Round-up of the Latest Foreclosure News

1.18.2013 | Housing in an integral part of a resilient city and region, just ask Las Vegas, Phoenix, and Cape Coral, Florida.  Far too many families remain stuck in place, underwater on their mortgages or just unwilling to sell in a down market. Many others are working to rebuild after losing their homes to foreclosure. And neighborhoods hardest hit by the foreclosure crisis face an uphill climb.

The latest news comes with a mix of good news and bad. Are we on the road to true recovery? You decide. Here’s the latest round-up of stories:

The real estate company Trulia announced yesterday that its barometer of the industry shows that the housing market is 51% back to normal. Trulia’s November Housing Barometer compares three key indicators — construction starts, existing-home sales, and delinquencies combined with foreclosures — to their worst point during the housing crisis and their pre-crisis levels. hat-tip: Housing Wire.

Rising home prices pulled more than 100,000 homeowners out of negative equity in the third quarter of 2012, according to CoreLogic. But 22% of all residential properties with a mortgage were underwater by the end of October 2012, albeit an improvement over prior quarters. [hat tip: Housing Wire]

Phoenix, ground zero for the housing crisis, is seeing  housing prices starting to turn up and foreclosure down. Gone are the days when a person could pick up a home for under $150,000, according to Housing Wire.

Florida, on the other hand, isn’t as lucky. As Dan Levy at the Financial Post reports, “Florida’s foreclosure crisis just won’t end. More than six years after subprime lending and overbuilding led to the worst U.S. real estate slump, the state had the biggest increase in home seizures last year, and the highest foreclosure rate, RealtyTrac Inc. said.” Home repossessions increased by 16,276 during the year to 84,456, the biggest gain nationwide.

Based on data from 70% of the US. mortgage market, Lender Processing Services estimates that 7% of mortgage loans were delinquent in November 2012, up 1.2% from the prior month. That’s still about 9% lower than the same time in 2011. Two-thirds of the delinquent loans were just 30 days past due, which either signals a longer path to recovery or the possibility that those families aren’t in too deep yet.

Fewer homes in the Bay Area of California were up for auction in November, as banks turned to loan modifications and short sales instead of foreclosures under a national settlement  that took effect in October.

TransUnion predicts the 2012 mortgage loan delinquency rate will come in at about 5%–and probably remain stuck there through 2013. (This rate includes borrowers who haven’t made a payment in over a year. Take them out, and the rate would be more like 2%.)  Predictions are that the largest declines in 2013 will be in  Nevada, Minnesota, California, and Arizona.

And on the consumer front, the Consumer Financial Protection Bureau released a final rule to regulate mortgage servicers, and implement consumer protections from the Dodd-Frank law.  The new standards include : 

 

  • Limitations on dual-tracking of loss mitigation and foreclosure proceedings
  • Early outreach to borrowers if delinquent on a payment
  • Prompt notification of foreclosure alternatives
  • Timelines for servicers to meet when contacting and responding to borrowers
  • Single application for loss mitigation with prompt and fair review
  • No foreclosure sale until all loss mitigation options are exhausted
  • No foreclosure sale if a loss mitigation agreement is in place
  • Rules for force-placed insurance
  • Specific explanation to borrowers for denial of a loss mitigation application.

See also CFPB’s helpful summary). Hat tip:  National Housing Council

Dory Rand, president of the Woodstock Institute in Chicago said of the CFPB ruling: “Homeowners trying to save their homes cannot be foreclosed upon before the servicer has adequately considered alternatives, which means fewer preventable foreclosures and less homeowner confusion and disengagement.”

And finally, from the Urban Institute–the impact of the recession and housing crisis on poor neighborhoods:

“Did the Great Recession hit poor neighborhoods especially hard? Surprisingly, between 2007 and 2009, residents in the poorest neighborhoods did not suffer worse losses in employment and wages than did other neighborhoods. Poor neighborhoods saw unusually high job losses among men but not among women. Because residents in poor neighborhoods had especially low homeownership rates, they were less likely to face big losses in home equity. Homeowners in poor neighborhoods were slightly less likely to sustain homeownership, but they werent locked out of jobs because of immobility. In fact, these homeowners fared better in the job market than renters.”

 

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