any impact now that the agreement has been signed might not be noticed as it would have to differentiate itself from everything else that is going on in the system and it would also be felt largely on a state by state basis rather than nationally.
Brinkmann summed up the NDS report saying, "Overall it has good news about where we are going but the bottom line is we are still dependent on the economy." As the job situation has improved so have delinquency figures and as long as this continues and there are no serious problems, such as a melt-down in Europe, we should see more of the same.
From: http://ping.fm/vpiav
Monday, May 14, 2012
Shadow Inventory: 46 Months to Clear Distressed Housing Supply
Shadow Inventory: 46 Months to Clear Distressed Housing Supply
05/14/2012 By: Carrie Bay
It will take 46 months to clear the market’s supply of distressed homes, or the shadow inventory, according to estimates from Standard & Poor’s Rating Services based on first-quarter 2012 data.
The agency’s latest estimate came in one month shy of the liquidation timeline determined in the fourth quarter of 2011.
While national residential mortgage liquidation rates appeared stable over the first three months of this year, these rates varied widely between local markets, which prevented any significant reduction in S&P’s months-to-clear estimate, the agency explained in its report.
Regional variations in how quickly servicers can clear the backlog of nonperforming loans are primarily due to differences in foreclosure procedures, judicial vs. non-judicial.
As of first-quarter 2012, S&P says its months-to-clear estimate in judicial states was almost 2.5x as long as non-judicial states.
S&P includes in the shadow inventory all outstanding properties on which the mortgage payments are 90 or more days delinquent, properties in foreclosure, and properties that are REO. The agency also includes 70 percent of the loans that became current, or “cured,” from 90-day delinquency within the past 12 months because S&P says these loans are more likely to re-default.
S&P’s calculation of the months to clear the shadow inventory is the ratio of the total volume of distressed loans to the six-month moving average of liquidations. Although S&P’s analysis of the shadow inventory uses only non-agency loan data, the agency’s analysts believe the months-to-clear is similarly high for the market as a whole.
The volume of these distressed U.S. non-agency residential mortgages—which excludes loans from government sponsored entities, such as Fannie Mae and Freddie Mac—remained extremely high at $354 billion in the first quarter, according to S&P. The agency does note, however, that the industry’s distress volume has declined in each quarter since mid-2010.
To put the shadows into perspective, S&P says this latest number, which is based on the original balances of the loans, represents slightly less than one-third of the outstanding non-agency residential mortgage-backed securities (RMBS) market in the United States.
The New York City metropolitan statistical area (MSA) has the highest months-to-clear in the nation, at 202 months.
S&P also reported that the U.S. monthly first default rate fell to 0.67 percent in March 2012, the lowest level since May 2007. The first default rate is the percentage of loans that became 90-plus-days delinquent in that month for the first time, as a percent of all loans that have never before been at least 90 days or more past due.
This means that properties are entering the shadow inventory at a slower rate. S&P says with this improvement, the speed at which servicers can liquidate or cure nonperforming loans will determine the size of the shadow inventory going forward.
Default rates have been falling since first-quarter 2009 and the average national liquidation rate has stabilized, according to S&P—both factors that bode well for getting a handle on the magnitude of the industry’s shadow inventory and its inevitable impact.
From: http://ping.fm/Jk0C7
05/14/2012 By: Carrie Bay
It will take 46 months to clear the market’s supply of distressed homes, or the shadow inventory, according to estimates from Standard & Poor’s Rating Services based on first-quarter 2012 data.
The agency’s latest estimate came in one month shy of the liquidation timeline determined in the fourth quarter of 2011.
While national residential mortgage liquidation rates appeared stable over the first three months of this year, these rates varied widely between local markets, which prevented any significant reduction in S&P’s months-to-clear estimate, the agency explained in its report.
Regional variations in how quickly servicers can clear the backlog of nonperforming loans are primarily due to differences in foreclosure procedures, judicial vs. non-judicial.
As of first-quarter 2012, S&P says its months-to-clear estimate in judicial states was almost 2.5x as long as non-judicial states.
S&P includes in the shadow inventory all outstanding properties on which the mortgage payments are 90 or more days delinquent, properties in foreclosure, and properties that are REO. The agency also includes 70 percent of the loans that became current, or “cured,” from 90-day delinquency within the past 12 months because S&P says these loans are more likely to re-default.
S&P’s calculation of the months to clear the shadow inventory is the ratio of the total volume of distressed loans to the six-month moving average of liquidations. Although S&P’s analysis of the shadow inventory uses only non-agency loan data, the agency’s analysts believe the months-to-clear is similarly high for the market as a whole.
The volume of these distressed U.S. non-agency residential mortgages—which excludes loans from government sponsored entities, such as Fannie Mae and Freddie Mac—remained extremely high at $354 billion in the first quarter, according to S&P. The agency does note, however, that the industry’s distress volume has declined in each quarter since mid-2010.
To put the shadows into perspective, S&P says this latest number, which is based on the original balances of the loans, represents slightly less than one-third of the outstanding non-agency residential mortgage-backed securities (RMBS) market in the United States.
The New York City metropolitan statistical area (MSA) has the highest months-to-clear in the nation, at 202 months.
S&P also reported that the U.S. monthly first default rate fell to 0.67 percent in March 2012, the lowest level since May 2007. The first default rate is the percentage of loans that became 90-plus-days delinquent in that month for the first time, as a percent of all loans that have never before been at least 90 days or more past due.
This means that properties are entering the shadow inventory at a slower rate. S&P says with this improvement, the speed at which servicers can liquidate or cure nonperforming loans will determine the size of the shadow inventory going forward.
Default rates have been falling since first-quarter 2009 and the average national liquidation rate has stabilized, according to S&P—both factors that bode well for getting a handle on the magnitude of the industry’s shadow inventory and its inevitable impact.
From: http://ping.fm/Jk0C7
Thursday, May 10, 2012
Fiserv Expects Home Prices to Stabilize This Year Despite Price Declines
Fiserv Expects Home Prices to Stabilize This Year Despite Price Declines
05/09/2012 By: Esther Cho
Analyzing the housing market through the perspective of 384 markets, Fiserv Case-Shiller Indexes pointed to a slow, but steady pace toward recovery after dramatic prices declines.
According to the Fiserv indexes, in the fourth quarter of 2011, home prices in 18 percent, or 70, of the 384 metro areas tracked were either unchanged or had increased compared to a year ago during the same quarter. Also 32 percent of the metros, or 122, saw prices decline by less than 2 percent.
On the other hand, nearly one-half of the metro areas, or 191, saw prices decrease by more than 2 percent, including double-digit losses in Atlanta (-12.8 percent), Reno, Nevada (-10.8 percent), and Tucson, Arizona (-10 percent).
In the fourth quarter of 2011, the average price of a U.S. single-family home fell four percent from the year-ago period, and Fiserv Case-Shiller projects a further decline of 0.8 percent by the end of 2012.
“The year-over-year decline in average home prices does not tell the full story of stabilization and recovery,” said David Stiff, chief economist for Fiserv. “Nearly all non-price metrics – existing home sales, rising home order volumes, increased spending on home improvement, a jump in multi-family construction – indicate that the housing sector hit bottom last year and has started along a path of slow recovery.”
Stiff also added that they expect home prices, which tend to fall behind changes in sales activity, to stabilize by the end of summer, then rise at an annualized rate of 3.9 percent over the next five years.
Markets that showed improvement after large price declines include Detroit, Michigan (+9.8 percent), Cape Coral, Florida (+3.5 percent), and Port St. Lucie, Florida (+1.1 percent).
According Fiserv, some of the hardest-hit markets are expected to see the fastest growth during recovery, while home prices in markets that were not as adversely affected by the crises are expected to increase at a slower rate.
Twenty-two of the 25 markets that have seen the largest decline in home prices from peak to the end of 2011 are in California and Florida.
When distinguishing between the best-performing markets versus the worst, in the 2011 fourth quarter, 13 out of the 30 best had unemployment rates of seven percent or less and 14 had a median family income above the national average.
Seven of the 10 worst-performing markets in 2011 had unemployment rates higher than the national average and median family incomes below the national average.
When home prices do hit bottom, Fiserv said they will be 35 percent lower than their peak level in the first quarter of 2006.
With the prices declines and low mortgage rates, affordability is greater than ever. For a conventional mortgage, the payment for a median-priced home represents 12 percent of median-family income, the lowest percentage on record since 1971.
Fiserv Case Shiller anticipates the affordability will encourage more first-time and trade-up buyers into the market as apartment rents increase. The growth in demand will then put a floor under home prices.
Fiserv is a provider of financial services technology solutions. The indexes used data from the FHFA and include thousands of zip codes, counties, metro areas, and state markets. The Fiserv Case-Shiller home price forecasts are produced by Fiserv and Moody’s Analytics.
From: http://ping.fm/7FSu0
05/09/2012 By: Esther Cho
Analyzing the housing market through the perspective of 384 markets, Fiserv Case-Shiller Indexes pointed to a slow, but steady pace toward recovery after dramatic prices declines.
According to the Fiserv indexes, in the fourth quarter of 2011, home prices in 18 percent, or 70, of the 384 metro areas tracked were either unchanged or had increased compared to a year ago during the same quarter. Also 32 percent of the metros, or 122, saw prices decline by less than 2 percent.
On the other hand, nearly one-half of the metro areas, or 191, saw prices decrease by more than 2 percent, including double-digit losses in Atlanta (-12.8 percent), Reno, Nevada (-10.8 percent), and Tucson, Arizona (-10 percent).
In the fourth quarter of 2011, the average price of a U.S. single-family home fell four percent from the year-ago period, and Fiserv Case-Shiller projects a further decline of 0.8 percent by the end of 2012.
“The year-over-year decline in average home prices does not tell the full story of stabilization and recovery,” said David Stiff, chief economist for Fiserv. “Nearly all non-price metrics – existing home sales, rising home order volumes, increased spending on home improvement, a jump in multi-family construction – indicate that the housing sector hit bottom last year and has started along a path of slow recovery.”
Stiff also added that they expect home prices, which tend to fall behind changes in sales activity, to stabilize by the end of summer, then rise at an annualized rate of 3.9 percent over the next five years.
Markets that showed improvement after large price declines include Detroit, Michigan (+9.8 percent), Cape Coral, Florida (+3.5 percent), and Port St. Lucie, Florida (+1.1 percent).
According Fiserv, some of the hardest-hit markets are expected to see the fastest growth during recovery, while home prices in markets that were not as adversely affected by the crises are expected to increase at a slower rate.
Twenty-two of the 25 markets that have seen the largest decline in home prices from peak to the end of 2011 are in California and Florida.
When distinguishing between the best-performing markets versus the worst, in the 2011 fourth quarter, 13 out of the 30 best had unemployment rates of seven percent or less and 14 had a median family income above the national average.
Seven of the 10 worst-performing markets in 2011 had unemployment rates higher than the national average and median family incomes below the national average.
When home prices do hit bottom, Fiserv said they will be 35 percent lower than their peak level in the first quarter of 2006.
With the prices declines and low mortgage rates, affordability is greater than ever. For a conventional mortgage, the payment for a median-priced home represents 12 percent of median-family income, the lowest percentage on record since 1971.
Fiserv Case Shiller anticipates the affordability will encourage more first-time and trade-up buyers into the market as apartment rents increase. The growth in demand will then put a floor under home prices.
Fiserv is a provider of financial services technology solutions. The indexes used data from the FHFA and include thousands of zip codes, counties, metro areas, and state markets. The Fiserv Case-Shiller home price forecasts are produced by Fiserv and Moody’s Analytics.
From: http://ping.fm/7FSu0
Wednesday, May 9, 2012
BofA to Offer Principal Writedowns to 200K Delinquent Borrowers
BofA to Offer Principal Writedowns to 200K Delinquent Borrowers
05/08/2012 By: Carrie Bay
Bank of America began mailing out more than 200,000 letters this week targeting borrowers thought to be eligible for principal-reducing modifications under terms of the recent settlement the company and four other servicers reached with the federal government and 49 state attorneys general.
To be eligible, a homeowner must owe more on the mortgage than the property is worth today and must have been at least 60 days behind on payments on January 31, 2012.
In addition, the homeowner’s monthly housing costs must be more than 25 percent of gross household income, and the loan must be owned and serviced by Bank of America or serviced for another investor that has authorized the bank to grant principal writedowns.
Officials at Bank of America estimate average monthly savings of 30 percent for customers who qualify for the program.
The North Carolina-based lender said Tuesday that it has already extended about 5,000 trial modification offers involving principal reductions since March, with a potential total of more than $700 million in forgiven mortgage debt. Homeowners are required to make at least three timely trial payments before the modification can be made permanent.
“Building on home retention and payment assistance programs already in place, we are meeting our obligation to deliver this additional relief to our customers following the completion of the recent global mortgage settlement,” said Ron Sturzenegger, Bank of America’s executive over legacy asset servicing.
“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors, and communities,” Sturzenegger added.
The first letters of Bank of America’s mail blitz should start landing in mailboxes this week with the majority of the 200,000-plus identified candidates receiving notice by the third quarter of this year.
Bank of America has committed to slashing $11 billion in mortgage debt for struggling homeowners as part of the settlement agreement reached. But with BofA expecting an average principal reduction of $150,000 for each borrower, crude estimates put the tab potentially as high as $28 billion to $30 billion if a large majority of those targeted respond to the company’s outreach efforts and satisfy the qualifying criteria.
From: http://ping.fm/8Qqc4
05/08/2012 By: Carrie Bay
Bank of America began mailing out more than 200,000 letters this week targeting borrowers thought to be eligible for principal-reducing modifications under terms of the recent settlement the company and four other servicers reached with the federal government and 49 state attorneys general.
To be eligible, a homeowner must owe more on the mortgage than the property is worth today and must have been at least 60 days behind on payments on January 31, 2012.
In addition, the homeowner’s monthly housing costs must be more than 25 percent of gross household income, and the loan must be owned and serviced by Bank of America or serviced for another investor that has authorized the bank to grant principal writedowns.
Officials at Bank of America estimate average monthly savings of 30 percent for customers who qualify for the program.
The North Carolina-based lender said Tuesday that it has already extended about 5,000 trial modification offers involving principal reductions since March, with a potential total of more than $700 million in forgiven mortgage debt. Homeowners are required to make at least three timely trial payments before the modification can be made permanent.
“Building on home retention and payment assistance programs already in place, we are meeting our obligation to deliver this additional relief to our customers following the completion of the recent global mortgage settlement,” said Ron Sturzenegger, Bank of America’s executive over legacy asset servicing.
“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors, and communities,” Sturzenegger added.
The first letters of Bank of America’s mail blitz should start landing in mailboxes this week with the majority of the 200,000-plus identified candidates receiving notice by the third quarter of this year.
Bank of America has committed to slashing $11 billion in mortgage debt for struggling homeowners as part of the settlement agreement reached. But with BofA expecting an average principal reduction of $150,000 for each borrower, crude estimates put the tab potentially as high as $28 billion to $30 billion if a large majority of those targeted respond to the company’s outreach efforts and satisfy the qualifying criteria.
From: http://ping.fm/8Qqc4
Tuesday, May 8, 2012
Short Sales Will Increase Dramatically in 2012
Short Sales Will Increase Dramatically in 2012
by The KCM Crew on May 7, 2012
We believe that short sales will be a major part of the real estate market in 2012. That is why we have dedicated this entire week to posts exclusively on this subject. We hope that by the end of the week you have a better handle on the need for short sales and a better understanding of the process. – the KCM Crew
It seems that the banks have finally realized that a short sale is a better option than foreclosure for them, the homeowner and the neighborhood. It is for this reason we believe that 2012 will come to be known as the year of the short sale. CNN Money reported on this exact point:
“We believe 2012 could be a record year for short sales,” said Daren Blomquist, vice president at RealtyTrac.
Banks are showing signs of being more open and willing to approve the deals — even if it means accepting less money. The average sales price for a short sale was $174,120 in January, down 4% from December and 10% year-over-year.
Market Watch also addressed the short sale situation recently:
Fitch expects the increase in short sales to continue because of the potential benefits afforded to both lenders and borrowers. Some borrowers may prefer short sales because, though they cannot stay in the property, they often walk away with cash incentives from lenders and healthier credit reports unmarred by foreclosure. For lenders, short sales provide a more efficient and cheaper alternative to the increasingly lengthy and costly foreclosure process.
Why Are the Banks Now Leaning Towards Short Sales?
The simple answer is that the banks lose less money when doing a short sale. The CNN Money article mentioned above explains:
Typically, banks get about 20% less for a foreclosed home. Foreclosure can also take years to unload, during which expenses, like property taxes, insurance and other expenses, mount up.
The Market Watch report breaks it down further:
Short sales…are currently getting completed 20 months after the last payment made on the loan, approximately 10 months less than the average time to foreclose. Shorter timelines reduce lenders’ carrying costs (i.e. accrued loan interest and property taxes, insurance, and maintenance) and eliminate most of the legal expenses associated with foreclosure and liquidation. As a result, loss severities tend to be considerably lower. Historically, for loans with similar attributes, short sales have severities 10%-15% less than REO sales. As the proportion of short sales increases, we expect average loss severities to improve further.
How Many Short Sales Could Be Completed?
JPMorgan has projected that over 500,000 short sales will be done this year. Also, NECN.com recently reported:
RealtyTrac estimates that if the January numbers it found hold up, there would be about 105,000 “pre-foreclosure” sales of homes, most of them short sales, during the first quarter of this year, and at that rate something like 400,000 for the year.
How Long Will Short Sales Be a Major Part of the Market?
The NECN article shows us that short sales are here to stay for some time.
According to the Mortgage Bankers Association, there are nearly 3.5 million homeowners delinquent on their mortgages by at least one month, including 1.5 million who are 90 days or more behind on paying their mortgage. And there are 12.5 million homeowners still who are “underwater,” owing more on their mortgage than their home is worth. That suggests that at the current rates, barring some spectacular economic recovery, it would take years, even decades, for short sales alone to clean up the mortgage mess that remains.
Short sales are here to stay. We must accept this fact and work hard to learn the process and apply it where it makes sense.
From: http://www.kcmblog.com/2012/05/07/short-sales-will-increase-dramatically-in-2012/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28The+KCM+Blog%29
by The KCM Crew on May 7, 2012
We believe that short sales will be a major part of the real estate market in 2012. That is why we have dedicated this entire week to posts exclusively on this subject. We hope that by the end of the week you have a better handle on the need for short sales and a better understanding of the process. – the KCM Crew
It seems that the banks have finally realized that a short sale is a better option than foreclosure for them, the homeowner and the neighborhood. It is for this reason we believe that 2012 will come to be known as the year of the short sale. CNN Money reported on this exact point:
“We believe 2012 could be a record year for short sales,” said Daren Blomquist, vice president at RealtyTrac.
Banks are showing signs of being more open and willing to approve the deals — even if it means accepting less money. The average sales price for a short sale was $174,120 in January, down 4% from December and 10% year-over-year.
Market Watch also addressed the short sale situation recently:
Fitch expects the increase in short sales to continue because of the potential benefits afforded to both lenders and borrowers. Some borrowers may prefer short sales because, though they cannot stay in the property, they often walk away with cash incentives from lenders and healthier credit reports unmarred by foreclosure. For lenders, short sales provide a more efficient and cheaper alternative to the increasingly lengthy and costly foreclosure process.
Why Are the Banks Now Leaning Towards Short Sales?
The simple answer is that the banks lose less money when doing a short sale. The CNN Money article mentioned above explains:
Typically, banks get about 20% less for a foreclosed home. Foreclosure can also take years to unload, during which expenses, like property taxes, insurance and other expenses, mount up.
The Market Watch report breaks it down further:
Short sales…are currently getting completed 20 months after the last payment made on the loan, approximately 10 months less than the average time to foreclose. Shorter timelines reduce lenders’ carrying costs (i.e. accrued loan interest and property taxes, insurance, and maintenance) and eliminate most of the legal expenses associated with foreclosure and liquidation. As a result, loss severities tend to be considerably lower. Historically, for loans with similar attributes, short sales have severities 10%-15% less than REO sales. As the proportion of short sales increases, we expect average loss severities to improve further.
How Many Short Sales Could Be Completed?
JPMorgan has projected that over 500,000 short sales will be done this year. Also, NECN.com recently reported:
RealtyTrac estimates that if the January numbers it found hold up, there would be about 105,000 “pre-foreclosure” sales of homes, most of them short sales, during the first quarter of this year, and at that rate something like 400,000 for the year.
How Long Will Short Sales Be a Major Part of the Market?
The NECN article shows us that short sales are here to stay for some time.
According to the Mortgage Bankers Association, there are nearly 3.5 million homeowners delinquent on their mortgages by at least one month, including 1.5 million who are 90 days or more behind on paying their mortgage. And there are 12.5 million homeowners still who are “underwater,” owing more on their mortgage than their home is worth. That suggests that at the current rates, barring some spectacular economic recovery, it would take years, even decades, for short sales alone to clean up the mortgage mess that remains.
Short sales are here to stay. We must accept this fact and work hard to learn the process and apply it where it makes sense.
From: http://www.kcmblog.com/2012/05/07/short-sales-will-increase-dramatically-in-2012/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28The+KCM+Blog%29
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