by Jim the Realtor | Nov 15, 2013 | Foreclosures/REOs, Short Sales, Short Selling |
From the wsj.com:
Troubled homeowners who get a break from their mortgage lenders could face a hefty tax bill next year if a key provision expires at the end of the year, though state laws could determine which borrowers will have to write a check to Uncle Sam.
Homeowners who live in states where mortgages are non-recourse—that is, where they aren’t personally liable for the unpaid balance—may avoid the potential tax hit even if Congress doesn’t act, according to a letter sent by the Internal Revenue Service released by Sen. Barbara Boxer (D., Calif.) on Friday.
In the letter to Sen. Boxer, the IRS clarified that certain non-recourse debt forgiven by lenders wouldn’t typically be considered taxable income by the IRS. This means that for most California borrowers, the expiration of the tax provision may not have a meaningful effect.
“California homeowners have struggled through years of economic hardships during the Great Recession,” said Ms. Boxer in a statement Friday. “I am relieved that these families will not face a burdensome tax penalty just as they are trying to rebuild their lives with a short sale.”
In the letter, the IRS wrote that “if a property owner cannot be held personally liable for the difference between the loan balance and the sales price, we would consider the obligation a non-recourse obligation.” As a result, the owner would not have to count that forgiven debt as income.
Other states with laws that prevent lenders from seeking so-called “deficiency judgments” to recoup defaulted debts from borrowers would likely be in the same camp as California, the letter said.
Short sales have fallen sharply as a share of overall sales over the past year as the housing market has rebounded and fewer homeowners have found themselves underwater. In California, short sales accounted for around 12.6% of homes that were resold last month, down from 26.7% one year earlier, according to research firm DataQuick.
Read full article here:
http://blogs.wsj.com/developments/2013/11/15/why-california-homeowners-could-avoid-tax-forgiveness-hit/
by Jim the Realtor | Oct 30, 2013 | Foreclosures/REOs, Loan Mods, Mortgage News, Principal Reductions, Short Selling |
Hat tip to daytrip for sending in this article from the latimes.com alerting us to the expiring The Mortgage Debt Relief Act of 2007, wrapped around the free cheese in the recent JP Morgan settlement:
http://www.latimes.com/business/hiltzik/la-fi-mh-homeowners-20131029,0,6953798.story#axzz2jD09ygWq
David Dayen spots a new blow for underwater homeowners that thus far has flown under the radar: the coming expiration of the Mortgage Forgiveness Debt Relief Act of 2007, scheduled for Dec. 31.
The act is a mouthful, but it’s been a crucial factor in helping countless families get out from under bad mortgages. Simply put, the act relieves homeowners from having to pay taxes on any loan forgiveness they receive in a mortgage restructuring. (The maximum exemption is $2 million for a couple.) The measure was originally set to expire last Dec. 31, but it was extended another year by the fiscal cliff deal.
The foreclosure crisis is ebbing, but the relief is still needed. Millions of families are still underwater and facing delinquency, default, and foreclosure. As Dayan notes, those who succeed in obtaining principal reductions will be getting a bill that’s almost certain to be unaffordable.
As an additional irony, the act’s expiration comes just as JPMorgan, one of the banks that contributed massively to the housing crisis, reaches a deal that gives it a tax break on its multibillion-dollar settlement of federal charges related to the disaster.
He suggests folding an extension of the homeowner relief act into the JPMorgan settlement, but the extension looks like something that would have to clear Congress all by its lonesome. What are the chances of that? Congress has a lot to do as the end of the year looms. Somehow the things that aren’t on its agenda are all needed to help the less advantaged of society — food stamp extensions and now mortgage relief. Come New Year’s Day, we’ll be asking once again: Who do the people on Capitol Hill work for?
by Jim the Realtor | Sep 6, 2013 | Foreclosures/REOs, No-Foreclosure as Banking Policy, Shadow Inventory |
From DSNews.com:
As home prices improve and headlines spell out recovery, those on the ground in housing markets across the country are encountering a new threat: “zombies.”
These so-called “zombie” foreclosures take place when a bank initiates foreclosure on a property but then abandons the process, leaving the property in a sort-of no-man’s land—vacant but not for sale.
According to RealtyTrac, there are about 167,000 properties nationwide that fall into this category. In addition, the company says there are hundreds of thousands of unlisted REOs and even more properties winding through lengthy judicial foreclosure procedures.
“Unlisted foreclosures and bank walkaways used to be extremely rare, but they have mushroomed recently, ballooning into a large number of homes stuck in foreclosure limbo, sometimes for years,” RealtyTrac stated in its most recent issue of Foreclosure Report News.
JtR: Click on the link above to read about some smug REO brokers.
Bank of America has 23,966 foreclosure “zombies,” the most held by any bank, according to RealtyTrac.
Wells Fargo is not far behind with 22,968, and JPMorgan Chase holds the third-highest inventory of foreclosure “zombies”-16,054 by RealtyTrac’s count.
With 55,503, Florida is home to the highest number of unoccupied “zombie” properties.
In total, RealtyTrac estimates there are about 1 million vacant homes that need to be sold but are currently out of reach for most real estate agents.
Meanwhile, real estate markets across the country are dealing with inventory shortages.
The shortages, combined with high investor activity, have caused price surges in several markets. In fact, some real estate professionals worry that investors have crowded out traditional buyers and artificially inflated property values in some areas.
“It’s not rocket science to predict what will happen next,” said Steve Hawks of Platinum Real Estate Professionals in Henderson, Nevada.
He says Las Vegas “will see another 20 percent appreciation in prices over the next nine months. Vacant homes and delinquent loans will be converted to available inventory in the second half of 2014. And the second bubble pop in less than a decade will begin.”
“Only stupid money is buying now,” Hawks said.
JtR: If prices are going up 20% over the next nine months, why stupid now???
A full 8 percent of single-family homes in the Las Vegas metro-about 40,000 properties-are vacant, according to data from the Lied Institute at the University of Las Vegas.
RealtyTrac says agents hoping to survive in today’s zombie-land must form relationships with banks, private lenders, the GSEs, and distressed borrowers to dig into the shadow inventory and zombie population in order to bring markets back to life.
http://www.dsnews.com/articles/real-estate-professionals-must-battle-foreclosure-zombies-to-survive-2013-09-04
by Jim the Realtor | Aug 7, 2013 | Flips, Foreclosure Count, Foreclosures, Foreclosures/REOs, Jim's Take on the Market
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:
by Jim the Realtor | Jul 10, 2013 | Foreclosures/REOs, Market Buzz, Market Conditions, No-Foreclosure as Banking Policy |
Hat tip to Booty Juice for sending in Nick’s article on the Las Vegas market- and the effects of halting foreclosures:
http://online.wsj.com/article/SB10001424127887323687604578467260571838502.html
You’ll need to be a subscriber to read the full article – but here are excerpts:
LAS VEGAS—In a city dotted with tens of thousands of vacant houses, Jericho Guarin figured it would be easy to buy his first home. But nearly a year after beginning a search late last summer, he has come up dry.
“It has been a nightmare,” says the 37-year-old U.S. Air Force officer. “There are plenty of empty houses, but they’re just not for sale.”
Indeed, it is a lopsided equation. The number of available homes has plunged here after a sweeping state law subjected lenders to stiff new foreclosure rules and penalties. With banks exercising caution, many homeowners—including those seriously delinquent on their loans—have been allowed to remain in place. As a result, there is little on the market at a time when first-time buyers and real-estate speculators are anxious to tap both cheap prices and low-interest mortgages.
Many real-estate agents, home builders and consumer advocates argue that the law, intended to remedy foreclosure-processing abuses, has backfired. Some owners who are behind on payments aren’t maintaining their homes as banks refrain from eviction proceedings. The perverse outcome: Inventory shortages have spurred new developments despite a glut of properties stuck in foreclosure limbo.
The foreclosure delays have helped distressed homeowners like Scott Chatley, who went 54 months without making a mortgage payment. That gave him enough time to pay off debts, repair his credit, and begin saving for a down payment on his next home. Mr. Chatley, who bought a home here in 2005 for $495,000 with no money down, stopped making his $4,000 monthly mortgage payments in mid-2008 when he lost his job as a software engineer.
Mr. Chatley says he delayed foreclosure first by seeking loan modifications and then by filing for bankruptcy. His mortgage company, Bank of America Corp., last fall approved a short sale of his home for $169,000 to an investor. Though he moved out in September, Mr. Chatley says he probably could have stayed longer because the bank hadn’t been actively moving along the foreclosure.
Recently, he was prequalified by a credit union for a new mortgage and hopes to buy a new place later this year or early next. “If I see a rule that exists to help me recover without having to do anything illegal, why would I not use that?” says Mr. Chatley.
A Bank of America spokesman said it isn’t able to tell how much, if any, effect the state law had on Mr. Chatley’s foreclosure delay.
Nearly 45,000 loans are either 90 days or more past due or in foreclosure. Local electric-utility data showed nearly 64,000 vacant homes at the end of last September, according to a tally by analysts at the University of Nevada-Las Vegas. Fewer than 8,000 of those units were listed for sale.
A lag in foreclosures has had other deleterious effects. Homeowners’ associations aren’t collecting dues from borrowers who are behind on their mortgages. Some associations have begun taking advantage of their rights to file liens ahead of the bank—and then sell the liens to investors, who pay a few thousand dollars for the right to take control of the home until the bank forecloses.
Investors buy the liens “in the hopes that the mortgage is going to be lost in la-la-land, and the bank won’t foreclose for six months or two years,” says Richard Weiss, a real-estate investor who said he has taken ownership of around seven properties. While waiting for the bank to get its act together and foreclose, “you can do whatever you want—put a tenant in there and collect the rent,” says Mr. Weiss.
http://online.wsj.com/article/SB10001424127887323687604578467260571838502.html
http://www.calculatedriskblog.com/2013/07/timiraos-foreclosure-squeeze-crimps-las.html
by Jim the Realtor | Jun 25, 2013 | Foreclosure Count, Foreclosures/REOs, No-Foreclosure as Banking Policy |
Hat tip to Ken for sending in this article from Forbes:
http://www.forbes.com/sites/morganbrennan/2013/06/24/3-reasons-the-bubble-like-surge-in-home-prices-wont-last/
An excerpt that suggests one reason why prices are going up:
In some cases banks are choosing to hold onto distressed assets longer, hoping to minimize losses on homes by artificially tamping down distressed inventory levels now. So when a home comes available in a foreclosure sale, the lender may choose to repossess it as a future REO than part with it during an auction.
In states like Arizona, that repossession is logged at the value of the mortgage — a “sales price” that may very well be higher than the actual market value of the property, according to Ingo Wizner, president of real estate research firm Local Market Monitor.
Around SD County, it appears that more borrowers have started making their payments. The number of SD filings has dropped off almost by half, Y-O-Y:
Last month had 69% fewer REOs, and 42% fewer 3rd-party sales, Y-O-Y:
Regardless whether the shortage of distressed properties is due to more borrowers now making their payments, increased legislature, or a deliberate shift in banking policy, the foreclosure spigot has slowed to a trickle.
by Jim the Realtor | Jun 21, 2013 | Foreclosures/REOs |
NORTH SACRAMENTO (CBS13) — Real-estate agents are trying find new ways to combat squatters they say are devaluing their properties. Our CBS13 crew got a firsthand look as they discovered squatters staying in an empty home.
Re/Max real-estate agent Zack Alber toured the crew through a property on Thursday.
Just a few feet into the house, there were signs that someone had been living inside of the home. One of the squatters attempts to hide from our crew in the kitchen. Seeing the camera, they are quick to leave.
“I usually don’t go by myself, I come with a group of people,” Alber said.
Before entering the house, Alber offered to grab the nightstick he carries in his car to protect himself and the property. He’s been finding new ways to keep the squatters out.
“Sometimes we have security guards that sit in patrol cars at night so nobody breaks in,” he said. It’s a big expense that real-estate agents weigh against the value of the home.
John Franks has been homeless for more than a year. We found him in the backyard with a loofah and some soap. “I will not go inside a property,” he said. He says he just wanted to use the faucet and wash up and avoids going inside so he won’t get into trouble.
As we leave, Alber locks up the property, although it probably doesn’t matter. “They’re gonna get in,” he said. (A few hours later, the squatters were back in the house).
by Jim the Realtor | May 20, 2013 | Foreclosures/REOs |
Another fishy can-kicking device being employed here – hat tip to SD Squatter for sending this in from the latimes.com:
Sales of homes in foreclosure by Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. ground nearly to a halt after regulators revised their orders on treatment of troubled borrowers during the 60 days before they lose their homes.
The banks said they paused the sales on May 6 to make sure that their late-stage foreclosure procedures were in accordance with the guidelines. The banks wouldn’t say exactly which issues had been under scrutiny.
Bank of America Corp., by contrast, continued foreclosure sales at a normal pace, apparently confident its procedures met the revised restrictions.
“We manage our mortgage servicing operations in compliance with all laws, regulations and standards for sound business practices,” BofA said Friday in a statement.
The halted foreclosures are the latest complication stemming from a settlement between 13 large mortgage servicers and their federal overseers. Banks and regulators also have struggled to distribute billions of dollars in aid to borrowers equitably as required under the settlement.
Chase resumed a normal volume of foreclosure sales last week, saying its practices complied with the latest bulletin from the Treasury Department agency that regulates national banks, the Office of the Comptroller of the Currency, or OCC.
http://www.latimes.com/business/money/la-fi-mo-banks-foreclosure-halt-20130517,0,4350791.story
by Jim the Realtor | Apr 30, 2013 | Foreclosures/REOs, Frenzy, Graphs of Market Indicators |
An excerpt from HW:
Any homebuyer on the market right now will tell you the crowd of buyers and multiple offers are creating a challenge.
Those in search of distressed homes owned by the U.S. Department of Housing and Urban Development are not immune to this supply-and-demand situation. In fact, recently one HUD home in San Diego attracted 100 offers within 10 days.
“In this market, because it’s so competitive we’re seeing buyers just happy to get a house. They are being less selective on location and condition,” said Whissel, broker/owner of Whissel Realty.
But in its latest news report, RealtyTrac reported that an uptick in homes owned by HUD may create opportunities for patient buyers.
Experts project that over the next two years, as lenders steadily work through a backlog of foreclosures delayed by foreclosure-processing reviews, the supply of these HUD homes will increase significantly.
In the western part of Riverside County in California, HUD-owned home sales are increasing significantly.
“HUD sales have increased due to the hold back of bank-owned homes for robo-signing reviews, and, most recently, the Homeowner Bill of Rights,” said HUD local listing broker Nat Genis.
Genis added, “Inventory is there, just not being released during the banks/servicers review of the loan/mortgage documents.”
Read more here:
http://www.housingwire.com/news/2013/04/29/hud-homes-add-inventory-starved-market?utm_source=feedly
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For those hoping for more inventory, it’s good to see that the recent foreclosure activity around San Diego appears to have been going in the right direction over the last couple of weeks:
by Jim the Realtor | Apr 24, 2013 | Foreclosures/REOs, Shadow Inventory, Strategic Defaults |
An excerpt from an article in the MND:
While great efforts must be taken to avoid a future crisis and bailout the SIGTARP says, we cannot lose sight of the current TARP bailout. Wall Street may have recovered but Main Street has not. TARP was always intended as a bailout of the financial system to protect American families. Business and homeowners are still feeling the effect of the crisis and still need help from TARP.
“In its March 2013 TARP report, Treasury writes, ‘Thanks to TARP…struggling homeowners have seen relief, and credit is more available to consumers and small businesses. ‘” SIGTARP says of this, “Lost in this statement is the unfortunate reality that this improvement is only a fraction of what TARP could and should have done, and in many ways still can do.”
As of March 31, Treasury had spent less than 2 percent ($7.3 billion) of TARP funds on homeowner relief programs including HAMP and the Hardest Hit Funds while spending 75 percent to rescue financial institutions. “Treasury pulled out all the stops for the largest financial institutions, and it must do the same for homeowners.”
Treasury also has a responsibility to insure the help it does provide is sustainable.
In order to avoid foreclosure through HAMP a homeowner must remain active in a permanent mortgage modification and only 862,279 homeowners are in one, about half of which were funded with TARP money.
Now many homeowners are defaulting on these modifications, more than 312,000 to date. SIGTARP is concerned that these defaults are increasing at an alarming rate. As of March 31 the oldest modifications, done in Q3 and 4 of 2009, are defaulting at respective rates of 46.1 and 39.1 percent.
The report says Treasury should work to curb redefaults, which often inflict great harm on already struggling homeowners when any amounts previously modified suddenly come due. SIGTARP recommended this month that Treasury conduct research to better understand the causes of redefaults and work with servicers to develop an early warning system so they can intervene before problems occur.
As regards Wall Street, the report says too big to fail is not just about size, it is about the interconnections the largest financial firms have to each other and to American households.
Regulators were shocked, in 2008, to find how these large institutions were tied to each other and to counterparties so that if one went down it pulled other down with it. Even the institutions themselves did not realize the extent to which they were linked. Nor did they realize their exposures to short-term funding counterparties which, as Treasury Secretary Geithner said, “can flee in a heartbeat”, bringing the system down. While the financial system is more stable now, ending too big to fail is critical to its safety.
http://www.mortgagenewsdaily.com/04242013_tarp_hamp.asp
Homeowners who live in states where mortgages are non-recourse—that is, where they aren’t personally liable for the unpaid balance—may avoid the potential tax hit even if Congress doesn’t act, according to a letter sent by the Internal Revenue Service released by Sen. Barbara Boxer (D., Calif.) on Friday.
