Distressed Dispositions Outpace New Delinquencies as Shadows Shrink

The industry’s shadows are shrinking, according to CoreLogic. The residential shadow inventory of unlisted REOs and soon-to-be REOs stood at 1.6 million units as of July 2011, based on the analytics firm’s calculations. CoreLogic says that tally represents a supply of five months and is down from 1.7 million units in April and 1.9 million units in July of 2010.

“The moderate decline in shadow inventory is being driven by a pace of new delinquencies that is slower than the disposition pace of distressed assets,” CoreLogic said in a report released Tuesday. CoreLogic estimates the current stock of properties in the shadow inventory by calculating the number of distressed properties not currently listed on multiple listing services that are seriously delinquent (90 days or more), in foreclosure, and real estate owned (REO) by lenders. Of the 1.6 million properties currently in the shadow inventory, CoreLogic’s study shows that 770,000 units are seriously delinquent (2.2-months’ supply), 430,000 are in some stage of foreclosure (1.2-months’ supply) and 390,000 are already in REO (1.1-months’ supply). As of July 2011 the shadow inventory is 22 percent lower than its peak level, reported by CoreLogic to be 2 million units, or an 8.4-months’ supply, in January 2010.

The company also highlighted the fact that the aggregate current mortgage debt outstanding of the shadow inventory was $336 billion in July 2011, down 18 percent from $411 billion a year earlier.

“The steady improvement in the shadow inventory is a positive development for the housing market,” said Mark Fleming, chief economist for CoreLogic. “However, continued price declines, high levels of negative equity, and a sluggish labor market will keep the shadow supply elevated for an extended period of time.”

Based on CoreLogic’s market assessment, the total housing inventory – including both the shadow inventory and visible inventory listed for sale – was 5.4 million units in July of this year, down from 6.1 million units 12 months earlier.
The shadow inventory accounts for 29 percent of the combined shadow and visible inventories.

Lawmakers Consider Making Florida a Non-Judicial State

Florida has one of the longest foreclosure timelines in the country, and some state lawmakers hope to shorten that timeline by removing the courts from the process. Florida is one of more than 20 judicial states – states that require foreclosures to funnel through the courts before becoming official.
According to LPS, “The pipeline ratio in judicial states is more than three times that of non-judicial states.” The Florida Bankers Association has supported the idea of removing the courts for the last several years, but the idea was not embraced by lawmakers when the proposed it in 2010. Now lawmakers have taken an interest. Governor Rick Scott told the Sun Sentinel he is interested in learning more about the prospect.

“Well, I want to make sure that we have an efficient process, so we don’t create a reason for banks or whoever lends money not to lend money in Florida,” Scott told the Sun Sentinel. “When you talk to people that are in the system now they say it’s 600 days to get through foreclosure. All that does is create another incentive for people to not lend money when we want people to lend money to our state.”

Anthony DiMarco, EVP of government relations for the Florida Bankers Association told the Miami Herald Florda’s housing crisis is the result of a long line of homes waiting stagnant in the foreclosure process.
“If you can move more quickly, properties can get back on the market, and it will stimulate the economy,” DiMarco told the Miami Herald. “You won’t have blight. Property taxes will get paid. Condo fees and homeowners association fees will be paid. People will buy paint and furniture.”

However, Rep. Darren Soto (D-Florida) spoke out in opposition to the idea of making Florida a non-judicial state. He told the Miami Herald, “I don’t think we need to be replacing people’s rights with expediency, particularly when we’re talking about property rights.”

Article is from DSnews.com.

BofA May Sell Mortgage Unit to Fortress: Report








Bank of America Corp is in talks to sell its correspondent mortgage lending unit to a division of Fortress Investment Group LLC, the Wall Street Journal reported on Friday.

The largest U.S. bank by assets, which has been saddled by losses and litigation related to its residential mortgage business, last month said it would either wind down or sell the correspondent business, which buys loans from other banks and mortgage brokers.

Nationstar Mortgage Holdings Inc, which is owned by Fortress, is conducting due diligence on the deal, according to the paper. It cited unnamed sources who said no final agreements have been reached.
Fortress officials could not immediately be reached by Reuters.

“We continue to work with interested parties, and feel we are making positive progress toward a potential sale,” said Dan Frahm, a Bank of America spokesman. He declined to elaborate.

A sale of the mortgage unit would join a steady flow of sales of “noncore” assets that the bank has been disposing of this year to raise capital to offset losses and meet tougher capital rules being phased in by regulators worldwide.
The bank’s shares have lost roughly half their value this year on concerns that continuing problems related to the loans of the former Countrywide Financial could force the company to raise as much as $50 billion of new equity and dilute current shareholdings.

Chief Executive Brian Moynihan, who in August arranged for a $5 billion investment from Warren Buffett’s Berkshire Hathaway, has said the bank can absorb its losses through asset sales and earnings.

Article is from Yahoo News.

Home Seller Offers $1,000 in Booze to Buyer








Drink for free at the local watering hole and make it home in seconds. That’s what one Glenview, Ill., homeowner is offering as a way to set apart her 3-bedroom townhouse in a down real estate market.

Melanie Gravdal has been struggling to sell the unit, so she’s decided to offer a unique incentive to stoke interest: $1,000 worth of food and drink at Grandpa’s Place, the bar across the street, to whomever buys the house. “We weren’t getting very much traffic because there was so much competition in the market,” said Gravdal, of Glenview, a suburb about 18 miles north of Chicago. “We live in a place where restaurants and bars come within walking distance so we thought this was a way to cross-promote the neighborhood and our homes.”

Gravdal and her husband, who live in the house with their 2-year-old daughter and 5-year-old son, are looking to move back to California.  The family first put their house on the market in June, but with a bevy of similar townhomes in the area, interest was hard to come by. Yet prospects have picked up since she suggested the bar promotion to her realtor, Missy Jerfita, around Labor Day.  “Before the promotion we had two showings in seven weeks,” Gravdal said. “Since the promotion, … we’ve had nine. It used to be that sellers would make cookies for buyers to show them that they were good. Now the onus is on the seller to sweeten the deal.  ”After dropping the price $25,000, the house is currently listed at $450,000, just slightly below the average for a 3-bedroom townhouse. At Grandpa’s, fliers for the promotion are posted all over the bar area.  “It’s become kind of a talking point,” said Mike Maginot, the general manager at Grandpa’s. “As far as whether it’s going to work I don’t know. The rallying point seems to be actually how to spend the $1,000s. The best idea I’ve heard is a family of four coming in once or twice a month, enjoying a meal and going on their way.”

Article is from Real Estate msnbc.com.

Tax deed sales rising in area

Thousands of Tampa Bay area residents have lost property after falling behind on their mortgages and even homeowners association dues.

But there’s a third way people are losing homes and land: delinquent property taxes.

In the first nine months of this year, the owners of more than 200 properties in Hillsborough County have lost them in “tax deed sales,” where the county clerk’s office sells off properties that are at least two years behind on their tax bills.

That number has nearly doubled in the past three years.

Who’s buying them?

Often, it’s financial heavy hitters such as a JPMorgan Chase subsidiary and a former Massachusetts hedge-fund manager.

Many of the properties are dilapidated homes or vacant land in blighted areas.

Some are more valuable.

In June, the Hillsborough County clerk’s office sold 1.8 acres of industrial land in Ruskin containing five warehouses and mobile homes for just $40,000.

Although it is not a high-end property, the county property appraiser still valued it at $230,000.

Ken Knox, who runs a Ruskin aluminum business, had wanted to buy the property for 15 years but couldn’t make a deal. He marveled at the price an investor group paid for it at the Hillsborough County Courthouse.

“I offered (the owners) a quarter-million dollars just before it went to tax sale,” Knox said.

Investors for years have paid the back taxes for delinquent property owners. In return, investors receive a “tax certificate,” and the property owners must pay back the investor with interest of up to 18 percent if they want to keep their home.

What’s new is the number of property owners losing their homes and land.

An investor essentially can foreclose on the property if the delinquent taxpayer hasn’t paid him back within 22 months.

Already this year, the owners of 233 properties have lost them in tax deed sales at the county courthouse.

That’s up from the 170 properties during all of last year and 110 properties in all of 2009, data from the Clerk of the Circuit Court show.

Court Clerk Pat Frank said she foresaw the trend a few years ago.

Property taxes have stayed fairly high, although so many properties have sunk in value.

Some property owners now seem willing to let their homes and land go for the amount of back taxes, Frank said.

“It’s one indication of the real estate market,” Frank said.

Last week, about 40 investors gathered on the second floor of the county courthouse to scour the list of 17 properties that were to be auctioned at discount rates.

Young men in shorts and jeans scrolled through their PDAs or pulled up pictures of the properties on their tablet computers.

A few bidders at the auction sent text messages to the investors who were bankrolling them, but they wouldn’t reveal any names when approached by a reporter.

Only a few of the 17 properties on sale that day held any interest for bidders.

Many were vacant land or older houses in modest neighborhoods, but every now and then, a property would catch fire with bidders.

One parcel in Odessa opened at just over $30,000, but shot up to $50,030 as bidders stared one another down over several minutes.

That winning bid would seem to be a huge bargain, given that the county Property Appraiser’s Office valued the parcel at $175,000.

However, two bidders insisted to a reporter that it wasn’t worth anywhere near that appraisal. They also warned that many of the properties that go to tax deed sales carry liens and have other problems that can make them more hassle than they’re worth.

The bidder who paid the $50,030 told a reporter he had been hired by someone else to buy the properties, but he declined to reveal his backer.

Big institutional buyers such as banks and hedge funds appear to be the biggest local acquirers of such property.

What’s not clear is whether the big institutions wanted to take title to the properties, or whether they paid the delinquent taxes as an investment and simply got stuck with the properties when the owner didn’t repay them.

One firm, Plymouth Park Tax Services, has taken title to 14 such properties since Jan. 1, county records show.

Plymouth Park is a subsidiary of JPMorgan Chase.

A JPMorgan Chase spokeswoman said Tuesday that Plymouth Park plans to stop investing in new tax certificates.

Another group called Alumni Partners II also has taken title to 14 tax-delinquent properties this year. County records identify its leader as Eric Kobren of Longboat Key.

The Tribune was unable to reach Kobren, but a biography of him on the website of his former company, Kobren Insight Management, says he runs a hedge fund called Alumni Partners.

Also, news articles about tax certificates from other news sources say Kobren is a big player in the market nationwide.

In Ruskin, some businessmen with ties to the industrial land auctioned off in June can’t understand why it went for only $40,000.

Bill Hoffman has leased property there for a car repair shop for 30 years and was in limbo as the family that owned it went delinquent on its taxes.

He said the original property owners died and their children began fighting over the property. The Tribune was unable to reach the family this week.

Knox, the aluminum business owner, also leased space there until recently. He tried to buy the property for about $250,000, but its owners wouldn’t sell.

“The family just could not come together on the sale,” Knox said.

Robo-Signing Puts Ownership of Thousands of Homes in Question

NEW YORK — Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.
The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as “robo-signing,” led the nation’s largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and other lenders to temporarily halt foreclosures nationwide last fall.

At the time, “robo-signing” was thought to be contained to the affidavits that banks file when a mortgage is issued and somebody buys a house. The documents are used to prove they have the right foreclosure if the homeowner isn’t making mortgage payments. Companies that process mortgages said they were so overwhelmed with paperwork that they cut corners.

But now, as county officials review years’ worth of mortgage paperwork, in some cases combing through one page at a time, they are finding suspect signatures — either signed with the same name by dozens of different people, improperly notarized or signed without a review of the facts in the paperwork — on all sorts of mortgage documents, dating as far back as 1998, The Associated Press has found.

“Because of these bad titles, property owners can’t prove they own the properties they think they bought, and banks can’t prove they had the right to sell them,” says Jeff Thigpen, the registrar of deeds in Guilford County, N.C.

How Widespread a Problem?

In Guilford County, where Greensboro is located, a sample of 6,100 mortgage documents filed since 2006 turned up 74 percent with questionable signatures. Thigpen says his office received 456 more documents with suspect signatures from Oct. 1 through June 30.

The suspect signatures found by Thigpen and other registrars around the country were on documents from the banks involved in the temporary foreclosure halt and others.

Widespread robo-signing that stretches back a decade or more could create problems for homeowners. Regulators have so far not asked lenders to clean up the potentially millions of suspect documents filed in the past decade or earlier. That troubles some banking experts, including Sheila Bair, who until early July was chairwoman of the Federal Deposit Insurance Corp.

“We do not yet really know the full extent of the problem,” Bair said in written remarks to the Senate Banking Committee. She and others have called for a comprehensive study on the extent of the fraudulent signatures in mortgage documents.

A Potential Problem for Sellers

If documents with robo-signed signatures are challenged in court, judges could question the ownership of the properties, says Katherine Porter, a professor at University of California, Irvine, School of Law and an expert on consumer credit law. The consequences extend to homeowners in good standing when they try to sell.

If invalid documents are discovered in the chain of ownership, it could delay the sale or make it difficult for buyers to get a mortgage because title insurers won’t write a policy for the property, says Justin Ailes, vice president of government affairs of the American Land Title Association, a trade association representing the title insurance industry. Banks and other mortgage lenders won’t write a home loan without title insurance.

Among the findings shared with The Associated Press by county officials from several states:

• An investigation of mortgage documents in the county that includes Salem, Mass., found that more than 25,000 had suspect signatures. The earliest date to 1998, says John O’Brien, the registrar of deeds there.

• In Michigan, the state attorney general has sent criminal subpoenas to three companies that processed mortgage paperwork after 24 local recorders of deeds looked through their files and found rampant robo-signing.

• An Illinois county, Kankakee, pulled a sample of 60 documents filed since 2007 to look for suspect signatures. All 60 were “signed” by people who have been identified as robo-signers. At least 12 county officials in Illinois have sent their findings to the state attorney general.

The results of these reviews are troubling to the registers of deeds in counties across the country. It’s the job of these officials to record documents on property transfers, and they say, they need to be able to trust that notarized paperwork is legitimate.

“I want papers that come into our office to be clean,” says Lori Gadbois, the recorder of deeds in Kankakee County, whose office handles more than 15,000 mortgage documents in a typical month.

Beginning in the Housing Boom

Many banks began outsourcing paperwork at the beginning of the housing boom around 1998. That’s when an increasing number of home loans were being packaged into securities on Wall Street and sold off to global investors. As demand skyrocketed, lenders and mortgage processing firms hired entry-level employees to sign hundreds of mortgage documents a day.

Sometimes they forged the signatures of executives who were qualified to sign. Other times, actual executives signed the documents without verifying their accuracy. Many of the documents were stamped by notaries even though the people who had signed the documents weren’t present when the papers were notarized, a requirement by law. All are instances of robo-signing, and are potentially illegal.

The 50 state attorneys general have been negotiating a settlement with major lenders over robo-signing and other bad mortgage practices. Analysts say it could top $20 billion. But the attorneys general of some states, including New York, Massachusetts, Illinois, Delaware and California, have balked because banks have demanded a release from all future liability on past mortgage practices or the mortgage-backed securities they sold to investors.

Meanwhile, federal bank regulators have focused on getting banks to clean up their act in the future, not on fixing the potentially millions of tainted documents that have been filed in land record offices in counties across the country.

Robo-signing came to light last fall, when the largest banks halted foreclosures for several months to clean up their paperwork problem. The lenders promised last fall to stop the practice. But The Associated Press reported in July that robo-signing has continued. Officials in at least four states say mortgage documents with suspect signatures have been filed with counties in recent months. The revelation led to calls for Congressional hearings.

On Thursday, the mortgage unit of Goldman Sachs Group Inc. agreed to stop robo-signing and other controversial mortgage practices under an agreement with New York state’s banking regulator. The Federal Reserve, meanwhile, launched a formal enforcement action against the unit, Litton Loan Servicing, ordering it to review foreclosure proceedings from 2009 and 2010.

“The banks are playing with the integrity of the land record system,” says John O’Brien, the recorder of deeds from Salem, Mass.

Tens of Thousands of Documents at Risk

The documents that are filed in county deed offices are legal affidavits that transfer loans from one bank to another in a sale, refinancing, or foreclosure and certify if a loan has been paid off. They verify that there are no claims against the property.

Robo-signing could ultimately invalidate tens of thousands of homeownership documents, say legal experts.

In addition to delaying regular sales, banks could be blocked from foreclosing, even if the homeowner falls behind on mortgage payments for the same reasons.

That’s already happening.

Judges who handle foreclosures in Maine, California, Arizona, New York and other states have thrown out foreclosure cases if documents contain signatures of known robo-signers.

On July 1, a state judge in Brooklyn ruled that HSBC lacked the legal authority to foreclose on homeowner Ellen Taher because the mortgage documents that accompanied the filing were signed by at least three known robo-signers.

In May, a Maine judge dismissed another foreclosure involving HSBC, calling mortgage documents presented in a case untrustworthy because they contained signatures of one person posing as three different people. HSBC spokesman Neil Brazil says another company handled the mortgage paperwork in the New York case, and the bank is working with regulators to address and resolve issues related to robo-signing.

Registrars like Thigpen in North Carolina and O’Brien in Massachusetts say they have taken their findings to federal authorities. Except for a call from the North Carolina attorney general’s office, though, Thigpen says he has been ignored for months.

Deed offices in North Carolina and Massachusetts have stopped recording documents if they contain signatures of names known to be part of the robo-signing scandal. Such actions could delay new sales. O’Brien, the recorder of deeds from Massachusetts, says he’s only responsible for one county out of more than 3,000 in the U.S.

“Federal regulators with a lot more authority than me have to step up to the plate and help correct this,” he says.

Article is from AOL Real Estate.

HAMP Mortgage Modification Program Still No Help

The Obama administration announced more disappointing numbers for its signature anti-foreclosure initiative and said Thursday that it would continue to withhold payments from two banks running the program.

Just 14,000 homeowners received trial modifications under the Home Affordable Modification Program in July, the fewest of any month since shortly after the program’s launch early in 2009. The previous low came in June. (The Treasury Department, which oversees HAMP, said 22,079 modifications in total have been reported since the June numbers came out, but some of those modifications happened in previous months.) The administration also released its second quarterly review of homeowner treatment by banks and companies that service mortgages, finding that Bank of America and JPMorgan Chase have continued to do such a bad job that incentive payments for completed modifications would be withheld.

“While tens of thousands of additional homeowners benefit from the administration’s programs each month, we need to keep the pressure on servicers to effectively assist those homeowners who are still struggling and eligible for assistance,” said Treasury official Tim Massad in a statement. “These assessments provide an unprecedented level of information about servicer performance and are designed to help more eligible homeowners walk away from this process with better results.”

Article is from AOL Real Estate.