Tag Archives: foreclosure


FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

The Federal Housing Administration (FHA) is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released Friday.

Borrowers who experienced a foreclosure must wait at least three years before getting a chance to get approved for an FHA loan, but with the new guideline, certain borrowers who lost their home as a result of an economic hardship may be considered even earlier.

For borrowers who went through recession-related financial event, FHA stated it realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”

In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond their control. The lender also needs to verify the income loss was at least 20 percent for a period lasting for at least six months.

Additionally, borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.

According to the letter, recovery from an economic event involves reestablishing “satisfactory credit” for at least 12 months. Criteria for satisfactory credit include 12 months of good payment history on payments such as a mortgage, rent, or credit account.

The new guidance is for case numbers assigned on or after August 15, 2013, and is effective through September 30, 2016.

By: Esther Cho, DSNews


Fla. Pushing Ex-owners to Apply for Lawsuit Money

 If you know of homeowners who lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2011, Florida Attorney General Pam Bondi asks that you provide them with this website address – nationalmortgagesettlement.com – and tell them to act now.

Part of the $32 billion national mortgage fraud settlement with Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo included a $1.5 billion fund to compensate borrowers who were foreclosed on after Jan. 1, 2008.

Approximately $170 million is available for cash payments to Florida borrowers. As of last Thursday, 51 percent of eligible homeowners had applied for assistance. Many others have not responded to multiple mailers and live operator calls informing them they may be eligible for modified loans and reduced mortgages.

“This week, I’m going around the state to find these individuals,” Bondi told Realtors attending the Florida Realtors Mid-winter Meetings last week in Orlando. “If I have to, I’ll stand on the steps of every city hall in the state and beg people who deserve their money to come forward.”

Borrowers who submit a claim online will see a deadline notice of Jan. 18, 2013. However a spokesperson for the Attorney General’s office says claims administrators will accept claims forms through Feb. 15, 2013. The form must be filled out completely and properly or the claim will not be paid.

Individuals who have questions or need help filing their claims can contact the settlement administrator, toll-free, at 866-430-8358, or send questions by email to administrator@nationalmortgagesettlement.com.

Source: Florida Realtors


Once-Invisible Inventory Can Be Seen on Zillow

Instead of finding clever ways to chase shadow inventory, Zillow has decided to make things easy for thrill-seeking homebuyers and investors who are trying to track down unlisted, invisible inventory.

The real estate data provider announced Thursday it is now providing information on 1.2 million pre-foreclosure and foreclosed properties at no cost. The homes provided through Zillow are not yet listed and apparently, are yet to be found on any Multiple Listing Service (MLS).

Before, only certain investors were privy to such information.

“For the first time, home shoppers are able to see the entire scope of housing inventory in their area, both pre-market and for-sale, side by side,” the company said in a release.

According to Zillow, 55 percent of homebuyers have considered purchasing a foreclosure, but the problem was where to find the information.

“This is another tremendous step forward in consumer empowerment. Zillow is taking information that was really only available to a select group – in this case, savvy investors – and making it more easily available to interested home buyers,” said Spencer Rascoff, Zillow’s CEO. “What’s more, bringing this information to light, and taking this inventory out of the shadows, can help bring these homes to market faster than ever before.”“

The pre-market inventory includes nearly 1 million pre-foreclosure properties, or homes that have begun the foreclosure process or have been scheduled for auction.

In addition, Zillow’s inventory has more than 260,000 unlisted foreclosed properties.

Zillow will also include its own estimate of the sale price of the home if sold as a foreclosure with the percentage and dollar discount based on fair market value. Foreclosure details will also be included, such as the timeline of the foreclosure process, unpaid balance, and the lender.

Another added feature will be 147,000 Make Me Move properties. For this feature, homeowners name a price for which they might sell their home.

Users can view pre-foreclosure, foreclosed, and Make Me Move inventory by visiting Zillow.com and conducting a search using the pre-market filter. Foreclosure details are available for those who sign in.

Seattle-based Zillow is a real estate information marketplace and provides information about homes, real estate listings, rental listings, and mortgages through its mobile applications and websites.

By: Esther Cho, DSNews


Is the Industry Seeing Sunlight Break Through the Shadows?

The shadow inventory that previously darkened industry outlook is beginning to fade. In fact, we may soon begin to see the sunlight on the horizon.

In July shadow inventory – unlisted homes that are seriously delinquent, in foreclosure, or held as REOs – declined 10.2 percent year-over-year, falling to 2.3 million homes, according to CoreLogic’s Shadow Inventory Report released Tuesday.

“This is yet another hopeful sign that the housing market is slowly healing,” said Anand Nallathambi, president and CEO of CoreLogic.

Last July’s 2.6 million-home shadow inventory was eerily close to the level recorded two years prior in May 2009. Now, the heavy shadows are lifting.

The current shadow inventory is valued at $382 billion, down from $397 billion in July 2011.

The current shadow inventory equates to a six-month supply, according to CoreLogic.

The analytics firm also reports the rate of distressed sales taking homes out of the shadows is close to matching the rate of newly seriously delinquent homes falling into the shadows.

Seriously delinquent homes – those 90 or more days delinquent – are the most common type of home in today’s shadow inventory, making up 1 million of the 2.3 million-home total.

About 900,000 homes are currently in foreclosure, and another 345,000 are in REO.

Despite fading shadows nationally, some states continue to struggle with long foreclosure timelines.

“While a lower outflow of distressed sales helps alleviate downward home price pressure, long foreclosure timelines in some parts of the country causes these pools of shadow inventory to remain in limbo for an extended period of time,” said Mark Flemming, chief economist at CoreLogic.

Forty-five percent of the shadow inventory is concentrated in five states – Florida, California, Illinois, New York, and New Jersey.

By: Krista Franks Brock, DSNews


Shadow Inventory Down…in Most States

 

 

 

 

 

 

 

 

 

 

CoreLogic, in their most recent foreclosure report, revealed that approximately 1.3 million homes, or 3.2 percent of all homes with a mortgage, were in the national foreclosure inventory as of August 2012 compared to 1.4 million, or 3.4 percent, in August 2011. Month-over-month, the national foreclosure inventory was unchanged from July 2012 to August 2012.

CoreLogic identifies foreclosure inventory as “the share of all mortgaged homes in any stage of the foreclosure process”. Their report revealed that 32 of the 50 states have seen their percentage of foreclosure inventory decrease compared to last year. Though foreclosure inventory is slowly shrinking nationally, some states are headed in the opposite direction.

The four states with the highest foreclosure inventory as a percentage of all mortgaged homes according to CoreLogic:

  • Florida – 11%
  • New Jersey – 6.5 %
  • New York – 5.2%
  • Illinois – 4.8 %

These numbers coincide with those reported by LPS in the recent Mortgage Monitor which revealed that foreclosure starts in judicial states increased by 21% month-over-month while decreasing by 3% in non-judicial states. All the states listed above are judicial states.

LPS ranked states by how long it would take to clear their shadow inventory at that states’ current sales pace for foreclosed properties. Using that measure, New York and New Jersey have a much larger pipeline of distressed properties than any other state. (Florida and Illinois are not on this list because they are clearing their distressed properties at a much faster pace. Their pipeline is shrinking more rapidly).

These facts caused Mark Zandi, chief economist of Moody’s Analytics, to report:

“Shadow inventory is falling in much of the country –except for the Northeast. The implication is that house prices will be much weaker in the Northeast in coming years as these distressed properties eventually get sold.”

 

By: The KCM Crew, KCM Blog


Short sales? Foreclosures? Principal reductions? The tax man may soon come a calling

Mark Baer listed his Walsingham Heights home for sale, buyers offered $100,000 less than what he owed on his mortgages.

Baer, 50, believed he could persuade the bank to forgive the difference. But the deal posed a big risk: If not done by the end of the year, it could cost him $30,000 in taxes.

“If I do close before that deadline, I will feel like the luckiest man in the world,” Baer said. “If you owe the government money … they can come take your last pair of sneakers. They could take everything.”

Starting Jan. 1, underwater homeowners could be in for a painful surprise: The Internal Revenue Service will begin counting most forgiven mortgage debt as income that can be taxed.

Foreclosed? You’ll be taxed on what’s left on your mortgage. Win a write-down on your principal? You’ll pay taxes on what was cut. Even short sales, the distressed market’s new norm, will be taxed on what was still owed.

For example, if a bank reduces a mortgage principal by $100,000, that homeowner would owe taxes on that amount because it would be treated as income. A homeowner in a 20 percent tax bracket would owe $20,000.

The tax time bomb could serve as a costly new indignity for homeowners. The fallout would be particularly drastic in the Tampa Bay area, where the foreclosure rate remains high and nearly half of all mortgage holders owe more than their homes are worth.

It could also sludge up the housing market as it teeters toward recovery, real estate agents said. Spooked potential sellers could dodge the taxes by staying put in their homes. Instead of the confidence that comes with a fresh start, they would remain burdened by a financial anvil.

“If (tax relief) is not extended, you’re going to get a bunch of people stuck in short sales … and they’ll never be able to get out,” said Keller Williams agent Steve Capen. “I don’t think it would be good for anybody.”

The change comes with the end of the Mortgage Forgiveness Debt Relief Act, passed by Congress in 2007 at the dawn of the housing bust. It allowed homeowners to write off the “phantom income” of forgiven debt but is set to expire Dec. 31.

The law allows homeowners to write off up to $2 million in mortgage debt this year, as long as it was spent on buying or improving a primary home.

The IRS will provide for some very limited exceptions after the provision’s end, meaning most homeowners would have no chance to scrape past the tax unscathed.

Securing a deficiency waiver will keep bank collectors away, but not the IRS. Even a bankruptcy is not likely to remove the extra tax.

Congress has talked of an extension, but final approval is far from guaranteed in a polarized election year. Extending the provision for two years would cost the government more than $2 billion in tax revenue, Congressional Budget Office records show, at a time when Republicans and Democrats both crow about cutting deficits.

Beth Cromwell, a short sale processer with Hillsborough Title, is telling worried homeowners that she would bet on an extension.

“There’s too many short sales that haven’t even been approved yet,” Cromwell said. “If they don’t (extend), they’re just going to create a wave of people filing for bankruptcy.”

Others, like attorney Charles Gallagher, are more doubtful of an 11th-hour rescue. “I’m not real hopeful D.C. will come up with a fix by the end of the year,” he said.

Lenders must forgive the debt by Dec. 31 for homeowners to make the cut, and short sales and other forgiveness measures can often take longer than 90 days to process.

“If you want to get in by the end of the year, you’d need to list your house today,” and even then it might be too late, Capen said. “I have a feeling December is going to be a mess.”

By: Drew Harwell, Tampa Bay Times


Housing Crisis to End in 2012 as Banks Loosen Credit Standards

By: Krista Franks Brock, DSNews.com

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 to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago. Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters. However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit 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, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.


Radar Logic: 2011 Home Bargains May Continue This Year

By: Krista Franks Brock, DSnews.com

Last year was a good year for home bargain-hunters, according to the latest data from Radar Logic. The firm’s January report revealed a 5.42 percent decline in prices from January 2011 to January 2012 and a simultaneous 7.7 percent increase in transactions.

Radar Logic surveys 25 metropolitan statistical areas on a monthly basis.

However, despite the year-over-year increase, home sales decreased 23.5 percent in the month ending January 19. The decline was greater among traditional sales, which fell 25.9 percent, than distressed sales, which declined 15 percent.

The discrepancy between traditional and distressed sales enhanced the overall price decline, according to the Radar Logic report, which stated, “the relative increase in distressed sales weighed on the RPX Composite, exacerbating its decline.”

The 5.42 percent price decline over the year brought Radar Logic’s composite to its lowest rate since July 2002.

However, the rate of decline did slow toward the end of 2011, but Radar Logic nonetheless suggests the market has not yet reached bottom.

“Frankly, I don’t think we’ve reached the bottom in housing prices,” said Quinn Eddins, director of research at Radar Logic.

Supply continues to outpace demand “particularly if you consider homes in the foreclosure process and those under water,” according to Eddins.

“At very least the excess supply will delay the recovery in housing prices, and could well push prices lower,” Eddins said.

Radar Logic predicts prices will remain flat this year and next before increasing “at an accelerating pace” in 2014 and 2015.


Home Affordability Index Reaches Record-High Level

Reprinted from DSnews.com
Written by Esther Cho

Home affordability has reached the highest peak since 1970, which is when the data was first recorded, according to National Association of Realtor’s (NAR) housing affordability index. The index rose to 206.1 in January, and an index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced single-family home, assuming a 20 percent down payment and 25 percent of gross income for mortgage principal and interest payments.

“This is the first time the housing affordability index has broken the two hundred mark, meaning the typical family has roughly double the income needed to purchase a median-priced home,” said Moe Veissi, NAR president.

While projections about future mortgage rates and home prices have been mixed, NAR expects little change and anticipates affordability levels will stay high through 2012.

“Housing inventory levels have declined to a point where conditions are becoming much more balanced in much of the country,” Veissi said. “If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth.”

The index is based on the relationship between median home price, median family income, and the average mortgage interest rate.