06085 – Foreclosure Inventories

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

San Jose,CA – Foreclosure Outcomes

Bank of America May Lead The Way!

Image via Wikipedia

A San Francisco Times article published late last year pointed to data by foreclosureradar.com showing significant foreclosure activity by Bank of America.

Read Article here: Bank of America said to fuel big increase in California foreclosures

Related articles

• Mortgage deal means more foreclosures (money.cnn.com)

Most San Jose neighborhood values will continue to perform well in 2011 and into 2012 even with the recent negative news about Bank of America unleashing a slew of new foreclosures into California in the coming months.

Foreclosure levels will remain the same in 2012

That’s a pretty bold statement on my behalf but having just retuned from a national foreclosure convention I stand in pretty good company including the likes of Freddy Mac economists and various other national asset diposition companies who are all waiting for the foreclosure activity to increase.

The challenge over the last year has been the slow and methodical process of making sure banks are staying within the legal boundaries of the foreclosure process all brought on by the ROBO signing lawsuits. As a result the anticipated levels of foreclosiure activites are expected to stay at current levels through 2012.

What does this mean for San Jose Neighborhoods?

Neighborhoods like Willow Glen, Rose Garden, Almaden Valley, and Santana Row to name a few should continue to maintained their values while Downtown, Central San Jose, South San Jose, and the east valley will feel the affects of foreclosure activity.

Should I wait for the market to turn?

Experts at the foreclosure convention are now saying that we will continue to see the current real estate market through 2016. You have plenty of time to buy before the market sees a significant change and until then buyers will continue to find opportunities in those neighborhoods affected by foreclosures.

Related articles

• California foreclosures set to surge (Housingwire.com)

06085 – Foreclosure Inventories

Foreclosure inventories stayed steady with little change to the amount of people who defaulted on their loans(green) and even less sale activity(blue). This is the first month that showed 0% activity in REO inventory levels(red).

06085 – Foreclosure Filings

Notice of sales increased(blue) while people who received a notice of default fell slightly(green).

06085 – Foreclosure Outcomes

Cancellations fell last month reducing the amount of foreclosure postponements for people currently in default(grey). Postponements(cancellations) are a good indicator of modification and short sale activity. The number of properties going back to the banks as a result of a sale increased slightly(red).

06085 – Time to Foreclose

The average time a homeowner had before losing their home to foreclosure has continued its steady climb and is close to one year(green). Bank are taking an average of 200 days to sell properties(red).

Project Homeowner

I’m sure by now you must have heard some news about a foreclosure prevention event going on in downtown San Jose this week but do these guys really help where most people have run into decline after decline to a modification request. I can’t really say that NACA will save your home from foreclosure but what I can tell you is what I have seen in my own experience with Project Homeowner.

Project Homeowner

A few years ago the Department of Real Estate and CHASE got together to create a traveling foreclosure prevention roadshow very similar to what you now see on a regular basis at events like the NACA one in San Jose.

• What has changed from few years ago is the investors willingness to participate in such events by allowing the borrower to modify.
• What hasn’t changed are the general guidelines of most investors and that is “Does this modification help the homeowner?”.

Project homeowner was revolutionary because it was able to bring the big lenders to the table (CHASE, Wells Fargo, Bank of America, etc…) and a few years ago lenders did not have staff on the ground to accommodate this need.

What NACA brings to the table

One of the reasons NACA has had much success nation wide is because of the media attention and I would imagine the lenders looking for an opportunity to create positive public relations impact with it’s homeowners.

Some things never change

The bottom line is this;

• If the lender owns the note(your loan) then your chances of a modification increase greatly. If an outside investor owns the note the bank must ask for investor for approval in order to modify your loan.
• Either way this scenario has not changed from past years and can dramatically increase your chances of a successful modification.

It doesn’t hurt to try

I received a call from a client over the weekend asking me if they should try to modify though NACA and may answer was “absolutely yes”. The great thing about this event is that most of the big lenders have staff to help escalate your situation to a level where the decision makers can help you get to your goal.

NACA Foreclosure Prevention infomration:

https://www.naca.com/index_main.jsp

Foreclosure Filings* have dropped over since February as shown by the Notice of Sale indicator down 32% from the previous year.

06085 – Foreclosure Outcomes

Foreclosure Outcomes* show cancellations are way up over the previous year possibly fueled by successful short sales. My own experience tells me that modifications made up a very small percentage of these cancellations. REO indicator also shows that properties are not going back to bank compared to the previous year again fueling my thought that properties are having success in short sale and modification attempts.

06085 – Foreclosure Inventories

2011 Foreclosure Inventories* have stayed steady with a steady drop in scheduled sale dates possibly fueled by modifications or short sales.

06085 – Time to Foreclose

Foreclosure Timeframes*
The interesting fact about this chart is how many months it’s taking for a bank to foreclose compared to the previous year there are clear signs that banks are moving though the foreclosure process much faster 5.97% compared to 21.66% from the previous year.

*Foreclosureradar.com

Related articles

• Santa Clara County Foreclosures, Bank Owned Homes, Short Sales (foreclosureradar.com)

06085 – Foreclosure Filings

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.

06085 – Foreclosure Outcomes

Affordable Market Hit Hardest

The chart below shows the $300,000 to $500,000 real estate market has been impacted the most in February.

06085 – By Est. Market Value

Related articles

• Santa Clara County February Home Sales Surpass Same Month Last Year (prnewswire.com)
• Realtor group seeks to ease short-sale process (sfgate.com)

As we wind down the 2010 “Year of the Short Sale” the one area that continues to challenge sellers are second lien holders who ask sellers to commit to repayment of  the deficiency(Balance of unpaid loan).

Legal Warnings

The California Association of REALTORS attorneys continue to caution sellers who are being asked to wave their legal rights as a condition of second lien holders acceptance. Second lien holders may not have the ability to obtain a legal judgement against a seller who opts for foreclosure rather than moving forward with a short sale. The concern is that while there is currently no legal precedence in a non-recourse state like california for some of these second lien holders there is a concern that over time we will see a surge in collection efforts by attornies who buy these non performing notes.

Buy Your Freedom

Second lien holders are now asking for a 10% to 20% contribution from sellers who in most cases do not have the ability to pay their way out of this responsibility. Some of you may be thinking that you will just avoid paying and wait for the negative credit to fall off. The bad news is that a collection attorney has the ability to obtain a legal judgment against you and peruse you for fourteen years. Pay now or pay later.

Lesser of two Evils

Who would you rather negotiate with? The lender/servicer of your loan or a collection company. The answer is a no brainer, your servicer/lender will work with you. Collection companies add additional fees and penalties that can make any reasonable agreement difficult to negotiate. My recommendation is that you avoid letting your loan fall ninety days past due. Lenders/servicers are now closing loans and deferring them to collection companies. You may have to continue making payments on your second until you have a short sale approval in hand to prevent your loan from going to a collection company.

Wachovia has announced they will no longer postpone a foreclosure sale date once it has been set. This directly affects our ability to assist our clients if they decide to short sale in lieu of foreclosure.

What this means to sellers

Procrastination will have dire consequences on sellers who wait until the last minute(less than two weeks) to put their house on the market as a short sale. We obviously understand that sellers want to exhaust all options before considering a short sale including a modification. Sellers should make a decision to sell no later than the filing of a notice of default on their home if the want to have the best chance of a successful short sale.

What this means to buyers

Buyers must be ready to close fast. In a recent listing I had ten offers on a home, a third of the offers were using a loan product that required a forty five day escrow. On the other hand there were other offers that were all cash or conventional(5% down payment or more). If you are considering buying a short sale you should look at the possibility that you may be asked to close in less than thirty days otherwise your chances of the seller accepting your offer are slim. Sellers are under extreme pressure to perform and as such are looking for a quick close from a committed buyer.

Other lenders are following this trend

My sources tell me we are seeing a trend and there is rumor that Bank of America is considering eliminating short sale extensions. I experienced this with Household Finance(HFC), my negotiator emphasised that there would be no extension on a short sale approval and that a sale date was set for the day after the expiration of the sort sale approval. Our seller decided to accept an offer form a buyer who was able to close in twenty one days.

Adjust your expectations or they will be adjusted for you

Short sales continue to evolve and we continue to see changes to the way servicers and investors manage properties in default. It’s clear we are witnessing a shift  in the flexibility we will receive when it comes to negotiating with servicers and investors and it appears as though they are now willing to cut there losses and move on.

Mark and Susan are among the growing number of homeowners who go to sleep at night knowing that their home is under water. In the case of Mark and Susan they bought their home for $350,000 in 2006 and are now watching homes twice the size of theirs selling in the neighborhood for $150,000.

Frustration and reality for California homeowners

The frustration for Mark is knowing that the government is providing assistance to first time home buyers and people who have decided to stop making payments on their mortgage. “We did everything right and could just let our house go into foreclosure like most homeowners in our position but I can’t see myself doing that”.

Mark is referring to the growing number of homeowners opting to either walk away or in some cases buy another home at a lower price then simply stop making payments on the first home letting it go into foreclosure. Most of Mark and Susan’s neighbors have  done exactly that and yet they continue to fight the temptation of following suit.

Mark also asked me how many homeowners were on the verge of default.

My response to Mark’s question was to share a statistic I recently read from the California Association of REALTORS showing the long run delinquency average of 4 percent increased to just under 9.2 percent. Foreclosure long run average was still relatively low at 5.2 percent.

9o percent of California mortgages were  still being paid on time in the first quarter of 2009.

Mark was surprised when he heard this statistic but it was no real comfort to him knowing that his situation seemed hopeless.

Is there anyone out there who can help?

“Why doesn’t the government help homeowners like us who have done everything right?” asked mark. “Give us a tax credit or provide a little incentive or relief by allowing us to modify our rate, anything to reward us for doing the right thing”.

I shared statistics, talked about legislation regarding tax relief laws for foreclosed homeowners, and just listened.

At the end of our conversation I realized that I didn’t have the answer for  Mark and Susan. All these nice people want is for someone to acknowledge their frustration and to let our legislators know they exist.

Mark and Susan are among the homeowners in this country who want to do the right thing.