Real Estate Information

Austin Kilgore | 12.29.08

The Hope Now alliance announced it will enhance and expand its services and expects to help facilitate more than 2 million loan modifications next year.

Included in its 2009 plans are at least 30 additional homeowner workshops, which alliance officials believe will increase the number of homeowners who attend workshops by more than 50 percent. Plans are also being prepared for web-based resources to supplement the telephone-based Hope Hotline for homeowners to start the foreclosure prevention process, and other tools to provide consumer counseling like phone-a-thons.

The group will also increase its outreach and public information to reach more homeowners in danger of losing their homes.

According to Hope Now projections, from January to November, 2008, the alliance prevented 2.2 million foreclosures with nearly 950,000 mortgage modifications, and received more than 1 million calls to the Hope Hotline. More than 500,000 at-risk homeowners responded to the 2.9 million letters Hope Now distributed. The 18 percent response rate is six times more than the typical response rate loan servicers receive when they send their own mailings.

Hope Now officials are crediting the Streamlined Modification Program, a collaboration between Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) that is a faster modification approval process that went into effect December 15, and June's creation of uniform guidelines amongst Hope Now members to create a faster and easier foreclosure prevention process, and an agreement for dealing with second liens, which had previously stalled attempts to hasten the prevention process.

“The mortgage lending industry has shown enormous flexibility and commitment in the face of this past year’s constantly changing economic outlook,” Mortgage Bankers Association COO John Courson said. “The plans Hope Now has for 2009 demonstrate clearly that the whole mortgage lending industry will continue to serve the needs of homeowners no matter what the situation.”

But despite the optimism of Hope Now supporters, critics warn that not enough at-risk homeowners are receiving loan modifications, and many modifications backfire because payments on the modified loans are actually higher than original payment.

According to research by the National Association of Consumer Bankruptcy Attorneys (NACBA), Hope Now worked out loan modifications resulting in lower monthly payments for 266,087 homeowners; loan modifications with the same or higher monthly payments for 226,667 families; and 780,000 short-term repayment plans.

“The American home mortgage foreclosure crisis has gone from the danger zone to the full-blown crisis stage,” NACBA president Henry Sommer said. “The number of foreclosures is growing rapidly and is reaching well beyond the subprime world to the American middle class. Despite a proliferation of voluntary programs, we are not seeing evidence of a meaningful number of sustainable loan modifications.”

Carrie Bay | 12.29.08

The Department of Housing and Urban Development (HUD) issued a notice late last week, advising lenders of the termination of the Federal Housing Administration's FHASecure program, under which FHA was able to insure refinance transactions for borrowers delinquent on their mortgages. While this foreclosure prevention program will sunset this Wednesday, December 31, FHA said it will continue its standard rate-and-term refinance program for borrowers who are current on their existing mortgages.

The FHASecure program was created by the Bush Administration in 2006, to help combat the onset of rising foreclosure numbers across the nation -- a problem that since then has mushroomed into a full-blown housing and economic crisis of historical proportion.

According to HUD, maintaining the program past the planned termination date of the end of this year would have a negative financial impact on FHA's Mutual Mortgage Insurance (MMI) Fund, which pays for any losses the agency must cover when insured mortgages default. HUD said the expected hits to this fund from an extension of the FHASecure program would have to be offset by either substantial across-the-board premium increases or the suspension of FHA’s single family insurance programs altogether.

So, as of December 31, 2008, FHA will not issue any new case numbers for lenders seeking to refinance borrowers into FHASecure loans, the agency said. However, any loans for which the lender has requested a case number and taken a loan application prior to December 31, will be processed and insured by FHA.

Last month, the Center for Responsible Lending (CRL) and several other industry organizations, including the American Bankers Association (ABA) and the Mortgage Bankers Association (MBA), submitted a letter to HUD Secretary Steve Preston asking the Department to continue the FHASecure program at least through the end of next year. According to the industry groups, extending the program would help to keep millions of families in their homes and, in the process, stem the wave of foreclosures that are at the root of the country's economic crisis.

“Without doubt, the current crisis has caused a significant decrease in the availability of loan options, along with increasing lending standards throughout all credit markets,” the letter said. “In light of all the challenges, banks and mortgage lenders need all possible tools to be successful in these extremely challenging times. The expanded loan options offered by FHASecure are an essential component of our collective efforts to help the largest possible numbers of at-risk borrowers. This is not the appropriate time to permit the lapse of a viable mortgage refinance option,” the organizations wrote.

According to CRL and its fellow program proponents, FHASecure was designed to help families at more moderate income levels, and its these homeowners who are most in need of assistance right now. Even more important, CRL said, is that the design of the FHASecure program is not set in statute and therefore permits the program to adequately adapt to market evolutions. FHASecure's added flexibility is a key strength during these unpredictable times of elevated delinquencies, CRL said.

In addition to retaining its standard rate-and-term refinance program, FHA said it will also continue its cash-out and streamlined refinance products as foreclosure alternatives. And in addition, FHA's HOPE for Homeowners (H4H) program is currently available to help borrowers who are already delinquent on their mortgages. FHA said it encourages lenders to consider this product for meeting the needs of distressed homeowners.

However, CRL says that H4H is a very new and still evolving program, and cannot serve as a replacement for the FHASecure system. The two programs were created to address rather distinct consumer needs, CRL said, and they differ in the form of assistance that they provide to homeowners. According to CRL, FHASecure is a much more accommodating product.

For example, one of the difficulties in trying to assist struggling borrowers is the fact that loan investors in many cases will not permit loan modifications. And even when investors do agree to modifications, loans may be securitized in such a complex manner that the operational difficulties of obtaining investor approval present a high hurdle to overcome. CRL points out that FHASecure is a refinance program, not a loan modification program, allowing lenders to sidestep such modification obstacles.

Carrie Bay | 12.29.08

The Distressed Property Institute is training Realtors to help struggling homeowners in danger of foreclosure.

The institute, based in Florida and launched last January, is now offering the Certified Distressed Property Expert (CDPE) designation after in-depth on-site or online training on how to handle short sales. According to the institute, nationally, only 12 percent of short sales are closed. Among CDPE designated Realtors, that number skyrockets to more than 80 percent, the institute said.

According to Bob Corcoran, owner of the international real estate training firm Corcoran Consulting & Coaching, "The CDPE gives real estate agents the knowledge, confidence and tools they need to be successful in the short sales market. It is important that agents learn this aspect of real estate in order for them to be successful in this ever changing market," Corcoran said.

"With this crisis comes a responsibility of every Realtor to provide value to their clients, especially to those facing a distressed property situation such as delinquent payments, short sale, or foreclosure," added real estate educator Howard Brinton.

Judy Reed of Re/Max Allegiance in Virginia Beach, Virginia, has been a Realtor for 30 years. She said she's seen a lot of market cycles, but never anything like this. She took the CDPE course in October to become more educated about short sales.

"Seven out of 10 people go into foreclosure without any professional intervention," Reed said. "They don't know that they have options. The knowledge that I've gained from the Distressed Property Institute gave me the knowledge to help these homeowners."

For more information about The Distressed Property Institute's foreclosure prevention�training, click here.

Carrie Bay | 12.23.08

Families on the verge of foreclosure and facing eviction in several cities across the country hosted early Christmas dinners with Congressional lawmakers this week to intimately discuss the impact of the economic and housing downturn on Main Street Americans.

U.S. Representatives from Hyattsville, Maryland; Brooklyn, New York; Bridgeport, Connecticut; Ocoee, Florida; and Houston, Texas, joined constituents in their homes – all of which are in the process of foreclosure. The legislators broke bread with the families and discussed the work that they and the incoming administration will do to rectify problems in the mortgage system and regulate future lending.

The holiday dinners were organized by the Association of Community Organizations for Reform Now (ACORN), which is working to keep the families in their homes. ACORN is a national community organization for low- and moderate-income families, with over 400,000 member-families organized into 1200 neighborhood chapters in 103 cities nationwide. Since 1970, ACORN has taken action on issues of concern to its members, such as better housing for first-time home buyers and tenants.

Lawmakers participating in the dinner events included: Rep. Donna Edwards (D-Maryland, District 4); Rep. Jim Himes (D-Connecticut, District 4); Rep. Yvette Clarke (D-New York, District 11); Rep. Jerrold Nadler (D-New York, District 8); Rep. Edolphus Towns (D-New York, District 10); New York State Senate Leader Malcolm Smith; Rep. Alan Grayson (D-Florida, District 8); and Rep. Sheila Jackson-Lee (D-Texas, District 18).

Austin Kilgore | 12.23.08

The Mortgage Bankers Association announced Monday the promotion of five employees to the position of associate vice president or director.

- Mark Brady, associate vice president of sponsorships
Brady will direct and supervise meeting and conference sponsorships, and organize and direct sponsorship sales programs. He previously served the MBA as director of sponsorship, and before that, co-founded and was assistant editor of Talking Drums magazine.
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- Kimberly Newell, associate vice president of exhibits
Newell will direct sales and coordinate trade show activities and will manage the planning, promotion, supervision and on-site management of MBA meetings and conferences. She previously was the MBA's director of exhibits, and before that, managed more than 20 events a year as senior sales manager at GES Exposition Services, a general services contractor in the tradeshow industry.

- Teresa Betz, associate vice president of facilities management
Betz will be responsible for identifying, developing, managing, and implementing the administrative services to meet the MBA's operational needs, specifically in the areas of leasing/subleasing, property management, space/facilities, insurance, business continuity, and emergency preparedness. She was previously the director of facilities management.

- Jennifer Moffitt, director of advertising
Moffitt will manage advertising for the MBA's Mortgage Banking magazine, NewsLink, a group of online newsletters, show guides and other ad-related materials. She will also be responsible for directing the MBA's Home Loan Learning Center Web site, and a series of online workshops, managing the ad traffic process, and developing a new ad library to organize materials for ongoing use. She was previously the MBA's previously manager of advertising, and before that, was was traffic director at the public relations firm Porter Novelli.

- Jeffrey Malik, director of development
Malik will manage a team of developers and oversee custom software development projects for the MBA's internal projects and the for-profit consulting services arm of Lender's Technology Corporation. He will be the lead technical architect for application development, and direct the deployment and upgrade of new applications. He previously was the manager of development, and was also database manager at Callahan and Associates.

“I am proud to recognize these hardworking and dedicated individuals for the many invaluable contributions they have made to MBA,” said John Courson, MBA's chief operating officer. “In their expanded roles, they will each continue to play an important part in representing our industry, particularly in this time of change, and we look forward to many successes in their new roles.”

Austin Kilgore | 12.23.08

There were more than 133,000 new loan modifications - an increase of 16 percent - in the third quarter of 2008, and new foreclosures decreased 2.6 percent from the second to third quarters, according to the latest joint Mortgage Metrics Report from the offices of the Comptroller of the Currency and Thrift Supervision.

For the first time, the report also included re-default rates for modified loans. 37 percent of loans modified in the first quarter were 30 or more days delinquent after three months, and 55 percent of the same loans were delinquent after six months. 19 percent of the loans were 60 or more days delinquent after three months, and that figured jumped to nearly 37 percent after six months.

While the increase in loan modifications is a signal that lenders are more willing to help troubled borrowers stay in their homes, Comptroller of the Currency John Dugan warned it may not be enough.

“One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months,” Dugan said. “This trend of increasing delinquencies underscores the need to understand why these modifications have not been more sustainable.”

The quarterly report provides data on 35 million first-lien mortgages, representing more than $6.1 trillion in assets, held or serviced by national banks and thrifts.

Other highlights of the report:
 

- The number of delinquent loans increased during the third quarter across all loan categories—prime, Alt-A, and subprime. More than nine out of 10 mortgages remained current, but the percentage of current and performing mortgages fell from 93.33 percent at the end of the first quarter to 91.47 percent at the end of the third quarter.

- Banks and thrifts continued to work with borrowers to mitigate losses and help borrowers retain their homes. The number of newly initiated home retention actions—loan modifications and payment plans increased by 13 percent from the second quarter to the third quarter.

- Loans held on the books of servicing banks and thrifts had the lowest re-default rates at 35.06 percent after three months, and 50.86 percent after six months, compared with loans serviced on behalf of third parties. The lower re-default rate for loans held by servicers may suggest that there is greater flexibility to modify loans in more sustainable ways when loans are held on a servicer's own books than when loans have been sold to third parties.

Carrie Bay | 12.22.08

Walnut Creek, California-based National Loan Auditors (NLA) now offers an online resource portal for clients to gain up-to-date information on statues and case law pertaining to lending and foreclosure. In addition, the Law Portal provides the latest news regarding legal compliance issues and status updates on all federal, state, and municipal compliance legislation. The NLA Law Portal has all the information relevant to lending and foreclosure in one place, saving lenders, servicers or attorney’s time and money on legal research, the company said.

“NLA Law Portal has been designed to empower our clients with the information necessary to measure liability or form the basis for litigation,” said August Blass, CEO of National Loan Auditors. “The portal adds value to our forensic loan audit by providing support for its findings and information on how to effectively use the audit report in legal proceedings. Users are given summaries and user guidelines that distill lending and foreclosure law into a short manageable synopsis, saving hours in research.”

NLA Law Portal allows users to access the database, with the ability to search various summary topics such as alternatives to workout agreements, Truth in Lending Act summary, and HOEPA action steps. State legislation is also available. By selecting a state, users receive current case law and statues in that state. Litigation tools are also displayed when applicable. All summaries, statues, case law, and litigation tools are accessible in menu format allowing for easy navigation and accessibility, the company said.

NLA helps lenders, hedge funds, private equity funds, attorneys, and loan modification professionals expose high-risk loans containing document errors, compliance errors, and underwriting errors. Servicers and investors can readily identify their most troublesome loans, immediately adjust internal strategies, or liquidate high-risk positions when necessary to accurately reflect ROI or future performance, NLA explained.

The company provides quality control, pre-close and post-close auditing, risk assessment consulting, and fraud prevention to the mortgage, legal, and banking industries. NLA’s other services include forensic loan audit, which exposes federal, state, county, and statute violations contained within a loan file, life-of-loan audit, and expert witness.

Carrie Bay | 12.19.08

Chicago-based Navigant Consulting, Inc. released a report yesterday showing an unprecedented escalation in the number of subprime-related filings, and worsening economic conditions promise to drive the litigation volume ever higher, the research firm said.

The number of subprime mortgage and related cases filed in federal court during just the first nine months of 2008 already exceeds by more than 50 percent the total for all of 2007 (448 to 294), Navigant reported. According to the firm's analysis, filing volume in the third quarter of 2008 was the third highest on record with 131 new matters, while the total number of cases filed reached an astounding 742 for the 21-month period ending on September 30, 2008.

The Navigant third-quarter report also shows the subprime-related cases further outstripping the 559 U.S. savings-and-loan cases of the early 1990s, the previous high-water mark in terms of litigation fallout from a major financial crisis.

“The bottom line is that new cases continue to be filed much more rapidly than existing cases are being disposed,” said Jeff Nielsen, who leads Navigant Consulting’s Financial Services Disputes & Investigations group. Nielsen, who actively advises clients in a number of subprime-related matters, added, “We are looking at a traffic jam that will take many years to untangle.”

Nielsen also emphasized that the disastrous market conditions of late 2008 mean that new cases will continue to roll off the assembly line through year-end. For example, the Chapter 11 bankruptcy filing by Lehman Brothers in September 2008 – the largest such filing in U.S. history and perhaps the defining moment in the current credit crisis – has spawned its own cottage industry of litigation.

The report also notes that while the volume of new case filings continues unabated, the litigation is showing signs of maturing based on the breakdown of new cases filed. For example, borrower class action filings – which lead all categories over the seven quarters tracked by Navigant – fell precipitously in the third quarter, as the underlying loan transactions become more remote in time. Meanwhile, the number of securities lawsuits and contract disputes increased sharply, registering their highest quarterly totals to date.

“What we’re seeing is a relative increase in the number of cases brought by investors and institutions,” said Nielsen, “as affected parties take stock of their losses and the recriminations follow from there.”

Navigant Consulting, Inc. is a global, independent consulting firm providing dispute, investigative, operational, risk management, and financial advisory solutions to government agencies, legal counsel, and companies facing the challenges of uncertainty, risk, distress, and significant change. The company focuses on industries undergoing substantial regulatory and structural change and on the issues driving these transformations.

Carrie Bay | 12.19.08

Fidelity National Financial Inc. has received the green light to purchase two underwriting subsidiaries from bankrupt title insurer LandAmerica Financial Group Inc. Federal antitrust regulators allowed the legal waiting period mandated under the Hart Scott Rodino Act to expire at midnight on Thursday without intervening in the deal, essentially clearing the way for Fidelity to acquire LandAmerica's Commonwealth Land Title Insurance Co. and Lawyers Title Insurance Corp. for about $282 million.

According to a Reuters report, analysts consider the purchase of the individual LandAmerica businesses to be a better deal for Fidelity National than its original plan to acquire the entire company. Fidelity had extended a $126 million offer to acquire the Virginia-based title insurer in November but then two weeks later, abruptly pulled out of the deal, which would have required Fidelity to also assume over $500 million of LandAmerica's debt.

Fidelity's retreat led the already faltering LandAmerica to file for bankruptcy in late November and agree to sell off its largest underwriting subsidiaries. LandAmerica's business was hit hard by weakening housing market conditions. The firm posted significant losses for several quarters and was forced to close approximately 420 offices and cut more than 5,200 jobs since the beginning of the housing downturn in 2007.

In a statement issued today, Fidelity National said it must still obtain a final approval order from the Nebraska Department of Insurance removing the two subsidiaries from bankruptcy receivership before the deal can be completed (both Commonwealth and Lawyers are registered in the state of Nebraska). However, for the most part that step is largely a formality, since Nebraska Insurance Commissioner Ann Frohman gave her approval for the sale on Monday.

Frohman also granted approval to a competing proposal by Houston, Texas-based Stewart Title Guaranty Co. to acquire the two LandAmerica units. But on Tuesday the Federal Bankruptcy Court of the Eastern District of Virginia bumped Stewart out of the mix by considering and approving only Fidelity’s offer.

Fidelity National said it expects to close the transaction for LandAmerica's Commonwealth Land Title Insurance and Lawyers Title Insurance by December 22.

Fidelity has also agreed to acquire a third LandAmerica underwriter, United Capital Title Insurance Co., for approximately $16 million. That transaction must still be approved by California regulators, but is expected to close in the first quarter of 2009.

The acquisitions will make Fidelity National the largest title insurer in the country, with approximately 45 percent market share.

In related news, several lawsuits have been brought against the also bankrupt LandAmerica 1031 Exchange Services Inc., an intermediary trust in which investors could place their money while they looked for other properties to buy as a legal means of deferring capital gains taxes. According to the Richmond Times-Dispatch, days before LandAmerica 1031 declared bankruptcy, the troubled business was still accepting money from customers. Now that money is tied up in the firm's bankruptcy proceedings and customer accounts have been frozen. As a result, allegations of fraud, misconduct. and breach of contract have been leveled against the business unit, the Richmond, Virginia newspaper said.

Carrie Bay | 12.19.08

The nation’s foreclosure hemorrhage has finally slowed and 2009 should see a significant decline in foreclosures as buyers return, pushing home prices up and fueling a real estate recovery, according to the 2009 Outlook from California-based ForeclosureS.com.

“Recovery is underway. Affordable is back in the housing market,” said Alexis McGee, president of ForeclosureS.com. “In 2009, housing will not only recover, but we’ll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market.”

According to McGee, the Treasury Department's proposal for 4.5 percent fixed mortgage rates, along with housing prices that are now lower than they were “pre-housing bubble” and new tax credits for home buyers, all mean that prices will start rising again in 2009. “This is a great time to buy properties for investors -- to buy properties at wholesale prices below today’s already low prices -- rent them out for positive cash flow and then sell them for big profits in late 2009 once price appreciation kicks in,” McGee added.

The latest U.S. Foreclosure Index by ForeclosureS.com shows a slight drop in the number of properties repossessed by lenders following foreclosure. The number of REOs, or lender-owned real estate, fell from 84,534 in October to 84,291 in November. And that number is off nearly 21 percent from September’s 106,415 REO filings, ForeclosureS.com said. According to the foreclosure tracking company's market data, year-to-date, 12.6 of every 1,000 households nationwide have been lost to foreclosure.

“Certainly some of the drop reflects growing results of government and private efforts to keep homeowners in their homes,” said McGee. “But the recovery takes shape when you factor in other things like what the National Association of Realtors calls ‘solid’ gains from a year ago in existing home sales in some key areas, and the fact that many of the same areas are seeing dropping home prices. Fewer foreclosure actions were initiated in the last quarter, too, according to the latest Mortgage Delinquency Survey from the Mortgage Bankers Association,” McGee noted.

“California is a great example of what’s happening now and what lies ahead for the housing sector,” McGee continued. “Long a leader in the subprime mortgage mess and rising numbers of foreclosures, the state’s foreclosures have slowed significantly.”

The latest U.S. Foreclosure Index numbers show November REO filings in the state of California down to 15,978 in November, 6.55 percent fewer than in October and off nearly 50 percent from September. Home prices there have come down too, as much as 39.4 percent compared to a year ago in some areas like Riverside-San Bernardino-Ontario, according to National Association of Realtors (NAR) figures. That’s left many homeowners that bought their homes at high price points with upside down, or underwater, mortgages—they owe more than the value of the home. But it’s also made homes more affordable for plenty of other people, and solid, and in many cases rising, existing-home sales support that, McGee said.

In November, another perennial leader in foreclosures, Arizona, saw its REOs and pre-foreclosure filings drop (down 5.19 percent and 5 percent respectively), according to U.S. Foreclosure Index numbers.

The pre-foreclosure picture when averaged nationally isn’t quite as bright. Pre-foreclosures include notice of mortgage default and/or foreclosure auction. Amid all the negative economic news, pre-foreclosures for November were up 5.57 percent from October, with 27.1 of every 1,000 households across the country facing some kind of foreclosure action, according to ForeclosureS.com. All in all, 177,254 pre-foreclosure filings were recorded for November, compared to 167,906 filings in October. Still, based on the analysis from ForeclosureS.com, November numbers are down more than 7.5 percent from this year's high recorded in March.

“Pre-foreclosure numbers will likely climb in early 2009 (albeit at a much slower rate than in 2008),” McGee said. “Too many homeowners already are just too overextended and likely won’t seek help to work out their delinquent mortgages until after a pre-foreclosure filing against their property. That filing, it seems, is the wake-up call for many to get the help they need and sell,” McGee explained.

McGee says, though, that as the year progresses, she expects bright spots to emerge, both in terms of foreclosure numbers and within regional housing markets, as efforts to work with strapped homeowners really begin to take root.

“I wish my crystal ball could pinpoint everything that’s going to happen with housing markets in the next 12 months, but there are just too many variables,” McGee said. “What I can tell, though, is that hardest hit housing markets have already hit bottom and others will follow in 2009.

“Third-quarter National Association of Realtors numbers actually show existing-home sales picking up in about 20 percent of the areas studied,” McGee continued. “And, given the uncertainty and volatility of the stock market combined with all-time low interest rates, extremely affordable low-priced homes, and all the choices out there, 2009 is an excellent time to buy real estate. Properties, especially foreclosed ones, will be highly discounted, lenders are motivated to work with buyers, and the opportunities abound. The bottom line to keep in mind: What goes down absolutely positively will go back up again.

“The return of solid housing markets is an important part of restoring stability to financial markets. The market will return when mortgage rates and home prices are down, and that's exactly what is happening now in the hardest-hit areas of the country,” McGee added.