RealtyTrac

Second-quarter pre-foreclosure sales jumped 19% from the previous
quarter, suggesting more banks and distressed borrowers are
searching for efficient ways to offload properties that are near
foreclosure, RealtyTrac said. Third parties acquired 102,407
pre-foreclosures in the second quarter, while 162,680 bank-owned
homes were sold in the same period. Pre-foreclosure sales are
generally short sales and properties sold within the foreclosure
process. As for who is nabbing up distressed and bank-owned
properties, RealtyTrac said third parties acquired 265,087 homes
classified as in foreclosure or bank-owned in the second quarter.
That is up 6% from the revised first quarter figure and down 11%
from the second quarter of last year. The average sales price for
foreclosures or bank-owned properties hit $164,217 in 2Q, down
less than one percent from 1Q and 5% from the second quarter of
2010. The sales price for distressed real estate was 32% below
the average sales price of homes not in foreclosure. States with
the largest quarterly increase in pre-foreclosure home sales
included Nevada, which experienced a 43% increase; Washington
(39%), California (38%); and Texas (34%). The states with the
highest number of foreclosure sales included Nevada, Arizona and
California.

Freddie MAC dumps record #'s REO

Freddie Mac sold roughly 31,000 previously foreclosed and
repossessed homes in the first quarter, a new record for the
company as both government-sponsored enterprises shed inventory
from the end of last year. Combined, both Fannie Mae and Freddie
hold 218,000 REO properties as of the end of the first quarter,
down from roughly 234,000 at the end of 2010, according to their
filings. In the first quarter of 2011, Freddie holds roughly
65,000, compared to its larger sibling Fannie, which holds
153,000 REO in its inventory. While both GSEs made progress in
cutting down this portion of the nation's inventory of foreclosed
homes, which continues to drag down home prices, inventory has
elevated since one year ago. Both Fannie and Freddie held
163,000 properties in the first quarter of 2010, almost what
Fannie holds currently by itself. Repossessions at Freddie
increased by nearly 1,000 in the first quarter, and the holding
period for these homes averaged 191 days before being resold.
This varies significantly from state to state, especially as
servicers restart foreclosure processes in different areas of the
country. Servicers paused the process late last year to correct
procedural problems. "We expect the pace of our REO acquisitions
to increase in the remainder of 2011, in part due to the
resumption of foreclosure activity by servicers, as well as the
transition of many seriously delinquent loans to REO," Freddie
said in its financial supplement.

Cash is still King

For existing homes in March, the bulk of the market, 35% of all transactions were all-cash (that's a new record), and 22% were sales to investors; investors don't necessarily want to hold on to these properties for very long, so they may come back on the market again soon. But back to the distressed properties. While the National Association of Realtors says 40% of March sales were distressed properties (up from 39% in February and 35% a year ago), another survey from Campbell/Inside Mortgage Finance finds nearly half of all homes on the market are distressed. Short sales are 'booming' according to the same report up to nearly 20% of sales. But short sales are a double-edged sword. Yes, they're better for the banks and the sellers because there is less of a financial loss to the bank and less of a credit loss to the seller, but they make comps and appraisals even murkier than they already are.

From the Campbell/IMF report: 'Home values continue to decline, making normal sale homes worth much less than they should be. Appraisers continue to use foreclosed or distressed property sales to establish value on non-distressed listings. Further, these same appraisers will not make any adjustments for amenities, (pools, spas, solar, etc.), when compiling a normal sale vs. distressed comps. I have had at least one appraiser tell me that his firm has been given marching orders to calculate the current value based on all properties sold within the last 3 to 6 months and only use the average square footage minus 10% to establish neighborhood value comps. If this is indeed standard practice, it will take a mighty long time to realize any increases in property values,' complained an agent in Arizona. It's not just in Arizona either.

Just 25% get Foreclosure Relief

25% get mortgage relief

Just one in four of the 2.7 million homeowners who sought to participate in the Obama administration's signature mortgage assistance program have succeeded in getting their monthly payments reduced. The rest failed to qualify for the program or were disqualified after they were initially accepted into the program, according to an analysis by the Wall Street Journal of data on applicants to the program newly released by the Treasury Department. In all, about 680,000 homeowners who applied for the Home Affordable Modification Program, or HAMP, had received permanent modifications of their loans and were making timely payments or were still in the trial phase as of December. Almost 6.7 million U.S. homes were lost to foreclosure, short sales or turned back to lenders between 2000 and 2010, according to Moody's Analytics. Another 3.6 million could meet the same fate through 2013. The White House launched the HAMP program in 2009 as a broad attempt to reverse the rising number
of home foreclosures relieved by reducing families' mortgage payments, typically by lowering the interest rate and extending the term of a loan.

But the administration's strict eligibility criteria resulted in far lower participation than expected. Almost half of the applicants to the program, or about 1.3 million homeowners, were declared ineligible from the start. Applicants were most often rejected because they didn't submit the necessary paperwork, or it was lost by their mortgage company. Nearly 266,000 applicants were denied for this reason. Another 255,000 were ineligible because they were considered to have affordable mortgages, defined as less than 31% of pretax income. Borrowers also were turned down because they had loans for more than $730,000 or were not considered in danger of defaulting soon. Another 770,000 homeowners started the program but were later disqualified, most for the same paperwork and eligibility problems as the applicants turned away at the outset. Only a small number were rejected for failing to make trial payments. Homeowners in southern states had the hardest time getting into the
program and staying there. In the four-state region of Arkansas, Louisiana, Oklahoma and Texas, about 83% of applying homeowners failed to complete the loan-modification process. That proportion was 80% in the four-state region of Alabama, Kentucky, Mississippi and Tennessee.

Homeowners had the least trouble getting into the program in New England, where the rejection rate was 72%, and in western states, including Alaska, California, Hawaii, Oregon and Washington. The program has faced sharp criticism. Neil B., the departing special inspector general overseeing the program, has faulted the administration for launching it with inadequate analysis and only partially developed guidelines. This led to delays and confusion, and the program "continues to fall short of any meaningful standard of success," he said a report released in January. House Republicans have called the program a waste of money and are considering a bill this week to end the program. "In an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners," Rep. Spencer B. (R., Ala.) said last week.

Just 25% get Foreclosure Relief

25% get mortgage relief

Just one in four of the 2.7 million homeowners who sought to participate in the Obama administration's signature mortgage assistance program have succeeded in getting their monthly payments reduced. The rest failed to qualify for the program or were disqualified after they were initially accepted into the program, according to an analysis by the Wall Street Journal of data on applicants to the program newly released by the Treasury Department. In all, about 680,000 homeowners who applied for the Home Affordable Modification Program, or HAMP, had received permanent modifications of their loans and were making timely payments or were still in the trial phase as of December. Almost 6.7 million U.S. homes were lost to foreclosure, short sales or turned back to lenders between 2000 and 2010, according to Moody's Analytics. Another 3.6 million could meet the same fate through 2013. The White House launched the HAMP program in 2009 as a broad attempt to reverse the rising number
of home foreclosures relived by reducing families' mortgage payments, typically by lowering the interest rate and extending the term of a loan.

But the administration's strict eligibility criteria resulted in far lower participation than expected. Almost half of the applicants to the program, or about 1.3 million homeowners, were declared ineligible from the start. Applicants were most often rejected because they didn't submit the necessary paperwork, or it was lost by their mortgage company. Nearly 266,000 applicants were denied for this reason. Another 255,000 were ineligible because they were considered to have affordable mortgages, defined as less than 31% of pretax income. Borrowers also were turned down because they had loans for more than $730,000 or were not considered in danger of defaulting soon. Another 770,000 homeowners started the program but were later disqualified, most for the same paperwork and eligibility problems as the applicants turned away at the outset. Only a small number were rejected for failing to make trial payments. Homeowners in southern states had the hardest time getting into the
program and staying there. In the four-state region of Arkansas, Louisiana, Oklahoma and Texas, about 83% of applying homeowners failed to complete the loan-modification process. That proportion was 80% in the four-state region of Alabama, Kentucky, Mississippi and Tennessee.

Homeowners had the least trouble getting into the program in New England, where the rejection rate was 72%, and in western states, including Alaska, California, Hawaii, Oregon and Washington. The program has faced sharp criticism. Neil B., the departing special inspector general overseeing the program, has faulted the administration for launching it with inadequate analysis and only partially developed guidelines. This led to delays and confusion, and the program "continues to fall short of any meaningful standard of success," he said a report released in January. House Republicans have called the program a waste of money and are considering a bill this week to end the program. "In an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners," Rep. Spencer B. (R., Ala.) said last week.

foreclosures Up ** delinquencies Down

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MBA - foreclosures up delinquencies down

The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 8.22% of all loans outstanding as of the end of the fourth quarter of 2010, a decrease of 91 basis points from the third quarter of 2010, and a decrease of 125 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 46 basis points to 8.93% this quarter from 9.39% last quarter. The percentage of loans on which foreclosure actions were started during the fourth quarter was 1.27%, down seven basis points from last quarter and up seven basis points from one year ago. The foreclosure delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.

The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.63%, up 24 basis points from the third quarter of 2010 and up five basis points from one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.57%, a decrease of 13 basis points from last quarter, and a decrease of 110 basis points from the fourth quarter of last year. The combined percentage of loans in foreclosure or at least one payment past due was 13.56% on a non-seasonally adjusted basis, a 22 basis point decline from 13.78% last quarter.

J. Brinkman, MBA's chief economist said "These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the US. Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008. Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession. Perhaps most importantly, loans three payments (90 days) or more past due have fallen from an all-time high delinquency rate of 5.02% at the end of the first quarter of 2010 to 3.63% at the end of the fourth quarter of 2010, a drop of 139 basis points or almost 28% over the course of the year. Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible."

"While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner. Despite continued high levels of unemployment, the economy did add over 1.2 million private sector jobs during 2010 and, after remaining stubbornly high during the first half of 2010, first time claims for unemployment insurance fell during the second half of the year. Absent a significant economic reversal, the delinquency picture should continue to improve during 2011, Brinkmann said.

M. Fratatoni, MBA's vice president for single family research said "While the foreclosure starts rate fell during the fourth quarter, the percentage of loans in foreclosure rose to equal the all-time high. The foreclosure inventory rate captures loans from the point of the foreclosure referral to exit from the foreclosure process, either through a cure (perhaps through a modification), a short sale or deed in lieu, or through a foreclosure sale. As we predicted last quarter, the percentage of loans in the foreclosure process increased in the fourth quarter, largely due to the foreclosure paperwork issues that were being addressed in September and October. These issues caused a temporary halt in foreclosure sales, particularly in states with judicial foreclosure regimes, such as New Jersey, Florida, and Illinois.

With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter." "The share of loans in foreclosure in California and Florida combined was 36.0%, a decrease from 37.3% in the third quarter, and 39.3% a year ago. Over 24% of the loans in Florida are one payment or more past due or in the process of foreclosure, the highest rate in the nation, followed by Nevada at over 22%, compared to an average of 13.6% for the nation. Only eleven states saw an increase in their foreclosure start rate with Maryland seeing the largest increase."

On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types. The seasonally adjusted delinquency rate stood at 4.51% for prime fixed loans, 11.23% for prime ARM loans, 21.26% for subprime fixed loans, 25.32% for subprime ARM loans, 12.26% for FHA loans, and 6.67% for VA loans. The% of loans in foreclosure, also known as the foreclosure inventory rate, increased 24 basis points to 4.63%, which ties the survey's record high, last reached in the first quarter of 2010. All loan types saw an increase in the% of loans in foreclosure. The foreclosure inventory rate for prime fixed loans, which, make up the largest portion of the survey (accounting for 63% of the loans), increased 22 basis points to 2.67%.

This was the highest rate recorded for prime fixed in the history of the survey. The rate for prime ARM loans increased 17 basis points from last quarter to 10.22%. Subprime fixed loans saw an increase of 104 basis points to 9.92%, which is a new record high in the survey. The rate for subprime ARM loans increased 26 basis points to 22.04%, while the rate for FHA loans increased eight basis points to 3.30% and the rate for VA loans increased 21 basis points to 2.35%.

The foreclosure starts rate decreased nine basis points for prime fixed loans to 0.84%, five basis points for subprime fixed loans to 2.73%, and 22 basis points for FHA loans to 1.02%. The foreclosure starts rate increased two basis points for prime ARM loans to 2.38%, 15 basis points for subprime ARM loans to 4.24%, and two basis points for VA loans to 0.88%. Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes of the non-seasonally adjusted results. The non-seasonally adjusted delinquency rate decreased for all loan types since the fourth quarter of 2009. The delinquency rate decreased 135 basis points for prime fixed loans, 124 basis points for prime ARM loans, 284 basis points for subprime fixed loans, 152 basis points for subprime ARM loans, 154 basis points for FHA loans, and 91 basis points for VA loans.

The non-seasonally adjusted foreclosure starts rate increased 21 basis points for prime fixed loans, 26 basis points for prime ARM loans, and seven basis points for VA loans, but is down 47 basis points for subprime ARM loans, 26 basis points for FHA loans, and remains unchanged for subprime fixed loans on a year over year basis. Forty five states saw increases in the rate of foreclosure starts on a year over year basis, with the largest increases coming in Washington, Rhode Island and the District of Columbia. The largest decreases were in Florida, Connecticut, and Maryland. Nevada and Arizona top the rankings in terms of foreclosure starts and loans in foreclosure across most loan types.

Overage of Foreclosures

26% of home sales are foreclosures and short sales

According to a RealtyTrac report released yesterday, 26% of all homes sold last
year were foreclosures and short sales. Homes already foreclosed on and
repossessed by banks, called REOs (real estate owned), sold for an average of
36% less than normal sales, RealtyTrac reported. Meanwhile, the discount for
homes sold while they were still in the foreclosure process (short sales) was
15%. "It's like the post-holiday sales at Sear's where they're trying to clear
out unwanted inventory," said Tony Sanders, a real estate professor at George
Mason University.

Nevada had the highest percentage of distressed sales of any state at 57%. That
was, however, less than 2009, when 67% of sales there were foreclosures. In
Arizona, 49% of sales were distressed properties; in California, 44%; and in
Florida, 36%. Foreclosed properties sold for the biggest discount -- 50% off --
in New Jersey. These investment opportunities are not going away. Nearly 30% of
mortgage borrowers are underwater on their loans, owing more than their homes
are worth, according to Stan Humphries, chief economist for Zillow, the real
estate web site. These owners are very vulnerable to foreclosure so the number
of distressed properties that will go on sale only the next year or two will
probably remained high.