posted
Foreclosure rates surge, biggest jump in 5 years.
Alex Veiga, AP Real Estate Writer, On Thursday April 15, 2010, 7:32 am EDT LOS ANGELES (AP) -- A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.
RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.
More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.
"We're right now on pace to see more than 1 million bank repossessions this year," said Rick Sharga, a RealtyTrac senior vice president.
Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.
These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.
"We're finally seeing the banks start to process the inventory that has been in foreclosure, but delayed in processing," Sharga said. "We expect the pace to accelerate as the year goes on."
In all, more than 900,000 households, or one in every 138 homes, received a foreclosure-related notice, RealtyTrac said. The firm based in Irvine, Calif., tracks notices for defaults, scheduled home auctions and home repossessions.
Homeowners continue to fall behind on payments because they've lost their job or seen their mortgage payment rise due to an interest-rate reset. Many are unable to refinance because they now owe more on their loan than their home is worth.
The Obama administration's $75 billion foreclosure prevention program has only been able to help a small fraction of troubled homeowners.
About 231,000 homeowners have completed loan modifications as part of the Obama administration's flagship foreclosure prevention program through March. That's about 21 percent of the 1.2 million borrowers who began the program over the past year.
But another 158,000 homeowners who signed up have dropped out -- either because they didn't make payments or failed to return the necessary documents. That's up from about 90,000 just a month earlier.
Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.
The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida and California, with Nevada leading the pack, RealtyTrac said.
Rising home prices and speculation fueled a wave of home construction there during the housing boom. But now the state, particularly around the Las Vegas metropolitan area, is saddled with a glut of unsold homes.
Still, the number of homes in Nevada that received a foreclosure filing dropped 16 percent from the first quarter last year.
All told, one in every 33 homes in Nevada was facing foreclosure, more than four times the national average, RealtyTrac said.
Foreclosure filings rose on an annual and quarterly basis in Arizona, however.
One in every 49 homes there received a foreclosure-related notice during the quarter.
Florida, meanwhile, posted the third-highest foreclosure rate with one out of every 57 properties receiving a foreclosure filing.
California accounted for the biggest slice overall of homes facing foreclosure -- roughly 23 percent of the nation's total. One in every 62 properties received a foreclosure filing in the first quarter.
posted
I thought this was supposed to get better? Isnt that what they said would happen if we passed all the mega spending bills? Biden said this was getting better thanks to the administrations actions.
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so.
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What do you think would have happened if we let those companies who failed.....fail? Wouldnt that have gotten rid of the problem instead of putting band aids all over the place? I understand there would be some problems, but nothing that time would not have been able to heal.
Those banks and companies should have failed, and the bailouts should have gone to the citizens who were impacted by them.
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so.
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posted
Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.
IMO? the banks have been very slow in the legal process of processing a house/borrower that's behind into the foreclosure process.
i think they actively did this to keep from having too many on the market at any given time.
i've been waiting 8 months for my next door neighbors house to be processed so i can buy it. they haven't mad e payment in year or more and it is still not in foreclosure.
they haven't even lived in it since last Sept.
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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quote:Originally posted by CashCowMoo: What do you think would have happened if we let those companies who failed.....fail? Wouldnt that have gotten rid of the problem instead of putting band aids all over the place? I understand there would be some problems, but nothing that time would not have been able to heal.
Those banks and companies should have failed, and the bailouts should have gone to the citizens who were impacted by them.
i beleive this will be called the Depression that wasn't a depression. It's going to last awhile yet. And i hate to say this, but am still looking for the double dip.
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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quote:Originally posted by glassman: Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.
IMO? the banks have been very slow in the legal process of processing a house/borrower that's behind into the foreclosure process.
i think they actively did this to keep from having too many on the market at any given time.
i've been waiting 8 months for my next door neighbors house to be processed so i can buy it. they haven't mad e payment in year or more and it is still not in foreclosure.
they haven't even lived in it since last Sept.
yup. It's called the shadow market, or sumpin like that.
Basically, the banks were willing to take TARP money to help themselves, but they don't want to help homeowners.
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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i think the banks are in the DOW right now and waiting to sell to the "average" investor. Their buying in is what brought he mkt back up the last 25%
once the average investor gets back in the stock makt then the banks will have their money freed back up to loan out, the million$ question- if the avg investor will ever come back.
i'm not interested until they clean the mkt up, which i don't see hapn'in
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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Housing Crash Update: There's A World of Pain Ahead
By Mike Whitney
April 16, 2010 "Information Clearing House " - -- The brief period of stabilization in housing appears to be over and the next leg-down has begun. Mortgage rates are edging higher, foreclosures are on the rise, and the government programs that supported the sector, are being phased out. The uptick in bank-owned properties (REO) is adding to surplus inventory and pushing down prices. A recently released report from First American CoreLogic shows that "distressed sales accounted for 29 per cent of all sales nationwide." Nearly one-third of all home sales are distressed REOs. Also, according to a report from Clear Capital, "Home prices nationally have dropped 3.9 percent quarter to quarter, the first quarterly drop in nine months. (Thanks to Diana Olick, Realty Check, CNBC) Bottom line: More people are being forced from their homes, the banks are facing bigger losses, and the housing market is on the skids.
The Obama administration's Home Affordable Modification Program (HAMP) has largely been a bust. Of the 3 to 4 million potential modifications, only 170,000 homeowners have successfully converted into a new mortgage. Under the new "principal reduction" plan, borrowers will be able to refinance into a FHA loan if lenders agree to slash the face-value of the mortgage. This puts the government on the hook if the homeowner defaults, which will lead to heftier losses for Uncle Sam. One of the main sticking points with the new program has been second liens, which are the home equity loans that were made using the mortgage as collateral. Falling home prices have made these loans essentially worthless, but the banks have resisted writing them off altogether because hundreds of billions of dollars are at stake. Even so, the four biggest banks have signed on to the new program hoping to stem the surge in foreclosures. Here's an excerpt from an article on Housingwire that shows how desperate the banks are to stop the bleeding:
"Two major banks are expecting major increases in foreclosures, by the end of 2010.
"According to the Irvine Housing blog, Bank of America, which currently forecloses on 7,500 homes every month will see that number rise to 45,000 by December 2010.....
“JPMorgan Chase is forecasting bigger foreclosure numbers in the coming months. According to a presentation at the end of February, JPMorgan expects the amount of real estate owned (REO) properties in its portfolio to reach between 33,000 to 45,000 in Q410. By comparison, in Q409, REO inventories were at 23,100." ("Big Banks Prepare for Major Rise in Foreclosures Ending 2010" Jon Prior, Housingwire.)
Bank of America's 6X increase in projected foreclosures is a real eye-popper. It suggests that housing prices (particularly in California) have quite a bit further to tumble. This will effect everything from private consumption to state revenues. It's a disaster.
Worth noting is that subprime defaults are largely over, and that, the new wave of foreclosures is made up of option ARMs, primes and Alt As. Many of these are high-income individuals who are using "strategic default" as a way to cut their losses and walk away from what has turned out to be a bad business deal. In fact, the data show that well-heeled homeowners are almost twice as likely to default than middle or low income people. So much for moral hazard.
Obama's revised HAMP program could keep as many as one million homeowners out of foreclosure, but, even so, it's just a drop in the bucket. Foreclosures and short sales will soar into 2011 no matter what the government does. In fact, the torrent has already begun as CNBC's Diana Olick reports on Tuesday:
"Lender Processing Services just put out its "Mortgage Monitor Report," and we have a new record: The nation's foreclosure inventories reached record highs. February's foreclosure rate of 3.31 per cent represented a 51.1 per cent year-over-year increase. The percentage of new problem loans also remains at a five-year high. The total number of non-current first-lien mortgages and REO properties is now more than 7.9 million loans. Furthermore, the percentage of new problem loans is also at its highest level in five years." (CNBC, Diana Olick, Realty Check.)
Whoa. 8 million homeowners are behind on their payments! And, that's not all; mortgage applications dropped 9.6 per cent last week while the Refinance Index (refis) fell 9 per cent in the same period. So, mortgage apps are down even though the Firsttime Homebuyer Tax Credit is still in effect (it ends in two weeks) and, even though this is the "peak season" for home sales.
So, why the sudden spike in foreclosures a full four years into the housing crash?
Because the banks have been withholding supply to keep prices artificially high. There may have been an understanding between the banks and the Fed (a quid pro quo?) to keep inventory low so it looked like Bernanke's $1.25 trillion Quantitative Easing (QE) program was actually stabilizing the market. But now that the banks are stuffed with reserves, there's no need to continue the charade. So the dumping of backlog homes has begun. That will cause inventories to rise and prices to fall. More homeowners will slip into negative equity which will lead to even more foreclosures. It's a vicious circle. If the coming wave of foreclosures is anything close to Bank of America's projections, there's a world of pain ahead.
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posted
Because the banks have been withholding supply to keep prices artificially high. There may have been an understanding between the banks and the Fed (a quid pro quo?) to keep inventory low so it looked like Bernanke's $1.25 trillion Quantitative Easing (QE) program was actually stabilizing the market.
WTF? why are they blaming Bernanke? this is the banks own doing- they are trying to sell what they have at the best price possible.
they cannot afford to take allof the bad mortgages off their books at once either. it's merely a technicality of bookkeeping, but once the property goes itno foreclosure it gets listed as liability instead of an asset.
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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