Multnomahforeclosures.com was updated today with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 2 years. Multnomahforeclosures.com idocuments the fall of the great real estate bust of the 21st century.
All listings are in PDF and Excel Spread Sheet format.
Multnomah County Foreclosures
http://multnomahforeclosures.com
Applications to purchase a home increased during the week ending September 3 as refinanceapps slid, according to the latest survey from the Mortgage Bankers Association.
That bucked an ongoing trend seen over the past few months in which refinance apps were surging and purchase apps were falling flat.
Overall, home loan demand decreased 1.5 percent from one week earlier, thanks to a 3.1 percent dip in refinance activity, offset by a 6.3 percent rise in purchase apps.
“Purchase applications increased last week, reaching the highest level since the end of May. However, purchase activity remains well below levels seen prior to the expiration of the homebuyer tax credit, and is almost 40 percent below the level recorded one year ago,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.
“On the other hand, refinance volume dropped last week for the first time in six weeks, but the level of applications to refinance remains close to recent highs, as historically low mortgage rates continue to draw borrowers into the market.”
The refinance share of mortgage activity fell to 81.9 percent of total apps from 82.9 percent one week earlier as mortgage rates inched off record lows.
The popular 30-year fixed averaged 4.50 percent, up from 4.43 percent, while the 15-year fixed rose to 4.00 percent from 3.88 percent.
Finally, the one-year adjustable-rate mortgage ticked up to 7.00 percent from 6.95 percent, and remains quite unattractive.
Multnomahforeclosures.com was updated with the largest list of Notice Defaults to date. With Notice of Default records dating back over 2 years. Multnomahforeclosures.com documents the fall of the great real estate bust of the 21st centry. The lists are of the raw data taken from county records.
It is not a bad idea for investors and people that are seeking a home of their own to keep an eye on the Notice of Default lists. Many of the homes listed are on the market or will be.
All listings are in PDF and Excel Spread Sheet format.
Multnomah County Foreclosures
Mainstream media, the Government and consumers themselves vilify debt as the root of the consumer’s financial plight and the root of a weakening country. Debt is not the problem; it’s the management of debt and the way debt is structured that is creating the problem not the debt itself. Unless you win the lottery, invent a cure for cancer or get adopted by Bill Gates or Warren Buffett, debt will be something you will have to face somewhere along the course of your adult life; it’s a natural component of our society.
In today’s economic environment hard working American’s are experiencing a level of fear and financial uncertainty they have never been faced with. This is keeping them up at night wondering how they are going to sustain a life they have worked so hard to build. Americans are also wondering why those we have trusted for all these years; the banks, money managers and politicians, are thriving financially, but don’t seem to be contributing anything of real value to the public? Today, the predominant questions being asked by the American public as it relates to their financial future are; what am I going to do, what can I do, how am I going to do it? We all work way too hard to be faced with these questions. The answers to these frightening questions are right in front of us. The answers lie in the use of the financial resources we use every day. You just need to know how to use them to your advantage.
The crux of the problem for consumers and the country alike lie with misaligned, improper or a shear lack of education on the use of the banking tools we use every day. The three banking tools that we use every day; checking accounts, credit cards and loans are simply being used improperly. The solution lies in educating consumers and institutions to use these tools in the proper sequence and function to manage debt properly, regain control of income and possess the authority to control the repayment of debt. It’s as simple as that. By exposing the failed business model of conventional banking and borrowing practices, realigning them into a model that actually helps consumers get more out of what they own and what they earn, we can once again grow individually, as a society and a nation.
The Truth Is In The Proof.
TruthInEquity.com
The real estate and foreclosure crisis has stripped African-American families of more wealth than any single event in history.
The American middle class has been hammered over the last several decades. The black middle class has suffered to an even greater degree. But the single most crippling blow has been the real estate and foreclosure crisis. It has stripped black families of more wealth than any single event in U.S. history. Due entirely to subprime loans, black borrowers are expected to lose between $71 billion and $92 billion.
To fully understand why the foreclosure crisis has so disproportionately affected working- and middle-class blacks, it is important to provide a little background. Many of these American families watched on the sidelines as everyone and their dog seemed to jump into the real estate game. The communities they lived in were changing, gentrifying, and many blacks unable to purchase homes were forced out as new homeowners moved in. They were fed daily on the benefits of home ownership. Their communities, churches and social networks were inundated by smooth-talking but shady fly-by-night brokers. With a home, they believed, came stability, wealth and good schools for their children. Home ownership, which accounts for upwards of 80 percent of the average American family’s wealth, was the basis of permanent membership into the American middle class. They were primed to fall for the American Dream con job.
Black and Latino minorities have been disproportionately targeted and affected by subprime loans. In California, one-eighth of all residences, or 702,000 homes, are in foreclosure. Black and Latino families make up more than half that number. Latino and African-American borrowers in California, according to figures from the Center for Responsible Lending, have foreclosure rates 2.3 and 1.9 times that of non-Hispanic white families.
There is little indication that things will get much better any time soon.
The Ripple Effect
If anything, the foreclosure crisis is likely to produce a ripple effect that will continue to decimate communities of color. Think about the long-term impact of vacant homes on the value of neighborhoods, and about the corresponding increase in crime, vandalism and shrinking tax bases for municipal budgets.
“The American dream for individuals has now become the nightmare for cities,” said James Mitchell, a councilman in Charlotte, NC who heads the National Black Caucus of Local Elected Officials. In the nearby community of Peachtree Hills, he says roughly 115 out of 123 homes are in foreclosure. In that environment, it’s impossible for the remaining homeowners to sell, as their property values have been severely depressed. Their quality of life, due to increases in vandalism and crime, diminished. The cities then feel the strap of a receding tax base at the same time there is a huge surge in the demand for public services.
Charlotte, N.C. Baltimore, Detroit, Washington D.C. Memphis, Atlanta, New Orleans, Chicago and Philadelphia have historically been bastions for the black middle class. In 2008, roughly 10 percent of the nation’s 40 million blacks made upwards of $75,000 per year. But now, just two years later, many experts say the foreclosure crisis has virtually erased decades of those slow, hard-fought, economic gains.
Memphis, where the majority of residents are black, remains a symbol of black prosperity in the new South. There, the median income for black homeowners rose steadily for two decades. In the last five years, income levels for black households have receded to below what they were in 1990, according to analysis by Queens College.
As of December 2009, median white wealth had dipped 34 percent while median black wealth had dropped 77 percent, according to the Economic Policy Institute’s “State of Working America” report.
“Emerging” Markets Scam v. Black Credit Crunch
While the subprime loans were flowing, communities of color had access to a seemingly endless amount of funding. In 1990, one million refinance loans were issued. It was the same for home improvement and refinance loans. By 2003, 15 million refinance loans were issued. That directly contributed to billions in loss equity, especially among minority and elderly homeowners. Also at the same time, banks developed “emerging markets” divisions that specifically targeted under-served communities of color. In 2003, subprime loans were more prevalent among blacks in 98.5 percent of metropolitan areas, according to the National Community Reinvestment Coalition.
One former Wells Fargo loan officer testifying in a lawsuit filed by the city of Baltimore against the bank says fellow employers routinely referred to subprime loans as “ghetto loans” and black people as “mud people.” He says he was reprimanded for not pushing higher priced loans to black borrowers who qualified for prime or cheaper loans. Another loan officer, Beth Jacobson, says the black community was seen “as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania.”
“We just went right after them,” Jacobson said, according to the New York Times, adding that the black church was frequently targeted as the bank believed church leaders could convince their congregations to take out loans. There are numerous reports throughout the nation of black church leaders being paid incentives for drumming up business.
Due in part to these aggressive marketing techniques and ballooning emerging market divisions, subprime mortgage activity grew an average of 25 percent per year from 1994 to 2003, drastically outpacing the growth for prime mortgages. In 2003, subprime loans made up 9 percent of all U.S. mortgages, about a $330 billion business; up from $35 billion a decade earlier.
Now that the subprime market has imploded, banks have all but abandoned those communities. Prime lending in communities of color has decreased 60 percent while prime lending in white areas has fallen 28.4 percent.
The banks are also denying credit to small-business owners, who account for a huge swath of ethnic minorities. In California ethnic minorities account for 16 percent of all small-business loans. In the mid-2000s roughly 90 percent of businesses reported they received the loans they needed. Only half of small businesses that tried to borrow received all or most of what they needed last year, according to a survey by the National Federation of Independent Business.
In addition, minority business owners often have less capital, smaller payrolls and shorter histories with traditional lending institutions.
Further complicating matters is the fact that minority small-business owners often serve minority communities and base their business decisions on things that traditional lenders don’t fully understand. Think about the black barber shop or boutique owner, who knows there is no other “black” barber shop or boutique specializing in urban fashions within a 30-minute drive. While that lender may understand there is such a niche market as “urban fashions,” they likely won’t understand the significance of being “black-owned” in the market as opposed to corporate-owned. Or think of the Hispanic grocer with significant import ties to Mexico who knows he can bring in produce, spices and inventory specific to that community’s needs, things people cannot get at chain grocery stores. That lender might only understand there is a plethora of Wal-Marts in the community where he wants to grow his business.
Minority business owners are often more dependent upon minority communities for survival, which of course are disproportionately depressed due to subprime lending. Consequently, minority business owners have a lower chance of success. Banks, understanding that, are even less likely to lend. It’s like a self-fulfilling prophecy, and it’s beginning to resemble the traditional “redlining” of the 1980s and 1990s.
“After inflicting harm on neighborhoods of color through years of problematic subprime and option ARM loans, banks are now pulling back at a time when communities are most in need of responsible loans and investment,” said Geoff Smith, senior vice president of the Woodstock Institute.
Believe it or not, no one in a position of power to stop all this from unfolding was blindsided. Ben Bernanke was warned years ago about the long-term implications of the real estate bubble and subprime lending. Still, he set idly by. He told the advocates who warned him that the market would work it all out. Perhaps they thought the fallout would be limited to minority communities, or perhaps they just didn’t care.
Devona Walker has worked for the Associated Press and the New York Times company. Currently she is the senior political and finance reporter for theloop21.com.
When he tried to change the terms of his home loan, Michael Guzman was rejected because the bank didn’t consider his joblessness a long-term hardship.
Kamie Kahlo’s bank offered her a modified mortgage on her Queen Anne home but later told her the lower payments weren’t permanent.
And Leslie Oldham was stunned her bank moved to foreclose on her Kent home before it gave her a decision on a loan modification.
“I tried everything I could to work it out with the bank,” said Oldham, 58, “because the last thing I wanted to do was file a bankruptcy.”
More than a year since President Obama announced an unprecedented national foreclosure-prevention program, many homeowners’ experiences with the program have left them feeling frustrated and angry at mortgage servicers.
The program gives servicers financial incentives to permanently lower the monthly payments of homeowners who qualify for and successfully complete a three-month trial period. Servicers can modify a mortgage by lowering the interest rate, extending the loan’s terms or deferring payment of principal.
Federal auditors say the Treasury Department has failed to hold banks and other servicers accountable for following the loan-modification program’s guidelines, and state regulators say there’s little they can do.
Some examples from the Government Accountability Office:
• Delayed decisions: After three months of accepting payments on a modified trial loan, banks are supposed to decide whether to make the new terms permanent. But some banks have a backlog of thousands of homeowners who have been making trial payments for six months or longer.
• Inconsistent treatment: Fifteen of the 20 largest servicers in the program didn’t follow federal guidelines for evaluating borrowers’ loans and may have treated similarly situated borrowers differently.
• No meaningful appeals: The Treasury does not independently review borrowers’ application or loan files, nor does it have clear penalties for servicers who violate the program’s rules.
The program was intended to keep 3 million homeowners from foreclosure, but it had produced only about 435,000 permanent modifications through July.
Treasury officials say the program’s impact can’t be measured by a single statistic. Many homeowners who were deemed ineligible for the federal program have been offered private loan modifications by their servicer.
Still, six of every 10 seriously delinquent borrowers are not getting help, according to a new study by the State Foreclosure Prevention Working Group. Struggling homeowners are alienated by the mixed messages and long delays, the group said, and almost three-quarters of modified mortgages leave borrowers owing more, not less.
“That is not a sustainable solution,” said Roberto Quercia, who consulted on the study and is director of the Center for Community Capital at the University of North Carolina, Chapel Hill. “For people underwater, making the hole deeper is a recipe for disaster.”
Jumbled paperwork
In March 2009, Treasury officials launched the federal Home Affordable Modification Program (HAMP), its cornerstone effort to rescue the nation’s housing market, in which property values have fallen at a rate not seen since the Great Depression.
Homeowners must pass three tests to be considered: First, they must have an eligible hardship, such as unemployment. Second, their mortgage must exceed 31 percent of their gross monthly income.
Finally, the bank applies a “net present value” test to see if it will lose more money from foreclosing on their home than from modifying the mortgage.
Through July, homeowners in the program saw a median 36 percent, or more than $500, savings in their monthly payment after permanent modification, according to the Treasury.
But the number of homeowners making trial payments who were dropped from the program — more than 600,000 — now exceeds the number with permanent modifications.
“Paperwork has been the No. 1 reason homeowners have not been able to convert to permanent modifications,” Treasury spokeswoman Andrea Risotto said.
The second most common reason, she said, is that homeowners are unable to keep up with payments during the trial period.
Housing counselors and lawyers for homeowners say servicers misplace documents or wrongly reject eligible applicants for no good reason — even after they’ve made trial payments for six months or longer.
“The servicers are claiming that the files are a mess or are incomplete,” said Marc Cote, a housing counselor who coordinates Washington state’s foreclosure-prevention hotline. “We have confirmation the fax was received. Then you call back in two days and there’s no record of it. That’s not uncommon.”
Regulators at the state Department of Financial Institutions say they’ve been flooded with consumer complaints about mortgage issues — such as banks failing to properly credit homeowners for payments.
Department director Scott Jarvis says a series of federal court decisions since 2002 has made it nearly impossible for regulators to force national banks and thrifts to comply with state consumer-protection laws.
“It’s a massive shell game,” Jarvis said. “The pea is the consumer, and the consumer ends up getting shuffled around the shells and rarely gets anything resolved.”
For their part, big banks and other servicers say they’re helping distressed borrowers, while being fair to the majority of homeowners who pay their mortgages on time.
This year, Chase opened a loan-modification office in Tukwila that focuses on screening homeowners with Chase mortgages in Washington and Oregon.
And a coalition of big banks recently announced support for a Web portal called HOPE LoanPort that housing counselors can use to submit complete applications, verify their receipt and get status updates.
“In the end I think we all share a common goal, which is to help as many customers as possible stay in their homes,” said Rebecca Mairone, Bank of America’s national default-servicing executive.
Left in limbo
Cote, the housing counselor, recounts this story: On Aug. 6, a national bank told an elderly owner of an Issaquah house that her application for loan assistance — submitted March 3 — was still under review.
A week later, a trustee let the bank repossess the woman’s house. The bank had denied the woman’s application but never notified her in writing, as required.
“They’re violating the guidelines,” said Cote, whose agency doesn’t allow him to identify the national bank.
Some Seattle-area homeowners echo Cote.
Guzman, of Lake Stevens, has been unemployed for more than two years and was told — incorrectly — by Chase last year that his joblessness did not count as a permanent hardship.
“Servicers continue to evolve their implementation of HAMP,” Chase said in a statement.
Moreover, Chase said, it asked Guzman to reapply for loan assistance, but he has refused.
Guzman said he’s already submitted paperwork three times.
“Millions of people have gone through this wringer like I have,” he said.
Kahlo, who bought her Queen Anne home in 1999, said she did everything Bank of America asked her to do to qualify for relief under the federal program.
After the bank told her it wasn’t permanently modifying her mortgage, she sued, alleging it had violated the federal program’s rules.
Bank of America sought to dismiss the suit, saying the lower monthly payment it offered her was an alternative to the federal program.
“A participating servicer is not required to modify every HAMP-eligible loan,” the bank stated in court.
Without a permanent modification, Kahlo says, she’s in limbo. “I don’t know if I’m sleeping in their home or my home,” she said.
Declaring bankruptcy was a last resort for Oldham, a widow in Kent who manages payroll for a small construction company.
But she believed she had no recourse because Bank of America foreclosed on the manufactured home she’s lived in for 15 years.
Oldham said she got behind on her mortgage because of medical bills.
She applied for a modification last year, but the bank tacked a foreclosure notice on her door before she received an answer.
Oldham complained to the state Attorney General’s Office, which passed her on to the state Department of Financial Institutions. That department routinely forwards such complaints — about 540 so far this year — to federal regulators.
With Oldham, though, the state department lost track of her complaint, finally sending it along last month.
Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com
Two-thirds of the people seeking foreclosure -prevention counseling in the major local program say it was their loss of jobs or income that got them in trouble.
And the majority of people counseled did not have subprime mortgages, but conventional, fixed-rate mortgages, according to Hudson River Housing Inc., a Poughkeepsie-based nonprofit.
The group said its count of counseled homeowners has exceeded 1,500 since beginning the program in 2008.
Mary Linge, director of home ownership and education, said that 66 percent of homeowners currently cite loss of jobs and reduced income as primary reasons they face foreclosure.
In foreclosure, a lender who isn’t being paid takes possession of the property.
Of those who have recently sought services, 79 percent have conventional loans, compared with 43 percent in late 2008 when the program began, Linge said.
“The foreclosure crisis is now largely being driven by economic pressures, not bad mortgage products,” Linge said.
Recent research by the Poughkeepsie Journal found that foreclosure filings in state Supreme Court rose in 2009 by nearly 20 percent over 2008. For the first seven months of this year, filings are on course to show a further 10 percent increase.
Hudson River Housing has received three federal grants totalling $308,602 for counseling people through the Hudson Valley Foreclosure Prevention Services.
Linge said the National Foreclosure Mitigation Counseling program that has funded her group has done research on results nationally.
Homeowners who got counseling were 60 percent more likely to avoid losing their homes than people who did not seek help. Clients were more likely to get a loan modification and, on average, saved $454 a month on mortgage payments.
Reach Craig Wolf at cwolf@poughkeepsiejournal.com or 845-437-4815.
MILWAUKEE — When the housing bubble burst, one of the culprits, economists agreed, was exotic mortgages, including those that required little or no money down.
But on a recent evening, Matthew and Hannah Middlebrooke stood in their new $115,000 three-bedroom ranch house here, which Mr. Middlebrooke bought in June with just $1,000 down.
Because he also received a grant to cover closing costs and insurance, the check he wrote at the closing was for 67 cents.
“I thought I’d be stuck renting for years,” said Mr. Middlebrooke, 26, who earns $32,000 a year as a producer for a Christian television ministry.
Although home foreclosures are again expected to top two million this year, Fannie Mae, the lending giant that required a government takeover, is creeping back into the market for mortgages with no down payment.
Mr. Middlebrooke’s mortgage came from a new program called Affordable Advantage, available to first-time home buyers in four states and created in conjunction with the states’ housing finance agencies. The program is expected to stay small, said Janis Smith, a spokeswoman for Fannie Mae.
Some experts are concerned about the revival of such mortgages.
“Loans that have zero down payment perform worse than loans with down payments,” said Mathew Scire, a director of the Government Accountability Office’s financial markets and community investment team. “And loans with down payment assistance” — like Mr. Middlebrooke’s — “perform worse than those that do not.”
But the surprise is the support these loans have received, even from critics of exotic mortgages, who say low down payments themselves were not the problem, except when combined with other risk factors like adjustable rates or lax underwriting.
Moreover, they say, the housing market needs such nontraditional lending, as long as it is done prudently.
“This is subprime lending done right,” said John Taylor, president of the National Community Reinvestment Coalition, an umbrella group for 600 community organizations, and a staunch critic of the lending industry. “If they had done subprime this way in the first place, we wouldn’t have these problems.”
At Harvard’s Joint Center for Housing Studies, Eric Belsky, the director, said the loans might be the type of step necessary to restart the housing market, because down payment requirements are keeping first-time home buyers out.
“If you look at where the market may get strength from, it may very well be from first-time buyers,” he said. “And a very significant constraint to first-time buyers is the wealth constraint.”
The loans are the idea of state housing finance agencies, or H.F.A.’s, quasi-government entities created to help moderate-income people buy their first homes.
Throughout the foreclosure crisis, the state agencies continued to make loans with low down payments, often to borrowers with tarnished credit, with much lower default rates than comparable mortgages from commercial lenders or the Federal Housing Administration. The reason: the agencies did not offer adjustable rates, and they continued to document buyers’ income and assets, which many commercial lenders did not do. In 2009, the agencies’ sources of revenue dried up, and they had to curtail most lending.
Then they created Affordable Advantage. The loans are 30-year fixed mortgages, with mandatory homeownership counseling, available to people with credit scores of 680 and above (720 in Massachusetts). The buyers have to put in $1,000 and must live in the homes.
All of these requirements ease the risk, said William Fitzpatrick, vice president and senior credit officer of Moody’s Investors Service. “These aren’t the loans that led us into the mortgage crisis,” he said.
So far Idaho, Massachusetts, Minnesota and Wisconsin are offering the loans. The Wisconsin Housing and Economic Development Authority has issued 500 loans since March, making it the first state to act. After six months, there are no delinquencies so far, said Kate Venne, a spokeswoman for the agency.
The agencies buy the loans from lenders, then sell them as securities to Fannie Mae. Because the government now owns 80 percent of Fannie Mae, taxpayers are on the hook if the loans go bad.
The state agencies oversee the servicing of the loans and work with buyers if they fall behind — a mitigating factor, said Mr. Fitzpatrick of Moody’s.
“They have a mission to put people in homes and keep them in homes,” not to foreclose unless other options are exhausted, he said. The loans have interest rates about one-half of a percentage point above comparable loans that require down payments.
Ms. Smith, the spokeswoman for Fannie Mae, distinguished the program from loans of the boom years that “layered risk on top of risk.”
With the new loans, she said, “income is fully documented, monthly payments are fixed, credit score requirements are generally higher, and borrowers must be thoroughly counseled on the home-buying process and managing their mortgage debt.”
For Porfiria Gonzalez and her son, Eric, the loan allowed them to move out of a rental house in a neighborhood with a high crime rate to a quiet street where her neighbors are retirees and police officers.
Ms. Gonzalez, 30, processes claims in the foreclosure unit at Wells Fargo Home Mortgage; she has seen the many ways a mortgage holder can fail.
On a recent afternoon in her three-bedroom ranch house here, Ms. Gonzalez said she did not see herself as repeating the risks of the homeowners whose claims she processed.
“I learned to stay away from ARM loans,” or adjustable rate mortgages, she said. “That’s the No. 1 thing. And always have some emergency money.”
When she first started shopping, she looked at houses priced around $140,000. But the homeownership counselor said she should keep the purchase price closer to $100,000.
“They explained to me that I don’t need a $1,200-a-month payment,” she said.
The counselor worked with her real estate agent and attended her closing. On May 28, Ms. Gonzalez bought her home for $90,500, with monthly payments of $834. After moving expenses, she has kept her savings close to $5,000 to shield her from emergencies.
“If I had to make a down payment, it would have wiped out my savings,” she said. “I would have started with nothing.”
Now, she said, she is in a home she can afford in a neighborhood where her son can play in the yard. A neighbor brought her a metal pink flamingo with a welcome sign to place by her side door.
“My favorite part is the big backyard,” said Eric, 10. “And that’s pretty much it.”
“You don’t like it that it’s a quiet, safe neighborhood?” his mother asked.
“Yeah, I do.”
“He didn’t go out much with kids in the old neighborhood,” she said.
“Because they were bad kids,” he said.
Ms. Gonzalez said that owning a house was much more work than renting, and that when the basement flooded during a heavy rain, her heart sank.
“But I look at it as an investment,” she said, adding that a similar house in the neighborhood was on the market for $120,000.
Prentiss Cox, a professor at the University of Minnesota Law School who has been deeply critical of the mortgage industry, said the program met an important need and highlighted the track record of state housing agencies, which never engaged in exotic loans.
“It’s not a story people want to hear, because it won’t bring back the big profits,” Mr. Cox said. “The H.F.A.’s have shown how the problems of the last 10 years were about having sound and prudent regulation of lending, not just whether the loans were prime or subprime.”
He added, “One of the great and unsung tragedies of the whole crisis was the end of the subprime market.”
Mortgage Q&A: “When to refinance a mortgage?”
With mortgage rates at record lows, you may be wondering if now is a good time to refinance.
The popular 30-year fixed-rate mortgage slipped to 4.32 percent this week, well below the 5.08 percent seen a year ago, and much better than the six-percent range seen years earlier.
So should you refinance now?
Well, that answers depends on a number of factors.
First, what is the current interest rate on your mortgage(s)? And what will the closing costs be on the new mortgage? They’ve been rising lately…
Let’s look at a quick example:
Loan amount: $200,000
Current mortgage rate: 5.5% 30-year fixed
Refinance rate: 4.25% 30-year fixed
Closing costs: $2,500
The monthly mortgage payment on your current mortgage (including just principal and interest) would be roughly $1,136, while the refinanced rate of 4.25 percent would carry a monthly payment of about $984.
That equates to savings of $152 a month.
Now assuming your closing costs were $2,500 to complete the refinance, you’d be looking at about 17 months of payments before you broke even and started saving yourself some money.
So if you refinanced again or sold your home during that time, refinancing wouldn’t make a lot of sense.
But if you plan to stay in the home (and with the mortgage) for many years to come, the savings could be substantial.
Other Considerations
If you’re currently in an adjustable-rate mortgage, or worse, an option arm, the decision to refinance into a fixed-rate loan could make even more sense.
Or if you have two loans, consolidating the balance into a single loan (and ridding yourself of that pesky second mortgage) could result in some serious savings.
Additionally, you might be able to snag a no cost refinance, which would allow you to refinance without any out-of-pocket costs (the rate would be higher to compensate).
A cash-out refinance could also contribute to your decision to refinance if you were in need of money and had the necessary equity.
Finally, if you’re already in a 30-year fixed and want to build equity, you might consider taking a look at the 15-year fixed, which is pricing at a record low 3.83 percent, assuming you could handle a higher monthly payment.
Just when I thought the housing market was finally being left to correct on its own, I’m starting to hear talk regarding yet another home buyer tax credit. From HUD to the hedge funds, it sounds as if it is gaining steam yet again. This one could involve not just first time/move-up buyers, but a credit for buyers purchasing foreclosed properties or short sales (when the bank allows you to buy a home for less than the value of the outstanding mortgage).
HUD Secretary Shaun Donovan, appearing on CNN’s State of the Union this weekend, didn’t rule out another tax credit. He did say it’s “too early to say,” but then added that “we’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”
After that several Congressional candidates in Florida threw their voices behind the possibility, and Florida Gov. Charlie Crist then chimed in on the same show, saying that another tax credit, “would stimulate the economy. It would increase home sales in Florida.” He finished with: “I would absolutely encourage the president to support that because it would certainly help my fellow Floridians.”
So of course then I went the official route and followed up with a HUD spokesperson who responded: “No news here…there are no discussions underway to revive the credit.”
Is it all political? And is another tax credit the answer? “I don’t think it’s all political,” says housing consultant Howard Glaser. “I think they are panicked that the economy/housing got away from them.” Glaser doesn’t sound convinced the tax credit is really on the table. “They can do a lot off budget with the GSE’s and FHA with no Congress.”
I know a lot of you out there would argue that a housing market correction, as painful as it is, is necessary for housing to truly find its footing again and recover for the long term. Another artificial stimulus could just prolong the agony and set us up for the same drop off in sales and prices that we’re seeing right now.
But it could also move some inventory quickly. With inventories of new and existing homes dangerously high, and the shadow supply of foreclosures pushing that volume even higher, more stimulus could be a necessary evil. I liken it to what I’m doing with my lawn this week. All summer I fought the weeds, pulling them, using the organic sprays and repellents, spreading mulch to deprive them of any air. And then I gave up. I called the lawn service and told them to bring every chemical in their arsenal. Shock the overgrown mess into submission once and for all, so that I can start fresh again and reseed this fall.
The Obama administration plans to set up an emergency loan program for the unemployed and a government mortgage refinancing effort in the next few weeks to help homeowners after home sales dropped in July, Housing and Urban Development Secretary Shaun Donovan said.
“The July numbers were worse than we expected, worse than the general market expected, and we are concerned,” Donovan said on CNN’s “State of the Union” program yesterday. “That’s why we are taking additional steps to move forward.”
The administration will begin a Federal Housing Authority refinancing effort to help borrowers who are struggling to pay their mortgages, and will start an emergency homeowners’ loan program for unemployed borrowers so they can stay in their homes, Donovan said.
“We’re going to continue to make sure folks have access to home ownership,” he said.
Sales of U.S. new homes unexpectedly dropped in July to the lowest level on record, signaling that even with cheaper prices and reduced borrowing costs the housing market is retreating. Purchases fell 12 percent from June to an annual pace of 276,000, the weakest since the data began in 1963.
Sales of existing houses plunged by a record 27 percent in July as the effects of a government tax credit waned, showing a lack of jobs threatens to undermine the U.S. economic recovery.
House Sales Plummet
Purchases plummeted to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed last week. Demand for single-family houses dropped to a 15-year low and the number of homes on the market swelled.
U.S. home prices fell 1.6 percent in the second quarter from a year earlier as record foreclosures added to the inventory of properties for sale. The annual drop followed a 3.2 percent decline in the first quarter, the Federal Housing Finance Agency said last week in a report.
Donovan said on CNN yesterday that it is too soon to say whether the administration’s $8,000 first-time homebuyer credit tax credit, which expired April 30, will be revived.
“All I can tell you is that we are watching very carefully,” Donovan said. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”
Reviving the tax credit would “help enormously” in the effort to fight foreclosures and revive the economy, Florida Governor Charlie Crist said on the same CNN program. Florida has the third-highest home foreclosure rate in the country, with one in every 171 housing units receiving a foreclosure filing this year.
To contact the reporter on this story: Holly Rosenkrantz in Washington athrosenkrantz@bloomberg.net.
Ever since the housing collapse began, market seers have warned of a coming wave of foreclosures that would make the already heightened activity look like a trickle.
The dam would break when moratoriums ended, teaser rates expired, modifications failed and banks finally trained the army of specialists needed to process the volume.
But the flood hasn’t happened. The simple reason is that servicers are not initiating or processing foreclosures at the pace they could be.
By postponing the date at which they lock in losses, banks and other investors positioned themselves to benefit from the slow mending of the real estate market. But now industry executives are questioning whether delaying foreclosures — a strategy contrary to the industry adage that “the first loss is the best loss” — is about to backfire. With home prices expected to fall as much as 10% further, the refusal to foreclose quickly on and sell distressed homes at inventory-clearing prices may be contributing to the stall of the overall market seen in July sales data. It also may increase the likelihood of more strategic defaults.
It is becoming harder to blame legal or logistical bottlenecks, foreclosure analysts said.
“All the excuses have been used up. This is blatant,” said Sean O’Toole, CEO of ForeclosureRadar.com, a Discovery Bay, Calif., company that has been documenting the slowdown in Western markets.
Banks have filed fewer notices of default so far this year in California, the nation’s biggest real estate market, than they did 2009 or 2008, according to data gathered by the company. Foreclosure default notices are now at their lowest level since the second quarter of 2007, when the percentage of seriously delinquent loans in the state was one-sixth what it is now.
New data from LPS Applied Analytics in Jacksonville, Fla., suggests that the backlog is no longer worsening nationally — but foreclosures are not at the levels needed to clear existing inventory.
The simple explanation is that banks are averse to realizing losses on foreclosures, experts said.
“We can’t have 11% of Californians delinquent and so few foreclosures if regulators are actually forcing banks to clean assets off their books,” O’Toole said.
Officially, of course, this problem shouldn’t exist. Accounting rules mandate that banks set aside reserves covering the full amount of their anticipated losses on nonperforming loans, so sales should do no additional harm to balance sheets.
Within the last two quarters, many companies have even begun taking reserve releases based on more bullish assumptions about the value of distressed properties.
Now there is widespread reluctance to test those valuations, an indication that banks either fear they have insufficient or are gambling for a broad housing recovery that experts increasingly say is not coming.
Banks did not choose the strategy on their own.
With the exception of a spike in foreclosure activity that peaked in early-to-mid 2009, after various industry and government moratoriums ended and the Treasury Department released guidelines for the Home Affordable Modification Program, no stage of the process has returned to pre-September 2008 levels. That is when the Treasury unveiled the Troubled Asset Relief Program and promised to help financial institutions avoid liquidating assets at panic-driven prices. The Financial Accounting Standards Board and other authorities followed suit with fair-value dispensations.
These changes made it easier to avoid fire-sale marks — and less attractive to foreclose on bad assets and unload them at market clearing prices. In California, ForeclosureRadar data shows, the volume of foreclosure filings has never returned to the levels they had reached before government intervention gave servicers breathing room.
Some servicing executives acknowledged that stalling on foreclosures will cause worse pain in the future — and that the reckoning may be almost here.
“The industry as a whole got into a panic mode and was worried about all these loans going into foreclosure and driving prices down, so they got all these programs, started Hamp and internal mods and short sales,” said John Marecki, vice president of East Coast foreclosure operations for Prommis Solutions, an Atlanta company that provides foreclosure processing services. Until recently, he was senior vice president of default administration at Flagstar Bank in Troy, Mich. “Now they’re looking at this, how they held off and they’re getting to the point where maybe they made a mistake in that realm.”
Moreover, Fannie Mae and Freddie Mac have increased foreclosures in the past two months on borrowers that failed to get permanent loan modifications from the government, according to data from LPS. If the government-sponsored enterprises’ share of foreclosures is increasing, that implies foreclosure activity by other market participants is even less robust than the aggregate.
“The math doesn’t bode well for what is ultimately going to occur on the real estate market,” said Herb Blecher, a vice president at LPS. “You start asking yourself the question when you look at these numbers whether we are fixing the problem or delaying the inevitable.”
Blecher said the increase in foreclosure starts by the GSEs “is nowhere near” what is needed to clear through the shadow inventory of 4.5 million loans that were 90 days delinquent or in foreclosure as of July 31.
LPS nationwide data on foreclosure starts reflects the holdup: Though the GSEs have gotten faster since the first quarter, portfolio and private investors have actually slowed.
“What we’re seeing is things are starting to move through the system but the inflows and outflows are not clearing the inventory yet,” he said.
Delayed foreclosures might be good news for delinquent borrowers, but it comes at a high price.
Stagnant foreclosures likely contributed to the abysmal July home sales, since banks are putting fewer homes for sale at market-clearing prices.
Moreover, Freddie says a good 14% of homes that are seriously delinquent are vacant. In such circumstances, eventual recovery values rapidly deteriorate.
Defaulted borrowers were spending an average of 469 days in their home after ceasing to make payments as of July 31, so the financial attraction of strategic defaults increases.
One possible way banks are dealing with that last threat is through what O’Toole calls “foreclosure roulette,” in which banks maintain a large pool of borrowers in foreclosure but foreclose on a small number at random.
O’Toole said the resulting confusion would make it harder for borrowers to evaluate the costs and benefits of defaulting and fan fears that foreclosure was imminent.
http://www.americanbanker.com/issues/175_165/foreclosures-modifications-california-1024663-1.html
Multnomahforeclosures.com was updated today (August 24th, 2010) with the largest list of Notice Defaults to date. With Notice of Default records dating back over 2 years. Multnomahforeclosures.com documents the fall of the great real estate bust of the 21st centry. The lists are of the raw data taken from county records.
It is not a bad idea for investors and people that are seeking a home of their own to keep an eye on the Notice of Default lists. Many of the homes listed are on the market or will be.
All listings are in PDF and Excel Spread Sheet format.
Multnomah County Foreclosures
For more than 20 years, the mantra in Washington has been “more, not less” when it comes to Fannie Mae, Freddie Mac and the expansion of homeownership.
But in light of the financial crisis and Fannie and Freddie’s near-collapse, policy leaders are also rethinking the government’s role — and many Americans are starting to question whether homeownership is the only path to the American Dream.
Fannie and Freddie function by buying, bundling and then stamping a government guarantee on mortgages. Then they sell them to investors. It keeps the banks happy because it keeps capital flowing, and it keeps consumers happy because it makes low, fixed-rate mortgages possible.
At least that how things were supposed to unfold. But the two mortgage finance giants “made astonishing mistakes,” Raj Date, executive director of a financial policy think-tank called the Cambridge Winter Center, told NPR’s Audie Cornish.
‘It Has All Come Back To Haunt Them’
“As normal people everywhere in the country realized that housing prices seemed to be growing straight into the stratosphere, instead of becoming more conservative about lending against those ridiculously high values, Fannie and Freddie just continued to make the same kind of loans and indeed made more aggressive loans during that period of 2005, 2006, 2007,” Date said. “And it has all come back to haunt them.”
So instead of rationally-priced credit, he said, the country wound up with a $6 or $7 trillion bubble in housing values. And all of Wall Street and most of the country’s banks made the same sort of mistakes, Date said.
Policy makers are at a bit of a crossroads, said Date, who was among a number of industry leaders who huddled with Treasury Secretary Timothy Geithner this week to figure out a new way forward on housing.
Fannie and Freddie have dramatically scaled back their level of aggressiveness in underwriting credit, Date said. But, he added, “the fact of the matter is that on average and over time, Fannie and Freddie represent an economic subsidy from the public at large to middle and upper middle-income homeowners.”
Despite talk on Capitol Hill of dismantling the two organizations, it might be tough to get rid of them. That’s because Fannie and Freddie, along with the Federal Housing Administration, are responsible for some 95 percent of the mortgages in the country today, Date said.
“If you think that the fall of 2008 was calamitous, believe me, you haven’t seen anything yet if you were just somehow to turn off the lights on Fannie and Freddie today,” he warned. “That said, I think the policy makers are trying to be thoughtful about the right long-term answer is for housing finance more broadly, and that involves revisiting some issues that have been treated as sort of untouchable for quite some time.”
Ultimately, Date said it might be time to rethink homeownership as an American ideal.
The White Picket Fence Reconsidered
“The world we live in today is not quite the world that existed in 1950,” he noted. “The nature of households and the rate at which they dissolve and reform, the nature of work and its transient nature across geographies are all things that suggest that maybe, just possibly, a middle-class American shouldn’t stake themselves to an illiquid, very large, concentrated, leveraged asset —- that is to say, a house.”
Alyssa Katz, author of Our Lot: How Real Estate Came To Own Us, also thinks America needs to reconsider the American Dream.
“Homeowenership has gone from being pretty much an unmitigated good — something that would provide stability — and instead has thrown a huge cloud of doubt over the value of homeownership for a lot of people.”
Even so, there also are downsides to renting, she said.
“Some of the common beliefs about renting are absolutely true,” Katz said. “Being a renter has very little security. They don’t have any promise they’ll be able to live in the apartment or home for more than a year or two. Renting is also perceived as something that really divides Americans by class. So I think for a lot of potential renters, or people who own and are thinking of making that transition to renting, they have to overcome this sense that they are giving up a sense of status.”
That’s a tough thing to shake for many Americans, she said.
If more people rent, the benefits of homeownership will only increase for those who own homes because the pool will shrink, Katz said.
“Those who have access to homeownership and the benefits that it brings, as a result of policy, will be even more privileged than they are now.”
http://www.npr.org/templates/story/story.php?storyId=129348144
While Portlanders continue to be plagued by home foreclosures, the number of distressed homeowners is spiking even faster in the suburbs these days.
Foreclosure actions filed against homeowners in upscale Lake Oswego mushroomed 20 percent the first six months of this year, compared with the same period last year, and rose 10 percent in jobs-rich Hillsboro, according to RealtyTrac Inc., an Irvine, Calif., real estate data services company. RealtyTrac counted nearly 300 Lake Oswego properties socked with foreclosure actions from January through June and more than 500 Hillsboro properties.
Foreclosures also shot up at a rate faster than Portland in suburban Oregon City, Milwaukie, Tigard, Tualatin, Sherwood and St. Helens.
“The foreclosure activity that is occurring in suburban markets in Oregon is unprecedented,” says Tom Cusack, a retired federal housing manager in Portland who continues to track the issue via his Oregon Housing Blog. “It’s affecting not just rural areas, not just inner-city neighborhoods, but suburban neighborhoods, probably more substantially than any time in the past,” Cusack says.
From January through June, foreclosure filings grew 6.5 percent in the city of Portland, compared with a year earlier, and 8.5 percent in Portland suburbs, not counting Clark County, according to RealtyTrac data.
In 10 different local ZIP codes — three in Portland and seven in the suburbs — foreclosure actions were filed against more than 2 percent of all properties the first six months of 2010.
Realtors say a record number of foreclosures dominates the area housing market, depressing home prices but also attracting bargain-hunters looking for distressed properties.
“Either you’re helping people get into them or helping get out of them,” says Fred Stewart, a Northeast Portland Realtor who operates a website listing foreclosed homes for sale in Multnomah County.
Distressed properties account for “40 percent of the business right now,” says Dale Kuhn, principal broker for John L. Scott Real Estate in Lake Oswego.
Every suburb is a unique real estate market, so it’s hard to generalize why some are experiencing more foreclosures now than before. In West Linn, for example, foreclosure filings were down the first six months of the year compared to a year earlier, while things are going in a different direction in its affluent neighbor to the north, Lake Oswego.
One factor could be that many borrowers of modest means took out subprime loans, which were the first to go through foreclosure when those loans “exploded” and reset to much-higher interest rates. Working-class neighborhoods had the highest foreclosure rates in the early months of the Great Recession.
“They got hit the hardest first,” says Rick Skaggs, a real estate broker at John L. Scott in Forest Grove.
In the Portland area, an unusually high number of middle-class and affluent borrowers took out interest-only loans and Option ARM or negative-amortization loans. Option ARMs (adjustable rate mortgages) allowed the borrower to pay a minimum monthly mortgage payment — akin to a credit card minimum payment — while tacking more principal onto the loan. Option ARMs and other alternative loans took longer to unravel than subprime loans, and many are now winding up in foreclosure. And those mortgages were more common for more expensive properties.
They were ticking time bombs, like subprime loans, but they had longer fuses, says Angela Martin, of the Portland public interest group Our Oregon.
Stewart offers another reason for the surge in suburban foreclosures. He’s noticing a larger pool of buyers now for closer-in Portland neighborhoods, as people seek to avoid long commutes. People selling distressed properties in Northeast and Southeast Portland have more options to sell than someone saddled with an unaffordable mortgage in a suburb, Stewart says.
Recent state and national statistics also reveal a counterintuitive trend — affluent homeowners are going into foreclosure lately at a higher rate than others.
Cusack recently analyzed data for Oregonians who took out traditional 30-year Federal Housing Administration loans since mid-2008. He found that the greater the loan amount, the greater the chances those became problem loans.
“The default rate and the seriously delinquent rate were higher for higher-income loans,” Cusack says.
Business owners and other affluent homebuyers who settled in suburban markets also had more resources available to hold onto their homes than lower-income homeowners, at least during the earlier stages of the Great Recession. That may explain why places such as Lake Oswego are seeing such an upsurge in foreclosures now.
“If you paid a half-million for anything in Lake Oswego in 2007, you’re ‘under water,’ ” Stewart says. That’s the term for people who owe more on their mortgage than their home is worth.
Portland bankruptcy attorney Ann Chapman, of the firm Vanden Bos & Chapman, is seeing an uptick in affluent clients coming to her office.
They had been turning to pensions, savings and family money to hold onto their homes and businesses, Chapman says. But as the economic downturn grinds on, some clients see the best option as dumping their home and filing for bankruptcy reorganization.
Affluent homeowners make a more sober assessment when they realize their homes aren’t going to be worth the mortgage amount for many years, she says. “They’re going to potentially be less emotionally involved when it comes to stopping the bleeding.”
It’s often a different story for lower-income homeowners who hope to hold onto the only homes they’ve ever had, or hope to have. “They get blinded by their optimism or their paralysis,” Chapman says.
Many Realtors say it’s a great buyer’s market now for those who have steady jobs, because interest rates are low and prices have fallen so much. But don’t expect the onslaught of Portland-area foreclosures to end any time soon.
“We are nowhere near the end if you look at the number of homeowners that will ultimately be at risk,” says Martin, citing a new study by the North Carolina-based Center for Responsible Lending. Based on that study, she figures Oregon is only halfway through the foreclosure crisis, in terms of the number of people affected by foreclosures.
Skaggs says he wishes he could be more positive, but he doesn’t see the light at the end of the tunnel. He just spoke with an investor last week who is about to walk away from five rental homes and let the bank take them back. Three of the homes are in the Beaverton area, one is in Bend and one is on the Oregon Coast.
“I probably know at least 15 people that in the next month or two are going to walk away from their homes.”
http://www.portlandtribune.com/news/story.php?story_id=128216600543594000