Foreclosures at record high in first half 2009 despite aid

[coyotes_geek]

CG: Oh by the way, that whole mortgage thing is still going on. Not that we'd have reason to notice since our politicians have swept this issue under the rug and moved on...........

**************

NEW YORK (Reuters) – U.S. home foreclosure activity galloped to a record in the first half of the year, overwhelming broad efforts to remedy failing loans while job losses escalated.

Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said on Thursday.

The number of properties drawing filings, which include notices of default and auctions, jumped 9.0 percent from the second half of 2008 and almost 15 percent from the first half of last year.

"Despite everybody's best efforts to date we're not really making any headway against the problem," Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.

Loans that were temporarily frozen by various state and federal programs, which mostly ended in March, started pushing through the process in the past three months.

One in every 84 households with loans got at least one foreclosure filing in the first half of this year.

"I don't think this suggests the economy is any worse than anyone expected but I certainly don't think it shows by itself any signs of improvement," Sharga said.

President Obama's housing rescue is gaining momentum in refinancing troubled borrowers with higher-rate loans and modifying untenable terms for others.

But the programs have been off to a slow start and in some cases will be too late or not enough to help severely struggling homeowners, industry analysts agree.

Private sector efforts to alter loans terms have made headway but are facing an uphill battle as the unemployment rate heads to double digits.

Problems emanating from loans made when standards were much looser have taken a back seat to defaults stemming from job losses and wage cuts.

"Unemployment-related foreclosures account for much of this increased activity, and the high number of borrowers who find themselves owing more on their mortgages than their homes are now worth represent a potentially significant future risk," James J. Saccacio, RealtyTrac chief executive, in a statement.

In June, as home prices continued to fall, albeit more slowly, foreclosure filings rose 5.0 percent from May and 33 percent from a year earlier.

June's foreclosure activity was the third highest on record, and the fourth straight month of filings on more than 300,000 properties.

"If we're really going to slow down the inflow of new foreclosure activity we are probably going to need to see more aggressive and more integrated activity between the lending community and the government," Sharga said.

The Treasury Department asked the largest 25 mortgage servicers last week to appoint a special liaison to work directly with government officials aiming to thwart defaults.

RealtyTrac forecasts about 4 million total filings this year on 3.2 million households with loans, which means little improvement from the first-half performance. The prior record was 3.1 million filings last year, up from a more typical year when about 800,000 foreclosure actions would be made.

The highest unemployment rate in nearly 26 years is the biggest factor keeping homeowners from staying current on monthly payments, Sharga said.

But there could also be a whiplash caused by "the big white elephant in the middle of the room" -- option ARMs, or adjustable rate mortgages with the option to make minimum payments. "A lot of them are going to be seriously upside down, probably at least 40 percent upside down."

That would mean a borrower owes at least 40 percent more on the mortgage than the home is worth.

A new U.S. program enabling borrowers are up to 25 percent upside down to refinance their loans would not be enough to help most option option ARM holders, Sharga said.

States where sales and prices soared most in the five-year housing boom early this decade stayed hardest hit in the first half of 2009.

Nevada remained the state with the highest foreclosure rate, with one in every 16 housing units with a loan getting a foreclosure filing. Arizona, Florida and California followed.

Other states in the top 10 were Utah, Georgia, Michigan, Illinois, Idaho and Colorado.

California was the state with the highest total number of foreclosure filings in the first half, with actions taken on 391,611 properties, or one in every 34 housing units with mortgages.

http://news.yahoo.com/s/nm/20090716/bs_nm/us_usa_housing_foreclosures_3

[Winehole23]

CG: Oh by the way, that whole mortgage thing is still going on. Not that we'd have reason to notice since our politicians have swept this issue under the rug and moved on...........Oh rly (http://www.realestaterama.com/2009/07/15/federal-and-state-agencies-target-mortgage-foreclosure-rescue-and-loan-modification-scams-ID05706.html)?

[Winehole23]

DC Considers Emergency-Loan Program for Mortgages (http://www.foxbusiness.com/story/dc-considers-emergency-loan-program-mortgages/)

Peter Barnes ([email protected])


FOXBusiness


With mortgage foreclosures accelerating because of rising unemployment, Washington policymakers are considering a new round of government programs to help struggling families keep their homes, including offering newly jobless homeowners emergency loans to help make mortgage payments.



“Initial efforts by the government to prevent foreclosures were not primarily designed to target an environment where one in five workers would be unemployed in some of the hardest hit communities,” William Apgar, senior advisor for mortgage finance at the Department of Housing and Urban Development, testified at a House hearing last week.

Economist Doug Lee of Economics from Washington is more blunt. “The Government’s program to assist homeowners by restructuring loans has been a failure, but the Government is not giving up,” he wrote in his most recent weekly note to clients

Apgar is scheduled to testify on Thursday before the Senate Banking Committee on government foreclosure prevention programs. Also on the witness list was Herbert Allison, the new manager of the Treasury Department’s Troubled Asset Relief Program; bank executives; mortgage investors and housing experts.


One administration housing official described the new discussions as in the “very early stages,” covering ideas that are “really complex, technical.” The official indicated new programs are not imminent.


In June, the unemployment rate hit 9.5%, the highest level in 26 years. Some analysts predict foreclosures could hit a record three million this year. So the program could theoretically help many Americans who are affected by the economic downturn.
Some recent proposals for assisting hard-hit homeowners from lawmakers, financial industry officials and housing advocates -- some of which are under consideration by the Obama Administration in one form or another, sources say -- include:


Providing government cash to help with mortgage payments. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, has proposed legislation that would commit $2 billion of TARP funds for loans to homeowners who lose their jobs and can’t qualify for other forms of housing assistance.
Temporarily reducing the size of a monthly mortgage payment by limiting it to interest due on a loan, eliminating the portion allocated for repaying outstanding principal for up to several years.
Increasing payments under an existing TARP program to eliminate “second liens” on properties created by home equity lines of credits and other second loans. Such lien holders, mainly banks, often must approve modifying a problem mortgage. But in many cases, they have refused permission out of concern that some, or all, of the original second loan amount could be wiped out in a refinancing. In March, as part of a new package of mortgage refinance and modification programs and incentives, the administration budgeted TARP funds for modifying second liens -- or “extinguishing” them altogether through small cash settlements.
Strengthening government guarantees for banks and investors against further losses from mortgages they modify. In February, the administration pledged up to $10 billion in TARP funds to insure mortgage holders against certain future losses on restructured loans when homeowners “redefault” -- which happens frequently. Now an Evanston, IL, investment management firm, Magnetar Capital (http://www.magnetar.com/), has proposed that the Administration expand its guarantee program to insure that a lender or investor will receive at least 75% of the home’s value if a homeowner ends up in foreclosure even with a modified mortgage. To limit taxpayer exposure in its plan, Magnetar proposed funding it through an annual 0.1% lender fee in each new mortgage. Magnetar says in addition to encouraging more loan modifications, its plan would help rebuild the private mortgage finance market, which locked up in the credit crunch, limiting funding for new mortgages. Supporters of the proposal say it is under review at the Treasury and Federal Reserve.
Allowing homeowners to rent their property if a bank repossesses it in foreclosure. One House bill would allow former owners to lease their foreclosed property for up to five years. The proposal is targeted less at helping struggling families keep a home and more at preventing foreclosed homes from being dumped on the real estate market, which can depress prices home further. Sponsors say the proposal would also give lenders a better chance at recouping their principal in a sale of the property once the housing market has stabilized.

As it considers new options for helping struggling homeowners, the Administration has stepped up pressure on mortgage servicing companies, which process loan payments and manage foreclosures, that are participating in its existing mortgage modification program. They include many of the nation’s largest banks.


Last week, Treasury Secretary Timothy Geithner and Housing Secretary Shaun Donovan said in a letter to servicers that “much more progress is needed” under the program. They demanded the firms detail by next week “specific steps” they will take to improve implementing and complying with it. Treasury and HUD officials have scheduled a meeting with servicing company executives for July 28.

[Winehole23]

CG: If your point was that measures undertaken so far have failed miserably, I agree 100%.

[coyotes_geek]

Oh rly (http://www.realestaterama.com/2009/07/15/federal-and-state-agencies-target-mortgage-foreclosure-rescue-and-loan-modification-scams-ID05706.html)?

I'm just saying that the mortgage mess is no longer the crisis du jour and our politicians aren't talking about it anymore. The programs are still out there, but since they've proven to be ineffective thus far we're not seeing our leaders out in front of this issue as they were 6 months ago.

[Winehole23]

Fair enough. It's not the topic du jour.

Meanwhile, the crisis itself is extending to prime loans.

[LnGrrrR]

It's selfish, but I'm hoping home prices continue to drop like rocks. It only increases the chance that I may one day feel secure enough to purchase a home.

[Winehole23]

+1

Malinvestment is bad.

[Wild Cobra]

It's selfish, but I'm hoping home prices continue to drop like rocks. It only increases the chance that I may one day feel secure enough to purchase a home.
Besides, homes are still way over priced. Have been for years. Since so many places depend on property taxes, based on property values, the governments have reason to appraise hoses for more, which in turn helps artificially inflate the prices!

Should this conflict of interest be illegal? For the tax assessors to be government run?

[BacktoBasics]

It's selfish, but I'm hoping home prices continue to drop like rocks. It only increases the chance that I may one day feel secure enough to purchase a home.You might feel secure enough but how easy will it be to actually make the purchase. Like everyone on this board I'm sure you have impeccable credit and are financially sound and secure. However I can tell you first hand that I've struggled to get a construction loan with a 720-740 FICO across the board. 32% debt to income ratio and 6 years on the job with 5% in land equity. Personally I feel like I'm near perfect on paper and my score should speak volumes about how low risk I am but nonetheless its been one of the most unenjoyable experiences in my life.

The banks are tough now and will be just as tough later. Its hard enough to keep a debt to income ratio in the low 30% let alone a FICO above 700. Hell if you carry over 45% credit card to limit debt you're likely to see that FICO dip below 675 regardless of the rest of your history.

This problem isn't going to get any better until they figure out how to lend to solid, not perfect, potential buyers. I'm not talking about the low risk any one can buy type shit. I'm talking about people with good credit who pay their bills on time but carry a little credit card debt and have scores in the mid to upper 600's. Those low risk buyers are the meat of this country and they're struggling to obtain even the simplest of loans.

[coyotes_geek]

I like that my property taxes are going to drop because of this, but it's still a little disconcerting to see the object that most of my net worth is invested in decline in value.

[LnGrrrR]

You might feel secure enough but how easy will it be to actually make the purchase. Like everyone on this board I'm sure you have impeccable credit and are financially sound and secure. However I can tell you first hand that I've struggled to get a construction loan with a 720-740 FICO across the board. 32% debt to income ratio and 6 years on the job with 5% in land equity. Personally I feel like I'm near perfect on paper and my score should speak volumes about how low risk I am but nonetheless its been one of the most unenjoyable experiences in my life.

The banks are tough now and will be just as tough later. Its hard enough to keep a debt to income ratio in the low 30% let alone a FICO above 700. Hell if you carry over 45% credit card to limit debt you're likely to see that FICO dip below 675 regardless of the rest of your history.

This problem isn't going to get any better until they figure out how to lend to solid, not perfect, potential buyers. I'm not talking about the low risk any one can buy type shit. I'm talking about people with good credit who pay their bills on time but carry a little credit card debt and have scores in the mid to upper 600's. Those low risk buyers are the meat of this country and they're struggling to obtain even the simplest of loans.

Oh I know most of the pitfalls. Technically, I could probably buy a home right now and still live comfortable. I'm enlisted for the next six years, so I have some job security. However, I won't feel I have ENOUGH job security until I'm retired, to be honest.

Right now, the base will provide housing, or a monetary equivalent. I'm fine with that. When I get out and KNOW where I want to settle down, I'll get a loan with VA backing, and I've have hopefully saved enough for a good down payment (20 to 25K).

[BacktoBasics]

Oh I know most of the pitfalls. Technically, I could probably buy a home right now and still live comfortable. I'm enlisted for the next six years, so I have some job security. However, I won't feel I have ENOUGH job security until I'm retired, to be honest.

Right now, the base will provide housing, or a monetary equivalent. I'm fine with that. When I get out and KNOW where I want to settle down, I'll get a loan with VA backing, and I've have hopefully saved enough for a good down payment (20 to 25K).Like I said I know you have it all figured out just like everyone else who posts here but there are millions upon millions of well deserving well qualified low risk buyers who don't have VA type backing or 25k to plop down on house.

I would say in all of the thousands of 680 or better FICO customers that I've had over the last 6 years less than 3% have put down more than 1k on a purchase. Now I know a home mortgage is different but requiring 20-25% down on extremely well qualified buyer is almost pointless.

The problem lies in the ability to lend and until that gets relaxed nothing changes. There won't be enough people to fill these empty homes and the banks are just going to be stuck with near worthless equity. If you can even use the word equity.

[DarkReign]

10-15% down or youre wasting your time even inquiring.

Want a $200,000 home? Better have $20k before ever talking to a bank (preferably the one you have the $20k with).

[LnGrrrR]

Like I said I know you have it all figured out just like everyone else who posts here but there are millions upon millions of well deserving well qualified low risk buyers who don't have VA type backing or 25k to plop down on house.

I would say in all of the thousands of 680 or better FICO customers that I've had over the last 6 years less than 3% have put down more than 1k on a purchase. Now I know a home mortgage is different but requiring 20-25% down on extremely well qualified buyer is almost pointless.

The problem lies in the ability to lend and until that gets relaxed nothing changes. There won't be enough people to fill these empty homes and the banks are just going to be stuck with near worthless equity. If you can even use the word equity.

^^
... is why I'm not buying a house right now. :)

I know many people don't have money to put down, or VA backing, and I could probably get a good loan now. I just don't feel comfortable enough financially to take on that responsibility/risk.

This belief that a home should be something everyone has is a bit ridiculous to me. Maybe I'm different than others, but signing my name to ANYTHING for 25 to 30 years concerns me greatly.

Heck, I'm surprised sometimes that I married after knowing my girl for only 3 years.

[BacktoBasics]

^^
... is why I'm not buying a house right now. :)

I know many people don't have money to put down, or VA backing, and I could probably get a good loan now. I just don't feel comfortable enough financially to take on that responsibility/risk.

This belief that a home should be something everyone has is a bit ridiculous to me. Maybe I'm different than others, but signing my name to ANYTHING for 25 to 30 years concerns me greatly.

Heck, I'm surprised sometimes that I married after knowing my girl for only 3 years.I agree that this notion that everyone is entitled to home ownership is pretty fucking stupid. However I think a well qualified low risk buyer should be able to get himself into a nice home for his family with reasonable parameters for qualification.

[BacktoBasics]

10-15% down or youre wasting your time even inquiring.

Want a $200,000 home? Better have $20k before ever talking to a bank (preferably the one you have the $20k with).
FHA is 3.5% but its a bitch to get some of these banks to work a deal that doesn't screw the buyer on the interest or back end.

[LnGrrrR]

I agree that this notion that everyone is entitled to home ownership is pretty fucking stupid. However I think a well qualified low risk buyer should be able to get himself into a nice home for his family with reasonable parameters for qualification.

Agreed. If I wasn't in the military, and knew I'd be living in the same area for longer than 5 years, I'd probably get one.

[101A]

10-15% down or youre wasting your time even inquiring.

Want a $200,000 home? Better have $20k before ever talking to a bank (preferably the one you have the $20k with).


It wasn't that long ago that it was UNDERSTOOD that without 20% equity; you ain't getting no mortgage.

It was probably right then, and it's right now. If that hadn't changed, we wouldn't be in this mess right now.

[BacktoBasics]

It wasn't that long ago that it was UNDERSTOOD that without 20% equity; you ain't getting no mortgage.

It was probably right then, and it's right now. If that hadn't changed, we wouldn't be in this mess right now.You couldn't be more wrong. Changing the required amount down to a more reasonable level has absolutely nothing to do with the mess we're in now. If they only did lending to well qualified buyers at the typical 5% down there wouldn't be a 10th if not 100th of the amount of foreclosures there are now.

They sold ARM's to people with scores in the low 500's with zero down and payments that were half if not 75% of they're monthly income. Even that isn't the real issue here. CDS's and MBS's dug an immeasurable hole.

If you eliminate the CDS's and MBS's bullshit lending to people with little to no money down isn't really an issue if you're lending to someone thats low risk.

[Wild Cobra]

It wasn't that long ago that it was UNDERSTOOD that without 20% equity; you ain't getting no mortgage.

It was probably right then, and it's right now. If that hadn't changed, we wouldn't be in this mess right now.
agreed.

[BacktoBasics]

Pretty massive stretch to think that % down has anything to do with the current state of the situation.

[Wild Cobra]

You couldn't be more wrong. Changing the required amount down to a more reasonable level has absolutely nothing to do with the mess we're in now. If they only did lending to well qualified buyers at the typical 5% down there wouldn't be a 10th if not 100th of the amount of foreclosures there are now.

They sold ARM's to people with scores in the low 500's with zero down and payments that were half if not 75% of they're monthly income. Even that isn't the real issue here. CDS's and MBS's dug an immeasurable hole.

If you eliminate the CDS's and MBS's bullshit lending to people with little to no money down isn't really an issue if you're lending to someone thats low risk.
Having someone who has saved that much shows the applicant had the drive and resources to do so also. Besides, since any market can fluctuate, requiring at least 10% down helps insure there is always equity in the house. Part of the problem we have is that the values decreased in the homes.

[coyotes_geek]

Pretty massive stretch to think that % down has anything to do with the current state of the situation.

No it isn't. If you lower that bar it becomes tougher to determine who the low risk people are and who the high risk ones are. If you raise the bar back up it becomes a hell of a lot easier because I doubt there's too many people with crap credit who have the financial discipline to save up 20%. No doubt there are 5%'ers who are going to be low risk, but clearly the financial institutions have proven their track record of separating them out from the rest of the masses is highly suspect. Raise the bar and the 5% folks will still keep saving and get up to 20% eventually. So they have to wait a couple of years. Small price to pay considering that it doesn't take that many bad apples getting through to spoil everything for the rest of us.

[ElNono]

Plus saving a 20% is a better deal for you anyways.
There's also the fact that since the market got so severely burned, you can expect an overreaction and a swing towards being more cautious.

[BacktoBasics]

No doubt 20% is a good thing its just not the driving factor in the current problem. Its has little to nothing to do with why we are where we are. The quality of the lend and the unethical practices with those high risk mortgages created this shit storm not relaxing the % down. I realize that had these bad lends had more upfront equity things might be slightly better but it would have had next to no effect from the typical solid well written well qualified loan. That's not the issue.

Furthermore I have tons and I mean literally thousands of applicants that have 5k 10k even 20kish type money down but have awful credit. The entire point of a FICO based system is to determine lending risk value. The lower the risk the more they should extend the lending parameters.

There is nothing to gain in the big picture of lending by requiring 25k down from a well qualified buyer who scores a 730 over requiring 8k down from the same buyer.

I do think zero down is a stretch these day or any days. Some equity or money down should be required but a % exceeding 10-15% is counter productive to a good functioning market.

I do agree that we're seeing an overreaction.

[ElNono]

There is nothing to gain in the big picture of lending by requiring 25k down from a well qualified buyer who scores a 730 over requiring 8k down from the same buyer.

It's actually a worse deal long term for the bank. But the reality also is that banks are reaching left and right for liquidity right now.

[BacktoBasics]

I don't have a payment calculator in front of me but the difference between 20k down and 8k down on a payment is probably less than 50 bucks. Thats not the issue with foreclosures. That equitable difference didn't drive these people to the breaking point.

The issue is you got people who make 2k a month with a starting mortgage of 600 bucks that has now skyrocketed to 1400. Or you got people who signed up for 1400 dollar payments but barely make over 2k.

Then you tack on CDS's and you got a recipe for disaster. Everyone wanted a piece of this shit pie.

[BacktoBasics]

It's actually a worse deal long term for the bank. But the reality also is that banks are reaching left and right for liquidity right now.100% agree. I know of two banks in my area right now that aren't lending at all. Not to anyone for anything. My best guess is they don't have the resources to get a loan to lend the money.

[LnGrrrR]

Also, no way am I signing an ARM. I don't care if I'm only going to be living in the house for 3-5 years and could sell it, and save money long-term. I'm not taking that chance... fixed rate for me.

[Spursmania]

I have purchased several foreclosure here in San Antonio, Texas. I even bought one nice home as low as 36 cents on the dollar. I rehab them and place them up for rent. Now is a great time to buy a home, but of course, it all depends on what part of the country you live in. Prices are still pretty stable here as compared to many parts of the nation.

As far as I know banks are still lending here in San Antonio. Many people I know have been able to get loans. I find large Commerical loans are more difficuly to get than rsidential loans.

Of course, I would never recommened anything but a fixed loan. All these ARMS and variable interest rate loans to people who were not qualified got us into this problem in the first place. A lot of people were at fault. The consumer who wanted more then they could afford, the loan officer, the underwriter, etc...
However, home ownership is not a right but a privilege.

Unless, of course, Obama makes us give up our homes so those that don't have can live in one for free. (Sarcasm here folks, don't get your panties in a bunch)

[Spursmania]

I have purchased several foreclosure here in San Antonio, Texas. I even bought one nice home as low as 36 cents on the dollar. I rehab them and place them up for rent. Now is a great time to buy a home, but of course, it all depends on what part of the country you live in. Prices are still pretty stable here as compared to many parts of the nation.

As far as I know banks are still lending here in San Antonio. Many people I know have been able to get loans. I find large Commerical loans are more difficuly to get than residential loans.

Of course, I would never recommened anything but a fixed loan. All these ARMS and variable interest rate loans to people who were not qualified got us into this problem in the first place. A lot of people were at fault. The consumer who wanted more then they could afford, the loan officer, the underwriter, etc...
However, home ownership is not a right but a privilege.

Unless, of course, Obama makes us give up our homes so those that don't have can live in one for free. (Sarcasm here folks, don't get your panties in a bunch)

[Bender]

I've got 8.5 years left on my house loan, at 4.88%. But san antonio is screwing me over on taxes, they raise my value 10 to 15k every year.
I bet my monthly tax payment to escrow will be at or above my P&I payment before my loan is paid off.

my house payment is one payment I have never been late on. Even though times are tough now for me & mine (wifey lost job, can't get another).

[Spursmania]

I've got 8.5 years left on my house loan, at 4.88%. But san antonio is screwing me over on taxes, they raise my value 10 to 15k every year.
I bet my monthly tax payment to escrow will be at or above my P&I payment before my loan is paid off.

my house payment is one payment I have never been late on. Even though times are tough now for me & mine (wifey lost job, can't get another).

Property taxes suck here, I agree. They are killing us. But at least we don't have state income tax. Sorry about your wife losing her job. These times really suck right now. By the way, you have a great rate and are much closer than most people are to owning your home out right.

[Wild Cobra]

I have purchased several foreclosure here in San Antonio, Texas. I even bought one nice home as low as 36 cents on the dollar. I rehab them and place them up for rent. Now is a great time to buy a home, but of course, it all depends on what part of the country you live in. Prices are still pretty stable here as compared to many parts of the nation.

As far as I know banks are still lending here in San Antonio. Many people I know have been able to get loans. I find large Commerical loans are more difficuly to get than rsidential loans.

Of course, I would never recommened anything but a fixed loan. All these ARMS and variable interest rate loans to people who were not qualified got us into this problem in the first place. A lot of people were at fault. The consumer who wanted more then they could afford, the loan officer, the underwriter, etc...
However, home ownership is not a right but a privilege.

Unless, of course, Obama makes us give up our homes so those that don't have can live in one for free. (Sarcasm here folks, don't get your panties in a bunch)
And people wonder why the rich get richer as the poor lose things. It's called smart investing!

[ElNono]

And people wonder why the rich get richer as the poor lose things. It's called smart investing!

It's also called having money to invest to begin with. I know, who cares about the details?

[Wild Cobra]

It's also called having money to invest to begin with. I know, who cares about the details?
You missed my point of people losing what they had by poor investments.

[SonOfAGun]

Government:

People must buy homes to kickstart the economy!

Any one with more than one house must pay a luxury tax!