U.S. foreclosure activity in July increased 8 percent from the previous month and 55 percent from July 2007, according to the RealtyTrac Foreclosure Market Report released today.

View state-by-state details.

Bank Repossessions (REOs) accounted for 28 percent of all activity during the month, while defaults accounted for 41 percent and auction notices accounted for 31 percent. That is in contrast to REOs accounting for just 16 percent of all activity in July 2007, while defaults in July 2007 were still at 41 percent and auction notices were at 43 percent. This shift in percentages shows that a higher proportion of properties that enter the forecosure process are ending up repossessed by lenders.

 

Things seem to be going from bad to worse for Ed McMahon, former sidekick to Johnny Carson on “The Tonight Show” and corporate spokesman for the American Family Publisher’s sweepstakes.

The Los Angeles Times reported today that McMahon is being sued by Westmoore Lending of Huntington Beach, Calif., to collect on a $250,000 loan it made to McMahon in 2006. The loan is secured by the star’s Beverly Hills home, which went into foreclosure back in June for $644,000 owed on a $4.8 million mortgage.

In interviews with Al Roker on “The Today Show” and Larry King Live on CNN back in June, McMahon admitted that poor money management, bad investments and two divorces led to the financial dilemma he and his wife Pamela now face. Ironically, the man who used to hand out millions of dollars to other people on television now could use some of that money himself.

Filed in Los Angeles Superior Court, the lawsuit alleges that loan documents show McMahon had committed to paying $3,125 a month for the first five months and then paying off the remainder of the loan in one final payment of $253,125. Carrying a 15 percent interest rate, the balance due grew to $275,000, according to the Associated Press.

McMahon’s Beverly Hills home remains on the market at $4.6 million.

The results of a new survey released today by the Federal Reserve confirms what many people looking to buy or refinance already know — it’s hard to get approved for a loan.

The Fed’s July 2008 Senior Loan Officer Opinion Survey, which covered 52 domestic banks and 21 U.S. branches and agencies of foreign banks, found that 75 percent of those banks had tightened lending standards for prime loans since the previous survey, in April. Standards were tightened even more for “nontraditional” loans — 85 percent of banks that originate that type of loan said they had tightened standards on those loans. And six out of seven banks that originate subprime loans said they had tightened lending standards on those loans in the last three months.

The outlook for the remainder of the year isn’t much friendlier for easy financing. About 45 percent of loan officers from domestic banks said they expected their banks to tighten lending standards on prime home loans in the second half of they year, and about 65 percent said they expected standards on nontraditional and subprime loans to continue to tighten during the same time period.

It’s good that banks are adopting more stringent lending guidelines than the virtually nonexistent ones they employed with the 2005 to 2007 vintage mortgages —  which turned out to be highly susceptible to foreclosure. But could the banks be overreacting with these tighter lending standards and thereby prolonging the housing slump? Or is this exactly what the market needs to ensure that home prices stay grounded in the reality of what homebuyers can truly afford?

Did anyone really expect anything else out of Ben Bernanke and the other 10 members of the Federal Open Market Committee this time around? No, they didn’t. And they got just what they expected.

As predicted by everyone from Wall Street analysts and TV commentators, to probably the corner grocery store clerk down the street, the Federal Reserve held steadfast at their meeting Tuesday and kept its short term federal funds rate at 2 percent.

The official statement released by the Committee Tuesday had a cautionary tone, noting that inflation remains a key concern as labor markets continue to soften and the housing market “contraction” remains ongoing.

All told, these concerns — along with energy prices — are going to weigh on the economy for the next few quarters. Reading between the lines, that could mean that the Fed doesn’t see the economy making any type of significant recovery until at least the second half of 2009.

Just like the Fed is doing…again…we’ll all have to just sit tight and wait and see.

In the meantime, the Labor Dept. just released its weekly report on jobless claims, noting that new claims for jobless benefits rose last week to the highest level seen in more than six years, according to the Associated Press.

What does all this mean for prospective home buyers and real estate investors looking to take advantage of present market conditions? It means that we haven’t seen a market as ripe as this one since the early 1990s, with such a vast selection of properties available to purchase at significant discounts.

Mention the word “foreclosure” and most investors conjure up images of run-down and dilapidated properties located in undesirable neighborhoods.

But now some of the ritzy residences are increasingly falling into foreclosure. As more and more well-heeled homeowners default on their mortgages and property taxes, homebuyers can scoop up these tony trophy properties.

Consider these posh properties with all the grandeur and sophistication you deserve.

11000 South Ocean Blvd.
Manalapan, Fla. 33462
Auction Price:   $40,000,000
SOLD: $22,000,000

If you think eight-figure foreclosures never happen — think again! In February, Veronica Hearst’s Manalapan trophy property — one of the most expensive foreclosures ever recorded — was sold at the Palm Beach County courthouse steps for an astounding $22 million.

Twenty two million dollars, however, doesn’t seem like a bad deal when you consider that the stately Villa Venezio in Palm Beach, Fla., comes complete with a rich history too. Sitting on 3.5 glorious acres of beachfront property, this stately 32,000 square foot (approx.) trophy mansion — complete with 52-bedrooms and 12 full bathrooms — was originally built in 1929 for the grandson of Cornelius Vanderbilt.

19 Dennis Lane
Mission Viejo, CA 92694
Cur. List Price: $1,600,000

If an eight-figure foreclosure is out of your price range, maybe this Mission Viejo, Calif. bank-owned repo will fit your budget. This 4,500 square-foot (approx.) defaulting dream home — perched in the tony hills of Orange County — is a stately steal at $1.6 million. Loaded with all the accouterments blue bloods require, this equity-rich residence is luxury living at its best. But a jewel like this can vanish. So bring your check book, before the posh perks near the Pacific Ocean disappears.

6841 Derby Circle
Huntington Beach, CA  92648
Cur. List Price: $1,750,000

Here’s another seven figure foreclosure fit for a queen. Royals will revel at this distressed damsel near the beach. Located near the ritzy Seacliff Country Club in Huntington Beach, Calif., this double-decker chalet has five spacious bedrooms and lovely four baths. For a mere $1.7 million, you can spread out all your toys in this 4,300 square foot (approx.) repo.

39497 N. 104th Street
Scottsdale, AZ 85262
Cur. List Price: $1,250,000

If ocean breezes aren’t your thing, maybe this Arizona gem will fit your budget. Scottsdale, Ariz., is one of the most popular and exclusive desert communities in the nation. Here’s a bank-owned mountain escape that includes a $320,000 golf membership. Sitting on a palatial half acre lot, this 3,756 square foot (approx.) home offers breathtaking views of the city and mountains. But hurry, somebody will sink this little birdie if you don’t tee off soon.

16 Artisan Street
Ladera Ranch, CA 92694
Cur. List Price: $984,900

Still out of your price range? Maybe you can bag this magnificent mansion for six figures. For a mere $984,900 — about what Veronica Hearst’s pays for a European vacation — you could snag this Ladera Ranch mansion in the big, bad O.C. Be the first in your neighborhood to brag about how you stole this flamboyant foreclosure from the bank. This swanky short sale — perched in posh planned community — has all the bells and whistles needed to live the racy O.C. lifestyle that only the Housewife of Orange County can live. But this polished pad won’t last long. Honey, where’s the checkbook?

ForeclosurePulse found these ritzy repos on RealtyTrac. Learn more about the best places to find flamboyant foreclosures by joining RealtyTrac.

What are you waiting for? Sign up for a FREE RealtyTrac trial today.

After listening to NBC Senior Correspondent Lisa Myers’ story on The Today Show last week, I am more convinced than ever that, as the old saying goes, people want their cake and to eat it too!

In my personal opinion*, that’s not going to happen in this economic downturn.

As Myers points out in her story, the new housing bill signed by President Bush earlier in the week will help a fraction of the families facing foreclosure. As the mortgage expert she interviewed projected, of the 3 million homeowners currently in distress in this country, this bill will help out maybe 10 to 20 percent.

Personally, what irked me the most about the piece was a couple she interviewed who are facing foreclosure and are obviously expecting this bill to be a personal bailout by the federal government. As Bush so aptly put it last year, it is NOT the federal government’s job to bail out people who bought a home they could not afford and had no business purchasing in the first place.

Both spouses work in this family with two children. As for dad, in his sound bite he said they can’t lose the house and be on the street with two kids. Well, I have bad news for him. They would not be the first people in America stuck in that situation. Whose fault is that? Let’s see…maybe…the government? I don’t think so.

Although, as Myers pointed out, this family won’t qualify for the program under the new housing bill anyway because they don’t fit the preferred profile: people who, but for their mortgage, are in “reasonably good financial shape.”

In this particular case, mom and dad not only bought a home, but then they loaded up with substantial credit card debt and car loans. I guess that’s the government’s fault too though.

As for the wife, in her sound bite she said, “It seems like no one’s there to help you out.” Now, granted that television news crews are infamous for editing a story anyway they want to. Maybe she was taken out of context. I have no way of knowing.

But, standing alone, based on what she said in the piece, my answer would be that if they want help they should seek it from the same sources everyone else does — family and friends. Or, they could consolidate their debt. Or they could speak with a financial consultant or credit counseling service. But don’t expect us — the hardworking taxpayers of America — to bail them out of a situation they shouldn’t have gotten themselves into in the first place.

We all have our own financial concerns to deal with in these troubling times.

What I think is unfair is for people like me, who play by the rules and can’t afford to buy a home in the neighborhood they want to live in, should have to pay for somebody else’s mistakes. Particularly when those people cheated the system, possibly lied, and then got to enjoy the fruits of their malfeasance.

Life’s not always fair, but as another old saying goes, you made your bed now lay in it. This couple needs a reality check. The scary thing is there are so many other people out there who are just like them and don’t deserve what they have either. These people probably signed up for option ARMs and some other type of so-called “liar loans” where they either didn’t have to qualify at all, or accepted some other option in order to get into a home.

They need to dig themselves out of the financial hole they’ve dug. Otherwise, there’s always filing for bankruptcy protection, but that won’t save the house either. It only delays the inevitable.

In any case, as Myers’ story illustrates, there’s a lot of people out there in for a rude awakening when they realize that this new housing bill does not give them a pass to financial freedom.

It’s time for a reality check folks! WAKE UP!

*This is the personal opinion of the author and does not necessarily reflect the opinion of RealtyTrac management or employees.

 

Three years ago Patricia and Milton Harper received a gift courtesy of reality television. ABC’s Extreme Makeover Home Edition came to the rescue, demolishing the Harper’s old run down home with a faulty septic tank and replacing it with a 5,300 square-foot, two-story dream home in Lake City, Georgia.

When the show first aired back on February 20, 2005, the home was the largest ever built in a week by the show. The home, built with the help of 1,800 volunteers and Atlanta-based Beazer Homes, is now scheduled for public foreclosure auction on August 5.

As so many people have done, the Harpers made the unfortunate error of using the home as an ATM machine. The couple borrowed $450,000 in equity as collateral to finance Mr. Harper’s construction business, which went bust. Now the beautiful mansion with a three-car garage on Ahyoka Drive is going to be sold next week on the Clayton County courthouse steps by JPMorgan Chase Bank, according to RealtyTrac.

A published report by the Associated Press says that in addition to building the home with $450,000 worth of donated labor and materials, the partners and employees at Beazer also contributed $250,000 for the family, including scholarships for the three children and a home maintenance fund.

For its part, the ABC television network told the AP that it advises every family on the show to consult with a financial planner after receiving their new home.

Still, for a potential homebuyer or investor looking for a newer property in a suburb of Atlanta, this is probably one of those properties that will go back to the bank as an REO. Most investors won’t touch a property like this, which probably has little or no equity, since they are looking for a discounted price. And most home buyers are looking for a deal below market value. So look for a listing on the local MLS soon.

Homeowners across the country may be feeling a bit like Mel Brooks’ character from his movie “High Anxiety” now that Standard and Poor’s has released its May numbers for the S&P/Case-Shiller Home Price Indices.

In the movie, Brooks’ character nervously sweats every time he even thinks about getting into an elevator. Well, the nation’s homeowners are sweating it out now, being taken on the descending elevator ride of their lives, especially those living in markets that experienced the largest gains during the boom years and are now freefalling deep into the elevator shaft.

The S&P figures for May show declines in all 20 metro areas reported for the second straight month — nine with record lows and 10 in double digits. Home prices in its original composite 10 metro areas fell to a new record low, down 16.9 percent from a year ago, while its composite 20 metro areas also reported a record yearly decline of 15.8 percent.

Biggest decliners on a yearly basis were Las Vegas (-28.4 percent) and Miami (-28.3 percent), followed by Phoenix (-26.5 percent), Los Angeles (-24.5 percent), San Diego (-23.2 percent), San Francisco (-22.9 percent) and Tampa (-20.2 percent).

Detroit was down 17.4 percent from May 2007 to a level below where home prices stood back in January 2000.

Washington, Los Angeles, New York and Miami are highlighted in a S&P press release as the best performing markets overall since January 2000.

On a monthly basis, from April to May the worse decliners were Miami (-3.6 percent) and Las Vegas (-2.9 percent).

“The overall real estate market continued to slide in May, with the 10-City and 20-City Composites declining by 1.0 percent and 0.9 percent for the month respectively. Since August 2006 there has not been one month where we have seen overall price increases, as measured by the two Composites,” said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, in today’s release.

With home prices continuing to decline, both on a monthly and yearly basis, it stands to reason that distressed homeowners are not out of the woods yet if they need to sell their homes to escape foreclosure.

For potential homebuyers, investors and real estate professionals, it means the flow of foreclosed properties should continue into the indefinite future — at least until home prices stabilize somewhere down the abyss and reverse their direction back up the elevator shaft.

The number of properties with some sort of foreclosure action against them (default notice, auction notice, bank repossession) has consistently risen for the past eight quarters (see chart). While there have been monthly fluctuations up and down during this time period, the quarterly numbers consistently have been up quarter over quarter, and the most recent quarter was no exception, according to the U.S. Foreclosure Market Report released by RealtyTrac today.

And while this upward trend in foreclosure activity is driven largely by a few populous states with volatile housing markets, there's no doubt the pain is spilling over into many other areas across the country.

“Forty-eight of 50 states and 95 out of the nation’s 100 largest metro areas experienced year-over-year increases in foreclosure activity in the second quarter," said RealtyTrac CEO James J. Saccacio in the press release announcing the Q2 report.

State governments that have gotten past the denial stage and actively addressed the foreclosure issue seem to be reaping the benefits of such foresight. One example is Colorado, whose foreclosure rate ranked No. 1 among the states in 2006, according to RealtyTrac. Some state officials initially took issue with the numbers, which engendered an important debate on how to accurately interpret and measure foreclosure data. But ultimately state officials took action by first investigating the foreclosure data themselves and then by working to curb foreclosures. The Colorado Division of Housing set up a foreclosure hotline to help people facing foreclosure. The state government enacted new laws addressing the issue, one of which gave homeowners more time on the front end of the foreclosure process to try to work out a way to stop or avoid the foreclosure.

Colorado's efforts appear to have had an impact. The state's foreclosure rate was down to No. 5 in the second quarter thanks in part to a 15 percent decrease in activity from the previous quarter. Activity was still up on a year-over-year basis, but at a much slower pace than the increase nationwide.

Late to the party as usual, the federal government is now trying to address the foreclosure issue as part of the mammoth housing bill making its way through Congress this week. President Bush has said he will sign the bill, which would allow many homeowners facing foreclosure to refinance into lower-cost, government-backed loans. The bill also earmarks $4 billion in grants for local communities to buy up foreclosed properties that may be negatively affecting the communities. Whether this bill will actually slow or stop the trend of rising foreclosures is up for debate. We'll certainly be watching to see if the third quarter foreclosure numbers translate into a ninth straight quarterly increase.

View Q2 state data.

View Q2 MSA data.

Lights! Camera! Action!

No it’s not one of the big commercial television networks spending millions of dollars on some game show with a stupid name. Rather, it’s more of a “reality” television show.

The State of Michigan is hitting the airwaves with a cable television show of its own called “House Michigan” aimed at promoting homeownership and everything that entails.

Since January 2006 Michigan has ranked in RealtyTrac’s top 10 states with the greatest foreclosure activity in the nation, most of that time maintaining a position in the top five.

In June 2008 — the most recent monthly ranking available from RealtyTrac — the Great Lakes State ranked fifth nationally, reporting 12,025 properties with foreclosure filings, accounting for 5 percent of the nation’s total foreclosure filings for the month. With one in every 375 Michigan households receiving a foreclosure filing during the month — 1.3 times the national average — the state’s foreclosure rate ranked fifth highest among the 50 states.

With all these distressed homeowners getting into financial trouble, combined with layoffs from the auto industry, it’s understandable that the state government may want to do something to promote homeownership and to educate its citizens about the details of what owning a home really means from a practical standpoint.

In a press release distributed by the Michigan State Housing Development Authority, the goal of the show is to provide programming that will give “realistic advice to improve the quality of life for everyone and lead to vibrant cities and neighborhoods across the state.”

Everything from affordable housing and refinancing a mortgage, to avoiding foreclosures and where to go for help with homelessness and domestic violence will be topics open for discussion on the program.

With unemployment well above the national average, and average home prices continuing to deflate statewide, any information that can help struggling homeowners deal with their situation and become more informed borrowers in the process can only help in these times of financial turmoil that are affecting so many people around the country.