Archive for May, 2010

Some 14% of mortgages delinquent or in foreclosure

Behind Homeowners Have Decisions to make

Behind Homeowners Have Decisions to Make

 

 

CHICAGO (MarketWatch) — The percentage of loans in foreclosure or with at least one payment past due was a non-seasonally-adjusted 14% in the first quarter, down from 15% in the fourth quarter of 2009, the Mortgage Bankers Association said Wednesday. CHICAGO (MarketWatch) — The percentage of loans in foreclosure or with at least one payment past due was a non-seasonally-adjusted 14% in the first quarter, down from 15% in the fourth quarter of 2009, the Mortgage Bankers Association said Wednesday. But mortgages in the foreclosure process hit a record high at a non-seasonally-adjusted 4.63%, up from 4.58% in the fourth quarter. The percentage of loans in the foreclosure process was 3.85% in the first quarter of 2009. Homeowner delinquency rates muddied the housing-market picture: While the seasonally adjusted delinquency rate rose, the figure on a non-adjusted basis dropped in the first quarterBut mortgages in the foreclosure process hit a record high at a non-seasonally-adjusted 4.63%, up from 4.58% in the fourth quarter. The percentage of loans in the foreclosure process was 3.85% in the first quarter of 2009. Homeowner delinquency rates muddied the housing-market picture: While the seasonally adjusted delinquency rate rose, the figure on a non-adjusted basis dropped in the first quarter.

The seasonally adjusted delinquency rate for mortgages on one- to four-unit residential properties, which includes mortgages at least one payment past due but doesn’t include those in foreclosure, rose to 10%, from 9.5%. The delinquency rate was 9.1% in the first quarter of 2009.

The non-seasonally-adjusted delinquency rate dropped to 9.4%, from 10% in the fourth quarter of 2009.

The MBA’s quarterly national delinquency survey covers 44.3 million loans on one- to four-unit residential properties, representing 85% of all first-lien residential mortgage loans outstanding in the United States.

“The issue this quarter is that the seasonally adjusted delinquency rates went up while unadjusted rates went down,” said Jay Brinkmann, MBA’s chief economist, in a news release. “Delinquency rates traditionally peak in the fourth quarter and fall in the first quarter and we saw that first quarter drop in the data. The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement.”

Typically, more homeowners fall behind on their mortgage payments in the fourth quarter, the time of year when the first heating bill comes and holiday expenses add up, he said. Sometimes, tax refunds help borrowers become current in the first quarter.

“Most importantly, the normal seasonal drop is coming right at the point where we believe delinquencies could potentially be declining and the problem for the statistical models is determining which is which,” he said.

Roughly 4.2 million mortgages were “seriously delinquent” in the first quarter, meaning that that they were 90 days or more past due or in foreclosure, he said in a phone interview.

The percentage of mortgages that entered the foreclosure process was a non-seasonally-adjusted 1.23% in the first quarter, up from 1.20% in the fourth quarter; the foreclosure starts rate was down from 1.37% in the first quarter of 2009.

“Compared to last year, delinquencies are worse, but compared to last quarter the news is more encouraging,” said Greg McBride, senior financial analyst for Bankrate.com. “But the jury is still out as to whether we’re going to see a sustained decline in delinquencies.

“The news is not as encouraging on the foreclosure front where a backlog of seriously delinquent borrowers, plus the added impact of strategic defaulters and borrowers falling out of the modification program all represent future foreclosure inventory waiting for a time to happen,” he said.

The road ahead

Brinkmann said there still is a case for gradual improvement in the delinquency numbers this year, but the magnitude of the improvement will depend on economic growth and the country’s employment picture. And with the slowdown in the European economy, U.S. economic growth expectations have been revised downward.

First-time unemployment claims, which had been falling since March 2009, stopped decreasing during the first quarter, Brinkmann said. That likely halted the decline in the 30-day delinquency rate.

“If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse. However, a bad situation that is not getting worse is still bad,” Brinkmann said in the news release.

Recent research, mainly from the credit bureaus, has also documented the increased incidence of “strategic defaults,” where borrowers who could make their mortgage payments decide to pay other bills ahead of their mortgage loan, said Michael Fratantoni, MBA’s vice president of research and economics. Typically, these are borrowers who owe more on their mortgage than the current market value of their home. See story on more homeowners opt to quit paying their mortgage.

“If you look back three, four years ago, it was always the case where a borrower would pay the mortgage first before the second mortgage or credit card debt,” Fratantoni said during a conference call with reporters. Today, for some groups of borrowers, that’s no longer true. “It runs counter to what anyone would typically expect and the historical experience,” he said.

Given that many strategic defaulters also have high credit scores, Brinkmann said that in the future, credit scores might not be as good a predictor of mortgage borrower risk. For people who take this route, even if their credit score improves, the fact they defaulted on their mortgage will have a negative impact for years to come, he said.

“Some of these people are underestimating the long-term costs,” including the ability to buy a house in the future, he said.

While Florida, Arizona, Nevada and California have played heavily into the national delinquency and foreclosure numbers for several years, that’s changing somewhat: Florida is still worsening, but California is showing signs of improvement, Brinkmann said.

“However, Washington, Maryland, Oregon and Georgia showed the greatest overall increases in foreclosures started compared to last quarter,” Brinkmann said.

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** CONSUMER ALERT ** WARNING REGARDING RESIDENTIAL “SHORT” SALES

 Short Sales Fraud is On the Rise In California

Short Sales Fraud is On the Rise In California

California Real Estate Commissioner Issues Short Sale Consumer Alert

Information Includes the Potential Perils of Short Sales

Forth Hoyt’s Sacramento Short Sale Center
Mortgage troubles? I can help … 916-316-3810

SACRAMENTO, Calif.–(BUSINESS WIRE)–The California Real Estate Commissioner, Jeff Davi, announced the issuance of a Consumer Alert by the California Department of Real Estate (DRE) warning consumers and real estate agents about the perils and potential pitfalls of short sales. The alert has been posted on DRE’s Web site at: http://www.dre.ca.gov/pdf_docs/ca/ConsumerAlert_ShortSales.pdf

“Moreover, the Consumer Alert educates consumers and real estate agents to recognize the elements of a fraudulent or questionable deal.”

“The number of short sales is on the rise and many consumers do not understand the consequences of such a transaction,” DRE Commissioner Jeff Davi said. “Moreover, the Consumer Alert educates consumers and real estate agents to recognize the elements of a fraudulent or questionable deal.”

To put it simply, a short sale transaction involves the sale of a property wherein a seller receives an offer from a buyer that is less than the amount of the mortgage loan(s) on the property. In order to complete the sale, the seller requests the lender to accept less than what is owed in order to allow the transaction to close. While short sales are a popular alternative to foreclosure, like all real estate transactions, they are complicated and sellers need to lookout for the pitfalls.

For example, in some instances a seller may be required to pay taxes on the forgiven debt. In addition, a seller may be an unwitting participant in a fraudulent short sale transaction wherein an unscrupulous agent or a short sale negotiator working with a straw buyer will make a lowball offer to the seller and in turn misrepresent the true market value of the property to the lender. If the lender accepts the offer, the straw buyer immediately re-sells it at the true market value, with the profits split among the conspirators. Had the property been sold for the most amount of money that the market will bear, the potential tax consequence to the seller is diminished and the lender would have received fair market value.

There are a number of government anti foreclosure programs available to provide you with solutions.  Are you a  homeowner looking for Government guidelines?  Check Your Eligibility Now

To stay safe; a few of the key elements a homeowner should look out for are the following:

For more information about DRE and its programs visit www.dre.ca.gov.

 

Courtesy Business Wire

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