Foreclosure activity hits lowest level since Q4 2007 (CHARTS)

RealtyTrac warns distressed-property 'dam ... will eventually burst'

Foreclosure filings hit their lowest level in more than four years in the first quarter, according to a report from foreclosure data aggregator RealtyTrac.
Default notices, scheduled auctions, and bank repossessions were filed on 572,928 properties in the first quarter, or one in every 230 U.S. housing units -- the lowest number of filings since fourth-quarter 2007, when 527,740 properties received filings.
Last quarter's foreclosure activity was down 2 percent from the fourth quarter and 16 percent from first-quarter 2011. March accounted for nearly 38 percent of the quarter's foreclosure activity, with 198,853 properties receiving filings. That was the lowest monthly total and the first under 200,000 since July 2007, the report said.
On an annual basis, foreclosure activity fell 17 percent in March.
"The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated," said Brandon Moore, RealtyTrac's CEO, in a statement.
"There are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and nonjudicial states in March.
"The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen -- both in terms of new foreclosure activity and new short-sale activity."
States that use the nonjudicial foreclosure process lead the nationwide decline in foreclosure activity, RealtyTrac said. Those 24 states and Washington, D.C., saw foreclosure activity drop 8 percent from the fourth quarter and 28 percent from first-quarter 2011.
Several nonjudicial states saw significant year-over-year drops in activity in the first quarter: Arkansas (79 percent), Nevada (62 percent), Washington (55 percent), Arizona (41 percent), Texas (31 percent), and California (21 percent).
By contrast, foreclosure activity rose 8 percent quarter to quarter and 10 percent year over year in the 26 states that mainly use the judicial foreclosure process.
Judicial states that posted some of the biggest annual increases include Indiana (45 percent), Connecticut (38 percent), Massachussetts (26 percent), Florida (26 percent), South Carolina (26 percent), Pennsylvania (23 percent).

Source: RealtyTrac.
Foreclosure starts, which include default notices or scheduled auctions depending on the state, rose for the third straight month in March, up 7 percent from February, though still down 11 percent year over year.
Foreclosure starts increased on a monthly basis in 31 states, with the biggest jumps in Nevada (153 percent), Utah (103 percent), New Jersey (73 percent), Maryland (53 percent), and North Carolina (47 percent).

Nevada posted the nation's highest foreclosure activity rate last quarter, with one in 95 units receiving a filing -- a 62 percent year-over-year drop.
California had the second-highest foreclosure activity rate (1 in 103 units), followed by Arizona (1 in 106 units).

Top 10 states with the highest foreclosure rates

Area	Foreclosure rate (Q1 2012)
U.S.	1 in 230 housing units
Nevada	1 in 95
California	1 in 103
Arizona	1 in 106
Georgia	1 in 119
Florida	1 in 123
Illinois	1 in 141
Michigan	1 in 162
Colorado	1 in 191
Utah	1 in 198
Wisconsin	1 in 206

Source: RealtyTrac
California metro areas accounted for 12 of the 20 metros with the highest foreclosure rates in the nationa in the first quarter, including eight of the top 10.

20 U.S. metros with the highest foreclosure rates

Metro area	Foreclosure rate (Q1 2012)
Stockton, Calif.	1 in 60 housing units
Modesto, Calif.	1 in 60
Riverside-San Bernardino-Ontario, Calif.	1 in 62
Vallejo-Fairfield, Calif.	1 in 63
Merced, Calif.	1 in 72
Sacramento--Arden-Arcade--Roseville, Calif.	1 in 77
Bakersfield, Calif.	1 in 81
Las Vegas-Paradise, Nev.	1 in 82
Phoenix-Mesa-Scottsdale, Ariz.	1 in 87
Visalia-Porterville, Calif.	1 in 89
Atlanta-Sandy Springs-Marietta, Ga.	1 in 90
Fresno, Calif.	1 in 92
Miami-Fort Lauderdale-Pompano Beach, Fla.	1 in 95
Oxnard-Thousand Oaks-Ventura, Calif.	1 in 97
Orlando-Kissimmee, Fla.	1 in 101
Rockford, Ill.	1 in 104
Chicago-Naperville-Joliet, Ill.-Ind.-Wis.	1 in 107
Chico, Calif.	1 in 111
Prescott, Ariz.	1 in 113
Santa Rosa-Petaluma, Calif.	1 in 113

Source: RealtyTrac.
From start to finish, the foreclosure process took an average of 370 days to complete nationwide, up from 348 days in the fourth quarter -- the highest average in the past five years, according to RealtyTrac.
Some key states are seeing foreclosure timelines decrease, however. In California, the average was 320 days, down from 352 days in the fourth quarter.
 
Colorado, Utah, Massachusetts, Nevada, Michigan and Maryland also saw declines.

The five states with the longest foreclosure timelines were New York (1,056 days), New Jersey (966 days), Florida (861 days), Illinois (628 days), and Maryland (618 days).

Mortgage help for homeowners with hospitalized child

Last autumn, Mortgage Bankers Association President and CEO David Stevens announced that his organization had created a new, nonprofit entity -- MBA Open Doors Foundation -- to be the umbrella operating unit for all the MBA's philanthropic activities.

The first charity the MBA chose to support was Spare Key, a Bloomington, Minn., nonprofit that helps families with critically ill or injured children by making a mortgage payment on their behalf.

"Helping families who are current on their mortgage but under incredible financial pressure while dealing with the hardest emotional challenge a parent could ever have is just the right thing to do," said Sarah Tinsley Demarest, executive director of the MBA's new charitable group.

"Parents want to be with their child, but they also want to hold on to their home. This gift allows a parent to do that, so they don't fall behind on their mortgage."

Demarest added, "It's for parents who are maxed out on taking leave from work. (It allows them to spend more) time with their child in the hospital."

Spare Key is a unique program founded in 1997 by Patsy and Robb Keech, whose son was born with a genetic birth defect and endured many hospitalizations during the first two years of his life. The Keeches were torn between wanting to be with their child in the hospital and going to work to maintain financial stability.

They chose to be with their son, so family, friends and strangers raised money during this time of crisis to pay the Keeches' mortgage so they wouldn't lose their home.

After their son died, the Keeches vowed to help other families in Minnesota who were in the same straits, and that was the start of Spare Key.

In 2010, Spare Key made 140 payments; in 2011, it made a record 201 payments.

Spare Key makes only one mortgage payment per family in a calendar year.

"We know, for families in more dire financial straits, this may not be exactly what they need, but for those families who need a bit more time in the hospital, who need a little bit more money in their pocket, who need that extra support, it's what we do," said Erin Werde, Spare Key's director of development and communications.

The one qualification to be eligible for Spare Key is that the a child must be in the hospital at least 21 out of the past 90 days, which means the charity serves kids that are at the more severe end of illness of injury. Of the children assisted, 47 percent had birth defects, 16 percent cancer, 13 percent prematurity, and 10 percent leukemia and accidents. About 75 percent of the Spare Key children are under 5.

In October, Werde got a call from a mother who lived in northern Minnesota, in a rural area far from a hospital. Her daughter, 6, had been complaining of headaches, which turned out to be brain tumors. Not only did the mother and daughter have to travel from northern Minnesota to Minneapolis -- they also traveled to Boston for treatments. Spare Key paid for a month's mortgage. As for the girl, she's doing much better.

Generally, the initial contacts with families are through hospital social workers. "We've been around the community long enough now that we have been able to form great relationships at the hospitals," Werde said.

"When a pediatric social worker sees a child has been in the hospital for an extended period of time, (the worker knows to) refer the families to Spare Key."

A family fills out an application, which can be obtained from the social worker or online, and then the Spare Key program director verifies all of the information: whether the family is current on the mortgage; length of hospital stay; and even that the house is actually located in the state of Minnesota.

Once those things are in place, a program committee reviews the application to double-check whether it fits Spare Key's criteria. When all that happens, Spare Key will make a mortgage payment with a cap of $1,200 directly to the mortgage company.

Perhaps the most controversial part of the Spare Key program is that it makes only one mortgage payment per calendar year. Also, the $1,200 cap may not come close to covering some families' monthly payments.

"We have discussed changes, but on our estimation there are about 1,000 families within our program parameters that we could be serving every year," Werde said. "There are other programs out there that will provide other types of support with bills. We highly encourage our families to seek other sources of support, as we are relatively narrow in our focus."

The MBA will follow the original Spare Key's formula and it, too, will stick to the "just one mortgage payment" formula.

What the MBA intends to do is support three new chapters of Spare Key. The first will be in the Washington, D.C., metro area, and the second two locations have yet to be announced. All should be open sometime in 2012.

"Our president, David Stevens, had heard about Spare Key some years ago and has been supporting it personally, as well as some of the other MBA members," Demarest said.

"Since the program was announced, we have had incredible outreach from our members wanting to be involved. We are trying to do this so the actual monies raised will go into mortgage grants and assistance, so we are looking where we have need and where we have members who will help us with the fundraising."

Inside the short-sale machine

Working full time on a 100 percent commission basis is not for wimps. The cost of health insurance alone is enough to send most sane people screaming into the night.

I can do it, and have survived the crash of the housing market, yet there are still times when some of the big banks make me want to cry.
Selling foreclosures really isn't a big deal and in most cases it goes smoothly. I occasionally run into trouble getting utilities turned on for inspections, but I can usually get it worked out with a few phone calls and some deep cleansing breaths, as needed.
It is the short sales that are the killer. Right now there are about 2,000 homes on the market in the Twin Cities area, and there are offers on some of them that are waiting for third-party approval -- bank approval. Many of those sales will fall through because the buyer will give up, move on or die of old age waiting for an answer.
In some cases, the home will go into foreclosure before an offer is approved. Agents do not get paid if there is no sale. There's nothing like working for free.
I would avoid short sales altogether if I could, but hard as I try I get dragged into them -- usually because a friend, family member or a neighbor needs help. I have never recommended a short sale because they are rarely in the best interest of my clients.
There is a really huge bank -- let's just say it is one of the banks that our tax dollars were used to bail out -- and it seems to own about half of the properties in town.
The bank put together a program to fast-track short sales -- they now "only" take five to 16 weeks -- but I don't think we are supposed to share that information with consumers.
In fact, I think that was in the fine print of a document I read yesterday. For a huge corporation, five weeks must seem fast to the point of being reckless.
Here is an example of how the bank operates, and why it can make me cry if I let it:  The bank required my client to fill out and sign an authorization form so that the bank has my client's permission to talk to me. That form is standard procedure.
My client signed it and sent it back to the bank. Two days later the bank requested that I send a copy of the same document. Of course, the bank already had a copy and I did not, leading me to contact my client to send me a copy of it so that I can send it back to the bank.
And then the bank told me that the form is overdue, and if I don't hurry the file will be closed.
The bank has an automated system that agents must use. It is not at all user-friendly, and sometimes I get email messages alerting me to check the messages in the system.
There are red letters on the screen with warnings, and many colors and words. And way up in the corner, in a tiny font, the screen states that there are two tasks I must complete.
It isn't enough to upload the file into the system -- it has got be submitted now or very soon, and failure to fill out a field that has a red mark by it creates all kinds of red warning messages on the screen. It is not at all unusual to have to send the exact same documents each day as they are requested all over again.
This is not what I left corporate America and a very affordable group health insurance policy for, and don't tell me I need short-sale certification.
I have to follow the rules for my client. After dealing with these short-sale programs I am positive that I would never do business with any of the banks involved. I would never go to them for a mortgage, or send a client to them or open a checking account.
I know there are many different branches and departments, but I am not that open-minded about it. I don't accept the "other" department or subcontractor excuse. I see a big brand with a big logo. The brand is only as good as the worst employee of whichever company it contracts with to deal with people like me and my client.
The people who sell real estate who are reading this probably know which bank or banks I am writing about, and if I mentioned them in a roomful of agents you would hear a groan.
I have witnessed many rants about these institutions over the past few years and I hope they do lose business because of how inefficiently they operate. They remind me of how depressing it can be to work inside of a huge, heartless, bureaucratic corporation.
There has to be a better way. There should not be 2,000 homes in my community with offers on them waiting for approval. Those homes need to be sold, and the process could easily be streamlined.
They could start by taking out the automated systems that are in place to make the process more efficient. The best way for agents to deal with these behemoth corporations is to have a nice glass of wine with dinner. There is no reasoning with the short-sale machine.

Inventory for Investors in Pre Foreclosure Homes

The real estate investor who can purchase property at under fair market value is in good position to make increased profits from the deal . Where does an investor locate excellent properties at severely discounted prices ? One niche market is pre foreclosure homes. Pre foreclosure homes are homes that the bank or lender has filed a notice of default on, but the property has yet to be sold at a public auction or trustee sale. There is a period of time between the filing and the sale when the home owner still has control of the home . To stop the foreclosure, the homeowner must bring mortgage payments to current, or he has the option to sell the property . This period of time is the ideal chance for the real estate investor to make an offer on the home . As an investor, you can increase your profits through negotiating with the seller for a deep discount off of the current market value of the home . As the buyer, you will also be able to inspect the house and learn what repairs and renovations might be needed . This inspection will also help you decide the amount you will offer on the property . There are foreclosure subscription services that will provide listings of pre foreclosure homes. The fee for the service issmall , and worthwhile in time and effort saved. The old method of researching records at the county courthouse was difficult and tedious. While getting to go through the public records is free , your time should be worth more, and the little charge for the subscription service will pay you back with your first pre foreclosure homes purchase. The foreclosure market has been a favorite for the real estate investor because of the severely reduced prices. The same deep discounts can be found on these pre foreclosure homes, with the extra advantage of being able to deal and negotiate with a highly-motivated homeowner . It’s worth taking a look at the pre foreclosure homes market.

Fannie Mae launches exclusive foreclosure deterrence plan

Fannie Mae declares unique foreclosure avoidance planfrom Government Refinancing Assistance In addition to the HAMP and HARP and HAFA foreclosure avoidance programs offered from the federal government, Fannie Mae released its own plan just lately for the numerous loans they back. We obtain this from a recent HousingWire article about the topic: Fannie Mae introduced its version of the Making Residence Affordable Foreclosure Alternatives (HAFA) program Tuesday, implementing the plan for all conventional home loans that are held in Fannie’s portfolio, which are part of an mortgage-backed security (MBS) pool with a distinctive servicing choice, or that are part of a shared-risk MBS pool for which Fannie Mae markets the acquired house.



The Fannie Mae plan takes effect August 1, this year and is created to mitigate the impact of foreclosures on borrowers that are entitled for any mortgage modification below the Residence Affordable Modification Program (HAMP) but were unsuccessful in acquiring one, Fannie said. Like the Treasury Department’s HAFA program, servicers can't think about a borrower for HAFA before borrower is examined and eliminated from eligibility for any Making Home Affordable Modification Program (HAMP) workout strategy. Also like the Treasury plan, Fannie Mae may offer servicers cash incentives for completed HAFA transactions, $2,200 for short sales and $1,200 for deed-in-lieu of foreclosure agreements. Borrowers are also entitled for $3,000 in incentives. That’s much more than within the Treasury’s HAFA program, where servicers are entitled for $1,000 and the borrower gets $1,500. Within the Treasury HAFA, the investor is also entitled for any $1,000 incentive. …


After announcing the plan in October 2009, Treasury’s HAFA plan began in April. The Fannie Mae HAFA plan is the latest in a string of programs designed to help borrowers avoid foreclosure. In addition to HAFA and HAMP workouts, Fannie Mae is letting some distressed borrowers stay in their homes as renters, under the deed for lease (D4L) plan. Below D4L, the homeowner-turned-renter is required to pay fair market rent to stay in their home for up to twelve months. The renter must have enough income to sustain a 31% income-to-rent ratio and rental payments are not subsidized by Fannie Mae, but could possibly consist of renters suitable for Section eight payments. Also, in 03 this year, Fannie Mae instructed its servicers to think about an “alternative modifications” for all mortgages that did not qualify for any permanent conversion below HAMP. That “Alt Mod” plan, which sunsets on August 31, this year, is comparable to HAFA.

Pre Foreclosure Homes - Close the Deal

The real estate investor who can purchase property at under fair market price is in good position to make increased profits from the deal . Where does an investor locate good homes at dramatically discounted cost ? One niche market is pre foreclosure homes. Pre foreclosure homes are houses that the bank or lender has filed a notice of default on, but the home has yet to be sold at a public auction or trustee sale. There is an amount of time between the filing and the sale when the property owner still maintains control of the house . To halt the foreclosure, the owner needs to pay mortgage payments to current, or he has the option to sell the house . This window of time is the ideal chance for the real estate investor to make a deal on the property . As an investor, you can maximize your profits by negotiating with the seller for a big discount off of the current market value of the house . As the buyer, you will also be allowed to inspect the property and learn what repairs and renovations might be needed . This inspection can also help you decide the amount to offer on the home . There are foreclosure subscription services that will furnish listings of pre foreclosure homes. The cost of the service is minimal , and worthwhile in time and research saved. The old method of researching records at the county courthouse was time-consuming and tedious. While getting a look at the public records costs nothing , your time should be worth more, and the small fee for the subscription service should pay you back with your first pre foreclosure homes purchase. The foreclosure market has been a target for the real estate investor due to the deeply reduced prices. The same big price reductions can be found on these pre foreclosure homes, with the additional advantage of being able to deal and negotiate with a highly-motivated homeowner . It’s worth taking a look at the pre foreclosure homes market.

Related articles

• Selling Your House Faster (activerain.com)
• What is the difference between pre foreclosure and foreclosure (wiki.answers.com)
• Sell Fast to Avoid Foreclosure (activerain.com)

Real Estate Investors’ Guide to News Trends

Image via Wikipedia

There are a lot of important occurrences in real estate today. Real estate investors have to stay on top of the news. The success of real estate investing relies on staying informed.

I track real estate investing news and trends every single day. I carefully track real estate news items. I am careful to follow a number of different news sources. I make sure that I always know about everything going on in the industry.

You can change your real estate investing business forever if you are aware of the news. It can help you spot opportunities. You can definitely build credibility by being aware of the latest news. You can expand your business when appropriate. Real estate investors must know as much as possible about their arena.

Below you can check out my real estate investing news notes:

* Bulk REO investing is on the rise. - Bulk REO investing appears to the next big thing. It is important for you to be able to buy in volume rather than in small numbers. You will see the incredible gains that are possible. There are definitely a lot of real estate experts getting involved.

* Fannie Mae will be retiring a program soon. - Market stability has received great contributions from real estate investing. Some of Fannie Mae’s programs are not really necessary at this point in time. The GSE has decided that the time has come to let the program go. Home buyers are losing options and you need to know.
* You need to know about this aspect of commercial real estate investing. - This is an important part of every deal. There are some investors, though, that think the opposite of others. This is an area of serious disagreement. You will need to make the decision that best fits your commercial real estate investing strategy.

It is vital that you know everything possible about your business arena. This means that you will need to always be aware of how the real estate market is changing. You can be sure to read about real estate every day. Check in here if you lack the time to do your own research!

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Getting Loan Modification To Your Favor

Loan modification or loan workout as sometimes commonly called, is a change in the terms of a mortgage agreed upon by the lender. Alterations are considered to aid homeowners in getting lower monthly payments that will deter possible foreclosure. The lender meets with the owner to reach an agreement in determining what loan terms can be changed for the benefit of both parties. The proposed outcome will enable individuals to pay a smaller monthly sum based on their present income.

Lenders can make modifications at their own discretion, but are usually motivated by profit to offer better options to the borrower. When an individual continues to make payments at a reduced rate, the financial institution accrues more income than if they had to foreclose on the property. Federal programs available within low-income states mandate that lenders offer appropriate modifications. Mortgages are improved in a number of ways that comprise of reductions in interest rates, principals and late fees. The loan can also have a monthly payment cap according to a household's income and be extended over a longer period of time. Forbearance programs are obtainable for those needing a few more months to get back on good financial standing.

There are determining factors a lender will ponder before making loan modifications. Consent relies on the type of hardship that has caused the borrower's predicament. The recent economy has brought upon the stress of employment loss. Individuals may get laid off or fired, losing their regular income. People are losing their jobs due to company cutbacks and business bankruptcy. An accident could leave the sole income provider with unexpected medical bills or the inability to work. Other reasons that determine modifications to mortgage loans may be the financial future situation, property equity and the amount owed.

Many homeowners now have the option of utilizing HAMP or the Home Affordable Modification Program. Applications can be submitted when borrowers are in default, bankruptcy or foreclosure. The process is not difficult and starts with a modification affidavit. The borrower then provides proof of income and tax returns with all family information. Documents are then submitted to the lender for approval.

With the housing crisis upon us, many individuals owe more on their homes than the property is worth. The HAMP program believes struggling property owners should be given the chance to stay in their homes.

Related articles

• Hilary Kramer: How to Avoid Home Loan Modification Scams (huffingtonpost.com)
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Getting Loan Modification To Your Favor

Image via Wikipedia

Loan modifications are changes in the terms of a mortgage agreed upon by the borrower and the lender. Alterations are considered to aid homeowners in getting lower monthly payments that will deter possible foreclosure. The financial institution and the homeowner meet to determine what loan terms can be altered to the advantage of both parties. The hope is that individuals will be able to pay a smaller monthly payment based on their current income.

Lenders have the ability to deny any modifications, but are usually motivated by revenue to recommend better options to the homeowner. When a financial institution has to foreclose on a property, there may be less income accrued than if they had allowed payments at a reduced rate. Federal programs available within low-income states mandate that lenders offer appropriate modifications. Mortgages are altered in several ways that include a reduction in interest rates, principals and late fees. The loan can also have a monthly payment cap according to a household's income and be extended over a longer period of time. Forbearance programs are obtainable for those needing a few more months to get back on good financial standing.

There are determining factors a lender will consider before making mortgage modifications. There are many factors a lender will take into consideration before making mortgage modifications. The major approval is based on the nature of hardship that has caused the financial problem. The recent economy has shown an increase in the unemployment statistics. Finding work can be very difficult with the influx of lay offs. An accident could leave the sole income provider incapacitated or with an urgency to pay unexpected medical costs. Other determining factors to loan modifications may be the property equity, amount owed and future financial situation.

Many homeowners now have the option of utilizing HAMP or the Home Affordable Modification Program. Applications can be submitted when borrowers are in default, bankruptcy or foreclosure. The process starts with a simple modification affidavit. The borrower then provides proof of income and tax returns. All documents are submitted to the lender to await approval.

With the housing crisis upon us, banks lose money if they have to foreclose on a property that is worth less than the borrower owes. The HAMP program believes struggling property owners should be given the chance to stay in their homes.

Related articles

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• 1 factor can make mortgage modifications up to one-third more likely, study finds (eurekalert.org)