LPS: Foreclosure Backlog Stands at 30x Foreclosure Sales Volume

New data released by Lender Processing Services (LPS) Monday show that while delinquencies continue to decline, an enormous backlog of foreclosures still exists with overhang at every level.

As of the end of February, foreclosure inventory levels stood at more than 30 times monthly foreclosure sales volume, indicating this backlog will continue for quite some time, according to LPS.

Ultimately, these foreclosures will most likely reenter the market as REO properties, LPS notes, putting even more downward pressure on U.S. home values.

The company reports that the average U.S. loan in foreclosure right now has been delinquent for a record 537 days. A full 30 percent of loans in foreclosure have not made a payment in over two years.

Still, LPS says its data show that banks’ modification efforts have begun to pay off, as 22 percent of loans that were 90-plus-days delinquent 12 months ago are now current.

February’s data also showed a 23 percent increase in Option-ARM [adjustable-rate mortgage] foreclosures over the last six months, far more than any other product type.

In terms of absolute numbers, Option-ARM foreclosures stand at 18.8 percent, a higher level than subprime foreclosures ever reached, LPS said.

In addition, deterioration continues in the non-agency prime segment.

According to LPS’ report, both jumbo and conforming non-agency prime loans showed increases in foreclosures and were the only product areas with increases in delinquencies.

LPS reports that the total U.S. loan delinquency rate stood at 8.8 percent as of the end of February. The U.S. foreclosure inventory rate hit 4.15 percent.

By the company’s calculations, there are a total of 6,856,000 mortgages in the United States that are considered non-current.

Original Source

Debate on Fannie, Freddie's future begins

Washington lawmakers will start the debate on the future of housing finance after the Federal Deposit Insurance Corp. releases a report on risk retention rules, CNBC reports. Why is this important? Because we may see the end of 30-year fixed mortgages as we know it. Banks may have to take more risk, Fannie Mae and Freddie Mac may be a totally different organization, and home buyers may have no choice but to put down 20 percent of the payment upfront.

Who's the boss: real estate agent or client?

Perhaps an easy way to approach the answer to this question is by using an analogy of a car owner and an auto repair shop owner. Technically, the client is the boss at the repair shop, but does that mean the client has mastery over fixing cars? Not really in most cases. Going by the norm, the car owner is rightfully the client, but the owner of the repair shop is a “subject matter expert or SME.” In order to accomplish objectives, the car owner (the client) must appreciate and acknowledge that he/she cannot fix cars and only the repair shop owner (the SME) can. The logical conclusion of this analogy is a common goal can be achieved only with the client and the SME work cohesively, like partners. After all, their objective is the same: to get the car fixed.


The very same analogy is equally applicable and relevant while answering whether the real estate agent or the home owner is the boss. In this case, the real estate agent is the SME and the potential home owner is the client. Their objectives are the same: to find the right home. The American approach to customer service has only two golden rules: 1. the customer is always right, and 2. go back to rule number 1.

Yes, we all understand these golden rules. But the fact is not all clients are made the same way. Some are demanding, some are patient and cooperative, some are punctual and some are not…and the list goes on. In an ideal world, every real estate agent would find an ideal customer. But unfortunately, we live in the real world which is not always ideal. This is where the 80-20 rule comes in handy. Like in most real life and business scenarios, a real estate agent can consider themselves lucky if they find two ideal clients for every ten clients they represent. It would be nice if there was a scientific way of pre-screening potential clients to determine if they had all the ideal qualities. But in the absence of such magic bullets, the onus is on the agent to adapt as best as they can to all varieties of clients, or take some proactive steps to weed out the avoidable ones.

So how does an agent do that? For starters, it may be prudent for the agent to arrange a preliminary meeting with a potential client and use it as an opportunity to not only figure out the prospect’s wish list, but to also determine if the prospect has the qualities of becoming an ideal client. This can be done by keenly observing several obvious and subtle behavior patterns. Was the prospect on time for the meeting? Were they very clear and organized about their wish list or was it vague? Did the prospect think of the agent as a SME or someone who is only interested in collecting commission after the sale? Was the prospect too demanding, rude or disrespectful in any way?

Answers to these and many other mental observations can help an agent in creating a win-win, boss-less relationship that’s transformational instead of just transactional. With this approach, it is also possible for the agent to achieve a near 100 percent “ideal client” rate, wherein both the client and the SME end up “working with” each other as partners, instead of the agent ending up “working for” the Boss (client) in a one-way transactional direction.

The Role of a Short-Sale Specialist

In the midst of record foreclosures, homeowners that are desperate to avoid foreclosure are increasingly seeking short sales, where the lender avoids foreclosure of a property by selling it at a price that’s less than the mortgage on it. Short sales have tripled since 2008, with numbers reaching four million in 2010. The popularity of short sales has inspired several scam artists as well. Therefore it is very important to prudently choose a short sale specialist from a reputed real estate firm.

 

An agent that specializes in short sales plays a critical role in the entire process. The qualities and roles of a great short-sales specialist are intertwined. Here’s a short list of both: 

• Must have well developed relationships and contacts with many banks
• Be knowledgeable in bank-specific foreclosure processes
• Possess great negotiation skills to deal with multiple lien holders
•  Be familiar with Broker Price Opinions (BPO) and property valuations
• Know state laws regarding short-sales and foreclosure prevention thoroughly
• Prepare short-sales packages that get the attention of negotiators
• Know the technical process of preparing preliminary HUD-1 closing statements
• Ability to handle multiple offers effectively
• Communicate with title companies, attorneys and third parties to coordinate closing
• Deal effectively with environmental risks and code violations
• Determine if and when postponing a foreclosure proceedings is appropriate
• Prevent banks from cutting real estate commissions deeply
• Protect and offer competitive commissions so that other Realtors are incentivized
• Get banks to pay for FHA repairs to make the house more saleable
• Avoid or minimize the chances of sellers having to sign promissory notes for portions of the deficit.

  

As a realtor with Coldwell Banker Ackley Realty, Paul Antonelli has watched hundreds of people ask for help to avoid foreclosure and most of them have been given bad information about what they can do. To make sure homeowners are armed with accurate and trustable information, the Central Florida Real Estate Show will boast two additional Orlando-based experts including Colleen Mitchell, a Wells Fargo Mortgage Broker, and Charles Castellon, a real estate foreclosure attorney.

  

Antonelli said, “It is my goal to make sure homeowners know what road to take before they make any decisions, because the wrong decision could cost you. For example, if a home goes into foreclosure and the bank sells it for less than it owned, most people are completely unaware that the bank can still come after them to pay off the rest of the money even if it already foreclosed.”

 

 

You can contact a short-sale specialist at Coldwell Banker Ackley Realty by sending an email to CBARShortSale@gmail.com or visit our Short Sale Savvy Blog.

 

Decline in real estate sales greater than stated?

While most experts had predicted that the residential real estate market in 2011 would remain unchanged from 2010, many had also expected a faster absorption rate of unsold inventory of existing homes compared to the previous year. This expectation seemed real for a fleeting moment in early 2011, mostly due to the buzz created by expectations. However, recent data indicates that sales of existing homes may decline further this year.

According to statistics released by the National Association of Realtors (NAR), 4.9 million existing homes were sold in 2010, which amounted to a 5 percent decrease from 2009. But data collected by CoreLogic estimates that sales of existing homes actually fell 12 percent to 3.6 million homes. The difference in these figures is largely due to the data sources and methodologies used by NAR and others.

NAR's numbers are based on data collected from multiple listing services and large brokerages. This means properties bought by banks at auctions for the value of their outstanding loans would likely be considered as sales on the NAR data. Such properties also show up on comps as “sold,” whereas in reality, these are bank-owned unsold properties. CoreLogic gets its numbers from public sales records from courts and counties. CoreLogic believes NAR’s methodology inflates actual sales by 15-20 percent. Inventory of unsold homes on the market in November 2010 represented a 16 month supply according to CoreLogic, as compared to NAR’s 9.5 months.
If CoreLogic’s numbers are true, there are plenty of unpleasant implications worth mentioning. A slower sales rate means it will take longer to sell unsold inventory. More homes for sale in a given market mean lower prices. There are many factors contributing to the decline in sales. Anemic sales caused by the expiration of the federal homebuyer tax credits, the impact of sales of distressed properties, and the excess supply of unsold homes are all choking the sales and prices of real estate.

A national repeat-sales home-price index compiled by CoreLogic was down 5.1 percent in November 2010 from a year ago. If that trend continues, home prices nationally will probably be down 10 percent year-over-year by spring of 2011.