Archive for March, 2009
U.S. home values sink at record pace in January
WASHINGTON (MarketWatch) — Home values in 20 major U.S. cities fell a record 19% in the 12 months ending in January, Standard & Poor’s reported Tuesday.
The Case-Shiller 20-city home price index fell a record 2.8% in January, with home values in all 20 cities falling at least 1%. Prices in the original 10-city index fell a record 19.4% over the past year after falling 2.5% in January.
Prices are down 29% from the peak in mid-2006, according to Case-Shiller.
Vegas ‘Ground Zero for Fraud’
LAS VEGAS-What happens in Vegas doesn’t always stay in Vegas, according to the U.S. attorney for the state of Nevada.
Contradicting the popular catch line used to promote tourism here, Gregory Brower said here last week that the statement isn’t true when it comes to mortgage fraud.
“Nevada and Las Vegas are ground zero for fraud, and Reno is no slouch, either,” he told the Mortgage Bankers Association’s National Fraud Issues Conference.
Perhaps because of the get-rich-quick mentality that is so prevalent in the Silver State and its gambling meccas, Mr. Brawley said it’s no surprise to him that scam artists are drawn to Vegas and environs.
“I hate to admit it because I grew up here, but it’s a mecca for fraudsters, and a magnet for fraud,” he said.
Appointed by President Bush late last year after serving as general counsel at the Government Printing Office in Washington, Mr. Brawley cited the unprecedented growth in housing here as a major reason fraud has prospered.
“We’re just scratching the surface,” he conceded. “The problem will get bigger before it gets smaller, and we’re likely to be very, very busy for months and years to come.”
The large number of repos here “is not entirely caused by fraud,” he said, “but it’s a significant part of the problem.”
By:Lew Sichelman
Bottom Line- Perhaps too early to buy in LV ?
More Banks Walking Away From Foreclosures
Cities across the country say they are seeing a disturbing new practice when it comes to foreclosures – more and more, banks are opting not to take possession of foreclosed properties because the costs of maintenance, repairs, and legal fees outweigh the still-declining value of the property.
According to a New York Times report published over the weekend, these bank walkaways, as they are being called, are spreading through cities across the nation, from Jacksonville, Florida, to South Bend, Indiana, and Kansas City, Missouri.
In Buffalo, New York, the Times reports that the problem has reached “epidemic” proportions in recent months. In fact, the city of Buffalo has brought a lawsuit against 37 different banks, the newspaper said, claiming they are responsible for the deterioration of more than 57 abandoned homes because they “walked away” from taking ownership of and maintaining the properties following foreclosure proceedings.
Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law, told the Times, “It [bank walkaways] is what some of us think is the next wave of the crisis.”
According to the Times, experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.
While a walkaway may be the most cost-effective option for banks in today’s market – given the fact that lenders can lose up to 50 percent of their investment in a foreclosure – it offers little assistance to the homeowners, who are still on the title and therefore legally responsible for the property’s upkeep under city ordinances. In addition, the homeowner is usually unaware of the bank’s decision not to repossess the home until after the home has already been sitting vacant, leaving it vulnerable to vandalism and contributing to neighborhood blight.
Larry Rothenberg, a lawyer for creditors’ rights firm Weltman, Weinberg & Reis, explained to the Times, “Oftentimes when the foreclosure starts out, it’s a viable property, but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”
Moral of this story- Investor’s stay away from RE in those “Jacked up” States !
Zero Payment Defaults Are on the Rise at FHA
The FHA is experiencing “a large number of zero payment defaults” in which borrowers fail to make even one payment on their new government-insured mortgages, a Department of Housing and Urban Development official said at the Mortgage Bankers Association’s annual National Fraud Issues Conference in Las Vegas.
The trend, which Lisa Gore, the assistant special agent in charge of the criminal investigation division in HUD’s inspector general’s office, called “a huge red flag” that some type of fraud has been committed, is similar to the one experienced in the 1999-2001 housing market turndown…
The Washington Post’s analysis of FHA data found that more than 9,200 loans insured by the agency in the past two years have gone delinquent with either one payment or no payments being made. The analysis found that the pace of what the Post called “instant defaults” has tripled in the last year, and more than two dozen loans are defaulting in this manner every week, the newspaper reported…
More REO’s coming !!!
UOP report: California is in worst recession since the 1930s
• Unemployment expected to hit 12 percent statewide
• The state will lose nearly a million jobs before it ends
The state’s recession should end in the fourth quarter of 2009, but the job market will remain weak through most of 2010, the report predicts.
The California economy is currently in the steepest part of a two-year decline, according to an economic forecast from the Business Forecasting Center in the Eberhardt School of Business at the University of the Pacific, Stockton.
The state’s unemployment rate is forecast to peak just over 12 percent at the end of the year, surpassing the previous peak of 11 percent in 1982-83. The long recovery from the deep downturn is expected to keep unemployment in double digits until the end of 2011.
The state’s recession should end in the fourth quarter of 2009, but the job market will remain weak through most of 2010, the report predicts.
Home prices rise for first time in a year- FHFA
U.S. home prices rose 1.7% in January compared with December, the Federal Housing Finance Agency reported Tuesday.
It was the first monthly increase in a year. Home prices are down 6.3% in the past year.
The “unexpected rise” in January was partially due to stronger sales in some markets, While this is certainly good news, in our view it is
too soon to call a turnaround in the cycle,” wrote Charmaine Buskas, a senior economist for TD Securities.
“We will have to see several consecutive months of improved prices before a true turnaround can be called, and a significant inventory overhang remains.”
Better coverage of the bubble mortgages (Case-Shiller index) for January will be released next Tuesday.
Stayed tuned !
California’s unemployment rate is rising faster than U.S. rate (10.5%)
California’s 10.5 percent rate in February was much higher than the U.S. rate of 8.1 percent. A year earlier, U.S. unemployment stood at 4.8 percent,
so the U.S. rate rose 3.3 points, compared to California’s increase of 4.3 points.
During the past 30 years, the California unemployment rate has been consistently above the national average even when the state
economy was strong, but the gap between California and U.S. has rarely been as large as it is now.
Existing US home sales rise on ‘deep’ discounting
Sales up 5.1% in February while prices drop 15.5% in past year (NAR)
Sales of U.S. pre-owned homes rose 5.1% to a seasonally adjusted annual rate of 4.72 million in February, boosted by “deep” price discounts,
the National Association of Realtors reported Monday.
It was the largest percentage gain since July 2003.
Freddie Fannie (GSEs) Suspend Foreclosure Evictions Through March
Freddie / Fannie (GSEs) Suspend Foreclosure Evictions Through March
As key players in the administration’s Making Home Affordable Program to preserve homeownership, both Fannie Mae and Freddie Mac have extended their suspensions of foreclosure evictions through the month of March. The GSEs have also instructed servicers not to complete foreclosure sales on any mortgages that may be eligible for the new federal loan modification program.
8.3M Borrowers Now Underwater
8.3M Borrowers Now Underwater
First American CoreLogic released its 2008 report on negative home equity Wednesday, in which it found that 8.3 million borrowers are now underwater on their mortgage. In the last year, the company said, the value of mortgaged residential properties has declined by more than $2.4 trillion, and one half of this loss occurred in California.
The 8.3 million mortgages currently in a negative equity position, meaning the borrower’s mortgage debt is more than the value of the home, represents 20 percent of all mortgaged properties.
