Foreclosure Rates Retreat from Record Highs

Foreclosure rates in the U.S. have been falling since the beginning of this year. According to RealtyTrac’s U.S. Foreclosure Market Report, foreclosure filings in the first quarter of 2011 decreased 15 percent from the previous quarter and 27 percent from the first quarter of 2010.


Foreclosure filings were made on 239,795 properties in March, which is a 35 percent decline from March 2010, when 367,056 homeowners received a foreclosure notice. About 215,000 properties were foreclosed on in the first quarter, which is a 17 percent decrease when compared to the first quarter of the previous year. 269,000 properties were scheduled for foreclosure auction in the first quarter, a 27 percent reduction from the first quarter of 2010.

Nevada, Arizona, California, Utah and Idaho were the top five states with the highest foreclosure rates. Despite seeing a ten percent reduction from the previous quarter, Nevada led the way with foreclosure filings on one in every 35 households. Arizona had the second highest rate with one in every 60 homes receiving a foreclosure filing during the first quarter. But these numbers were down 17 percent from the first quarter of 2010. California came in third with a foreclosure filing on one in every 80 houses.

Utah had the fourth highest rate, where one in 98 households was in foreclosure. Idaho posted the fifth highest foreclosure rate, with one in every 106 homes having a foreclosure filing during the first quarter. Georgia, Michigan, Florida, Colorado and Illinois were the other five that made up the top ten states that had 10 percent foreclosure filings in the first quarter. Florida accounted for nearly 9 percent of U.S. foreclosure activity, documenting 58,322 properties with a foreclosure filing during the quarter.

Some of these foreclosure numbers were artificially low because of processing delays, particularly in states where a judicial foreclosure process is utilized. This was attributed to the ongoing federal investigation of the foreclosure process in these states. States where non-judicial foreclosure process is employed had the 20 highest first quarter foreclosure rates among metropolitan areas. Las Vegas continued to remain in the number one position with the country’s highest metro foreclosure rate, where one in every 31 households had a foreclosure filing in the first quarter.

According to the Mortgage Bankers Association’s quarterly National Delinquency Survey, the percentage of homeowners with mortgages that were in foreclosure or seriously delinquent fell during the first quarter of 2010, and improvement in the performance of loans taken out from 2005-07 suggests a sustainable trend.

The serious delinquency rate -- the percentage of loans in foreclosure or delinquent by 90 days or more, was 8.1 percent during the first quarter, down from 8.6 percent during the first quarter of 2010 and 9.54 percent a year ago.

The percentage of mortgages in foreclosure was 4.52 percent, down from a record high of 4.64 percent in the fourth quarter, and the percentage of loans behind by 90 days or more dropped for the fifth consecutive quarter, to 3.58 percent.

Analysts predict a steep increase in foreclosure rates when the federal investigation is completed. When this happens, it will reveal a realistic U.S. foreclosure rate. Real estate pundits predict the market would stabilize when we get an accurate picture of foreclosure filings, and this will help determine the housing market trend for the rest of 2011.

New Bill introduced to speed Short Sales

A bill named the “Prompt Decision for Qualification for Short Sale Act of 2011” was introduced in the U.S. House of Representatives in April which would require mortgage lenders to respond to short sale requests within 45 days from the time they receive it. Short sales represent about 13% of recent home sales. This bill may be a boon to thousands of home owners who are unable to keep their home and hope to avoid foreclosure. The short sale process is currently inefficient and time consuming and many potential buyers end up walking away from the sale because of long delays, which invariably causes properties to be foreclosed.

The National Association of Realtors® (NAR) is fully supportive of this new bill. NAR had been actively pushing the mortgage industry to revamp the short sales approval process. Short sales are beneficial to lenders because they cost less than foreclosures and it also reduces the negative financial impact on borrowers. Ron Phipps, the president of NAR said “as the leading advocate for home ownership and housing issues, Realtors® want to help more homeowners avoid foreclosure by facilitating a short sale when a family is absolutely unable to keep their home; however, that can only happen if lenders and servicers approve short sale offers in a reasonable amount of time.”

Here’s the problem with the current situation. There are many decision-makers involved in the short sale process including buyers, sellers, investors, servicers, insurers and lenders. All of them must agree to approve or reject each sale. Lenders find it difficult to decide if they must approve or deny a sale. Sometimes this could cause several months of status quo, resulting in potential buyers getting frustrated and canceling their contracts due to a lack of response from lenders, and this results in properties being foreclosed.

According to the proposed bill, the servicer must notify the borrower about the status of their sale within the 45-day deadline. The notification may include approval or denial of the sale process, or a request for additional information and paperwork.

Phipps also stated that “streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close and reduce the overall number of foreclosures. This benefits sellers, lenders, buyers and the entire community.”

This bill has the potential to dramatically reduce the inventory of foreclosed homes across the country. However, it has not yet been assigned to a committee. A similar bill with the same title was introduced in September 2010, but it did not make it to a House committee for debate before the end of the legislative session. NAR has urged Congress to pass this new bill quickly. When passed, the bill would provide much needed relief to millions of home owners by helping them prevent foreclosures. It will also reduce the financial hit on lenders and servicers.

Is Homeowners Insurance difficult to obtain in Florida?

The sunshine state is often called the Pensioners’ paradise for good reason. It is the number one destination in the U.S. for retirees because of its balmy weather, low income and property taxes, active lifestyle opportunities, and its proximity to myriads of beaches and theme parks. For many infamous reasons, it is also one of the toughest states to get homeowners insurance, and that’s the topic of today’s blog.


Florida is home to six of the ten named home insurance perils including hurricanes, tornadoes, thunderstorms, floods, extreme heat and wildfires. When you add sinkholes, mold and termites to that mix, it is easy to figure out why it is so hard to obtain homeowners insurance in the state.

Florida’s homeowners insurance covers many types of losses. Every type of coverage is not available to all homeowners because of geography and location. The type and cost of insurance depends on which part of the state a home is located in. The state’s population is densely packed around the peninsula’s coasts and these are the areas that bear the highest risks. This means it is difficult to obtain insurance for oceanfront homes and homes located in hurricane zones. Homes located in areas prone to sinkholes may not get coverage for this type of loss. Since risks are lower for homes located in the central and northern part of the state, geography is less of a concern in these areas.

Florida laws protect insurance companies by allowing them to not accept applications in any part of the state for new or increase in existing coverage when the National Weather Service issues a warning or watch for hurricanes or tropical storms. Florida’s homeowner’s insurance does not cover flood damage, including water damage from a storm surge. Buying flood insurance may be impossible or prohibitively expensive for homes located in FEMA designated flood zones.

To remain competitive, insurance companies are expected to maintain top financial ratings from rating services firms like AM Best. If insurance companies’ issue too many policies to Florida homeowners, their financial ratings could be downgraded which in turn would make them less attractive compared to their competitors. Given Florida’s population growth, large numbers of applications are submitted to insurance companies annually and the underwriters selectively issue policies to low-risk homeowners with top credit ratings.

Due to historic and unprecedented number of natural disasters in recent years, insurance companies in Florida have issued billions of dollars to homeowners during this past decade. Unable to recover and remain profitable after such huge losses, many insurance companies pulled out of Florida, a couple of them were ordered to liquidate and three were taken over by the state government. For all these reasons it has become very difficult to get homeowners insurance in the state.
To ease the insurance crisis, the Florida legislature created a state insurance fund called the Citizens Property Insurance Corporation in 2002. It is now Florida’s largest home insurer. For many years, this was the only option for Floridians. However, due to calmer storm and hurricane seasons since the past couple of years, eight global insurance carriers have cautiously entered or re-entered the homeowner insurance market in the sunshine state.
While new homeowners continue to relocate to Florida to enjoy beautiful beaches, abundant sunny days, low taxes and other benefits, there aren’t a lot of companies left in the sunshine state that offer homeowners insurance.
Here are a few homeowner insurance resources for Florida residents:
The Florida Office of Insurance Regulation (FLOIR): http://www.floir.com/
Citizens Property Insurance Corporation: https://www.citizensfla.com/index.cfm
Florida Market Assistance Plan (FMAP): http://www.fmap.org/

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.