Banks Repo US Homes At Record Pace

July 15, 2010

Reuters

By: Lynn Adler

Banks repossessed a record number of U.S. homes in the second quarter, but slowed new foreclosure notices to manage distressed properties on the market, real estate data company RealtyTrac said on Thursday.

The root problems of job losses and wage cuts persist, making a sustained U.S. housing recovery elusive.

Banks took control of 269,962 properties in the second quarter, up 5 percent from the prior quarter and a 38 percent spike from the second quarter of last year, RealtyTrac said in its midyear 2010 foreclosure report.

Repossessions will likely top 1 million this year.

“The underlying conditions haven’t improved,” RealtyTrac senior vice president Rick Sharga said in an interview.

The housing market still grapples with “unemployment, economic displacement in general, and still sits on over 5 million seriously delinquent loans that in all likelihood will at some point go into foreclosure,” he said.

In 2005, the last “normal” year in housing, Sharga said, about 530,000 households got a foreclosure notice and banks took over a comparatively minuscule 100,000 houses.

This year more than 3 million households are likely to get at least one foreclosure filing, which includes notice of default, scheduled auction and repossession, Irvine, California-based RealtyTrac forecasts.

In the first half of the year, foreclosure filings were made on 1.65 million properties. That was down 5 percent from the last half of 2009 but up 8 percent from the first half of last year.

One in every 78 households got at least one foreclosure filing in the first six months of this year.

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Home Foreclosures Hit a Five-Year High in March

April 15, 2010

Daily Finance

By: Betsy Schiffman

Amid growing signs of an economic recovery, one troubling fact remains: Foreclosure rates aren’t slowing down. In March, 367,056 foreclosure filings were reported, according to RealtyTrac, up 19% from February and up 8% from a year earlier. It was the highest monthly total RealtyTrac has recorded since it began issuing a foreclosure report in January 2005.

The five states with the highest number of foreclosures are California (93,173), Florida (59,067), Arizona (18,856), Georgia (17,779) and Michigan (17,700).

“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said RealtyTrac CEO James Saccacio in a prepared statement. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs [bank repossessions] increasing 9% on a quarterly basis in the first quarter of 2010 compared to a 13% quarterly decrease in REOs in the first quarter of 2009.”

Modifying the Mortgage Modification Program

While the real estate market was burning, consumers were apparently out spending. March retail sales (in stores open at least a year) were up 9% from the same period last year, according to Thomson Reuters, and results easily exceeded analysts’ expectations for a 6% increase. It seems that consumers tapped into some of their savings and credit to cover March’s shopping sprees, given that income levels aren’t increasing and the unemployment rate still hasn’t budged from 9.7%.

Although the federal government is clearly cognizant of the foreclosure problem — it has made at least half-a-dozen modifications to its foreclosure prevention program since early 2009 — its efforts to stem foreclosures have thus far been futile. Most recently, President Obama pitched a plan that was meant to provide unemployed homeowners with temporary mortgage relief. Earlier this month, the federal government also vowed to loosen some of the restrictions on grants set aside for local governments to redevelop abandoned communities or foreclosed properties.

Washington has also rolled out a program to modify second mortgages called 2MP, as well as a plan to provide incentives to banks for forgiving some of the principal on underwater mortgages. Some banks, such as JPMorgan Chase (JPM) are adamantly opposed to the idea of principal reduction, while others have embraced the concept. Bank of America (BAC), for example, said it will reduce the outstanding principal on some mortgages by up to 30%.

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Foreclosures Hit Rich and Famous

April 9, 2010

The Wall Street Journal

By: Craig Karmin and James R. Hagerty

The rich and famous now have something in common with hundreds of thousands of middle and lower-class Americans: The bank is about to take their homes.

Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study for The Wall Street Journal.

Just this week, a Tudor mansion in Bel-Air belonging to film star Nicolas Cage was in foreclosure auction and reverted to the lender. On Wednesday, Richard Fuscone, a former top Wall Street executive, declared personal bankruptcy, forestalling a foreclosure auction that had been scheduled this week on his 14-acre Westchester mansion. Last month a Manhattan condominium owned by Italian film producer Vittorio Cecchi Gori was sold in a foreclosure auction for $33.2 million.

In February alone, 352 homes nationwide in this category were scheduled for foreclosure auction, the final step before a bank acquisition. That is the largest monthly number of these so-called notices of sale since the financial crisis began. By comparison, in all of 2009, there were 1,312 such notices.

Economists say the super-wealthy are among the last to lose their homes in a mortgage crisis because they usually have high savings, better access to credit and other means for staving off foreclosure. But many of them work in financial services and other industries hit especially hard by the crisis, and have seen their wealth shrink in the market crash.

While the numbers are modest compared with foreclosures at other income levels, they suggest the possibility of a sudden spike in bank takeovers of the wealthiest Americans’ property. Typically half the notices of sale result in homes being turned over to creditors, though the figure could be slightly lower for the richest Americans who have more financial options, according to Daren Blomquist at RealtyTrac.

Big borrowers are more likely to default than ordinary people, according to data from First American CoreLogic. Its loan database, reflecting more than 80% of the overall home-loan market, includes 1,700 loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American. Sam Khater, a senior economist at First American, said the bigger borrowers may be more prone to stop making payments when they have lost all their home equity.

Mr. Fuscone, Merrill Lynch’s one-time head of Latin America, put his mansion up for sale in November, asking $13.9 million. But he couldn’t find a buyer.

The court had scheduled a foreclosure auction for Thursday for the 18,471-square-foot mansion—with two swimming pools, two elevators, six fireplaces, 11 bathrooms and a seven-car garage. The personal bankruptcy filed in U.S. Bankruptcy Court Wednesday temporarily freezes the foreclosure process.

Reached by phone, Mr. Fuscone declined to comment. Brokers and real estate tracking companies say that his home is one of the most expensive properties to face foreclosure proceedings yet.

The phenomenon is not limited to the New York area. Banks have taken over homes with loans of $5 million or more in Georgia, North Carolina and Colorado, RealtyTrac says.

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