Forclosureradar.com posted its most recent findings today indicating that Bank Owned inventory continues to tighten. Furthermore the report indicates that California is among the high foreclosure activity states that is seeing a slowdown in foreclosure inventories. Santa Clara County bank owned inventories have slipped to a new low of 1939 for February 2012 as compared to the previous year.
Bank Owned
Bank owned activity has certainly made it easier for investors to benefit from the foreclosure activity while first time home buyers have had little luck in competing with investors to pick up these opportunities. The map below shows the bank owned inventory as of today for the City of San Jose alone. There are more than 7,000 properties that are 90 days or more in the foreclosure process for Santa Clara County.
Impact on your home search
For this reason I continue to think that short sales are the best opportunity for patient home buyers who want a good deal and are willing to work within the constraints of short sale timelines.
Relates article:The Foreclosure Report – February 2012
Pilot could open the door for more
The thought of a bank or investor willing to write off a portion of your mortgage can be very attractive but it does come with it’s challenges. Over the past four years there have been attempts to have principal reduction included in modifications and up to now there have been a few clients that I am aware of to have received this opportunity.
Most have had loan amounts under the conforming amount of $417,000. My concern with this decision by Bank of America is for homeowners who have made payments on time. How are they going to feel knowing their neighbor received a principal write down? The taxpayer is most likely going to carry the burden of this move towards principal reduction. This may also be the beginning for future programs but will they make a significant impact in our community?
Santa Clara County may not have an opportunity
The conforming loan amount makes it easy for Fannie Mae or Freddy Mac to offer this in most cases. Bank of America is a servicer, they don’t own the paper on the loans they service. Fannie and Freddy inventory is primarily located in areas where homes sold under the conforming loan amount. Santa Clara County would most likely not see much activity from this pilot program.
“The program will be funded from the $699.6 million the California Housing Finance Agency received from Treasury Department‘s Hardest Hit Fund last year. A spokesperson for the CalHFA said there is no set amount of loans BofA is targeting, but the bank will be soliciting eligible homeowners soon.”
Related Article: Bank of America set to write down principal on California mortgages (Housingwire)
Affordable housing is on the chopping block while much attention is directed towards the state deficit and Governer Brown looks for ways to bring spending under control.
I wanted to bring this to your attention before the decision by our state legislature on the budget is finalized. Redevelopment agency funds are now at stake and this really affects the ability for many people to become home owners in Santa Clara County.
- The question is should we stop affordable housing in our area and focus more on rental property housing?
- Does this eliminate home ownership for families who want to have a place of their own in San Jose?
- Does this also create a void for housing programs that can’t be reinstated?
The Mercury News wrote an article that addresses this problem.
“After federal funds, the money from the redevelopment agencies is the second-biggest source of funds in California for such housing. Since San Jose created its housing department in 1988, the city has spent $834 million building 21,702 units, with an additional $3.2 billion coming from private investors.”
Foreclosure Radar reports a drop in Notice of Default(NOD) filings from this time last year. The data supports our recent experience between investors and our clients who are working to modify their loans or short sale before a NOD is filed. I have been seeing more cooperation by lenders and servicers when communicating our intent ahead of time.
Foreclosure is a Reality in 2011
The federal government has provided relief programs to help those who would like to modify their loan and the Obama administration efforts continue but there have been recent attempts by federal legislators to kill HAMP. As you see in this chart investors are also throwing in the towel and my sense is that those people who haven’t made a mortgage payment in 18+ months are now going to have to come to grips with the reality that foreclosure is on the near horizon.
Cancellations have dropped indicating that modifications and/or a short sales continue to be a challenge for some homeowners. REO numbers also indicate that banks are steadily foreclosing in Santa Clara County.
Affordable Market Hit Hardest
The chart below shows the $300,000 to $500,000 real estate market has been impacted the most in February.
California took a bold step today in helping those homeowners in default by allowing taxes owed to the state to be forgiven through 2012.
As mentioned in my blog a few days ago and now the Governor says he will sign the bill as reported by the Sacramento Bee.
“Primarily, the bill affects people who had debt forgiven as they lost homes in foreclosures, short sales and deeds in lieu of foreclosure last year – and through 2012 now. Also affected: those who got loan modifications that cut the amount they owe the bank.”
Read more: http://www.sacbee.com/2010/04/09/2666095/california-wont-tax-forgiven-home.html#ixzz0kdhKy8yh
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