Who Walks Out? New Studies Shed Light on Strategic Defaults
DSNews

A nationwide rise in homeowners’ “negative equity” is convincing more people to walk out on their mortgages, even if they have favorable credit ratings and can afford to pay their loan, according to recent studies.

Two reports – one by researchers at Northwestern University and two other colleges, the other by the national credit bureau Experian and the consulting firm Oliver Wyman – are offering a clearer picture of “strategic defaultees” than has been previously available.

Kyl bill targets real-estate fraud
The Arizona Republic

New national legislation calls for setting up a $200 million fund to help states prosecute mortgage and real-estate fraud cases.

Sen. Jon Kyl, R-Ariz., is teaming with Sen. Charles Schumer, D-N.Y., to back the Fighting Real Estate Fraud Act of 2009, which would set up a grant program that local prosecutors, state attorneys general and Native American tribes could apply for to fund investigations.

Freddie Mac's house calls
The Denver Post

MCLEAN, Va. — Mortgage buyer Freddie Mac is going door to door to help delinquent borrowers avoid losing their homes.

The government-controlled agency hired Titanium Solutions to visit borrowers and encourage them to apply for loan modifications under the federal Making Home Affordable Program. The company will focus on borrowers who haven't returned letters or telephone calls about their late payments, Freddie Mac said Tuesday in a statement.

Lack of Equity Slows Federal Aid Program
The Washington Post

A federal program to allow borrowers with little or no equity in their homes to refinance is struggling to gain traction, according to government data released Tuesday, showing that only 93,070 borrowers have been helped since the effort was launched in April.

The program has encountered difficulties that government regulators had not expected, such as the limited capacity of lenders to carry it out and the large proportion of borrowers who could not initially qualify because their home values had fallen so sharply.

Rates Stay Low, But Applications Decrease in MBA Weekly Survey
MBANewsLink

Despite record-low interest rates, mortgage application activity fell by nearly 3 percent last week, the Mortgage Bankers Association said this morning in its Weekly Mortgage Applications Survey for the week ending September 25.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.94 percent from 4.97 percent, with points decreasing to 0.94 from 1.12 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year rate remains at its lowest point since May 22.

Home Prices in 20 U.S. Cities Fell Less Than Forecast
September 29, 2009, Bloomberg News

Home values in 20 U.S. metropolitan areas declined less than forecast in the year ended in July, a sign the housing slump that led to the worst recession in seven decades is abating.
The S&P/Case-Shiller home-price index fell 13.3 percent in July from a year earlier, the smallest drop in 17 months, the group said today in New York. Adjusted for seasonal variations, the gauge rose 1.2 percent from the prior month, the biggest gain since October 2005.

Have You Seen Your Realtor Standing in the Shadows?
September 28, 2009, Wall Street Journal

(This is the third installment of a series of posts on the shadow market. See Part 1, and Part 2). Last week offered a rude awakening for anyone who assumed the housing bust was over. As existing home sales slumped and home-building stocks sank, Laurie Goodman of Amherst Securities Group came out with a scary pre-Halloween report about the extent of the “shadow” housing inventory — the overhang of likely-to-be-foreclosed homes that have yet to hit the market. Various pundits have estimated the size of this shadow inventory in the millions. Ms. Goodman put a more specific estimate on it: 7 million homes. That’s well above the 5.1 million annual U.S. sales rate for previously occupied homes, as reported for August.

60 Million Mortgages May Have Fatal Flaws
September 29, 2009, RISMedia

The latest chapter in the mortgage meltdown is being written in court, as one by one, judges are putting a halt to foreclosures.  The latest was a recent Kansas Supreme Court case. In Landmark National Bank v. Kesler, the court held that a nominee company called MERS had no standing to bring a foreclosure action. Nor was Kansas the first. In August 2008, Federal Judge for the U.S. Bankruptcy Court for the District of Nevada ruled MERS had no standing. ”Indeed, the evidence is to the contrary, the Note has been sold, and the named nominee no longer has any interest in the Note.”  In September of 2008, a California Judge ruling against MERS concluded: “There is no evidence before the court as to who is the present owner of the Note. The holder of the Note must join in the motion.”

New Laws Tackle Nasty Foreclosures
September 28, 2009, LasVegasNow.com

Assembly bills 140 and 361 free up HOAs and municipalities to increase fines for brown lawn laws and mosquito-gestating pools. AB 361 goes farther by allowing HOAs to go onto property and clean up the exteriors. HOAs would foot the bill first and then place a lien against the owner or bank. Some cities and Clark County already place administrative fines on buildings, but the new legislation increases the fines to up to $1,000 a day. Both bills passed during the 2009 session by wide margins.

New-Home Sales Increased 0.7% to 429,000 Rate in August
September 25, 2009, Bloomberg News

Sales of new U.S. homes climbed in August to the highest level in almost a year as builders cut prices at a record pace to compete with the foreclosures that are flooding the market for previously owned houses. Sales increased 0.7 percent to a 429,000 annual pace, less than anticipated, figures from the Commerce Department showed today in Washington. The median price of a new house fell 9.5 percent from the prior month, the biggest decrease since records began in 1963.

Study: Housing More Affordable for ''move-Up'' Buyer
September 25, 2009, New York Times via The Associated Press

Welcome to Grayling, Mich., where residents paddle canoes through town on the winding AuSable River, ride snowmobiles on forest trails and take scenic walks among 150-year old trees at Hartwick Pines State Park. The former logging town ensconced in the woods of central Michigan owns another distinguishing trait, according to a Coldwell Banker study: Grayling's 6,500 residents live in the nation's most affordable housing market.

Housing Crash to Resume on 7 Million Foreclosures, Amherst Says
September 24, 2009, Bloomberg

The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said. The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. Assuming no other homes are on the market, it would take 1.35 years to sell the properties based on the current pace of existing-home sales, they said.  “The favorable seasonals will disappear over the coming months, and the reality of a 7 million-unit housing overhang is likely to set in,” they said.

The Foreclosure Pain May Drag on for Years
September 23, 2009, Wall Street Journal

(This is the first installment of a series of posts on the shadow market) Delays in dealing with home foreclosures are stretching out the pain for the U.S. housing market, as we reported in Wednesday’s Journal. That has stirred lots of debate over whether it is better for the nation to face the pain of millions of foreclosures immediately –  to get it over with fast — or to draw the process out over several years in hopes that the economy and housing demand will recover. In some of the former bubble markets, including Florida, the problem will be aggravated by looming defaults on option adjustable-rate mortgages (ones that start with minimal payments but require borrowers to face the music later) and high unemployment rates, says Jack McCabe, a housing analyst in Deerfield Beach, Fla. Mr. McCabe says he knows people who haven’t paid their mortgages in more than a year and are still haven’t been evicted. “Some people are saying, ‘I could pay my mortgage bill, but why?’” Mr. McCabe adds: “The distressed real estate market has become the real estate market in many locations, and that isn’t going to change for years.”

Existing Home Sales Slide Unexpectedly
September 24, 2009, CNNMoney.com

Existing home sales fell in August, snapping a four-month streak of increases, according to a report released Thursday. Sales of previously-owned homes fell 2.7% last month from July, but were up 3.4% from a year ago, said the National Association of Realtors. Sales had jumped 15.2% in the previous four months. August home sales hit a seasonally-adjusted annual rate of 5.1 million units, down from 5.24 million in July. That's well below the analyst consensus estimate of 5.35 million annual units compiled by Briefing.com. The median price of homes sold in July was just $177,700, a 12.5% year-over-year drop.

US Home Foreclosure Mediation in Jeopardy, Report Says
September 23, 2009, Reuters

A slew of state and local home foreclosure mediation programs have enormous potential to help homeowners, but most suffer from lack of industry accountability, according to a study released on Wednesday. The nonprofit National Consumer Law Center, or NCLC, in a new review of 25 foreclosure mediation programs in 14 states, warns that there is no data to confirm that foreclosure mediation programs anywhere have led to a substantial number of affordable and sustainable loan modifications. “If the programs continue to demand little or no accountability from servicers, they will likely go the way of federal efforts to control foreclosures that have failed as a result of relying on voluntary compliance by the lending industry," wrote the report's author, NCLC staff attorney Geoffrey Walsh. “It is unfortunate that the industry has so far prevailed in blocking Congressional action on court-ordered loan modifications, the one step that would level the playing field for consumers and ensure the necessary accountability from all parties."

High Anxiety Over the $8,000 Home Buyer Tax Credit
September 16, 2009, Wall Street Journal

Builders are so eager for an extension and expansion of the popular first-time home-buyer tax credit, they’re taking out ads. The National Association of Home Builders and other housing players this week launched a newspaper advertising campaign urging the extension of a program that the NAHB estimates has sparked more than 150,000 new and existing home sales this calendar year.

St. Joseph, Superagent in Real Estate
September 16, 2009, New York Times

Lord knows it’s rough out there in the housing market. Still, you had to feel bad for Patty Bonadies, digging with a spoon in the rocky soil in front of the new three-story colonial for sale at 7 Old Roaring Brook Road in search of the tiny statue of St. Joseph she had buried in hopes of helping the house sell.  With the housing market still dismal, the Catholic tradition of planting a statue of him as a way to help a house sell is going like gangbusters online, in stores selling religious goods and elsewhere — even if home sales are not.

Bank Failures Remain a Serious Problem
September 21, 2009, CNBC

Not too long ago, a rash of bank failures would have been huge news. Now it seems they are part of the “new normal.” Ninety-two banks have been closed already this year (compared with fewer than 30 for all of last year), and more than 400 are being watched closely by the government for potential problems.

Buyers Pay 3% Premium for Foreclosures
September 21, 2009, Orange County Register

Steve Thomas at Altera Real Estate in Aliso Viejo reports that the number of O.C. distressed properties (homes listed by agents as foreclosures or short sales) was 2,384 last week, -132 vs. two weeks earlier or a -5.2% change. “The average sale to list price ratio for foreclosures over the past three months is 103%,” Thomas said. “That means that, on average, foreclosures are selling for 3% above the list price. The sale to list price ratio for short sales and equity sellers is 98%. And, if there weren’t so many appraisal issues, those numbers would be even higher. Buyers in the lower ranges should not expect to offer that much less than the asking price.”