I am expanding the team to provide a wider range of services, and in particular, to work the f-list more effectively. Here’s one off the list today:
Category Archive: ‘Foreclosures’
At the Washington Realtors’ legislative hill day this year we had an opportunity to hear from the National Association of Realtors’ chief economist, Dr. Lawrence Yun. Dr. Yun spoke about the improving real estate market in Washington state and his optimistic outlook for our state’s housing prices to continue rising at a rate faster than the nation as a whole.
At the same time, he was concerned with the persistence of high levels of “shadow inventory” in Washington, even while those levels have been shrinking significantly across the nation as a whole. Dr. Yun surmised that the legal system in Washington was one that provided more obstructions to the foreclosure process, and that was creating a huge backlog of foreclosures that should have already been back on the market. The striking lack of inventory in our current market is holding back a large crop of eager buyers and stifling home sales in general.
The essence of Dr. Yun’s point was that we should speed up foreclosures. On its face, that’s not an argument you’re likely to hear from real estate professionals. Our organizations are constantly working for property owners’ protections and rights, and fighting fraudulent or predatory practices that force homeowners out of their homes.
This issue, however, is more complex than simply pitting banks against homeowners. When we really examine the broken foreclosure process in our state, and nationally, we have to make clear distinctions between the protections that distressed homeowners already have in place, and the unacceptable extensions of the actual foreclosure timelines taking place in the market.
There are an increasing number of homeowners who have realized that, even though their home is underwater and they have no intention of keeping it long-term, they can live in the home without making a payments for years on end. As long as the lender is inhibited from closing the actual foreclosure sale, the number of people living in homes for two and even three years, rent free, continues to build. The homes are a drag on the community, as these long-term foreclosures deflate nearby housing prices, instead of being resold and fixed up by the new homeowners. The homeowners can’t just abandon the property, because it is still legally in their name (see Zombie Titles).
The effort to shorten the timelines on these foreclosures would make no changes to the protections already built into the process for the truly distressed homeowner. There are already a number of steps for that person to repay their debt, work out an adjusted payment schedule, or find another means to save their home. These people usually have at least a year from the time they stop making payments until the foreclosure sale goes through, and those protections can and will continue to exist for them.
For those homeowners who have already been through the normal foreclosure process and are one, two, or even three years behind on payments, the process needs to be expedited. These folks have accepted that the home will be foreclosed upon, and the only question is when. It will be better for the neighborhood and, frankly, better for these former homeowners to move on with their lives and begin to rebuild their credit. This artificial backlog of foreclosure inventory has an eager market of buyers ready to move in, and our communities could benefit from a healthy gain in home sales as we continue to recover.
So, should we speed up foreclosures? If the current legal protections are preserved, but the unnecessary multi-year extensions can be avoided, then the answer is “Yes.” Sometimes, facing up to reality and moving forward is the only way to begin correcting the difficult times we’ve been through.
Five years ago, Keller, 10 months behind on his mortgage payments, received notice of a foreclosure judgment from JP Morgan Chase. In a few weeks, the bank said, his three-story house with gray vinyl siding in Columbus, Ohio, would be put up for auction at a sheriff’s sale.
The 58-year-old former social worker and his wife, Jennifer, packed up their home of 13 years and moved in with their daughter. Joseph thought he would never have anything to do with the house again. And for about a year, he didn’t.
Then it started to stalk him.
First, in 2010, the county sued Keller because the house, already picked clean by scavengers, was in a shambles, its hanging gutters and collapsed garage in violation of local housing code. Then the tax collector started sending Keller notices about mounting back taxes, sewer fees and bills for weed and waste removal. And last year, Chase’s debt collector began pressing Keller to pay his mortgage, which had swollen, with penalties and fees, from $62,100.27 to $84,194.69.
The worst news came last January, when the Social Security Administration rejected Keller’s application for disability benefits; the “asset” on Avondale Avenue rendered him ineligible. Keller’s medical problems include advanced liver disease, hepatitis C and inactive tuberculosis. Without disability coverage, he can’t get the liver transplant he needs to stay alive.
“I can’t make it end,” says Keller. “This house, I can’t get out.”
Keller continues to bear responsibility for the house because on December 23, 2008 – about two months after he received Chase’s notice of sale – the bank filed to dismiss the foreclosure judgment and the order of sale. Chase said it sent Keller a copy of its court filing on December 9, 2008. Keller says he never received any notification. Either way, his name remained on the property title.
The Kellers are caught up in a little-known horror of the U.S. housing bust: the zombie title. Six years in, thousands of homeowners are finding themselves legally liable for houses they didn’t know they still owned after banks decided it wasn’t worth their while to complete foreclosures on them. With impunity, banks have been walking away from foreclosures much the way some homeowners walked away from their mortgages when the housing market first crashed.
“The banks are just deciding not to foreclose, even though the homeowners never caught up with their payments,” says Daren Blomquist, vice president at RealtyTrac, a real-estate information company in Irvine, California.
Since 2006, 10 million homes have fallen into foreclosure, according to RealtyTrac, a number that in earlier, more stable times would have taken nearly two decades to reach. Of those foreclosures, more than 2 million have never come out. Some may be occupied by owners who have been living gratis. Others have been caught up in what is now known as the robo-signing scandal, when banks spun out reams of fraudulent documents to foreclose quickly on as many homeowners as they could.
IDAHO SPRINGS – A two-county SWAT team was sent to a home in Idaho Springs to evict a 63-year-old woman. The eviction happened last Tuesday, according to Captain Bruce Snelling with the Clear Creek County Sheriff’s Department.
“Usually an eviction doesn’t call for a tactical team,” Captain Snelling said.
SWAT team members with assault rifles were sent in because two dozen protestors joined 63-year-old Sahara Donahue. The protestors were part of a group called the Colorado Foreclosure Resistance Coalition, which is part of the Occupy movement.
The group’s spokesperson said they were there to help prevent officers from kicking Donahue out of her home. “We expected one or two sheriff’s deputies to show up, instead what we had was ten vans show up,” Darren O’Connor, a member of the coalition, said.
The number of SD properties foreclosed in 3Q12 were less than half of the number of foreclosures in 3Q10, but the ratio of third-party buys compared to those going back to the beneficiary has been changing.
Two years ago, 76% of the trustee sales went back-to-bene, but in the most recent quarter that number was only 57%. The quantity of third-party buys has remaining fairly constant, and would probably be higher if the banks put more properties out for sale. There appears to be quite an appetite:
Third-party bidding looks intense – rising 16% from the opening bid, and ending up within 9% of current value. Wow! Doesn’t that have to be putting pressure on retail pricing to rise?
If so, where are the future foreclosures that might feel some upward pricing pressure from flippers? The lower-end neighborhoods, where it’s so competitive that flippers could get away with adding a little extra mustard to their list price:
Diana is finally coming around to believe what we’ve been saying all along. From cnbc.com:
After months of declines, the foreclosure numbers are going up again. Foreclosure starts, the first phase of the process, rose 9 percent in May month-to-month, the first increase in over two years, according to a new report from RealtyTrac.
Bad news, right? Only if you are the one losing your home.
For the overall housing market, this is exactly what needs to happen to return to health. For hungry investors, it means more opportunity.
There are still millions of delinquent loans which will never “cure,” and the sooner they get processed and sold, the better for home prices and home buyer confidence.
As the so-called, “shadow inventory” of distressed properties (seriously delinquent loans and bank owned homes yet unlisted) drops, down to 1.5 million units in the first three months of this year from 1.8 million a year ago, according to a new report from CoreLogic, the real inventory of potential homes for sale can stabilize and become a more dependable reading for buyers.
How do you believe existing supply numbers if you know there is far more lurking in the pipeline, but you have no idea when it will hit the market?
“The decline in the shadow inventory is a positive development because it removes some of the downward pressure on house prices,” said CoreLogic’s chief economist Mark Fleming.
We’re seeing that in Phoenix and parts of California, where home prices are finally beginning to rise again. Much of the new strength is due to heavy investor demand and a lack of distressed supply for them to buy. Given that backdrop, seeing a rise in foreclosure starts now is not so dire.
You don’t have to worry about a pile of rotting meat, if there is a hungry pack of wolves waiting in the wings to gobble it up. That’s why lenders are trying not to repossess properties, but instead do short sales (where the home is sold for less than the value of the mortgage) or let the homes go at auction.
“The lenders are pushing those pre-foreclosure sales. They recognize the demand from the investors. I would expect the numbers to continue to increase from a year ago,” says Daren Blomquist of RealtyTrac. “We do hear a lot about, not just in terms of the hedge funds, but individual buyers looking for foreclosures in their area are having to compete against many other buyers.”
Georgia, which last month gained the dubious distinction of holding the nation’s highest foreclosure rate, leapfrogging the usual suspects (CA, AZ, FL, NV), is a prime example. Investors who are running out of options in the sand states are turning their attention to the Georgia, where overall foreclosure activity and bank repossessions both jumped over 30 percent.
The faster the process, the faster these investors will eat up the inventory, and as in Arizona, the faster overall home prices will recover.
There are now new state laws, government bailouts and a $25 billion national mortgage servicing settlement designed to safeguard consumers and keep as many possible in their homes.
However, a sizeable portion of troubled loans will inevitably have to go to foreclosure, and the sooner the better, especially as investor demand to buy and rent these properties, often back to the original owner, is high.
Though the spike in new filings around SD County was more of a blip:
Completed foreclosures for all of 2011 totaled 830,000 compared with 1.1 million in 2010. In December 2011 there was a month-over-month decrease in completed foreclosures to 55,000 from 57,000 in November 2011. The December 2011 completed foreclosures figure was also down from one year ago when it stood at 67,000. From the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures.
Highlights as of December 2011
The percent of homeowners nationally who were more than 90 days late on their mortgage payment, including homes in foreclosure and REO, was 7.3 percent for December 2011 compared to 7.8 percent for December 2010, and 7.2 percent in November 2011.
The five states with the highest foreclosure inventory were: Florida (11.9 percent), New Jersey (6.4 percent), Illinois (5.4 percent), Nevada (5.3 percent) and New York (4.6 percent).
The five states with the lowest foreclosure inventory were: Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (1.0 percent) and Washington (1.3 percent).
Of the top 100 markets, measured by Core Based Statistical Areas (CBSAs) population, 34 are showing an increase in the foreclosure inventory in December 2011 compared to a year ago, an improvement from November 2011 when 46* of the top CBSAs were showing an increase in the foreclosure inventory compared to a year ago.
“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures,” said Mark Fleming, chief economist with CoreLogic. “This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory.”
NSDCC detached REO sales: 2010 = 199 @ $316/sf, and in 2011 = 190 @ $293/sf
NSDCC detached Short sales: 2010 = 216 @ $318/sf, and in 2011 = 278 @ $292/sf
NSDCC detached Regular sales: 2010 = 2,045 @ $393/sf, and in 2011 = 2,094 @ $393/sf
Three Northern California real estate investors agreed to plead guilty to forming a conspiracy to rig bids at foreclosure auctions, the Department of Justice Financial Fraud Enforcement Division said Thursday.
Charges were filed in the U.S. District Court for the Northern District of California against Barry Heisner of Brentwood, CA; Dominic Leung of Alameda, CA; and Hilton Wong of San Ramon, CA.
The Department of Justice says the three defendants conspired with others to obtain favorable auction selling prices by agreeing not to bid against each other in certain circumstances and by selecting a winning bidder for each auction item in advance. Authorities say the defendants carried out these activities at various real estate auctions, spanning from August 2008 to January 2011.
Authorities claim Heisner, Leung and Wong also committed mail fraud by fraudulently acquiring title to properties sold at public auctions and then by holding second, private auctions open only to members of the conspiracy. The properties selected were then given to the conspirators who submitted the highest bids.
Some of the violations related to the uncompetitive practices are breaches of the Sherman Act, which carry a maximum penalty of 10 years in prison and a $1 million fine. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.
The FBI and the antitrust division have been working on California auction rigging cases for the past year. In October, two real estate investors pleaded guilty to bid rigging in the counties of Contra Costa and Alameda.
Think it’s been crazy so far?
Between sellers getting more optimistic, scamming realtors low-balling short-sales everywhere, and bank clerks hoping to find the 30-day price from hundreds of miles away, it could get wackier!
Hat tip to SM for sending this in from the ocregister.com:
It was a $2 million Laguna Beach dream house six years in the dreaming, building and litigating, but it was taken from Mark Zigner in less than a minute on Thursday, in an auction on the courthouse sidewalk.
I wrote last fall about the battle between Zigner and Pacific Mercantile Bank over the home on Ledroit Street. Zigner, a jewelry broker by trade, had started to build the house in 2006 and sunk his life into it.
He borrowed $2.2 million from PMB, with whom he’d done business for years. When real estate went south, PMB let Zigner slide on some payments and had given him every indication it would continue to do so until he could finish building the house and sell it. But one day in 2009, an executive who had worked at PMB 15 days decided to call the loan due, essentially wiping out Zigner’s assets and ruining his credit overnight.
Zigner sued. My column chronicled how a jury believed PMB wronged Zigner and awarded him $2.1 million – $1.87 million as punitive damages. That didn’t end it, and much has happened of late.
First, Judge Francisco Firmat on Wednesday reduced the punitive award to $950,000, making the overall judgment $1.2 million. “Disappointing but not surprising,” is how Zigner’s attorney Frank Battaile characterized the decision. A U.S. Supreme Court benchmark is that punitive damages be no more than four times the actual damages, which in this case were $250,000.
More critical to Zigner, however, was that Firmat denied PMB’s motions to toss out the verdict altogether. This means PMB’s next option is the state Court of Appeal. PMB said last fall it would challenge the verdict but on Thursday told me it would have no further comment on any aspect of the dispute.
While Zigner won the lawsuit, it is important to remember he hasn’t collected (because of the possible appeal) and by PMB’s estimate is still $2.8 million in arrears on the house. The house, however, isn’t worth that in today’s market. His real estate agent had buyers interested at about $1.8 million, which would require a short sale.
The agent, Barbara A. Amstadter of Prudential California, wrote to directly to PMB’s board and said she had three potential buyers. Amstadter, a distressed-property expert, wrote that PMB “will lose even more money foreclosing on this property than it would in doing a short sale … based on the industry-accepted knowledge that a foreclosure produces less return than a short sale.”
PMB’s lawyers, however, replied in a one-paragraph letter stating PMB wasn’t interested and would be foreclosing. Why? PMB isn’t saying. Amstader and Battaile are mystified.
“I’ve never had bank refusing to even let me present short sale offers,” Amstader said. Battaile told me: “I always thought they would come to the table, but they won’t give us the time of day.” Zigner, whose credit would be even further damaged by a foreclosure, thinks PMB is being vindictive. “I won this case. They want to bury me.” It’s also possible, he said, PMB has a buyer lined up.
In recent weeks, as Zigner saw foreclosure looming, he produced a YouTube video (“Support Mark Zigner”) telling his version of the fight. PMB attorneys fired off a cease-and-desist letter, calling the video “highly disparaging, incomplete and inaccurate” and contending that circulating it “constitutes legal defamation.”
Battaile responded that Zigner would not be removing the video – that, in fact, it is far less damaging to PMB than the court’s actual Statement of Decision of the case. “Judgments and verdicts have consequences and your client will have to live with them,” Battaile wrote back.
While Zigner may ultimately collect $1.2 million from PMB, he couldn’t hang onto his dream house. I went to the sale, held in the shade of the courthouse entryway on Civic Center Drive. Dozens of properties were on the block, and more than 35 potential buyers milled. A Mission Viejo house with an opening bid of $435,000 was the subject of an excruciating 15-minute-long bidding war in which the parties went up in $100 increments to the eventual price of $456,200.
Zigner’s house was next but there was no such fight. The preestablished opening bid by PMB was $2,046,938. “Going once … Going twice …” cried the auctioneer. Nobody spoke. In a matter of seconds, it was gone. The bank had taken it.