Posts Tagged ‘Foreclosed Homes’
Vacant Homes Will Drown Housing Recovery
A new study found, "foreclosed homes go through more than a year of very high vacancy rates following the auction and are substantially more likely to be vacant up to 60 months after the foreclosure."
Pros & Cons of the Foreclosure Freeze
Many states in America were struck when orders of foreclosure freeze were released. On Friday, Bank of America announced to the world about their plans of halting all foreclosure sales nationwide. This, according to many news websites is the aftermath of revelations by so-called "robo-signers.'' Many popular lending companies like JPMorgan Chase, PNC and GMAC have also suspended their foreclosure operations as well as Fannie Mae foreclosure sales. Together, these lenders own more than 3,000 properties for sale in Florida alone. So what will happen with this foreclosure freeze? Halting the foreclosure sales means the bank will continue to bear the costs of maintaining properties it has reclaimed, and won't be able to cash in on bank-owned sales, which move relatively quickly and often above asking prices. The already hurting housing market will most likely see a record setting low fourth quarter for sales since foreclosure sales make up more than 25% of the homes sold in Florida. When you look at it closely, the freeze could actually benefit both homeowners and the housing market. Homeowners facing foreclosure will have extra time to stay in their home while the effects of robo-signing are figured out and fixed. Prices might stabilize because so many homes are penned up. People trying to buy these foreclosed homes will have to wait out the freeze or find another home if they are in a rush to move in. Click here for a free Central Florida Real Estate Market report.
JPMorgan halts 50K foreclosures for possible flaws
JPMorgan Chase has temporarily stopped foreclosing on more than 50,000 homes so it can review documents that might contain errors. JPMorgan’s move Wednesday makes it the second major company to take such action this month, underscoring a growing legal problem. The issue could stall an already overloaded foreclosure process. Still, analysts don’t expect the delays to reduce the number of foreclosures over the long run. “It will probably slow things down for a couple months while these documents are reviewed,” said Rick Sharga, a senior vice president at foreclosure listing service RealtyTrac Inc. “It won’t stop things.” But if the problems turn up at more of the largest mortgage companies, a foreclosure crisis that’s already likely to drag on for several more years could persist even longer. GMAC Mortgage LLC last week halted certain evictions and sales of foreclosed homes in 23 states to review those cases. The company said it found procedural errors in some foreclosure affidavits. After GMAC’s announcement, attorneys general in California and Connecticut told the company to stop foreclosures in their states until it proves it’s complying with state law. The Ohio attorney general this week asked judges to review GMAC foreclosure cases. And in Florida, the state attorney general is investigating four law firms, two with ties to GMAC, for allegedly providing fraudulent documents in foreclosure cases. The issue is also gaining attention on Capitol Hill. Last week, Rep. Barney Frank, D-Mass. and two other lawmakers wrote to Fannie Mae, urging the government-controlled mortgage giant to stop working with so-called “foreclosure mill” law firms under investigation for document fraud. “Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?” the lawmakers wrote. A Fannie Mae spokesman said the company is reviewing the issue. JPMorgan acknowledged Wednesday that its employees signed some affidavits about loan documents without personally verifying the files. These affidavits verify the accuracy of the loan information, including who owns the mortgage. JPMorgan spokesman Kelly said the bank believes the information in the affidavits is accurate, and that the affidavits were prepared by “appropriate personnel.” The bank asked judges not to enter judgments against homeowners facing foreclosure until it completes its review of the problem. JPMorgan expects the process to take a few weeks. The way mortgages are packaged and sold to many investors as securities can make it hard to determine who has the right to foreclose on a homeowner. In some states, lenders can foreclose quickly on delinquent mortgage borrowers. But 20 states use a lengthy court process for foreclosures. They require documents to verify information on the mortgage, including who owns it. Florida, New York, New Jersey and Illinois are the biggest states with this process. Christopher Immel, a Florida lawyer who represents homeowners, said people who already have lost homes could sue their lender, alleging errors in documents. In August, a judge in Duval County, Fla., ruled that JPMorgan could not foreclose on two homeowners. The reasoning was that Fannie Mae carried the mortgage on its books and JPMorgan Chase only collected payments on the loan. JPMorgan Chase had identified itself as the owner of the loan. More lawsuits could come soon. In May, JPMorgan employee Beth Ann Cottrell said in a deposition that she and her staff of eight signed about 18,000 legal documents a month without reviewing every file. In a similar testimony, GMAC employee Jeffrey Stephan said he signed 10,000 documents a month without personally verifying the mortgage information. “It’s very realistic to believe that this is a standard practice in how they go about foreclosures in certain states,” said Immel, whose law firm took Cottrell’s and Stephan’s depositions. Copyright 2010 The Associated Press;
Home construction jumps 10.5% in August
Home construction increased last month and applications for building permits also grew. But the gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector. Construction of new homes and apartments rose 10.5 percent in August from a month earlier to a seasonally adjusted annual rate of 598,000, the Commerce Department said Tuesday. That’s the highest level since April. Pulling the figures up was a 32 percent monthly increase in the condominium and apartment market, a small portion of the total market. Single-family homes, which represent about 80 percent of the market, grew more than 4 percent. Housing starts are up 25 percent from their bottom in April 2009, but are still down 74 percent from their peak in January 2006. Building permit applications, a sign of future activity, grew by nearly 2 percent to an annual rate of 569,000. Builders are struggling with weak demand for new homes caused by high unemployment and a glut of foreclosed homes on the market. They had benefited in the spring from federal tax credits, but those expired in April. Lennar Corp., a major builder based in Miami, said Monday the number of buyers signing agreements to purchase its homes fell 15 percent from a year ago in the three months ended August 31. “It’s been a tough summer,” said Stuart Miller, Lennar’s chief executive, on a conference call with investors Monday. “As we’ve gone into September, we’re seeing a little bit of pickup in our traffic, but that shouldn’t be cause to heave a sigh of relief at this point.” Construction activity rose 34 percent in the West and was up 22 percent in the Midwest and 7 percent in the South. However, construction fell by 24 percent in the Northeast. On Monday, the National Association of Home Builders said its monthly index of builders’ sentiment was unchanged in September at 13. The index has now been at the lowest level since March 2009 for two straight months. Copyright © 2010 The Associated Press
GMAC stops some evictions, foreclosed home sales
GMAC Mortgage LLC said Monday it halted certain evictions and sales of foreclosed homes as it corrects “a potential issue” in its foreclosure process. The action highlights what is becoming a larger problem for lenders and servicers that may have illegally driven homeowners out of their houses. The issue is threatening to clog up an already overloaded foreclosure process. Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis, foreclosure-listing firm RealtyTrac Inc. said last week. Banks have been stepping up repossessions to clear out their backlog of bad loans. GMAC, which is owned by Detroit-based Ally Financial Inc., did not identify the specific internal issue that prompted the moratorium in its statement, but it has been linked to lawsuits this year surrounding the alleged falsification of a key foreclosure document. The Florida attorney general is investigating three law firms for allegedly providing fraudulent affidavits that identify who holds the original mortgage note in foreclosure cases. In Florida and in other states, this document allows lenders to bypass a costly trial and proceed with a foreclosure. Two of the three firms being investigated – the Law Office of Marshall C. Watson and the Law Offices of David J. Stern PA – have represented GMAC in foreclosure proceedings. And the person who signed many of these allegedly false affidavits was an employee of GMAC. In a deposition taken in December, GMAC employee Jeffrey Stephan said he signed 10,000 affidavits or similar documents a month without personally verifying who the mortgage holder was. That means many foreclosures could have taken place based on false documentation. Stephan could not be located for comment. “That’s hundreds of thousands of cases,” said Ice Legal PA attorney Christopher Immel who took the deposition. “And there are other people at other places who sign these kinds of documents as well.” GMAC did not address how many homeowners would be affected by its suspension of evictions and foreclosure sales. It expects the issues to be resolved within a few weeks or, at latest, by year-end. The company didn’t respond to questions beyond its statement. The issue of documenting who holds the mortgage is not unique to GMAC. Judges and lawyers nationwide are taking a second look at foreclosure affidavits. Many mortgages have been sliced up and sold to many investors as securities and that makes it harder to determine who is the ultimate mortgage holder. In August, a judge in Duval County, Fla., ruled that JPMorgan Chase could not foreclose upon two homeowners because Fannie Mae carried the mortgage on its books and JPMorgan Chase only serviced the loan. JPMorgan Chase had identified itself as the owner of the loan. Similar cases across the country are pending. The law firm that represented JPMorgan Chase in that case – Shapiro & Fishman – is the third law firm being investigated by the Florida state attorney. Copyright © 2010 The Associated Press, Janna Herron, AP business writer.
Communities to get first shot at foreclosed homes
Major mortgage lenders will now give state and local governments the right to buy foreclosed properties before they go on the market, giving them “a leg up” on speculators who have often thwarted local redevelopment efforts, Housing Secretary Shaun Donovan announced Wednesday. The First Look program will give communities a 48-hour heads up on foreclosed properties and the ability to buy them at a 1 percent discount, Donovan said. The effort is intended to help improve the $7 billion Neighborhood Stabilization Program, he said. “First Look is good for our housing market because it will bring much-needed speed” to the sale of bank-owned homes, Donovan said. Data show that vacant homes are more than three times more destructive to neighboring home values than those early in the foreclosure process. USA TODAY reported in July that more than $1 billion in Neighborhood Stabilization Program funds were unspent two years after Congress authorized the program. Short staffing and confusion over rules were partly to blame, but local governments also said lenders wouldn’t deal their foreclosed properties. Often, cities can’t move as quickly as private companies in buying homes – especially in highly visible areas or where they’re trying to assemble multiple properties in a land bank. “You can’t be successful in neighborhood stabilization unless you control all the pieces on the chess board,” said Craig Nickerson, president of the National Community Stabilization Trust, which runs the clearinghouse. The participating mortgage lenders account for 75 percent of foreclosed homes, Donovan said. They include Bank of America, Chase, Citibank, Wells Fargo and Freddie Mac. The banks won’t offer all their foreclosures. “We’re not going to run all our inventory through this engine,” said Steven Nesmith, senior vice president of Ocwen Financial Corp. He said about 20 percent will be offered to governments and non-profits. The plan might come too late to help communities involved in the first round of funding. Many have just days to write contracts or risk losing their federal funding. In all, 143 communities have less than a month to spend their federal money. If they don’t, the Department of Housing and Urban Development will freeze their unused funds – as much as $354 million nationally – and could take the money back. Palm Bay, Fla., has until Friday to spend its $5.2 million, and might fall $200,000 short. “Just with our purchasing requirements, we do not move as quickly as the private sector,” said David Watkins, the city’s growth management director. If First Look had been available from the beginning, he said, “we might be at least three or four months ahead of where we are now.” © Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Gregory Korte
Tenants of foreclosed homes often unsure of options
Erin Kennedy-Florez was 10 months into a one-year lease on a home in Richmond, Calif., when she found a notice on her door saying the home was being foreclosed. She said she called her landlord, who told her that he was trying to refinance the house and to keep paying him rent. “I was paying the rent, but he was not paying the mortgage,” Kennedy-Florez said. Soon after, the house went into foreclosure, and Kennedy-Florez immediately heard from a law firm representing Freddie Mac, the federal real estate lending agency that held the note on the home. “I had to decide whether I still wanted to be living there while they were showing it (to potential buyers),” she said. Kennedy-Florez’s situation reflects a problem that tenants rights’ groups say has been flying under the radar since the home foreclosure crisis began in 2008. They say thousands of renters have lost security deposits, paid rent to former landlords who no longer owned the house, and agreed to move on short notice because they didn’t know their rights. Kennedy-Florez accepted a cash settlement to move three weeks after the foreclosure in November 2009. She received the check the day she moved out but struggled to come up with the security deposit for a new rental in El Cerrito, Calif. The landlord still owed her a $3,200 security deposit and has been paying it back in $100 and $200 installments, she said. “I jumped at the first place I could find,” she said. “I’m hoping this place isn’t shaky, too.” Kennedy-Florez’s former landlord said the home had been foreclosed but that he had paid back the security deposit in full. He did not want to be named because of privacy concerns. Some of foreclosure situations probably have been resolved to the satisfaction of landlords and renters alike, said Gabe Treves, program coordinator with rights group Tenants Together, which is based in San Francisco. But Treves said his agency has helped 3,000 renters squeezed between landlords who are behind on their mortgage payments and lenders trying to recover their investments. “The vast majority of the tenants we talk to are having their rights violated,” Treves said. “Banks are being very aggressive in trying to get the tenants out, because they are stuck on the idea that if tenants vacate the home that they can sell it.” Wells Fargo Bank is committed to following all rules that protect tenants who are living in foreclosures, spokesman Jason Menke said. At the same time, Wells Fargo is in the business of lending money for home purchases, not in managing rentals, he said. “Generally, it’s our object to get a new owner into the house as quickly as possible,” Menke said. “It’s in our best interest and that of the community to return properties to the market.” California Attorney General Jerry Brown launched an investigation into the issue last month, partly in response to the Tenants Together report. Brown sent a letter in June to California banks, lenders, investors and law firms asking them to explain their procedures for dealing with tenants in foreclosed properties in an effort to find out whether laws are being broken. Tenants are protected by a 2009 federal law that allows them to stay in their units for 90 days after a foreclosure notice is posted, but they have other rights as well: • Renters can insist on staying in their units until the end of their leases, except when the new owner of a single-family home wants to move in. • They can require banks and their agents to put all communication in writing. • They are not required to take cash incentives to move out before the law requires. • Harassment, such as changing locks without a court order, entering the home without permission or shutting off utilities, is illegal. Wells Fargo sends tenants a letter outlining their legal options if it forecloses on the house where they live, Menke said. The bank often offers cash incentives for tenants to move out before the three-month period has passed. The bank also honors lease agreements as long as the tenant has a copy of the lease. But if the bank sells the house, tenants have 90 days from the sale to move, said Wells Fargo spokeswoman Mary Berg. “If the new owner wants to move in, then the tenant is no longer protected unless the new buyer decides to keep the renters there,” Berg said. Copyright © 2010 Los Angeles Times
Habitat for Humanity rehabbing foreclosed homes
Long known for building homes from scratch for the needy, Habitat for Humanity has begun doing rehab work on the nation’s growing inventory of foreclosed houses. With funding from the federal government, Habitat and other local not-for-profit contractors are buying up and remodeling foreclosed properties in Broward and Palm Beach counties. A partnership with the cities of Sunrise, Hallandale and North Lauderdale has allowed Habitat to acquire and rehabilitate 22 foreclosed homes, said Jason Crush, executive director of Habitat of Humanity of Broward County. Funding comes largely from the Neighborhood Stabilization Program, which is underwritten by the Department of Housing and Urban Development and aims to help areas hurt by foreclosed and abandoned properties. Sunrise Mayor Roger Wishner noticed many homes in Sunrise that are neglected. “It’s a great concern, that really hurts a neighborhood,” he said. Wishner said that allowing Habitat to use some of the money from the stabilization grant has enabled the city to save 20 to 25 percent in administration costs – money, he said, that can go to rehabilitating homes. Habitat, founded in 1976, uses volunteer labor and “sweat equity” from owners to reduce construction or rehab costs. Crush said that after the houses are remodeled, families waiting for placement within the program will be able to move in. Deidre Johnson, 38, of Lauderhill, is a single mother of a 14-year-old son and is living with her brother. She is currently working off the sweat equity of her home, a phase where the future homeowner accumulates credit by volunteering 200 to 500 hours on Habitat projects. “Words cannot express it ... I am blessed,” Johnson said referring to the chance of owning a home. “I just want to call a home ‘my home.’” She has been involved with the program since March and could be placed in one of the rehabbed homes after her requirements are met. Habitat Broward pays an average of $75,000 for a foreclosed property, Crush said, and puts another $40,000 into a complete rehabilitation. Volunteers began working on the first foreclosed property, on Southwest 19th Manor in North Lauderdale, on July 31. The home’s interior will be completely remodeled, and it will have a renovated roof and back porch, said site supervisor Mark Chatlos. He expects the remodeling of the home to be finished in three months. The home, which has been vacant for two years, posed a safety risk to the local neighborhood and reduced property values for other houses on the block, said Christi Rice, spokeswoman for Habitat Broward. “Our goal is to turn it into a safe, affordable home for one of our families, while at the same time helping to improve the entire surrounding neighborhood,” Rice said. In South Florida, nearly 50,000 properties are expected to go through foreclosure this year, part of a group of more than 1 million nationwide. Habitat for Humanity of North Palm Beach will also be remodeling foreclosed homes as part of a consortium led by the Lake Worth Community Redevelopment Agency, said Don Kula, construction manager for Habitat Palm Beach. The Lake Worth CRA leads a program of 20 nonprofit organizations with the goal of improving 130 properties in three years as stipulated by a $23.2 million stabilization grant it received earlier this year, said Mike McManaman, an administrator for the Lake Worth CRA. The goal of the grant money is to put mid-income families in homes and to put foreclosed properties back on the tax roll, he said. Kula said he expects Habitat Palm Beach will remodel 30 homes as part of the program and will begin renovations as soon as the Lake Worth CRA begins closing on the properties. He said construction will be up and running this quarter. Aside from remodeling foreclosed properties, the organization will extend its services to the property’s surrounding neighbors. Volunteers will be available to help neighbors with different types of exterior renovations such as painting the house or fixing a broken front door, Kula said. He added that at most, neighbors seeking help would have to pay the cost of the materials. Adopt-a-Family of the Palm Beaches is also working with the Lake Worth CRA. The group expects to remodel 50 homes, half being for ownership and the other half being for rental, said CEO Wendy Tippett. “This will provide a great pool for low-income folks to have safe housing,” she said. Crush said that Habitat has enough vacant land to build 35 single-family homes, but going forward it will mainly rehabilitate existing properties due to the lack of available of empty land in Broward County. “We’ve land banked enough for the next couple of years, but we are going to have to do rehabs,” said Crush. Crush added that the process for placing families has had to speed up due to the deadlines imposed by HUD through the grant. In the future, families will be placed at a normal pace in either a new home or a rehabilitated home. As the sub-prime mortgage crisis shackled commercial builders, Habitat for Humanity for the first time became one of the 10 largest contractors nationwide, joining names such as Lennar Corp. and Pulte Homes. It closed 5,294 sales in 2009, ranking it eighth in Builder magazine’s top 100 list. Crush said he thinks that future homeowners will take well to the rehabilitated properties. “ are happy to be in a situation where they can live in the same place, and they can take ownership and have pride in that ownership,” he said. Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Jorge L. Valens. Distributed by McClatchy-Tribune Information Services.
Inventory of homes for sale shrinks in South Florida
The number of homes and condominiums for sale across South Florida has steadily declined over the past two years, an encouraging sign for the region’s battered housing market. Still, industry observers worry about a sizable “shadow inventory” of foreclosed homes that could complicate any real estate recovery. Broward County had 19,869 properties on the market in July, down 35 percent from July 2008, according to a multiple listing service report compiled by the Keyes Co. Palm Beach County’s inventory of homes and condos slid 31 percent to 23,947 during the same period. The supply of new homes being built in the two counties also has decreased sharply in the past two years, said Brad Hunter of the Metrostudy research firm in Palm Beach Gardens. In 2005, sellers rushed to list their homes, hoping to fetch record prices during the housing boom. But the frenzy led to a collapse and prices plummeted. Thousands of foreclosures and short sales have clogged the market ever since, giving buyers plenty of choices and little reason to pay top dollar. “You won’t get price appreciation until you get the inventory in balance,” said Mike Pappas, president of Keyes. “We’re making great strides.” Declines in homes for sale already have helped stabilize prices recently. The median price in Broward rose 7 percent during April, May and June to $209,800 from a year ago, the Florida Realtors said Wednesday. Palm Beach County’s median increased at the beginning of the year but dipped 2 percent in the second quarter to $235,500. Pappas said his firm is handling fewer transactions involving foreclosed homes, and he thinks that’s an indication the foreclosure market has peaked. But some analysts disagree, pointing to a recent surge in homes repossessed by lenders that is pushing inventory levels higher in recent months. Banks are on pace to take back nearly 50,000 properties in Palm Beach, Broward and Miami-Dade counties this year, according to CondoVultures.com, a real estate consulting firm. Many lenders are careful to hold off listing those properties for sale all at once to prevent widespread price declines. Sean Snaith, an economist at the University of Central Florida, expects more foreclosures to result from homeowners losing their jobs. And he said the sagging labor market likely will discourage potential homebuyers. “You have to have a healthy labor market as a foundation for a healthy housing market,” Snaith said. Another concern is the expiration of the federal homebuyer tax credits. Buyers who signed contracts by April 30 and close by the end of September are eligible for the $8,000 and $6,500 tax rebates. But people who put homes under contract after April 30 don’t qualify. While pending sales still are robust, demand for homes is expected to wane in the second half of the year. Fewer sales would keep the supply of homes elevated and ultimately hurt pricing, said Chris Lafakis, an economist covering Florida for Moody’s Economy.com in West Chester, Pa. “Our forecast is that ... demand won’t be strong enough to work off the excess inventory fast enough to stave off future price declines,” Lafakis said. “But by this time next year, the worst of the declines will be over.” Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.
Housing construction rises 1.7 percent in July
New home construction edged up slightly in July but applications for building permits tumbled to the lowest point in 14 months, a sign of continued stress in housing. Construction of new homes and apartments rose 1.7 percent in July, the Commerce Department reported Tuesday. Still, applications for building permits, considered a good sign of future activity, fell 3.1 percent. A rebound in housing is considered critical for a sustained economic recovery. But builders continue to struggle with weak demand for new homes caused by high unemployment and a glut of foreclosed homes on the market. The July increase in housing construction pushed total activity to a seasonally adjusted annual rate of 546,000 units. Building activity in June was weaker than first reported. It fell 8.7 percent to an annual rate of 537,000 units, the slowest pace since October of last year. Housing construction got a boost earlier in the year when the government offered buyers up to $8,000 in federal tax credits. But after the incentives expired at the end of April, sales and constructions activity slumped. Driving the July increase was a 32.6 percent surge in construction of apartments and condominiums, which jumped to an annual rate of 114,000 units. The bigger single-family sector declined 4.2 percent, falling to an annual rate of 432,000 units. The drop in building permits left applications for new construction at a seasonally adjusted annual rate of 565,000, the slowest pace since May 2009. Construction activity surged 30.5 percent in the Northeast and was up 10.7 percent in the Midwest. However, construction fell 6.3 percent in the South and was flat in the West. In advance of the report on housing starts, the National Association of Home Builders reported Monday that its monthly index of builder sentiment dropped to 13 in August. That was the lowest reading in 17 months. Readings below 50 indicate negative sentiment about the housing market. The last time builders’ index was above 50 was in April 2006. Builders say consumers remain worried about the weak economic recovery and the sluggish jobs market. Among those who are buying, many are opting for deeply discounted foreclosed properties. Copyright © 2010 The Associated Press, Martin Crutsinger, AP economics writer.
