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  1. HUD Provides $1b to Unemployed to Prevent Foreclosures Beginning Today

    By on June 20, 2011

    The Department of Housing and Urban Development (HUD) released a press release this morning saying that the Emergency Homeonwers’ Loan Program (EHLP) to provide assistance to distressed homeowners in twenty-seven states as well as Puerto Rico.  The program has been allotted $1 billion under the Dodd-Frank regulatory reforms.

    HUD Secretary Shaun Donovan commented:

    “Through the Emergency Homeowners’ Loan Program the Obama Administration is continung our strong commitment to help keep families in their homes during tough economic times.  Working with our community partners across the nation through NeighborWorks® America, we are pleased to launch this program today in 27 states and Puerto Rico to help families keep their homes while looking for work or recovering from illness.”

    Homeowners who qualify may be able to get an interest free loan that will provide $50,000 or mortgage assistance for up to two years.  EHLP will pay a part of the distressed homeowner’s monthly payments as well as past due charges. The program is available to those who qualify in these states: Alaska, Arkansas, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming and Puerto Rico. Complete information on how to apply can be found here, or by calling 855-FIND-EHLP.

    Continue Reading…

    Category: Mortgage Rates

  2. States Consider Eliminating Distressed Homes as Comparables in Home Appraisals

    3 By on March 28, 2011
    Foreclosed and distressed properties are wreaking havoc on the housing market and home values in the United States, and a few states are attempting to change their laws to stop falling property values.  According to a report from the Appraisal Institute, four states, Illinois, Maryland, Missouri, and Nevada are pondering laws that would prohibit or greatly restrict the use of foreclosed and distressed properties as comparable sales in real estate appraisals.
    There are a couple of ways that foreclosures drag down nearby property values.  The first way is a proximity effect, where homes that are near foreclosures lose value simply due to being nearby a foreclosed property. An MIT report from last summer found that a foreclosure reduces the value of a neighboring property (within 250 feet) by 1%.  A foreclosed property usually loses 27% of its value due to the foreclosure.
    Another way that foreclosed and distressed properties affect property values is through home appraisals.  When someone is looking to sell or refinance their home, they generally need to get an appraisal on the house so the lender can verify its value.  One of the factors that an appraiser considers when determining a value is the sale price of nearby homes that are similar to the subject property (these homes are known as comparables).
    Category: Mortgage Rates

  3. Florida Foreclosure Problems and the Importance of Title Insurance

    1 By on September 30, 2010

    If you follow the housing industry at all, you’ve probably seen some of the crazy stories that have been coming out over the course of the past week or so regarding foreclosure mills in Florida as well as the suspension of foreclosures in many states by GMAC/Ally and now JP Morgan.  If you are not familiar with this story, here are some of the broad strokes:

    It seems as though there is widespread corner-cutting and possibly fraudulent behavior going on with a lot of mortgage servicers and companies who handle foreclosure processes.  A lot of this involves faulty chain-of-titles, missing documents and notes, and summonses that are never delivered or forged outright.  There are a lot of different things going on here, and others have written about them far more eloquently than I could.  Here is an excellent story by Yves Smith from Nakedcapitalism.com about the ridiculous situation going on in Florida.  Here’s something from the Florida Bar Association.  Here is Barry Ritholtz’ take on a guy whose house was foreclosed upon who didn’t even have a mortgage!  The situation prompted a letter demanding reevaluation of these processes from Representatives Congress Barney Frank, Alan Grayson, and Corrine Brown.

    To make a long story short, there are big, big problems in the mortgage processing/foreclosure servicing industry right now.  This is ridiculously sloppy work and has the potential to tie up many foreclosures and home sales in litigation for many years to come.  It is a ridiculous situation where the property rights of many are being totally ignored or sidestepped, and the victims often have little recourse.

    By this point you may be wondering what, if anything, this has to do with title insurance.  Imagine this scenario:

    Continue Reading…

    Category: Mortgage Rates

  4. Mortgage Delinquency Rate Down – Foreclosure Starts Way Up

    By on September 24, 2010

    Is it safe? Not for the housing market, it isn't.

    So mortgage delinquencies are down – sounds like a good thing, right?  Well, not really.  Delinquencies are down because foreclosure starts are up.  The highest since January according to Lender Processing Services via an article from Housingwire.  There were just over 282,000 foreclosure starts last month, which is a 1 percent increase from July and about 4 percent above the previous year.

    When foreclosure starts, that borrower is moved from the group of borrowers who are termed “delinquent” into the group of borrowers who are in foreclosure.  It is kind of similar to the way the unemployment rate goes down when unemployed people stop looking for jobs.  There aren’t less unemployed people in reality, just statisticians messing with numbers.

    So what is going on here?  It’s hard to say for sure, but for months we have been warning about imminent declines in home values following the withdrawal of government stimulus for the housing market.  We have started to see some indications that prices are indeed falling.  With nearly a quarter of borrowers with mortgages underwater on their homes, and another quarter who are very close to being underwater, it would be easy to conclude that more and more borrowers are being put in positions of negative home equity.  Negative home equity and loss of income are the major causes of foreclosure.  Price declines could lead to another wave of foreclosures, and we could be seeing the beginning of this process.

    Anecdotally, I can say from reader comments that borrowers appear to be getting angrier and angrier about the failure of mortgage modification programs (such as HAMP).  At the same time, strategic default is becoming more accepted by the American public (a recent survey said 1/3 of Americans have no issues with strategic default).  There is widespread perception that the government bailed out banks and corporations while hanging average homeowners out to dry.  If another large dip in housing values comes to pass, I would not be at all shocked to see a large increase in the number of people walking away from their homes in addition to an increase in non-voluntary defaults.

    What do you think?  Let me know in the comments section below.

    Category: Mortgage Rates

  5. More Than 12 Percent of Mortgages Nationwide Delinquent or in Foreclosure

    1 By on July 7, 2010

    I’ll keep this particular piece of bad news relatively short: Lender Processing Services reports that mortgage delinquencies were up fairly substantially last week.  Mortgage delinquencies in May increased to 9.2 percent, up 2.3 percent from the April.  This is also a 7.9 percent increase from the previous year.

    Going a little further, the nationwide foreclosure rate is 3.2 percent, meaning that more than 12 percent of mortgages are delinquent or in foreclosure.  Florida and Nevada lead the nation in non-current mortgage loans, with 22.4 percent and 21.8 percent respectively.

    Additionally, the number of delinquent loans that are “cured” (become current) is declining, meaning that fewer and fewer people who become delinquent on their mortgages are able to catch up on payments.

    None of this bodes particularly well for the future of the economy or the housing market.  Further home price declines could certainly contribute to additional foreclosures.

    Category: General

  6. Short Sales Skyrocket in Southern California

    2 By on July 7, 2010

    Some pretty stunning numbers about the Southern California housing market yesterday, courtesy of Jonathan Lansner and Jeff Collins of the Orange County Register.  Short sale transactions are up 74 percent in Southern California this year (Orange, Riverside, San Bernadino, and Los Angeles counties).

    While short sales tend to hurt property values*, increased short sales are likely a good development for an area like Southern California that saw a massive inflation in housing prices during the bubble years.  The increase in short sales serves several constructive purposes:

    • It removes housing inventory from the market, which is a key to some sort housing recovery.
    • It allows underwater home owners to shed onerous debt on houses which will take years to get back to their peak values, if they ever do.
    • The decrease in prices allows many of those who were priced out of the market in the mid-2000s the opportunity to purchase a home.

    *The most recent Case-Shiller home price index showed that the Los Angeles and San Diego markets both had 0.7 percent increases in home prices from March to April 2010.  Much of this could be due to the California Home Buyer Tax Credit goosing demand for homes.

    According to the article, there have been nearly 13,000 short sales in Southern California in the first half of 2010. As the Home Affordable Foreclosure Alternatives (HAFA) program ramps up, we can probably expect to see increased numbers of short sales across the country.  HAFA is a government program that is designed to encourage short sales.

    The high amount of short sales leads one to question if it makes more sense for a bank to accept less money than it is owed on a mortgage in a short sale versus negotiating a principle write-down with severely underwater homeowners in order to keep them in their homes.  Either way the lender is taking a loss.  What do you think about the increase in short sales?  Let us know in the comments section.

    Total mortgage is a licensed mortgage broker and lender in California.  Our California mortgage rates are among the best in the industry.

    Category: General

  7. Speculators Snapping Up Foreclosed Properties at Discount Prices

    By on July 6, 2010

    There is a new sort of land grab going on out west, and it involves foreclosed properties.  There is a fascinating article by Adam Geller of the Associated Press today about the foreclosure market in Arizona.  Many investors are snapping up foreclosed homes at bargain prices , hoping to either make money reselling the properties or renting them out.

    Right now foreclosed and distressed properties are essentially driving the housing market, comprising nearly one third of real estate sales.  Despite historically low mortgage rates, there is little new home construction, and the massive number of foreclosed properties is putting downward pressure on home prices, which many housing experts expect to decline through the remainder of the year.

    In places like Arizona, Nevada, Florida, and California, foreclosures are an especially big problem.  All these areas saw housing prices skyrocket through speculative bubbles, only to see prices collapse when the bubble burst, leaving many homeowners so far underwater that they walked away from their homes, leaving banks with massive numbers of distressed properties.  From the article:

    “At first, Doran isn’t sure what to make of today’s fifth house: 6233 S. Parkside Drive. Opening bid: $67,000.  Fresh oil stains the floor of the carport. A package from Amazon.com sits unclaimed on the step. No one answers.  It’s an open secret in Phoenix foreclosure investing that, facing a door that won’t budge, some runners simply drill the lock.  “Applicant will be required to do what it takes to get the maximum amount of information for our investors,” one bidding service stipulated in a recent ad for drivers on Craigslist. “This is not for a meek person. Must be an outgoing, forward and fearless individual.”  To Doran, whose real estate license lets him key in to some houses, the tactics of a few tar his trade unfairly. But at Parkside, the back door slides open without resistance. Whoever lived here is gone, leaving only a copy of “Dear Tooth Fairy” on a windowsill. Doran scans the kitchen.  “I’m always afraid I’m going to find a dead body in one of these,” he says, chuckling as he reaches for the refrigerator handle.  Not yet. But he has found cats and lizards floating in abandoned pools, and once, a dead puppy. A few weeks ago, at an empty house in Chandler, he found an Alaskan husky, very much alive, left behind with a bag of dog food.  At this stop, though, the biggest complications are a roof that needs replacing and the house’s size — it has just two bedrooms and a single bath, limiting its appeal.  “Somebody will buy it … for a rental,” he says”.

    It is a really fascinating article, and it is a scene that is likely replaying in many communities across the country.  Ultimately, somebody is going to have to absorb these distressed properties, or they will have to be demolished (a solution that few people want to recommend, but one that may be more practical than some of the alternatives).

    If you had a bunch of spare cash to invest, would you consider trying to buy real estate at bargain prices?  Let us know in the comments section below.

    Category: General

  8. Foreclosed Properties Driving Down Home Appraisal Values

    By on June 11, 2010

    mortgage-rates3Total Mortgage President and founder John Walsh wrote a byline article for National Mortgage Professional Magazine detailing the difficulties that many homeowners are having getting acceptable appraisal values on their homes.

    The problem lies primarily with the huge number of foreclosed and distressed properties on the market and the way in which appraisals are conducted.  The main way that an appraiser determines the value of a home is to look at like homes within one mile of the target property that have sold within the last six months.  The problem is that a large percentage of home sales are distressed homes or short sales.  These homes typically sell for a fraction of what they would sell for in a more normal market.  The predominance of these distressed properties puts downward pressure on appraised values.

    In some cases there is even a total lack of comparable data due to the low volume of home sales in many areas.  In these cases the appraiser uses a variety of methods to extrapolate the value of the home, but this is an inexact science at best.

    Many times when an appraised price comes in below the expected amount, it creates problems with financing.  It may raise the loan to value ratio of a mortgage and force a lender to purchase mortgage insurance, or it could cause a lender to decline financing altogether, putting the kibosh on the deal.

    I highly recommend clicking through to the article to read the whole thing, especially if you are a prospective home buyer or seller.

    Category: Mortgage Rates

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