My mother is still catching up with my video history of the bubble, and the foreclosure era. Here are some clips from early 2009:
Category Archive: ‘Foreclosures’
From the California Association of Realtors:
LOS ANGELES (Sept. 3) – Thanks to partisan political gamesmanship by the Assembly Appropriations Committee, struggling homeowners who sold their homes in a short sale in the past eight months will be further penalized by being forced to pay state income taxes on money they never received, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
Senate Bill 30 conforms California tax law to federal tax law, which already says sellers can’t be taxed on forgiven mortgage debt. SB 30 failed to pass out of the Assembly Appropriations committee last Friday. The vote on the bill was along party lines with Democrats voting “no” and Republicans voting “yes.”
“We are disappointed that California Assemblyman Mike Gatto (D-Pasadena) failed to show the leadership necessary to provide relief to distressed homeowners who are already in dire financial trouble,” said C.A.R. President Don Faught. “These are real families in real financial need who may well be forced into bankruptcy by an unresponsive legislature. To heap an unfair tax bill on top of the pain and emotional duress of losing a home is unconscionable.”
Under current state law, when a lender forgives mortgage debt in a short sale, the seller must pay state income tax on the amount of forgiven debt. The previous California exemption lapsed at the end of 2012, so forgiven mortgage debt on short sales occurring in 2013 is considered taxable state income. The federal government does not charge federal income tax, and neither should the state.
Unfortunately, Senate leadership, in an act of political gamesmanship, linked the enactment of SB 30 to a new tax measure in an effort to extort C.A.R.’s support for that tax measure.
The mid-range market isn’t getting much help from defaulted properties – here’s a look at last month’s foreclosure notices sorted by home size and their estimated value:
The foreclosure era is winding down, and around the North San Diego County Coastal region, the overall impact has been less than imagined - let’s recap the counts of distressed-sales:
Short sales have had more negative impact on average pricing than REOs lately, mostly due to realtor fraud:
Hopefully this embarassing chapter in realtor history will be over soon.
Back in the old days there were 100-500 foreclosures per year in SD County:
We’ve already had 1,504 properties get foreclosed in the first half of 2013, so historically we’re still at elevated levels.
But with the county averaging 3,000+ total sales per month, lenders will be able to sprinkle in a couple of hundred REOs each month without affecting values much. In addition, flippers will keep doing their share; selling a similar amount of properties for retail-plus.
Lenders must be feeling comfortable at these levels, because the number of total notices were almost identical for the last two quarters. The Notices of Trustee Sale were down 52% Y-O-Y:
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:
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: