This post will be continuously updated to let you know what's going on in the real estate industry regarding foreclosures. For those who are going through the uncomfortable but now commonplace home ownership turbulence, please view this Foreclosure Survival Guide.
5-27-2011: Average difference in price between sales of typical resales v. foreclosed/distresed homes is 27% - http://www.mortgagenewsdaily.com/05262011_foreclosures_realtytrac.asp
4-19-2011: So who's to blame for the financial system breakdown & foreclosure mess - read all about it in the Senate Subcommittee on Investigations report - Lots of blame to go around - http://levin.senate.gov/newsroom/supporting/2011/PSI_WallStreetCrisis_041311.pdf
3-15-2011: According to 2/24/2011 ABC - Home foreclosures in the Atlanta metro area rose about 11% in 2010. About 40% of all homes sold (30,400 of 78,600) were foreclosures.
3-15-2011: The planned mortgage write downs (even if limited & targeted) may not only cost taxpayers alot (if loans are backed by Fannie and Freddie-owned by the taxpayers), but the mortgage modification process will be extended thereby extending the recovery by delaying the foreclosure process. I am not advocating either way, but it means this is a double edged sword and economic recovery is key to reversing this slide.
3-1-2011: Even though mortgage delinquencies (those at least 30 days overdue) were down (to about 12.9% of all loans), foreclosures remain at an all time high and are not selling to alleviate the inventory. Also, about 4.6% of all US mortgage loans were in foreclosure in December 2010. (WSJ, 2-18-2011, A2)
1-10-2011: In 2009, there were about 14,000 foreclosures in Cobb County, 2010, about 16,000 and already in 2011, there are another 1,256 advertised for foreclosure in the County for February. Coupled with the 1,211 foreclosures in January 2011, Cobb is on track for at least another 15,000 foreclosures in 2011.
1-3-2011: Mark Zandi, chief economist at Moody’s Analytics, estimates 1.8 million foreclosed homes in the United States IN 2010 AND should rise to 2.1 million in 2011.
12-17-2010: The government's Troubled Asset Relief Program's special inspector general recently reported that 5.5 million homes had been the subject of foreclosure filings and that 1.7 million homeowners had lost their homes since January 2009.
12-15-2010: About 22.5% of current homeowners are underwater (i.e., owe more on their homes than what they are worth).
12-7-2010: About 1,750 foreclosures hit the Cobb County Courthouse steps yesterday - I am not sure when they will actually start hitting the market, but the majority should be listed by the end of February.
Note: Nationwide, there are about 13.5 million homeowners who have less than 5% of equity in their homes and 11 million owe more than the home is worth. (Source: WSJ, 11-27/28. 2010, A5)
12-3-2010: Mortgage delinquencies decline but the number of new foreclosures is on the rise. Nearly 13.5% of all home loans were at least 30 days late or in some sort of foreclosure status.
11-23-2010: I agree that there should be restitution for those individuals who were incorrectly foreclosed upon - that is terrible. But without knowing all the details of each situation, I don't know what exactly happened. However, dealing with banks, I sometimes wonder if their logic or procedures are antiquated. And they also misplace paperwork that is often scanned and emailed. But how big of a problem is it by foreclosing on people who are current on their mortgage, nobody knows but it could be about 1% from the recent House subcommittee proceedings.
11-15-2010: Of the 2.1 million mortgages in foreclosures as of 9-30-2010, the average days in foreclosure not making a mortgage payment) is 484 days. Florida alone experiences an average of 573 days (per WSJ 10-3-2010, A3). An interesting statement made in the article is that GMAC (part of Ally Financial - you know them - part of the Federal Government) suspended foreclosures "after" lawyers in Florida withdrew their lawsuits...now, why did they (US Government) do that?(WSJ-Oct 23-24, 2010)
11-9-2010: Buyers are refusing to buy alot of foreclosures an short sales due to all the investigations by the states...estimates of 30-35% of properties in foreclosure were held as second homes or by investors.
11-5-2010: About 200 investors were meeting recently in New York about the robosigning and other possible problems with foreclosing banks. Investors are frustrated with their losses and are looking for someone to blame and therefore pay their losses.
The Obama administration has conducted a 4 month investigation and plans to release results of investigation in the next month. SE (Mary Shapiro) is looking into disclosure, misrepresentation, omissions issues. HUD (Shaun Donovan) has the authority to fine or sanction banks. (WSJ, 10-20-2010, C2)
11-4-2010: Foreclosing mortgage holder - may lose a average of $1,000 per property per month of delay according to FBR Capital Markets. (WSJ-10-23-2010, B1)
11-3-2010: Bank of America (B of A) discovered the 85% of 1.3 million mortgage loans >60 days behind on payments came from Countrywide Financial Corp. 2008 acquisition.
11-2-2010: Ben Bernake was going to investigate if bank policies, procedures, or internal controls caused any improper foreclosures. A recent National Association of Realtors (NAR) survey of 20-25% of about 2,000 agents - they have a client no longer interested in purchasing due to this mess. Also, mortgage applications off about 30% from this time last year due to the federal tax credit surge.
10-28-2010: Some numbers...About 11 million residential properties with mortgages exceed home's value; shadow inventory (not on market yet) of 3.7 million foreclosed homes; prices may fall another 5-10%; - estimated 40% of homes with loans above home value; foreclosure not performed on 25% of people who haven't made a mortgage payment for past 2 years; 8 million homes in some stage of delinquency-default-foreclosure; another 8 million owners have mortgage values of at least 95% of their home's value; about 50% of homeowners using HAMP have defaulted within 12 months of modification; each 1% drop in home price lowers wealth by $70 Billion; and lost 5 million jobs in residential construction. With these facts, it's really not surprising that a home is no longer seen as a long term equity investment.
10-27-2010: Bond and mortgage insurers have filed lawsuits against banks and lenders for bad loans through poor underwriting and problem appraisals. Federal Home Loan Banks in PA, WA, CA have sued some Wall Street banks to force a "buy back" of bad loans. The legal question focus on the "representations and warranties" of a contractual nature. Trustees (administrator in banks who oversee loan pool or securitized loan packages) and loan servicers (daily management of loans including modifications). Example: Trustee determines borrower lied, can force originating bank to repurchase loan.
Bank of America is reviewing 102,000 foreclosure cases. Early reviews of several hundred selected revealed less than 25 had procedural errors like improper paperwork and signature errors, but nothing that would prevent a foreclosure. Also, Wells Fargo found some robo-signer issues without proper documentation but I don't believe it resulted in erroneous foreclosures.
Note: 40,if not all 50, states' Attorney Generals are planning a joint investigation of foreclosure practices of banks in their states. The Ohio Atty General was the first to file a lawsuit (against Ally - Govt owned bank) for signing and filing false documents. (MDJ 10-10-10 12A)
10-22-2010: There are estimates of between $24-180 billion of mortgages to repurchase besides those requested from Fannie, Freddie and insurers. As of October 2010, Fannie & Freddie have managed to get $6 billion repurchased and other banks could repurchase $22 billion. (I would think it's worst case scenario and they would by back loans secured by rel estate so will they really lose anything or make out like bandits if economy rebounds)...A weird take on this is the banks designed this crisis to somehow profit from it and are creating this smoke screen while putting their hand back in the cookie jar. I doubt they planned all this to lose money.
The Federal Housing Finance Agency (FHFA) (Edward DeMarco is acting director) - chief Fannie Mae/Freddie Mac regulator - based on the 64 subpoenas reported in June 2010,
10-21-2010: Impact on investors of these mortgage is unknown at this time but since MERS held many of these loans in their name, the qualification as a REMIC (real estate mortgage investment conduit), which provides for income tax exclusion as it passes income through to investors who pay the tax. One New York state judge thought the investors were partially liable for some of the $8.4 billion B of A settlement since they were perceived to not satisfy terms and condition of the pooling and servicing agreements.
JP Morgan Chase was setting aside $1.3 Billion in mortgage litigation reserves and another $1 Billion to cover repurchase of faulty mortgages from Fannie, Freddie or any one else. They are now reviewing 115,000 loan files.
Wells Fargo set aside $1.3 billion to settle demands to repurchase mortgages by investors.
Bank of America has reopened 100,000 foreclosure files and plans to proceed with foreclosures as of Monday, October 18th.B of A also has expended $1.7 billion related to repurchasing mortgages with $11 billion currently requested.
Estimates of more than 3 million "additional" vacant homes on the market and more are added monthly with foreclosure action.
Two large title insurance companies (Stewart Title and Old Republic) have instituted new, stricter guidelines writing title insurance and may end up rejecting coverage for foreclosures. The largest title insurance company Fidelity National Financial, Inc. has reached agreement with B of A to warrant foreclosures that were not caused by bank errors. (Source: WSJ 10-13-2010, A9)
10-20-2010: About 4.4 million home loans are either in foreclosure or at least 90 days overdue. There have been 6.4 million total actual foreclosures since 2006. B of A services 14 million ($2.1 Trillion) or 20% of mortgages in the US. Ten of the 14 million of Bank of America's (B of A's) total current mortgage loans and 80% of B of A's current delinquent loans came from B of A's acquisition of Countrywide. Note: So why did B of A "ever" acquire Countrywide's loans? - The truth may never be told....But, to coin a media term that was used on the last US President, we might want to try to "connect the dots".
Chris Dodd (Senate Banking Committee Chairman) plans to hold a hearing November 10, 2010 about improper documentation, confusion as to ownership, and whether there were any forced foreclosures that were not supported by proper procedures and documentation. (Note: Ok Chris, where were you in the Fannie/Freddie meltdown and putting a stop to funny loans?)
10-11-2010: Ok, in 25 words or less, "The moratorium on foreclosures is a short run buffer to long term pain thanks to Congress' fear of perception they don't care about homeowners (voters)." Banks may have submitted flawed affidavits (robo signed documents) in lieu of promissory note (that may have been lost or destroyed) and banks need more proof of ownership if that happens. Further complication stems from the Mortgage Electronic Registration System (MERS) temporarily holds a loan (but doesn't own it) while the true mortgage gets bought and sold several times and instead of filing a record in the applicable county for each change of ownership, MERS holds it until the dust settles.
Another problem raised is that in order for the income taxes from the securities to be exempted and passed through to the ultimate investors was to create a REMIC (real estate mortgage investment conduit), where the income generated is passed through to the investors and taxed accordingly. Since MERS held alot of these securitized loans, it may have disqualified the loans from being classified as REMICs and therefore subject to different taxes.
10-9-2010: WSJ Opinion 10-9/10;16/17-2010 A14/A5 - Politicians (Harry Reid, Nancy Pelosi, Debbie Wasserman Schultz)and others) were jumping into the fray by recommending a federal investigation or moratorium on foreclosures until loans were properly researched. President Obama vetoed a bill supporting electronic transmission of notarized documents across state lines which would have expedited foreclosures.
BOA, Wells Fargo, JP Morgan Chase (largest by stock value), and Citigroup service about $4.5-5.0 Trillion of mortgages owned by investors, or about 70% of the investor owned loans.
10-6-2010 (c1) - $2.8 trillion in mortgage backed securities. Upon mortgage foreclosure, holders of junior liens usually suffer total losses and primary liens take less of a hit. If a foreclosure is delayed, the servicer must keep advancing money to all lien holders even when the loan is not producing any revenue. This makes senior or primary lien holders desiring foreclosure faster to reduce expenses. Servicers normally have management agreements to protect the interest of the investors under securitized mortgage bonds. The Association of Mortgage Investors are demanding the loans be repurchased if any documentation is missing.
9-30-2010: JP Morgan was planning to halt the foreclosure process on 56,000 homes currently in some stage of the foreclosure process in 23 states. GMAC was to suspend evicetions/foreclosures/pending sales in certain states.
9-21-2010: Ally Financial (majority owned by the US Government) owns GMAC Mortgage (probably through the recent General Motors bailout). I think the following statement from a 9-21-2010 WSJ article sums up the mortgage mess in 25 words or less..."The securitization process has made it difficult to identify who actually owns the mortgage.".....DOH!
9-16-2010: MDJ, 9-10-2010 (page A1) - Foreclosures scheduled for October 2010 are about 20% lower than September's; and about 11,500 homes have been foreclosed in Cobb alone by this date (an 11% increase from same date in 2009); with Cobb's unemployment rate at about 10%, more short sales and foreclosures will put downward pressure on home prices; and lenders across the US foreclosed on about 93,000 homes in July 2010 alone (some estimate more than 1 million foreclosures in 2010 alone).
8-31-2010: WSJ, 8-27-2010 (page A4) - Even though the total number of homeowner who missed consecutive mortgage payments fell, the number of new distressed homeowners increased.
According to Jay Brinkmann, chief economist with Mortgage Banker Association, estimate more than 7 million homeowners are behind on payments or in foreclosure.
8-27-2010: WSJ page A4 referred to 4.5 million homeowners are delinquent or in foreclosure.
8-27-2010: MDJ page A1 mentioned 1 of 10 households is facing foreclosure and 2 million home have been foreclosed since the recession began.
8-4-2010: WSJ page C1 Federal Reserve Bank of New York acquired alot (about $29 Billion) of real estate properties in the bear sterns takeover in 2008, which have dropped 35% in value since then. About 50% of residential portion and 13% of commercial portion of the portfolio is non-performing.
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