Archive | Foreclosure RSS feed for this section

How to rescue the housing market: Foreclosures!

1 Sep

By Tami Luhby August 31, 2011: 5:27 AM ET

Delaying foreclosures is hurting the housing market, experts said.

NEW YORK (CNNMoney) — If the Obama administration really wants to save the housing market, it should speed up the foreclosure process — not prolong the inevitable, experts say.

Four years into the housing crisis, the real estate market is still teetering on the edge. The Obama administration has tried one program after another to stem the tide of foreclosures with limited success. And it is continuing to look for ways “to ease the burden on struggling homeowners,” though no new initiative is imminent, the White House said this week.

But some housing experts argue that the administration should go in a different direction than it has in the past. Instead, they say it’s time to focus on pushing many of those delinquent borrowers through the foreclosure process and putting foreclosed properties back into use.

While some of the 2.2 million loans in foreclosure can still be saved, many are too far gone, they say. Some 37% have not made a payment in more than two years, while another 34% have not made a payment in 12 to 23 months, according to Lender Processing Services.

“Loans enter into foreclosure, but never come out,” said Thomas Lawler, founder of Lawler Economic & Housing Consulting. “If this keeps going on, you have a continual overhang that never goes away.”

Delaying foreclosure increases the percentage of homeowners who’ll likely never catch up, Lawler said. In 2009, only 6% of delinquent borrowers were more than two years behind. And it means vacant properties still in limbo could fall even further into disrepair, hurting the value of the surrounding housing market.

Lawler is not the first to warn about the consequences of slowing the foreclosure process. Since the housing crisis began, several experts cautioned that foreclosure prevention efforts may only prolong the pain.

Accelerating foreclosures is tricky, however, especially since it is largely the purview of the states. But the administration could work with state officials to speed the process, especially on vacant homes, he said.

The push would come at a time when many mortgage servicers have slowed foreclosure efforts as they resolve shoddy paperwork practices. Foreclosure filings in July dropped to their lowest level since November 2007, due to processing delays and foreclosure prevention measures, according to RealtyTrac.

Getting rid of the glut

Another key to helping the housing market is facilitating the resale of homes that have already been foreclosed upon, experts said. This glut of vacant properties will continue to weigh on home values until they are sold.

“They can’t be a glacier hanging over the market with everyone waiting for it to fall,” said Jim Gaines, research economist at The Real Estate Center at Texas A&M University. “Those properties have to clear the market.”

A first step could be to sell off the foreclosed properties owned by Fannie Mae, Freddie Mac and the Federal Housing Administration. Collectively, they own 248,000 homes, about 31% of the foreclosure inventory.

The administration and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, are already looking for ways to unload these foreclosed homes. Earlier this month, they put out a request for ideas, including possible bulk sales of inventory. Also, they are interested in turning many of these properties into affordable rentals, which are sorely lacking in many communities. Experts interviewed agree this would be a good move for the market.

To entice investors to purchase these homes, as well as other foreclosed properties owned by banks, the administration could advocate for changes to the tax code, Gaines said. For instance, more favorable capital gains or depreciation rules could attract buyers.
The case against foreclosure

Of course, not everyone agrees that pushing people through the foreclosure process is the best solution to the housing crisis.

David Min, associate director for financial markets policy at the Center for American Progress, argues that there are many homeowners who can be saved if their payments can be adjusted to affordable levels or if some of their principal is forgiven. This particularly applies to those who are only a few months behind.

Foreclosure is very costly for servicers, homeowners and neighborhoods, he said.

“There are a lot of other options that make more sense” than foreclosure, Min said. “It’s just so destructive to value. We should be pulling every lever we can.”

Mediation, for instance, could help some homeowners avoid foreclosure, he said. Some 23 states and the District of Columbia currently have programs that require mortgage servicers to sit down with borrowers and discuss the homeowners’ options, though many began only in the last year. More than 70% of mediations end in a settlement, often restructuring the mortgage to a sustainable level, according to the center.

Helping those still current with their payments can also give the housing market — and the economy — a lift, albeit a somewhat marginal one, experts said.

For instance, the administration could revamp its refinancing program aimed at allowing underwater homeowners to take advantage of today’s lower interest rates. Improvements could include reducing some of the upfront costs and underwriting requirements.

Lowering borrowers’ monthly payments would give people more money to spend. And, for those on the edge, it could make it more likely that they will stay in their homes.

“It would be helpful to some borrowers with high rates,” Lawler said.

5 cities where home prices will rise this year – New York Made the List

11 Jul

July 8, 2011, 12:27 p.m. EDT
5 cities where home prices will rise this year
In a surprising twist, a Florida housing market makes the list

By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) — Despite recent price improvements nationally, only five markets in the country are expected to see home-price gains for the remainder of 2011: Washington, New York, Orlando, Dallas and San Francisco.

That’s right, Orlando, Fla., where prices have fallen 63% from their peak.

How to get your house a TV makeover
Vern Yip, interior designer and star of several TV home improvement shows, tells MarketWatch’s Amy Hoak about his latest design ideas and how to get your house on a TV makeover show.

More home-buying advice
• Top 10 cities for foreclosures
• The 6 must-have spaces in your next home
• Top tricks to sell your home if all else fails
• Five red flags when buying short-sale homes
• The retirement houses of tomorrow
Mortgages
• New mortgage fees mean costlier loans
• A 15-year mortgage isn’t for everyone
• More homeowners opt to quit paying mortgage
• Refinance in less than year? Maybe
• Refinancing mistakes to avoid
Home Video
• 10 priciest, 10 cheapest home markets
• Organize your small spaces
• Kitchens that make cooking fun
• Homes that help you as you age
• Dream kitchen on a budget
• Say goodbye to McMansions
See the entire MarketWatch Guide to Real Estate

This is according to Clear Capital’s home data index forecast, released Friday. The company provides real-estate valuation and risk assessment information for financial institutions.

Granted, prices are expected to be up only 0.7% through the remainder of the year in Orlando, said Alex Villacorta, director of research and analytics for Clear Capital.

“This is really a drop in the bucket compared with where this market has fallen,” he said. Yet it’s an encouraging sign of stability for a housing market that suffered the majority of its losses in 2008 and 2009, Villacorta added.

On a national basis, home prices are expected to fall another 2.4% for the second half of the year, according to the report.
A return to normalcy?

Still, recently there have been some hopeful signs that housing is at or very near the absolute bottom, he said.

Home prices rose 0.9% in the second quarter, compared with the first quarter, following nine months of price drops, according to Clear Capital.

In the S&P/Case-Shiller home-price index of 20 cities, prices were up 0.7% in April, compared with March. Read more: U.S. home prices up for first time in eight months.

Some may argue that the increases are seasonal and prices are up because more home buyers are in the market when the winter months end, Villacorta said. But even a seasonal blip is a good sign for a housing market that has been depressed for years now.

“We haven’t seen any seasonal blip in some time, so even if it is, it is a sign that markets are returning to normalcy once again,” Villacorta said.
Struggling markets

That said, not all markets have had a strong first half of the year.

Parts of the Midwest, for example, saw significant price drops in the first half of 2011. In Detroit, prices fell nearly 20% during the six months, with prices falling an average $12,000 on a typical $62,500 home there, according to the Clear Capital report.

On a national basis, prices fell 3.2% in the first half of the year.

A separate survey from Fannie Mae, released on Thursday, showed that a growing percentage of Americans aren’t optimistic about home prices in the year ahead.

Twenty-five percent of Americans expect prices to fall during the next 12 months, up from 19% who said the same in May, according to the Fannie Mae survey of 1,000 adults. Read more: Home price outlook worsens in June.

“We see a continued lack of confidence among consumers on home prices, the ability to sell their homes, and the state of their personal finances — all of which point to housing as a continued downside risk to economic growth going forward,” said Doug Duncan, vice president and chief economist of Fannie Mae, in a news release.

Here’s a look at the lucky five home markets:
1. Washington
Washington, D.C. is one of only five regions in the U.S where home-price trends are expected to improve during the rest of 2011.
2. New York
Home price trends in the northeast are expected to decline 0.8% overall, but in New York, above, real-estate prices should rise.
3. Orlando
The second half of 2011 could be good for hard-hit Orlando, Fla., where prices for homes and condominiums like this could rise by as much as 2%.
4. Dallas
A balance between prices and inventory could help support prices for homes like this one, for sale in Dallas.
5. San Francisco
San Francisco’s one of only five cities nationwide where home price trends will likely improve during the remainder of the year.

Copyright © 2011 MarketWatch, Inc. All rights reserved.
By using this site, you agree to the Terms of Service and Privacy Policy.

Intraday Data provided by SIX Telekurs and subject to terms of use. Historical and current end-of-day data provided by SIX Telekurs. Intraday data delayed per exchange requirements. Dow Jones Indexes (SM) from Dow Jones & Company, Inc. All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More information on NASDAQ traded symbols and their current financial status. Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Dow Jones IndexesSM from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Telekurs and is at least 60-minutes delayed. All quotes are in local exchange time.

Corcoran Forced to Correct False Neighborhood Boundaries in Brooklyn

15 Jun

We missed this story last month, but better late then never in applauding our Assemblyman Hakeem Jeffries for representing his districts properly…

Residential real estate giant the Corcoran Group has been commended by King’s County Assemblyman Hakeem Jeffries for correcting its advertising practices.

Corcoran, Jeffries said in today’s statement, had been falsely stating the boundary between Prospect Heights and Crown Heights in an effort to market Crown Heights’ properties as being in the more desirable Prospect Heights neighborhood. (TheRealDeal.com)

Read the rest HERE.

Insider Secrets – Globalization’s Effect on the USA’s Economy

28 Mar

In this latest video, I respond to to viewers questions about the current job market (and lack thereof of jobs) and how the expanded globalization effects all Americans as well as what you can do to enhance your attractiveness to employers.

Have your own questions that you want answered? Submit them and and get valuable financial advice by emailing me at Heru@Insidersgroup.com or to my Twitter page – twitter.com/HeruNekhet

Heru Nekhet
President, Insiders Group Inc
www.InsidersGroup.com