Bank of America Offers $20,000 Short-Sale Incentive to Homeowners, by Kimberly Miller, The Palm Beach Post


Bank of America, the nation’s largest mortgage servicer, is offering Florida homeowners up to $20,000 to short sale their homes rather than letting them linger in foreclosure.

The limited-time offer has received little promotion from the Charlotte, N.C.-based bank, which sent emails to select Florida Realtors earlier this week outlining basic details of the plan.

Only homeowners whose short sales are submitted for approval to Bank of America before Nov. 30 will qualify. The homes must have no offers on them already and the closing must occur before Aug. 31, 2012.

A short sale is when a bank agrees to accept a lower sales price on a home than what the borrower owes on the loan.

Realtors said the Bank of America plan, which has a minimum payout amount of $5,000, is a genuine incentive to struggling homeowners who may otherwise fall into Florida’s foreclosure abyss.

The current timeline to foreclosure in Florida is an average of 676 days — nearly two years — according to real estate analysis company RealtyTrac. The national average foreclosure timeline is 318 days.

“I think this is a positive sign that the bank is being creative to try and help homeowners and get things moving,” said Paul Baltrun, who works with real estate and mortgages at the Law Office of Paul A. Krasker in West Palm Beach. “With real estate attorneys handling these cases, you’re talking two, three, four years before there’s going to be a resolution in a foreclosure.”

Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance, called the short sale payout a “bribe.”

“You can call it a relocation fee, but it’s basically a bribe to make sure the borrower leaves the house in good condition and in an orderly fashion,” Cecala said. “It makes good business sense considering you may have to put $20,000 into a foreclosed home to fix it up.”

Homeowners, especially ones who feel cheated by the bank, have been known to steal appliances and other fixtures, or damage the home.

“This might be the banks finally waking up that they can have someone in there with an incentive not to damage the property,” said Realtor Shannon Brink, with Re/Max Prestige Realty in West Palm Beach. “Isn’t it better to have someone taking care of the pool and keeping the air conditioner on?”

A spokesman for Bank of America said the program is being tested in Florida, and if successful, could be expanded to other states.

Wells Fargo and J.P. Morgan Chase have similar short-sale programs, sometimes called “cash for keys.”

Wells Fargo spokesman Jason Menke said his company offers up to $20,000 on eligible short sales that are left in “broom swept” condition. Although the program is not advertised, deals are mostly made on homes in states with lengthy foreclosure timelines, he said.

And caveats exist. The Wells Fargo short-sale incentive is only good on first-lien loans that it owns, which is about 20 percent of its total portfolio.

Bank of America’s plan excludes Ginnie Mae, Federal Housing Administration and VA loans.

Similar to the federal Home Affordable Foreclosure Alternatives program, or HAFA, which offers $3,000 in relocation assistance, the Bank of America program may also waive a homeowner’s deficiency judgment at closing.

A deficiency judgment in a short sale is basically the difference between what the house sells for and what is still owed on the loan.

HAFA, which began in April 2010, has seen limited success with just 15,531 short sales completed nationwide through August.

But Realtors said cash for keys programs can work.

Joe Kendall, a broker associate at Sandals Realty in Fort Myers, said he recently closed on a short sale where the seller got $25,000 from Chase.

“They realize people are struggling and this is another way to get the homes off the books,” he said.

Oregon’s Shadow Inventory – The “New Normal”?, by Phil Querin, Q-Law.com


The sad reality is that negative equity, short sales, and foreclosures, will likely be around for quite a while.  “Negative equity”, which is the excess by which total debt encumbering the home exceeds its present fair market value, is almost becoming a fact of life. We know from theRMLS™ Market Action report that average and median prices this summer have continued to fall over the same time last year.  The main reason is due to the volume of  “shadow inventory”. This term refers to the amorphous number of homes – some of which we can count, such as listings and pendings–and much of which we can only estimate, such as families on the cusp of default, but current for the moment.  Add to this “shadow” number, homes already 60 – 90 days delinquent, those already in some stage of foreclosure, and those post-foreclosure properties held as bank REOs, but not yet on the market, and it starts to look like a pretty big number.  By some estimates, it may take nearly four years to burn through all of the shadow inventory. Digging deeper into the unknowable, we cannot forget the mobility factor, i.e. people needing or wanting to sell due to potential job relocation, changes in lifestyle, family size or retirement – many of these people, with and without equity, are still on the sidelines and difficult to estimate.

As long as we have shadow inventory, prices will remain depressed.[1] Why? Because many of the homes coming onto the market will be ones that have either been short sold due to negative equity, or those that have been recently foreclosed.  In both cases, when these homes close they become a new “comp”, i.e. the reference point for pricing the next home that goes up for sale.  [A good example of this was the first batch of South Waterfront condos that went to auction in 2009.  The day after the auction, those sale prices became the new comps, not only for the unsold units in the building holding the auction, but also for many of the neighboring buildings. – PCQ]

All of these factors combine to destroy market equilibrium.  That is, short sellers’ motivation is distorted.  Homeowners with negative equity have little or no bargaining power.  Pricing is driven by the “need” to sell, coupled with the lender’s decision to “bite the bullet” and let it sell.  Similarly, for REO property, pricing is motivated by the banks’ need to deplete inventory to make room for more foreclosures.  A primary factor limiting sales of bank REO property is the desire not to flood the market and further depress pricing. Only when market equilibrium is restored, i.e. a balance is achieved where both sellers and buyers have roughly comparable bargaining power, will we see prices start to rise. Today, that is not the case – even for sellers with equity in their homes.  While equity sales are faster than short sales, pricing is dictated by buyers’ perception of value, and value is based upon the most recent short sale or REO sale.

So, the vicious circle persists.  In today’s world of residential real estate, it is a fact of life.  The silver lining, however, is that most Realtors® are becoming much more adept – and less intimidated – by the process.  They understand these new market dynamics and are learning to deal with the nuances of short sales and REOs.  This is a very good thing, since it does, indeed, appear as if this will be the “new normal” for quite a while.

Pre-Foreclosure Short Sales Jump 19% in Second Quarter by Carrie Bay, DSNEWS.com


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Short sales shot up 19 percent between the first and second quarters, with 102,407 transactions completed during the April-to-June period, according to RealtyTrac.  Over the same timeframe, a total of 162,680 bank-owned REO homes sold to third parties, virtually unchanged from the first quarter.

RealtyTrac’s study also found that the average time to complete a short sale is down, while the time it takes to sell an REO has increased.

Pre-foreclosure short sales took an average of 245 days to sell after receiving the initial foreclosure notice during the second quarter, RealtyTrac says. That’s down from an average of 256 days in the first quarter and follows three straight quarters in which the sales cycle has increased.

REOs that sold in the second quarter took an average of 178 days to sell after the foreclosure process was completed, which itself has been lengthening across the country. The REO sales cycle in Q2 increased slightly from 176 days in the first quarter, and is up from 164 days in the second quarter of 2010.

Discounts on both short sales and REOs increased last quarter, according to RealtyTrac’s study, but homes sold pre-foreclosure carried less of a markdown when compared to non-distressed homes.

Sales of homes in default or scheduled for auction prior to the completion of foreclosure had an average sales price nationwide of $192,129, a discount of 21 percent below the average sales price of non-foreclosure homes. The short sale price-cut is up from a 17 percent discount in the previous quarter and a 14 percent discount in the second quarter of 2010.

Nationally, REOs had an average sales price of $145,211, a discount of nearly 40 percent below the average sales price of non-distressed homes. The REO discount was 36 percent in the previous quarter and 34 percent in the second quarter of 2010.

Commenting on the latest short sale stats in particular, James Saccacio, RealtyTrac’s CEO, said, “The jump in pre-foreclosure sales volume coupled with bigger discounts…and a shorter average time to sell…all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales.”

Saccacio says short sales “give lenders the opportunity to more pre-emptively purge non-performing loans from their portfolios and avoid the long, costly and increasingly messy process of foreclosure and the subsequent sale of an REO.”

Together, REOs and short sales accounted for 31 percent of all U.S. residential sales in the second quarter, RealtyTrac reports. That’s down from nearly 36 percent of all sales in the first quarter but up from 24 percent of all sales in the second quarter of 2010.

States with the highest percentage of foreclosure-related sales – REOs and short sales – in the second quarter include Nevada (65%), Arizona (57%), California (51%), Michigan (41%), and Georgia (38%).

States where foreclosure-related sales increased more than 30 percent between the first and second quarters include Delaware (33%), Wyoming (32%), and Iowa (30%).

 

Bank-Owned Backlog Still Building, by Carole VanSickle, Bryan Ellis Real Estate News Letter


At present, banks and lenders own more than 872,000 homes in the United States today[1]. And that number, twice the number of REOs in 2007 and set to grow by around 1 million in the years ahead as current foreclosures move forward, is starting to make a lot of real estate professionals pretty nervous. Although home sales volumes are up, many experts fear that the growing backlog of foreclosures and the necessity of getting them off the balance sheets is going to create a “vicious cycle” of depressed home values that cannot make a recovery until the foreclosure backlog is reduced – and that could take many, many years as some forecasts predict that 2 million homes will be REO properties before the bottom truly hits.

Nationwide, Moody’s analytics predicts that the foreclosure backlog could take three more years to clear and that home values are likely to fall another 5 percent by the end of 2011. However, the firm predicts a “modest rise” in prices in 2012, which has some people thinking that the situation might not be quite as bleak as it seems. However, regional analysis is going to be more important than ever before for real estate investors. For example, while hardest hit areas like Phoenix and Las Vegas are finally starting to work through their backlogs as prices get so low that buyers – both investors and would-be homeowners – can no longer resist, real estate data firm RealtyTrac recently released numbers indicating that New York’s foreclosure backlog will take more than seven years to clear[2]. Currently, it takes an average of 900 days for a property to move through the state judicial system. This means that while New York City may be, as some residents and real estate agents insist, impervious to real estate woes, the state market could suffer mightily in the years to come as those foreclosures slog through the system.

Do you think that a 5 percent drop in price in the coming year followed by “modest gains” sounds terrible, or does that just get you in the mood to buy?

Bryan Ellis Real Estate Blog
http://realestate.bryanellis.com

RealtyTrac: Foreclosure Activity at Lowest Level in Three Years, by Carrie Bay, DSNEWS.com


RealtyTrac says processing delays have reduced foreclosure activity to its lowest level since the first quarter of 2008.

New data released by the tracking firm shows that foreclosure filings were reported on 681,153 properties during the first three months of this year. That represents a 15 percent decline from the previous quarter and a 27 percent drop from a year ago.

Commenting on the latest numbers, James J. Saccacio, RealtyTrac’s CEO, said despite the recent plunge in foreclosure activity, the nation’s housing market continued to languish in the first quarter.

“Weak demand, declining home prices and the lack of credit availability are weighing heavily on the market, which is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork,” Saccacio said.

A total of 197,112 U.S. properties received default notices for the first time in the January to March period, a 17 percent decrease from the previous quarter and a 35 percent decrease from the first quarter of 2010.

Foreclosure auctions were scheduled for the first time on 268,995 homes. That’s down 19 percent from the previous quarter and 27 percent from the first quarter of last year.

Lenders completed foreclosure actions on 215,046 homes last quarter, a 6 percent drop from the fourth quarter of 2010 and a 17 percent decrease from the first quarter of last year. However, in states where the non-judicial foreclosure process is primarily used, RealtyTrac says bank repossessions (REOs) increased 9 percent from the previous quarter.

Illustrating the extent to which processing delays pressed foreclosure activity to artificially low levels, RealtyTrac says states where a judicial foreclosure process is used accounted for some of the biggest quarterly and annual decreases in the first quarter.

Florida foreclosure activity decreased 47 percent from the previous quarter and was down 62 percent from the first quarter of 2010, although the state still posted the nation’s eighth highest foreclosure rate with one in every 152 housing units receiving a filing in Q1.

First quarter foreclosure activity in Massachusetts fell 46 percent from the previous quarter and was down 62 percent from a year ago. The state’s foreclosure rate – one in every 549 housing units with a foreclosure filing – ranked No. 38 among the states.

New Jersey’s first quarter foreclosure rate of one in every 401 housing units with a filing ranked No. 34 among the states, thanks in part to a 43 percent decrease in foreclosure activity from the previous quarter and a 44 percent decline from the first quarter of 2010.

Connecticut’s first quarter foreclosure activity dropped 39 percent from the fourth quarter of 2010 and was down 65 percent from a year earlier. Pennsylvania posted a 35 percent decline from the previous quarter and a 29 percent drop from the same period last year.

Looking at the nationwide data for March, RealtyTrac’s report indicates that activity is already beginning to pick up some. Foreclosure filings were reported on 239,795 U.S. properties last month, up 7 percent from February. Both default notices and REOs increased in March compared to the previous month; scheduled auctions was the only stat to post a monthly decline.

 

Multnomahforeclosures.com: Updated Notice Of Default Lists


Multnomah County Courthouse in Portland, Orego...

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Multnomahforeclosures.com was updated with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 3 years. Multnomahforeclosures.com idocuments the fall of the great real estate bust of the 21st century. Over 50,000 Notice of default Listings

All listings are in PDF and Excel Spread Sheet format.

Multnomah County Foreclosures

http://multnomahforeclosures.com

Stewart Group Realty Inc.

Multnomahforeclosures.com: Updated Notice Of Default Lists for October 20, 2010


Multnomah County Courthouse in Portland, Orego...

Image via Wikipedia

Multnomahforeclosures.com was updated  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

Stewart Group Realty Inc.
http://www.sgrealty.us

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