From the Union-Trib:
A new, 90-day state moratorium on foreclosures went into effect this week to give homeowners more time to avoid losing their homes.
But because the California Foreclosure Prevention Act exempts lenders from the moratorium if they submit modification programs for review, few owners are expected to benefit from the law, government officials and industry leaders said.
As of yesterday, 39 institutions, which handle most lending activity in the state, had won 30-day exemptions from the moratorium while their plans are being reviewed. Seven of those, including Bank of America, had obtained approval for their plans and received permanent exemptions.
“My view is if we can even help one family avoid foreclosure, it’s a win,” said Assemblyman Ted Lieu, D-Torrance, who sponsored the law. “The goal of this bill is not to put in a moratorium as much as it is to get banks to run loan modification programs to keep people in their homes long-term.”
The new moratorium would extend to six months the time between the notice of default and the foreclosure sale, which is double the current time, officials said. Eligible loan modification programs must offer favorable terms for principal residences bought from 2003 through 2008.
Since the beginning of last year, about 200,000 loan modifications have taken place in the state, said Department of Corporations spokesman Mark Leyes. Over that same period, more than 304,000 homes have been foreclosed on, according to MDA DataQuick.
Even with loan modifications, many homes still are foreclosed because two-thirds of approved changes have not made monthly payments more affordable, said Paul Leonard, state director of the Center for Responsible Lending.
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As expected, the big lenders have already been exempted from the new moratorium, here’s the list:
http://www.corp.ca.gov/FSD/CFP/pdf/ExemptList.pdf
Ted’s prediction of this new law helping one family will be about right.
“Eligible loan modification programs must offer favorable terms for principal residences bought from 2003 through 2008.”
Define “favorable.” And favorable to whom?
Clearly not to the homeowners:
“Even with loan modifications, many homes still are foreclosed because two-thirds of approved changes have not made monthly payments more affordable…”
Ted should be thinking about what is best for families in general, not just the ones that bought in over their heads. When one family
moves out, another moves in. In human terms it’s net zero.
2003-2008? What about restricting it by the color of their skin while we’re at it? Picking winners never works.
Why prolong this folks?We all know these people bought high.Now they want the govt to save their ass.This sure sounds like socialism my friends.If I buy a stock and sell it for less guess what, I have a loss.I manned up and took my losses in 2000.I learned a lot.I never blamed my problems on someone else.In capitalism we have winners and losers.
AD- this isn’t capitolism.
“My view is if we can even help one family avoid foreclosure, it’s a win,” said Assemblyman Ted Lieu, D-Torrance, who sponsored the law.
If you really believe that, simply pass a law handing out $500K to a lucky family of your choice. It would be a lot cheaper.
Seen on Redfin:
This home is flagged as a short sale. We’re sorry, we don’t tour or write offers on short sales because of the slim chance that you’ll get the home.
These bore-atoriums frustrated me at first but now I just find myself laughing. What a joke!!! I mean really how many state and federal moratoriums can we have?
The reality I see on the street is many of my neighbors tried their best to get a loan mod but it didn’t happen so they are packing up and renting in a more affordable area.
Last night, I heard an almost successful loan mod. My neighbor told me they got a 2% rate and a 40 year term. That would have been pretty sweet. But the second loan wouldn’t budge so they are outta here.
It seems like the majority of people put forth the effort but are unsuccessful. Out of curiosity..Has anyone actually heard of someone getting a successful loan mod?
Are these loan mods to keep people in their homes or is the govt just helping the banks to delay the write down?
More evidence of the can being kicked down the road…
http://www.calculatedriskblog.com/2009/06/california-survey-of-loan-servicers-q1.html
Modifications for prime loans are surging (and Alt-A is increasing rapidly too). It is possible that subprime peaked during the moratorium period.
Note that completion can mean: account paid current (about 5%), paid-in-full (6%), modified terms (about 60% of completions), short sale (about 11%), deed-in-lieu of foreclosure (few), reductions in principal (few), and other workouts (about 15%).
http://www.calculatedriskblog.com/2009/06/california-mortgage-loan-data-by.html
Comparing the two graphs, conforming conventional loans and other (mostly small home equity loans) account for about half the number of loans, but only about 30% of the dollars.
At the other extreme, HELOCs account for 9% of the loans, but 24% of the outstanding balance (this surprises me)!
Most loans are fixed rate, but they are the smaller loans.
58.5% of the loans are fixed rate, but only 44% of the outstanding balance.
HELOCs are the opposite.
HELOCs account for 10.5% of the loans (not consistent with above – but these are the numbers in the report – probably a slightly different definition), and 24% of the outstanding balance.
ARMs are about 31% of the number of loans, and about 32% of the outstanding balance.
“Are these loan mods to keep people in their homes or is the govt just helping the banks to delay the write down?”
The latter.
What a idiot I am… I could’ve bought a house in 2005 with nothing down, defaulted on the loan, claimed I did not understand the documents I signed and had free rent for 3-4 YEARS.
Instead I did what I thought was the responsible thing to do. I rented since 2001 and have been saving money for a 20-30% downpayment.
What a buffoon I am.
“My view is if we can even help one family avoid foreclosure, it’s a win,” said Assemblyman Ted Lieu, D-Torrance
What an over achiever 🙂
It will only help one family if u are lucky.
JAP,
You are not the only one who thinks is a buffon. I know a bigger one – me….
I moved to America 19 years ago….believed in the land of “opportunist crooks”
You’d only have benefited in buying if you put close to 0% down, and even during bubble years that was a pretty small minority. In any case, any down modest payment you put would be gone at this point and you’d be renting from the bank.
What’s a shame of course is how much money is being wasted by all parties in deadlock. When a bank lends you money, the bank itself is in fact borrowing that money from depositors. Any mortgage that is not performing is burning money, and it’s only the other performing loans that could keep a bank breaking even. Not for long though..
democrat-obamissm-permabear=bullshit
So, the good news (for those looking to buy a “deal”) is that this law shouldn’t stop too many foreclosures if so many banks were given exemptions. The question is how well will the banks move this inventory out to market.
For a long time, I, too, was in the “there must be a huge shadow inventory” camp. I track a few areas (mostly Carlsbad, Encinitas and parts of Fallbrook & Bonsall) using (Jim’s recommended) “fidelityasap” site to see if distressed properties, which I know the homeowner didn’t sell, are scheduled for the courthouse sale. And if they are, I watch for when the bank takes possession. And if they do, I watch for their REO to come onto the market.
First observation…this process, starting with tracking distressed buyers unsuccessfully lowering their price, and ending with the bank finally listing the REO can be an incredibly long time.
Second: Once the clock starts on property A, somewhere you add in Property B, later C, etc. One day you see that “C” shows up in the REO listings before “A”. That gives you the immediate impression that A nd B are being held back as shadow inventory. But maybe bank C is just more aggressive, or efficient. Once you get to “H” or “Q” you are beginning to feel as if it’s a downright conspiracy!
Third: Having been watching potential REO properties since last October, I now believe the banks generally are not holding back property, per se. As of today, I can say that EVERY home I’ve been tracking (except some which were foreclosed mid-construction and may have structural issues) has eventually come onto the market or is still (re)scheduled for the courthouse steps. No, they do not come onto the market swiftly and not often at prices I’d hope for, but they all have appeared eventually (with noted exceptions above).
Fourth, I think the contrast of how the banks are handling mid-tier & up homes has been different; with the low-end, many times they were tossed onto the marketplace “as is,” as we’ve all seen in Jim’s videos. But they generally don’t seem to be doing that with more mid-range+ properties. They seem to be trying harder to get a better value out of these assets.
So, I’m beginning to believe, that as Jim implied in one of his previous posts, it could be just that “that one” we’re waiting for is the exception–maybe it needs too much done to it first, so they are working on it, etc.
Any similar or different experiences?
Shoppingaround,
What I’ve noticed is that the date for trustee sales has been getting pushed back often for many properties.
“For a long time, I, too, was in the “there must be a huge shadow inventory” camp.”
I have come to the conclusion that there is a shadow inventory but I don’t think it is as big as Mr. Mortgage has lead us to believe.
In the last 2-3 months, I found that I could track about 50% of the REO’s on foreclosure sites that have come onto the market in my area. The other 50% seemed to appear out of no where.
I have noticed many of the short sales and trustee sales have been sitting and some have disappeared from foreclosure sites, reappeared, then gone into cyber space.
There is one in particular with a great ocean view that has been on the market as a short sale for over 400 days. It went to auction in April and has disappeared from foreclosure sites. It doesn’t look like there are any tenants. The lawn is dead and there is no lock box.
I agree that there are lots “in limbo”–the courthouse steps sales get postponed, postponed, and some are cancelled…but I’m not sure how these moratoriums affect those already at the NOT-level.
So if that’s sort of delay in even taking the property is considered “shadow,” there yes, I’m seeing plenty of that.
If it’s only considered “shadow” once the bank owns it, but the bank then doesn’t market it (which is what is usually inferred by the term when I read it), I think it’s more blown out of proportion than it is (for the reasons I gave above).
Good morning to all.Talked with the realtor yesterday.Still drinking kool aid.She said business was booming and we are in another bull run for real estate.I asked her about all the people doing short sales and getting forclosed on.She said it was a temporary thing and buy now so you can lock in instant equity.Chance of a lifetime she says.I asked her if she was still taking her meds.
arizonadude,
LOL!