Foreclosure pipelines are re-filling nationwide.
According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings dipped below 192,000 in July 2012, a 3 percent decrease from the month prior.
RealtyTrac defines a “foreclosure filing” as any foreclosure-related action, including a Notice of Default, a Scheduled Auction, or a Bank Repossession.
July marks the 22nd straight month during which foreclosure filings fell on a year-over-year basis. At some point soon, however, that streak may end. This is because, for the third straight month, on an annual basis, foreclosures starts are on the rise.
More than 98,000 homes started the foreclosure process in July, a 6 percent increase from July of last year. Connecticut, New Jersey and Pennsylvania experienced the biggest increases, rising 201%, 164% and 139%, respectively.
Each is a judicial foreclosure state, which means that foreclosures must go through the state court system prior to auction.
Nationwide, just a few states accounted for the majority of July’s total foreclosure activity. 5 states were home to more than half of all tracked activity, according to RealtyTrac.
- California : 21.9 percent
- Florida : 13.3 percent
- Illinois : 7.2 percent
- Georgia : 5.7 percent
- Texas : 5.2 percent
Collectively, these 5 states represent just 33 percent of the nation’s population.
In contrast to the five states above, the bottom 14 states accounted for just 1 percent of the nation’s foreclosure activity, led by North Dakota. In North Dakota, just 3 foreclosure filings were made in July. Other “fewest foreclosure” states in July included District of Columbia (7 filings), Vermont (31 filings), and South Dakota (63 filings).
For home buyers in san rafael , with more foreclosed properties expected to go for sale this year and next, there will be some excellent “deals” and discounts — foreclosed homes typically sell at discounts of 20% or more as compared to comparable, non-distressed homes. However, foreclosed homes are often sold as-is, which means they may have defects.
Before placing a bid on a foreclosed home, therefore, make sure to have an experienced real estate agent on your side. Buying a foreclosed home may save you money at your closing, but may cost you money longer-term.
Foreclosures filings fell 5 percent between March and April of this year, and by 11 percent as compared to one year ago. The data comes from RealtyTrac. The foreclosure-tracking firm tallied fewer than 189,000 foreclosure-related actions last month — the fewest number since July 2007.
Rapidly-declining foreclosure figures are another signal that the U.S. housing market may already be in recovery.
According to RealtyTrac’s methodology, a “foreclosure filing” is any one of the following foreclosure-related events : (1) A default notice on a home; (2) A scheduled auction for a home; or, (3) A bank repossession of a home.
All three showed improvement in April :
- Default Notices were down 4% from March 2012
- Scheduled Auctions were down 4% from March 2012
- Bank Repossessions were down 7% from March 2012
Furthermore, April’s bank repossessions figure is notable. With just 51,415 homes reclaimed by banks, last month’s total represents a 26 percent drop from April 2011, and is the 18th consecutive month during which bank repossessions fell. This figure suggests that banks are seeking alternatives to foreclosure, including loan modifications and short sales, when appropriate.
Indeed, the National Association of REALTORS® reports that 11 percent of April’s home resales were short sales.
Whether you’re a first-time home buyer or an experienced one, homes in various stages of foreclosure can be alluring. They’re readily available and often come cheap as compared to non-distressed properties. However, make sure to look beyond just the “list price”. Foreclosed homes are often sold as-is. This means that the property could be run-down or rife with defects that render it uninhabitable and/or un-lendable.
If you plan to buy a foreclosed property in the East Bay, contact us. You can learn a lot about how foreclosures work by doing research on the internet, but when it comes to writing contracts and checking homes for defects, you’ll want an experienced agent on your side.
Is a short sale better for my credit score compared to a foreclosure?
It’s a question that we get over and over again. You’d think it would be obvious that a short sale would be better, but that’s not exactly the case. I came across a post on the FICO Banking Analytics blog titled “Research looks at how mortgage delinquencies affect scores” that I think helps to shine a light on how short sales and foreclosures affect FICO scores.
What stood out to me is that there’s virtually no difference in the both the impact of a short sale (w/ deficiency balance) & a foreclosure to a borrower’s FICO and also the time needed for that person’s score to fully recover. Additionally, a consumer with a higher FICO score to begin with will take a bigger initial hit and will take longer for their score to recover to pre-sale levels.
Here’s a double dose of foreclosure related info from the folks at ForeclosureRadar which I thought you’d find useful.
First off, COO Mark C. Skilling fills us in on “What’s new in Sacramento? (SB 1178 / SB 1275 / AB 1639)”. Looks like some more foreclosure related legislation is headed our way, including:
- Extending borrowers protections from personal liability purchase money loans that have been refinanced (SB 1178)
- Delaying the start of the foreclosure process until after final determination of a loan modification request (SB 1275)
- Providing a way for borrows to be compensated if their home is sold at auction by the lender’s mistake (SB 1275)
- Delaying the start of the foreclosure process until the completion of mediation between the borrow and lender (AB 1639)
For a full breakdown, check out the entire post where he breaks the bills down in detail.
Also worth checking out is founder & CEO Sean O’Toole’s powerpoint deck from his recent talk at SJREI ‘”Foreclosures: Market Update & Opportunities” which does an excellent job of breaking down where we are, how we got here and gives his take on where we’re headed and where the opportunities are. I’ve included screen shots of a couple of slides below and definitely recommend downloading & checking out the deck.
Foreclosed homeowners could still owe; Existing-Home Sales Improve; Loan Mods Often Damage Credit Scores
In hopes of trying to balance my output with my input, I’m going to start summarizing what’s in some of my open tabs in my browser and sharing them with you. That way we can all be smarter
/via Sacramento Business Journal: Foreclosed homeowners could owe ‘tens thousands of dollars’ to lenders.
You may not know it, but if you’ve refinanced from your original purchase loan and lose your home to foreclosure, you may be on the hook for the difference between the amount owed & the property’s value.
For example, if a homeowner has $200,000 outsanding for a refinanced mortgage and the lender forecloses on the house with the property valued at $150,000, the former homeowner could be liable for the remaining $50,000.
Senate Bill 1178 is trying to close that loophole.
/via REALTOR.org: Existing-Home Sales Continue to Improve in April
Lawrence Yun, NAR chief economist, said the gain was widely anticipated. “The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,” he said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low.”
/via SF Gate: Loan modifications often damage credit scores
Lots of good info in this article from Carolyn Said, but if you’re looking into a possible loan modification, there’s a list of tips in the article that you should be aware of…
- If you’re requesting a loan modification, here are some steps you can take to try to protect your credit:
- Try to stay current on payments while requesting a trial modification.
- Try to get a loan mod under the federal Home Affordable Modification Plan (HAMP), which has less impact on credit.
- Request that the lender not report your trial loan payments as partial payments.
- Make your trial payments on time.
- Homeowners who believe that servicers are not treating them fairly or complying with program guidelines can contact the HOPE Hotline at (888) 995-4673.
The latest release from the Mortgage Bankers Association, contained a bit of good news in that the delinquency rate for mortgage loans on 1-4 unit residential properties fell 17 basis points to a seasonally adjusted rate of 9.47 percent.
Some other notable bites from the release…
- The percentage of loans on which foreclosure actions were started during the fourth quarter was 1.20 percent, down 22 basis points from last quarter and up 12 basis points from one year ago.
- The percentages of loans 90 days or more past due and loans in foreclosure set new record highs. The percentage of loans 30 days past due is still below the record set in the second quarter of 1985.
- 30-day delinquencies actually fell by 16 basis points from 3.79 percent to 3.63 percent. Only three times before in the history of the MBA survey has the non-seasonally adjusted 30-day delinquency rate dropped between the third and fourth quarter and never by this magnitude. This drop is important because 30-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures.
- The pattern of mortgage delinquencies now very much follows the pattern of unemployment. Just as short-term delinquencies have fallen during the latter part of 2009, first-time claims for unemployment insurance have declined by about a third since their peak in March 2009.
My takeaway: We still have a record amount of loans in foreclosure, but the leading indicators are beginning to brighten up a bit.
The NAR released their 4th Quarter Housing Statistics today and showed increased sales & year over year price gains in many metro areas.
Lawrence Yun , NAR chief economist, said the first-time home buyer tax credit was the dominant factor. “The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he said. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”
Existing-home sales in the West jumped 16.2 percent in the fourth quarter to an annual rate of 1.38 million and are 18.2 percent above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9 percent below the fourth quarter of 2008, but with many areas showing notable gains.
“Markets in the West such as San Francisco, San Jose and Denver are showing double-digit price increases, and other markets like San Diego and Anaheim have begun to firm up,” Yun said.
In other good news, RealtyTrac’s January 2010 Foreclosure report shows a 10% decline in foreclosure activity nationwide.
“January foreclosure numbers are exhibiting a pattern very similar to a year ago: a double-digit percentage jump in December foreclosure activity followed by a 10 percent drop in January,” said James J. Saccacio, chief executive officer of RealtyTrac “If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works.”
While the news is good, I’m guessing it will be temporary as the home buyer tax credit expires, the Fed’s program to buy mortgage backed securities ends & the banks foreclosure activity picks up after a seasonal holiday slowdown.
It’s going to be an interesting spring for the housing market.
If you’re behind in payments, or think you might be headed in that direction, the NID Housing Counseling Agency is putting on a series of foreclosure prevention workshops in Oakland.
[h/t Empire Realty Blog]
I just came across a post from CNBC’s Diana Olick that sheds some light on whether banks are holding onto an inventory of homes that they’ve already foreclosed on instead of putting them on the market.
Here’s what Bank of America told her:
- Foreclosure sales have been abnormally low since we learned of the pending implementation of the administration’s Making Home Affordable program. From that point, we delayed the initiation of foreclosure proceedings and sales for customers that may eligible for a loan modification under MHA. As a result of this policy, our foreclosure sales in recent months have been as little as half the normal pace we experienced before.
- Until a foreclosure is completed, Bank of America continues to exhaust every possible option to qualify customers for modification or other solutions.
- Now that Making Home Affordable programs are operational, we do project an increase in foreclosures as we exhaust every available option to qualify customers for modifications and other solutions.
- While we have very strong loan modification programs now available, unfortunately, these foreclosure projections reflect the increasing number of customers who will not qualify for loan modification because they have suffered major life events servicers can’t solve…primarily unemployment and underemployment.
- We do not hold foreclosed properties off the market. The vast majority of mortgages serviced by Bank of America are owned by third-party investors. We have an obligation to them to prepare foreclosed properties for market and sell them as efficiently as possible.