November 2009 Entries
Alejandro Lazo of the LA Times has written an article that will be sure to raise some eyebrows. In this foreclosure heavy environment many people don’t understand the consequences of simply walking away from a mortgage and allowing the lenders to foreclose. It’s not like you used to hear it where people simply “turned in their keys” (in fact I don’t think it was ever as simple as that!). Foreclosures can have dire impacts on individuals.
An obvious effect of a foreclosure is on your credit score. If you have a foreclosure on your record, the likelihood of...
In a article written in the Wall Street Journal, Ruth Simon and James Hagerty report on a very disturbing fact: 1 in 4 mortgages are underwater. This doesn’t mean that 1 in 4 mortgages are in foreclosure it just means that the mortgages don’t support the underlying debt. Some people will continue to hang in there and pay on a mortgage that doesn’t equate to what the underlying properties are worth. Others will choose not to pay. Ms. Pepitone reports , “The majority of underwater mortgages are heavily concentrated in five states that have particularly suffered from the...
CMBC delinquencies up 3.86%
According to the latest index results from Fitch Ratings, large office and hotel
defaults led the delinquency rate among commercial mortgage-backed securities
(CMBS) up another 28 bps in October. The overall late-pay rate among US CMBS is
now 3.86%, according to Fitch’s delinquency index of 1,910 Fitch-rated CMBS
loans totaling $17.8bn. The office sector saw a 19.4% additional delinquencies
this month, as the hotel sector followed with 16.5% more delinquencies.
“Though longer leases on office properties have historically mitigated sharp
changes in performance, continued job losses are expected to increase pressure
on the office sector,”...
Short sales boosted
According to a securitization research note by Barclays Capital, short sales
have been boosted by mandatory and voluntary foreclosure prevention efforts that
prevent mortgages from entering real estate owned (REO) status. As
federally-funded modifications made through the Home Affordable Modification
Program (HAMP) grow in frequency and lenders are expected to hold off on
foreclosure proceedings, the REO pipeline shrunk, according to BarCap
researchers. The foreclosure prevention efforts have had the effect of
“artificially” boosting short sales. “The artificial constraints to foreclosure
auctions have resulted in a reduction in REO stock,” BarCap said. “As a result,
the net volume...
Posted byCarlos LaSallehttp://activerain.com/dpsAccording to the latest Realtors Confidence Index (RCI), one out of 10 recent home sales was through a short sale, but realtors are concerned about the hurdles buyers face in short sales. The primary reasons that some short sales fail include an incomplete short sale package, an offer that is too low, and inaccurate appraisals. According to Lynn Madison of the National Association of Realtors (NAR), buyers who are good candidates for short sales are very patient – it can take some lenders four months or longer to approve a short sale – have their financing in...
This article from the New York Daily News points out that while the number of homes entering the foreclosure process is up, the actual number of homes taken back by lenders as REO's was down as compared to a year ago. The author attributes this to the Obama administrations modification program which in my opinion is delaying the inevitable.
While the program is good at heart, many of the homeowners who qualify for the program eventually fall back into default status therefore beginning the foreclosure process all over again in future months. This why I believe; as do...
Posted byCarlos LaSalleReal estate rehab loans upAccording to ZINC Financial, these days more investors are applying for real estate rehab loans, or loans made to investors and collateralized against the quick-sale value of the property for which the loan is made. Also known as a hard money loan, lenders often structure a rehab loan based on a 60 to 70% loan-to-value (LTV) ratio — the amount the lender can expect to get from the sale of a property within one to four months of default. ZINC launched its Investor Rehab Program, which provides investors with a possible seven-day...
Posted byCarlos LaSalleShort sales don't hurt credit scoresSarah Davies, vice president of VantageScore, at the Loan Modifications Conference now underway in Dallas, Texas, says restructuring plans on a mortgage, whether in the form a forbearance, modification or short sale, have a relatively insignificant effect on the consumer’s credit score. VantageScore measures the generic consumer’s credit score and his or her likelihood of slipping into 90-plus day delinquencies on a scale of 501 to 990. If a servicer reduces a consumer’s original loan amount from 10-to-30%, the consumer’s credit score is only increased by three to 18 points, depending upon the...
Posted byCarlos LaSalleBanks finally “getting” short sales?Larry Murphy, president of the real estate monitoring firm SalesTraq, says he thinks banks are starting to realize it makes better financial sense to allow owners to sell homes through short sales than to repossess them. For example, of the 35,742 closings in Clark County, Nevada through the first three quarters, 75 percent were foreclosures and only 10 percent were short sales. But Murphy says that of the 11,249 contingent sales in place of homes on the Multiple Listing Service, 71 percent are short sales and 21 percent are sales by lenders of homes...
Posted byCarlos LaSalleRBS says housing recovering ahead of scheduleAccording to commentary by Royal Bank of Scotland (RBS) economists, the US economy and housing market in particular are recovering well ahead of the schedule previously anticipated by analysts and market observers. Although foreclosure inventory and the distressed mortgages cast a shadow on the US housing market, key indicators including new and existing home sales and prices suggest housing may be bouncing back. Foreclosures are working through the pipeline slowly, RBS says, because “the various mortgage modification programs initiated by the government have not done much to prevent foreclosures, but they have...
I read, with interest, an article by Ilyce Glink. In the article titled, “Do Mortgage Lenders Make More Money When a Loan Goes into Foreclosure?” she points out that loan servicing companies ( companies that collect monthly mortgage payments and distribute them to investors) make MORE money by foreclosing when compared to doing loan modifications. In addition, Ms. Glink states, “The report examined foreclosures made from 1995 through 2009 and found that loan servicers make more money by offering forbearance (where the homeowner is given a specific period of time to not make payments in an effort to...