Latest Builder Marketing about the Costs of Foreclosures

Posted on February 21, 2012 by Al Lorenz

Builder’s have it tough out there right now.  Not only have prices dropped and financing is difficult, but they have to compete with a glut of foreclosures not seen in our life times.  Further, foreclosures drive down the appraisals on new homes.  Builders have been marketing against foreclosures since last spring, but there are some new wrinkles showing up  in the market.

Fulton Homes, from the Phoenix area, has created their foreclosure calculator.  It has a relatively comprehensive list of potential costs of buying a foreclosure.  The company claims to use commercially available costs for acquiring and outfitting foreclosures in their area.

I think it is a pretty good tool, particularly for marketing their new homes.  Some foreclosures can be thoroughly trashed,, may have appliances stripped and could have legal issues and take a pile of money to address.  However, not all foreclosures are that way.

Frankly, looking for at great deal on a home takes both work and dedication.  I think the tool is a pretty good way a buyer can tell if they are doing their homework if they are buying a foreclosure.  If they look at all that and decide it is more than they want to figure out and deal with, they probably should be looking at a new home that is ready to go with a builder warranty.  Convenience is worth it sometimes.

New homes can be more energy efficient and can be easier to finance.  On the other hand, there are some great deals on foreclosures and many of them are relatively new.  Fannie Mae offers attractive financing on their foreclosures.

Whenever you buy a home, careful research into the process and each particular opportunity is critically important.  As always, we are here to help you find your Lake Chelan home!

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Audit shows Foreclosure Documentation problems are widespread

Posted on February 16, 2012 by Al Lorenz

Officials in San Francisco County completed an audit on 400 foreclosures in jurisdiction and found that almost all involved either legal violations or suspicious documentation according to a report released just yesterday.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities. – New York Times

The recent settlement with major banks has no provisions that would address most of the problems found in the San Francisco area audit.  Neither does the settlement allow lenders and servicers to escape liability for the types of issues found in the audit.

The issues that were commonly found in the audit are troubling.  Particularly concerning is the inaccuracies that appear to be rampant in the MERS (Mortgage Electronic Recording System) that often showed different owners of the properties than those recorded at the county level.  The MERS system was set in 1995 by Fannie Mae, Freddie Mac and some major banks.  It supposedly has the title information to nearly half of all properties in the country.  If it is wrong, hundreds of years of careful property chain of title has been horribly corrupted.

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Foreclosures rose in January

Posted on February 16, 2012 by Al Lorenz

Nationally, the rate of foreclosures rose 3% in January from the previous month to 1 in every 624 households according to RealtyTrac.  During most of 2011, foreclosure activity came to a virtual standstill in many states due to the processing halts from the “robo signing” scandal and other documentation issues that were uncovered in late 2010.

RealtyTrac’s CEO, Brandon Moor, said in a written statement “We expect the pattern of increasing foreclosures to continue in the coming months, especially given the finalized mortgage and foreclosure settlement reached in early February between 49 state attorneys general and five of the nation’s largest lenders.”

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Feds extend the time consumers have to get their Foreclosure Reviewed

Posted on February 15, 2012 by Al Lorenz

The deadline for requesting a review of your foreclosure has been extended to July 31st from April 30th according to the Office of the Comptroller of the Currency.

4.3 million letters have been sent to homeowners who were in some stage of foreclosure in 2009 or 2010.  So far, over 89,000 consumers have requested a review of their case.

Consumers who suffered “financial injury” due to improper foreclosure or foreclosure procedures could be compensated.  Compensation could be paid for misrepresentations made by the lender, impermissible fees or penalties, miscalculated mortgage payments or even if the payments were made for a loan modification and the bank foreclosed anyway.

14 large mortgage servicing companies are using independent consultants to carry out the reviews.  Lenders whose foreclosures may be eligible for compensation include Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc. and others.

The OCC said the extension allows them more time to increase the awareness of how eligible people may obtain a review.  One way you can get your foreclosure into the process is to call the toll-free hotline for foreclosure reviews.

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Does the Foreclosure Settlement stink?

Posted on February 9, 2012 by Al Lorenz

There are certainly folks who are not happy with the foreclosure settlement.  Some good information on the issues with the settlement can be found at nakedcapitalism.com.

Here is an example:

We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.- nakedcapitalism.com

Washington supposedly gets about $648 million in settlement payments.  Check out the Settlement Breakdown by State.

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What does the Foreclosure Settlement mean to you?

Posted on February 9, 2012 by Al Lorenz

Finally, after more than a year of wrangling, a settlement with the “big banks” in the foreclosure mess has been reached.  There is up to $25 billion to be paid by the banks as part of the settlement, much of that is to go to help people impacted by the whole mess.

If you are wondering what that might mean for you, be prepared to wait awhile longer to find out.  Details of the plan on a new “National Mortgage Settlement” website show that  payments and other relief will be made over a three-year period and “borrowers will not immediately know” whether they are eligible.

According to the web site, the folks who may be eligible for assistance include:

  • Homeowners needing loan modifications now, including first and second lien principal reduction.  The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.
  • Borrowers who are current, but underwater.  Borrowers will be able to refinance at today’s historically low interest rates.  Servicers will have to provide up to $3 billion in refinancing relief nationwide.
  • Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process.  $1.5 billion will be distributed nationwide to some 750,000 borrowers.

The timeline on the web site states:

  • Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance.
  • Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
  • This settlement will be executed over the next three years.

The beneficiaries on this settlement will be primarily those whose mortgages are owned by the 5 banks in the settlement.  Fannie Mae and Freddie Mac owned mortgages are not part of the settlement.

The banks in the settlement are Ally/GMAC, Bank of America, Citi, JP Morgan Chase and Wells Fargo.

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Completed Foreclosures fall by 24% in 2011

Posted on February 9, 2012 by Al Lorenz

CoreLogic reports that completed foreclosures for all of 2011 totaled 830,000 compared with 1.1 million in 2010. CoreLogic notes that since September 2008, there have been approximately 3.2 million completed foreclosures according to their National Foreclosure Report.

Completed foreclosures fell from November (57,000) to December 2011 (55,000), also representing a 24 percent drop from December 2010. The share of borrowers nationally that were 90 days or more delinquent on their mortgage payments, classified as seriously delinquent, improved to 7.3 percent in December 2011 compared to 7.8 percent in December 2010. – AGBeat

Washington is among the 5 states with the lowest foreclosure rate with its 1.3% foreclosure rate even though its delinquency rates are relatively high.

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The Impact of REOs on the Market

Posted on February 8, 2012 by Al Lorenz

REOs are a big part of the decline in housing prices.  They are typically discounted 20% to 30% from regular resales, and then they become comparables for appraisals that bring down what the next homes sell for.

Here’s how it works:

The subject needed a trash out. The owners obviously left in a hurry. Clothes were hanging in some closets and children’s school pictures still decorated the walls. There is an element of sadness and hopelessness that you can feel when you enter some of these properties. These people did not beat the house or take it out on the property. The just picked up and left, taking what they could, and leaving behind what didn’t fit or was no longer meaningful to them.

This house was purchased six years ago for $55,000, shortly before the market fell. As I searched for comparables, I came up with a few great ones — in similar shape and condition, just a few blocks from the subject property. But none were REOs. Some were estates and others were simply resales. All were in the $30-40,000 range for value. I could not use them.

The REO comparables I found were in the $15,000-$25,000 range. See how REOs are skewing the market? It’s a downward spiral. Because of the comps I had in front of me, this foreclosure will likely list for around $20,000. But If I was sitting in front of a seller, or a seller’s son, telling him what his parent’s house should sell for, I’d be recommending close to $35,000. – AGBeat

Home prices are down by all the measurements, but when you look at it without distressed sales, things look much better.

Distressed sales are still driving the data on average home prices.  According to Zillow, 20% of home sales were distressed sales in November.  Zillow economist Stan Humphries expects home prices to continue to fall modestly in 2012.

CoreLogic reports without distressed sales, December data actually shows the first monthly gain in home prices since July 2011 (up .2%). – Chelan Real Estate Blog

REOs are going to be with us for awhile, so don’t expect the market dynamic to change very quickly.

 

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Feds are looking for Investors to buy and rent REOs

Posted on February 3, 2012 by Al Lorenz

The Federal Housing Finance Agency, FHFA, is seeking applications of investors they can qualify to buy foreclosures in bulk to convert to rentals.

The plan is to allow qualified investors to purchase pools of foreclosed properties with the requirement to rent the purchased properties for a specified number of years. This rental period could provide relief for local housing markets that continue to be depressed by the volume of foreclosed properties, and provide additional rental options to certain markets.

This initiative comes from the combined brain trust of the Treasury Department, Department of Housing and Urban Development, Federal Deposit Insurance Corporation, Federal Reserve, Fannie Mae and Freddie Mac.

The focus is to be on the hardest hit areas.  The primary qualification so bidders include their financial wherewithal, experience and knowledge in financial and business matters to analyze and bear the risks of the investment opportunity and they will also be judged on their ability to keep certain information about the REO and related matters confidential.

I guess they wouldn’t want any details of government waste or fraud coming to light in an election year.  Interested investors can apply for this opportunity right here.

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Cave B Inn and winery auction!

Posted on February 3, 2012 by Al Lorenz

The Cave B Inn and winery in Quincy are up for auction on March 15.

The Cave B Inn has 30 guest rooms which include 15 standalone “Cliffhouses,” a spa, a pool and a restaurant.  Its address is 344 Silica Rd. NW in Quincy.

Parts of the Sagecliff Resort are also being auctioned, including vineyards, orchards, the 25 yurts that are located adjacent to the resort, other development parcels for a golf course, additional guest units, and residences including fractional share home sites.

The auction will be held at the Hilton Seattle Airport & Conference Center at 17620 International Blvd. in Seattle. The suggested opening bid is $3.5 million.  The assessed value of the 31.64 acre parcel with the Cave B Inn was nearly $1.8 million in 2010.

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