Borrowers Avoid Foreclosure

“The treadmill is still going a little faster than [Hope Now] can keep up with,” said Nicholas Retsinas, Director of Harvard University’s Joint Center for Housing Studies. “Foreclosures have outpaced the efforts to combat them.”

So, Hope Now is stepping up its efforts to reach out to troubled borrowers to let them know help is available, according to Faith Schwartz, the alliance’s executive director. The group has promoted its program through advertising, public announcements, as well as letters to at-risk borrowers and large foreclosure prevention events that it’s holding around the country.

“Outreach is crucial,” she said. “Borrowers have to talk to their lenders. That’s the most important message we communicate.”

A change in lender attitudes has probably paved the way for more workouts, according to Harvard’s Retsinas.

In July 2008, HOPE NOW mortgage servicers helped homeowners avoid foreclosure by completing more than 192,000 mortgage workouts.  Workouts include both modifications to the terms of existing mortgages and repayment plans.  All workouts are intended to be permanent changes that, barring a life event such as a job loss, death, or illness, will enable the homeowner to stay in the home as long as he or she wishes to do so.

“The participating lenders have come to grips with the idea that the market is not going to get better soon, so they are cooperating more with borrowers. Hope Now numbers reflect that,” he said.

Repayment plans simply give borrowers more time to pay lenders what they owe, either by extending the term of the loan or by raising monthly payments. They work best for borrowers who were thrown off the track by one-time events, such as an illness or temporary job loss.

But by and large they’re considered to be fairly ineffective at preventing foreclosures in the long run, since borrowers often cannot afford the original terms of their loans.

Modifying a mortgage by lowering the interest rate, the principal, or both, is the most effective means of keeping owners in their homes.

“Home prices are still falling” he said. “There are probably 10 million folks underwater, owing more on their mortgages than their homes are worth and that’s going to climb. Not everybody under water is going to foreclose. If you’re close to solvency, these efforts can help pull you back from the brink. But if you’re well underwater, you’re probably going to drown.”

As per the data, the HOPE NOW report estimates that on an industry-wide basis:

1. The total number of foreclosures prevented by mortgage services since July 2007 has risen to nearly 2.07 million.
2. Mortgage services provided loan workouts for approximately 192,000 borrowers in July, an increase of 11,000 loan workouts over June.
3. Approximately 112,000 of the homeowners with prime and sub prime mortgages helped by services in July received repayment plans; approximately 80,000 received loan modifications.
4. Nearly 52 percent of homeowners with subprime loans received modifications.

Virginia Foreclosures

Virginia foreclosures nearly triple in a year – last month’s rate was the 10th highest in U.S. alone.

Foreclosures in Virginia nearly increased thrice time last month, when compared with July ‘07 foreclosures, with Northern Virginia accounting for more than half of the foreclosures in the U.S.

Prince William County continues to have the highest rate, with one of every 103 homes in a state of foreclosure, including default notices, auction sales and bank repossessions.

The median price of a home in Prince William last month was $214,000, compared with $354,450 in July 2007, according to Metropolitan Regional Information Systems. Nearly 550 more homes were sold last month than in the previous July.

Virginia had the 10th-highest rate in the country last month, with 5,745 foreclosure filings, RealtyTrac report. The number of homes in the United States facing foreclosure in July jumped 55 percent from the year before.

Arlington County had far fewer, with one of every 1,357 homes in foreclosure.

There is a silver lining. Home sales have enlarged throughout most of the region, as high-priced houses become more reasonable. The sizable price declined in Prince William has fascinated first-time home buyers and investors who want to take benefit of the deal, according to the Virginia Association of Realtors.

Experts said that although the trend is promising, the housing market will not fully recover until foreclosures are absorbed.

A report from the Virginia Association of Realtors points to “dramatic” differences between Northern Virginia and other parts of the state. The association said it expects regional sales activity “to widen in the next quarter before the overall housing market edges back toward equilibrium.”

Virginia is almost like two different states, said Rick Sharga, senior vice president of RealtyTrac. “Northern Virginia tends to behave a little differently because of its proximity to the Beltway,” he said.

Ranking 10th in the country isn’t necessarily a bad thing, Sharga said, because foreclosure rates in the top six states, including California and Florida, are much more severe.
The alliance of mortgage servicers, counselors, and investors assembled to combat foreclosures fixed more than 192,000 problem loans during July, a one-month record that represents a 6% increase over June.

Despite this progress, foreclosures continue to climb; 91,752 families lost their homes in July. That represents an increase of 14% from June and more than doubles the number of July 2007, when only 42,043 homes went to foreclosure.

Home Foreclosures

Foreclosures loom large in convention state, there was a woman too embarrassed to be identified except as “Billie”, was revisiting her old neighbourhood eight months after losing her home to a bank foreclosure.

Her mistake, she said, was to let a mortgage broker consolidate her two mortgages into one, just a few years before the lesser of them was to be paid out.

“I guess he got a bigger fee that way,” said Billie, a middle-aged African American who is among hundreds of home owners whose mortgages have been foreclosed in the outer suburban pocket of Denver known as Green Valley Ranch. In nearby Perth Street, home owner Peter Chapman estimates up to one in five homes in his corner of the suburb has had its mortgage foreclosed. Another resident, Leon McKee, said people were just trying to hang on until the faltering economy improved.

“I think it’s going to go down more, unfortunately some people are not going to be able to hang on,” said Mr McKee. “(The big election issue) is definitely going to be the economy.”

Billie has moved in with her mother. She still has hope of buying another home. At 51, she has to work out how to start again.

Foreclosures have effected the people and it will effect if we do not learn to understand what is foreclosures and how we can save our homes from it.

But as they say One man’s tragedy is another man’s opportunity, as potential buyers wander through the empty homes, inspecting every room, opening every cupboard and closet.

“Yes, there is a sad story involved if you are to see a foreclosed house. But, if you really look at it from an investment perspective, you know, it’s (like) any other business.”

Life is hard and so does the feeling of being taken out from your dream home… As a wise man said, it’s always advisable to be prepared than to be thrown by the wind and storms of life.

Foreclosures and Housing Data

Foreclosures misrepresent housing data, as if the housing market wasn’t terrifying enough, the record-setting surge in foreclosures could be distorting some of the distantly watched housing data used to measure the market’s wellbeing.

The foreclosure flood is making listings of homes for sale a less trustworthy pointer, because much of the concerned inventory might be left out. In addition, fire-sale prices for such properties may also be skew the volume statistics.

The mixture of weak housing sales, falling home values, tighter credit situation and a slowing economy have left financially impoverished homeowners in a difficult spot – some borrowers have no other alternative but to foreclose if they can’t get a buyer for their home or compensate or refinance their loans.

Some real estate analysts say that this may signify that the housing circumstances are worse than they now look, dampening hope that the disturbed market could shortly be bottoming out.

“Your water pipes break and you need to have the wherewithal to get them fixed. If you have a really low income than that could be tough.”

This is most pronounced in what have been deem as “bubble” real estate markets, which saw the biggest gain during the home buying boom and are experiencing the major declines since the recoil began more than two years ago.

Foreclosures are also influencing housing sales and pricing data. Business dealings are being boosted by the sale of the distressed inventory, which in the bubble markets represents 40 percent of sales. But such sales then tend to push marketplace prices down, with the banks offering sheer discounts to move inventory.

“Since foreclosed properties are reduced in price until they sell, an increase in foreclosure transactions simply means there are more foreclosures rather than more buyers,” Sood said.

Until there is a clear indication that the surge in foreclosures has slow down, it will be very hard to call the housing disintegrate a thing of the precedent.

Homeowners Renting Property

Homeowners rent out property as they wait for a better market, as the would-be sellers become the first-time landlords, experts warn of pitfalls and stress the need for grounding.

Since last five years, real estate agent Paul Sessum has seen that the two questions from his sellers’ were usually: What’s my home worth, and how long will it take to sell?

But in recent months, Sessum of Keller Williams Realty World Media Center in Burbank said that the second question has been replaced by another question and that is that can I rent out my house and cover the mortgage?

Well that gives us a better picture of the current situation and circumstances which are faced by the sellers.

By preference or circumstances, real estate experts say that the ranks of first-time landlords are growing swell by homeowners for the future out the down market and those who simply are not capable to trade at the moment.

“We never seriously considered doing anything except selling until a broker suggested we take the equity out of our existing home, buy another house and rent out the old house until the market turns around,” Laurie said. “When the market really fell out last year, we decided to take his advice.”

They’re not the barely the ones who said that there are more sellers who feels it in the same way.

“About 15% of the national landlord market is new to land lording in the past two years,” said Bill Lederer, a Lake Forest, Ill.-based landlord and president and publisher of CompleteLandlord.com.

A fall 2007 study by CompleteLandlord.com — which provides form, online property management tools, resources and information for landlords — found that 17% of residential landlords didn’t intend to rent out their property at the time of purchase.

Out of those owners who eventually took the rental route, 39% already purchased another home, 24% believed they could make money if they held on to the property longer, 15% said property values were too depressed to warrant selling and 11%, like Holly Luong, believed they couldn’t sell at the price they wanted.

“Your home is an enormous investment, and you want to see a return,” he said. “If the existing market isn’t going to give you that return, renting gives you another avenue. And if you have a condition where the rent is going to cover up the mortgage, then why not do it?”

What is Foreclosure?

Foreclosures refer to a lender’s proceedings to repossess and sell a property for the borrower’s default in mortgage costs.

Foreclosure is the legal proceeding in which a mortgagee, or a lender, obtains a court ordered termination of a mortgagor’s equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan.

If the borrower defaults and the lender try to repossess the property, courts of equity can grant the owner the right of redemption if the borrower repays the debt. When this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lien holders can and do use foreclosure, such as for overdue taxes, unpaid contractors’ bills or overdue HOA dues or assessments.

The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property (immovable property) after the owner has failed to comply with a contract between the lender and borrower called a “mortgage” or “deed of trust”.

Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that “the lender has foreclosed its mortgage or lien”.

If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principle and fees the mortgagee can file a claim for a deficiency judgment.

Types of foreclosure – from Wiki
The mortgage holder can usually initiate foreclosure at a time specified in the mortgage documents; typically some period of time after a default condition occurs.

Within the United States and many other countries, several types of foreclosure exist. Two of them – namely, by judicial sale and by power of sale – are widely used, but other modes of foreclosure are also possible in a few states.

Foreclosure by judicial sale
More commonly known as Judicial Foreclosure, is available in every state and required in many, involves the sale of the mortgaged property under the supervision of a court, with the proceeds going first to satisfy the mortgage; then other lien holders; and, finally, the mortgagor/borrower if any proceeds are left.

As with all other legal actions, all parties must be notified of the foreclosure, but notification requirements vary significantly from state to state. A judicial decision is announced after pleadings at a (usually short) hearing in a state or local court. In some fairly rare instances, foreclosures are filed in Federal courts.

Foreclosure by power of sale
This is also allowed by many states if a power of sale clause is included in the mortgage. This process involves the sale of the property by the mortgage holder without court supervision. It is generally more expedient than foreclosure by judicial sale.

As in judicial sale, the mortgage holder and other lien holders are respectively first and second claimants to the proceeds from the sale.

Other types of foreclosure are considered minor because of their limited availability. Under strict foreclosure, which is available in a few states including Connecticut, New Hampshire and Vermont, suit is brought by the mortgagee and if successful, a court orders the defaulted mortgagee to pay the mortgage within a specified period of time. Should the mortgagor fail to do so, the mortgage holder gains the title to the property with no obligation to sell it. This type of foreclosure is generally available only when the value of the property is less than the debt (“under water”). Historically, strict foreclosure was the original method of foreclosure.

Foreclosure investment
Some individuals and companies are engaged in the business of purchasing properties at foreclosure sales. Distressed assets (such as foreclosed property or equipment) are considered by some to be worthwhile investments because the bank or mortgage company is not motivated to sell the property for more than is pledged against it.

The number of households in foreclosure increased 79 percent in 2007, with about one of every 100 U.S. households at some stage of the foreclosure process, according to the latest numbers from data aggregator RealtyTrac.

According to the detailed statistics the foreclosure rate (number of foreclosures available, see the picture) in the US is constantly growing and this situation is favorable for the foreclosure investment.

Foreclosures – Home resale

The Valley as a complete has broken the traditional home resale season on a low note as foreclosures and depressed home values sustained to control the landscape, but parts of the Southeast Valley in July bucked that trend. In Valley wide, foreclosures represented 42 percent of the resale market in July. That compares to 14 percent in July 2007.

Overall in the Southeast Valley, traditional sales eclipsed foreclosure sales, and the median price on traditional resellers topped the median price on foreclosures.

In Mesa the stats shows: 315 foreclosures, $160,000 median price; 485 traditional sales, $179,000 median price.

In Chandler the stats shows: 120 foreclosures, $198,405 median price; 320 traditional sales, $239,750 median price.

In Tempe the stats shows: 15 foreclosures, $213,560 median price; 100 traditional sales, $248,500 median price.

In Gilbert the stats shows: 170 foreclosures, $231,000 median price; 345 traditional sales, $240,000 median price.

In Ahwatukee the stats sows: 15 foreclosures, $238,925 median price; 100 traditional sales, $295,000 median price.

In cities closer to the urban center like Tempe or Chandler, homes tend to be more expensive and therefore less attractive to investors, said Jay Butler, director of Realty Studies at Arizona State University’s Morrison School of Management and Agribusiness at Polytechnic in Mesa.

“The East Valley is not immune but is doing better than other areas,” Butler said. “It’s more stable, and the university provides some stability too.”

“There’s a lot of frustration out there right now,” Butler said.

“Forty-eight percent of our credit losses were from four states: California, Arizona, Nevada, and Florida. These states saw the most dramatic run-up in prices, and are now seeing the most rapid declines,” Mudd told investors during a conference call earlier this month.

Home prices have cratered in certain markets since the peak. Cape Coral was down 50 percent, Las Vegas was down 35 percent, and northern Virginia was down 30 percent. In California, Modesto and Stockton were down 50 percent and Riverside was down 40 percent.

“So, the housing market has returned to earth fast and hard,” Mudd said. “Some signs do offer rays of positive light. Foreclosures actually fell in Michigan. Same-period home sales were up in California. And, as the [government-sponsored entities] provide most of the liquidity to the primary market, that market is functioning and a safe center of credit risk; pricing and product is being restored.”

Fannie Mae said it hopes its new offices in Florida and California will reduce defaults and better manage the property it has taken in foreclosure.

NYSE: FNM is down to its lowest level in 18 years, falling $2.04 to $3.95 in Wednesday trading. The 52-week high was $70.57 on Aug. 22.

Foreclosure Purchase Program

Federal foreclosure-purchase program may fall flat in California. The $4-billion plan may harm homeowners in the state who are trying to put up for sale. Several county governments are uncertain whether they have the staff to utilize the financial support.

The foreclosure-purchase program – included in the landmark housing bill sign by President Bush last month – face rising suspicions among real estate expert and economists, who spot out that the government, will now be contending with lenders and private homeowners who have been struggling to put up for sale in a depressed market.

What’s more, an analysis by The Times shows that the California communities are with the most foreclosures – and therefore they are likely to be first in line for the federal aid – they already have a relatively sufficient supply of reasonable housing.

Out of the top 12 counties in California with the highest foreclosure rates, only Sacramento County has an equally towering need for reasonable housing, according to report from MDA DataQuick and the California Assn. of Realtors.

“I’m not sure this is the most cost-effective use of these funds,” said Kerry Vandell, director of the Center for Real Estate at UC Irvine. “Sometimes an experiment like this is just that, an experiment. And you don’t find out until later that it doesn’t really work out too well.”

The Times contacted housing officials in the 12 California counties with the highest concentration of foreclosed properties. Most of them said they had not lobbied for the bill, and a number of people wondered whether they even had the staff to put together and use the funding appropriately.

“There was a sense that they needed to put some money toward the problem and do that fairly quickly before the election,” Pelz said. “That’s probably why there wasn’t as much of a consultative process as there might have been had they had more time to put something together and really vet it out.”

The purchase-program was a fiercely contested stipulation of the housing bill. President Bush threatened a veto over the matter, claiming the $4 billion would be a bailout for banks and others who ended up in bad lending decisions.

“These empty homes are creating nesting places for criminals,” Waters said. “Later I discovered that this was a result of the subprime meltdown.”

In California, for example, most of the foreclosed homes are in areas such as the Central Valley, the Inland Empire and the Antelope Valley, locales known for their huge stock of low-cost housing.

If anything, these areas are fitting more reasonable because of foreclosures, and sales have chosen up in large part because of the ease of use of these homes at a discounted price.

“Those foreclosures are being purchased at a very rapid rate, and they are going to families who have been previously price-excluded out of the market,” said Mark Boud, a consultant who runs Real Estate Economics in Irvine.

Home Sales Jump up in July

Different views came up on the news that Southern California home sales jump in July, let’s see what the newspapers have to say:

Foreclosures fueled home sales in southern California in July to their highest level in more than a year, pushing the average price down by nearly a third, MDA DataQuick reported on Monday.

“What we’re looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages. What we’re still not seeing is this level of distress spreading to more expensive or established neighborhoods,” John Walsh, MDA DataQuick president, said in a statement.

Southern California was particularly hard hit by the deterioration of the housing market.

Home and condo sales in six counties, including Los Angeles and San Diego, rose 13.8 percent to 20,329, the highest since March 2007, while the average price was $348,000, down 2 percent from the previous month and 31.1 percent from a year earlier.

Southern California home sales rose last month for the first time in nearly three years, as steep discounts lured buyers back into a market where values have tumbled 31% over the last year.

Sales volume was up 13.8% overall from a year earlier, with Riverside County leading the way with a 48.6% jump, MDA DataQuick reported Monday. Los Angeles County was the exception, posting a 3.2% decline.

The rise is being driven in part by buyers like Andre and Jody Ocampo, who attended an auction of 250 foreclosed homes at the Riverside Convention Center on Sunday, looking for a bargain.

After just three minutes of bidding, they became buyers of a Lake Elsinore home — offering $385,000 for a house that had been appraised just a couple of years ago at nearly $700,000.

The Ocampos said they weren’t worried that prices would continue falling, as most real estate experts predict, because they plan to live in the home and not resell it for a quick profit.

Los Angeles County, the one exception to the trend, hasn’t been hit as hard by foreclosures and has relatively fewer discounted homes for sale. That’s probably why it saw a slight decline in sales instead of the increase seen in neighboring counties, said John Karevoll, MDA DataQuick’s chief analyst.

The median home price in Southern California last month fell 31.1% to $348,000 from $505,000 in July 2007, DataQuick said, the lowest level since February 2004, when the region was in the frenzy of the housing expansion. The decline ranged from 25.6% in San Diego County to 35.2% in San Bernardino County.

The market is also being weakened by “short sales,” in which homeowners price their homes for less than what they owe on their mortgages in hopes of avoiding foreclosure.

In addition, most lenders have tightened their standards, eliminating many potential home buyers who might have qualified for a loan during the boom.

What we’re looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages,” said John Walsh, president of MDA DataQuick.

For bargain hunters like Dale Smet of Santa Clarita, the timing is perfect.

Prices will stop falling, he said, when foreclosures stop increasing, existing home sales are strong and the unsold inventory gets far below its current level of 19,058.

While agents report overbidding on some foreclosure properties, Christopher Thornberg, a principal at Beacon Economics in Los Angeles, noted that interest is coming from “vulture funds” with millions of dollars to spend on distress sales.

“That process is not in any way, shape or form an indication of a return to stability; a healthier housing market,” he said.

Since the real estate bubble popped in late 2005, price declines have been particularly steep in lower-priced and newly built neighborhoods, where many owners used low-cost, sub-prime mortgages to buy.

Foreclosures up 55% from July-07

Foreclosures up 55% from July-07 to July-08

The number of properties in some form of foreclosure filing in July was up 55 percent from a year ago and up 8 percent from June, as it was reported today.

The private company RealtyTrac said 272,171 properties were in filings for default notices, auction sale notices and bank repossessions.

The number of repossessions meanwhile hit 77,000 for the month, bringing the total number of homes for sale in the US which are repossessed to 17 per cent.

Nevada continued to have the highest foreclosure rate in July, the company said, at one in every 106 households. That rate was up 97 percent from a year ago and up 15 percent from June.

California was next at one in every 182 properties, and Florida was third at one in every 186 properties. Arizona, Ohio, Georgia, Michigan, Colorado, Utah and Virginia filled out the 10 worst states.

Missouri was 18th worst, at a rate of one in 747 properties, up nearly 73 percent from a year ago. Kansas was 37th, at one in 1,784, up 57 percent from a year ago.

James Saccacio, chief executive of the California-based research company, said in a statement: “The sharp rise in REOs, combined with slow sales, has resulted in a bloated inventory of bank-owned properties for sale

“Bank repossessions, or REOs, continued to be the fastest growing segment of foreclosure activity in July.”

So the United States is experiencing the highest rate of foreclosures which are revealed to be in Florida and California.

I am adding the comment under this post which was sent by Yanni Raz:

How Can You Save Your Property From Foreclosure

Mortgage insurance companies as we all know are helping banks and homeowners to avoid foreclosures.
Surprisingly as it sounds these mortgage insurance companies will even put some of their own money to help homeowners to make the payments for their homes.

1.Why do mortgage insurance companies willing to put their own money?
2.How can we know if we’re insured by these insurance companies?
3.Why these big corporations help banks and homeowners?
4.Will the insurance companies help the homeowners also if they’re not insured?

Lots of homeowners don’t have a lot of knowledge about their loans. Some people don’t even know their own Interest rate.
So I will assume that most of you out there will not understand the term pmi (private mortgage insurance).

What is pmi?

pmi is a policy which the bank act as the beneficiary and the borrower makes a monthly payment for the insurance of course.

The pmi(private mortgage insurance) protects the banks in bad times like today, when a lot of homes are foreclosing or selling through a short sale and the banks are loosing a lot of money.

When do you pay pmi?

Normally if you buy a house or refinance your existing house there will be a very important issue that can also prevent you from qualifying, and that is the ltv (loan to value).
If you take a loan with more then 80% ltv (loan to value) then you will probably will pay pmi.

Some of us will remember great times that we could loan more then 80% of the value of the home but then we also had to take a second mortgage loan or an equity Line of credit loan of 10% or even 20%, but those days are long over.

Today banks will want you to put more down so you’re not going to let go from the house and also so the banks will have a pmi(private mortgage insurance)to be protected.

I know that it sounds that the insurance companies are just there to protect the banks.

That’s not true they’re helping homeowners too, as I said before that they will help you with payments and they will also partner with credit counseling agencies to help homeowners with their payments.

Insurance companies will try contacting you through phone or they will be mailing you letters to refer you to different websites so you can get an idea what to do next with your home and save your home from a foreclosure.

Mainly what you really need to do if you have any problem with your house and you’re negative with your payments first you should contact your lender.

Your lender will guide you what to do next.

I hope this information will be useful. Please do comment