Summit Realty

Foreclosure starts surge in Western states

By Inman News

Foreclosure starts jumped by double digits from July to August in four out of five Western states tracked by ForeclosureRadar, reversing what had been a declining trend over the past several months, the company said.

The increase in foreclosure starts seen in Arizona, California, Nevada, Oregon and Washington appeared to be driven primarily by Bank of America and related companies, which boosted notice of default and notice of trustee sale filings by 116 percent from July to August.

Wells Fargo and US Bank also ramped up foreclosure start filings, ForeclosureRadar said, while filings by JP Morgan Chase and Citibank were essentially flat, ForeclosureRadar said.

In California, foreclosure starts jumped nearly 70 percent from July to August, totaling 31,965 — the highest level in a year. The average time to foreclose in California increased to 333 days in August, 49 days longer than a year ago.

Notice of trustee sale filings were up more moderately, rising 6 percent from July to August but still down nearly 24 percent from a year ago at 24,020.

California properties sold back to the bank (REO) increased 12 percent from July, to 11,104, down nearly 23 percent from a year ago. Sales to third parties on the courthouse steps were up 10 percent from July, to 3,853, an 11 percent increase from a year ago.

California foreclosure inventories remain down or flat from a year ago. Banks had 107,000 REO homes on their books — about the same as in July — and the number of homes scheduled for trustee sale was down nearly 24 percent from a year ago, to 94,000.

Homes in preforeclosure — those already hit with a notice of default but not yet scheduled for sale — jumped 20.5 percent from July to August, to 134,000. That was 10 percent below the preforeclosure number in California a year ago.

In Arizona, notice of trustee sale filings — the first step in the foreclosure process in that state — were up nearly 15 percent from July to August, to 7,060. That’s 34 percent below the same time a year ago. Time to foreclose in August was flat from July at 175 days, but up 15 percent from a year ago.

The number of Arizona homes going back to the bank as REOs fell 8 percent from July and 43 percent from a year ago, to 3,068. Sales to third parties on the courthouse steps were up 5 percent from July and 39 percent from a year ago, to 1,666.

Banks had 25,278 Arizona homes in their REO inventories, down 5 percent from July and 22 percent from a year ago. Another 35,860 had been hit with a notice of trustee sale filing, down 3 percent from July and 38 percent from a year ago.

In Nevada, notice of default filings jumped 44 percent from July but were down nearly 14 percent from a year ago, to 6,108. Time to foreclose jumped 14 percent from July to August, reaching a new record of 368 days.

Notice of trustee sale filings slipped for the fifth consecutive month, dropping 10 percent from July and 43 percent from a year ago, to 3,523.

Banks took back 1,805 Nevada homes, up 1 percent from July but down 14 percent from a year ago. Properties sold to third parties on the courthouse steps rose 20 percent from July and 28 percent from last year, to 786.

Foreclosure inventories were down or flat from a year ago. Banks had 16,425 REOs on their books, down nearly 5 percent from July and from a year ago.

The number of properties scheduled for sale was down 9 percent from July and 40 percent from a year ago, to 7,758. Homes in preforeclosure jumped nearly 26 percent from July to 47,509, down 14 percent from a year ago.

Washington saw a 3 percent increase in notice of trustee sale filings from July to August, reversing four months of consecutive declines. Activity on the courthouse steps slowed as foreclosures sold back to the bank (REOs) dropped 30 percent month over month, and foreclosures sold to third parties — typically investors — were down 33 percent. Time to foreclose was nearly flat in August at 104 days.

In Oregon, notices of default were up 36 percent from July to August, but filing activity was down 46 percent from a year ago. Properties sold back to the bank rose 243.3 percent from July as Recontrust, a subsidiary of Bank of America, began to clear the 2,800 foreclosures it started in April.

Properties sold to third-party investors were up 46 percent from July and 17.4 percent from a year ago. Time to foreclose dropped in August for the second month in a row, falling nine days from July, to 150 days.

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5 bright spots in real estate recession

The real estate market meltdown was much more severe and has lasted much longer than even the most bearish housing market observer would ever have predicted. Rather than values taking a dip, they’ve taken a double dip in many places; and the housing sector drama has infected the job market and the entire world’s economy.

Yet, there are some very shiny silver linings to this whole mess — a handful of ways in which our mindsets, habits, behaviors and approaches to money, mortgage and even life decision-making — have been changed by this real estate market debacle. As I see it, here are the five best things about this otherwise terrible housing recession:

1.People now buy for the long term. Even Jeff Lewis, that reality TV house flipper extraordinaire, has declared that he’s tapped out of the flipping business for the foreseeable future, trading in his real estate wheeling and dealing for the design business.

Recently, he mentioned having lost six homes in the real estate market crash. While Lewis flipped homes as his business, just five years ago, many Americans — homeowners and investors alike — took a short-term view on their homes, buying them with the idea that they could count on refinancing, pulling cash out or even reselling them anytime they wanted, at a profit.

Reality check — those days are gone. Now, buyers know they’d better be prepared to stay put for somewhere between seven and 10 years (shorter in strong local markets, longer in foreclosure hot spots) before they buy if they want to break even. And this is causing them to take mortgages they can afford over time, and make smarter, longer-term choices about the homes they buy.

2. Dysfunctional properties are being weeded out and creatively reused. Municipalities like Detroit and Cleveland are demolishing blighted and decrepit properties in dead neighborhoods en masse, intentionally shrinking their cities to match their shrinking populations. These efforts are also eliminating breeding grounds for crime, and focusing resources on the neighborhoods that have a better chance of surviving and thriving in the long term.

In the so-called “slumburbias” of central California, Nevada and Arizona, McMansions are being repurposed into affordable housing for groups of seniors, artist communities and group homes.

3. American housing stock is getting an energy-efficient upgrade. The news would have you believe that every American has lost his or her home, walked away from it, or is now renting by choice. In fact, the vast majority of homeowners have simply decided to stay put.

Instead of selling and moving on up, homeowners are improving the homes they now plan to stay in for a long(er) haul. And this generation of remodeling is focused less on granite and stainless steel, and more on lowering the costs of “operating” the home and taking advantage of tax credits for installing energy-efficient doors, windows, water heaters and more. And while the first-time homebuyer tax credit is a thing of the past, the homeowner tax credits for energy-optimizing upgrades are in effect until the end of this year.

4. People are making more responsible mortgage decisions, and building financial good habits in the process. Buyers are buying far below the maximum purchase prices for which they are approved. They are reading their loan disclosures and documents before they sign them. And, thanks to the stingy mortgage market, they are spending months, even years, in the planning and preparation phases before they buy: paying down their debt; saving up for a down payment (and a cash cushion, so that a job loss wouldn’t be disastrous); being responsible and sparing in their use of credit to optimize their FICO scores; and creating strong financial habits in one fell swoop.

5. Our feelings about debt and equity have been reformed. Americans no longer use their homes like ATM machines, to pull out cash, pay off their credit cards and then start the whole overspending cycle over again. Many can’t, because their homes are upside down and cannot be refinanced in any event — much less to pull cash out.

Others have been reality-checked by the recession, and are dealing with their non-mortgage debt the old fashioned way: by ceasing the pattern of spending more than they make, and applying the self-discipline it takes to pay their bills off.

Home equity, in general, is no longer viewed as an inexhaustible source of cash. Rather, we see it as a fluctuating asset to be protected and increased — not so much through the vagaries of the market, but through the hard work of paying the principal balance down. Many of those refinancing into today’s lower rates aren’t doing it to pull cash out, as was the norm at the top of the market; instead, they are refinancing into 15-year loans to pay their homes off sooner than planned, or reducing their required payment so their extra savings can be applied to principal.

Of course, it remains to be seen how lasting these changes will be if and when home prices go up and mortgage guidelines loosen up. But since neither of these things look likely to happen in the short term, hopefully there’s a chance that these behavior shifts will become part of a permanent mindset reset for American housing consumers.

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LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED

In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder.  Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale.  This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units.  Any purported waiver of this rule shall be void and against public policy.

Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale.  A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.

Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.

This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.

Information provided from C.A.R

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The Advantages of Buying A New San Diego Home

In this economic atmosphere, the prospects of getting a good deal may lure buyers toward buying a San Diego short sale or REO. But while up-front costs may seem lower on an REO or San Diego short sale listings, buyers often end up paying in other ways. Here are five advantages of buying a new San Diego home to think about:

1. NO REPAIRS. With a San Diego short sale or REO, the previous owner may have stopped maintaining their property. That means buyers could end up with expensive repair bills. But new San Diego homes for sale often include builder warranties for workmanship, materials, and structural problems to help protect against large out-of-pocket repair expenses.

2. NO SURPRISES. With new San Diego homes, what you see is what you get. With an REO or San Diego short sale listings, what you might not see is what you get. New San Diego homes often come with many disclosures from the seller, though in reality, very little may actually need to be disclosed. For San Diego REO listings, not only is the bank exempt from some of the disclosure requirements for sellers under California law, but the previous homeowner may be long gone.

3. GUARANTEED QUALITY. New san Diego homes are usually built with modern conveniences and energy-efficient technology. They may also come with warranties for craftsmanship, appliances and more, to give buyers peace of mind. Short sale and San Diego REO listings may not come with warranties or upgrades and may not be available for inspection prior to purchase, so buyers could be in for some expensive surprises after purchase.

4. FRIENDLIER FINANCING San Diego new Homebuilders often have relationships with lenders that help buyers obtain financing for new San Diego homes with relative ease. For San Diego short sales and REOs, the property may have a lower price tag, but some buyers may run into difficulty getting financing.

5. SHORTER PURCHASE PROCESS. San Diego new Homebuilders usually have homes available for immediate occupancy or on a move-in schedule that’s convenient for buyers needed move-in dates. Negotiating a San Diego short sale can take several months — and there’s no guarantee the offer will be approved.

Download a Free Homebuyer’s Kit from Lennar Homes!

Information provided by Lennar Homes through C.A.R.

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Realtors Applaud Bill to Speed Lender Response to Short Sales

A new bill to improve the process for approving short sales may soon bring relief to distressed home owners who are unable to keep their homes and hope to avoid foreclosure. The bill, introduced in the U.S. House yesterday and strongly supported by the National Association of Realtors®, would impose a deadline of 45 days on lenders to respond to short sale requests.

The legislation, the “Prompt Decision for Qualification for Short Sale Act of 2011,” was offered in Congress by U.S. Reps. Tom Rooney (R-Fla.) and Robert Andrews (D-N.J.).

“The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a home owner from foreclosure,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I.

“Realtors® and consumers continue to raise issues about delays in the short sale process, because lenders are unable to decide whether to approve a short sale. After many months of delays, and with no response from lenders, potential buyers are losing patience and cancelling their contracts, often resulting in the property entering foreclosure. A short sale minimizes the negative impact on sellers and generally costs the lender less than a foreclosure,” said Phipps.

NAR has been actively pushing the lending industry to improve the process for approving short sales, which represent about 13 percent of recent home sales according to NAR data. Phipps praised Reps. Rooney and Andrews for their efforts on the bill and urged Congress to pass the bill quickly.

“As the leading advocate for home ownership and housing issues, Realtors® want to help more home owners avoid foreclosure by facilitating a short sale when a family is absolutely unable to keep their home; however, that can only happen if lenders and servicers approve short sale offers in a reasonable amount of time,” said Phipps. “Streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close and reduce the overall number of foreclosures. This benefits sellers, lenders, buyers and the entire community.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Washington, April 13, 2011

Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section.

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