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Foreclosure Estimate Falls

Banks May Possess Fewer Homes, but Figure Likely to Rise

APRIL 28, 2010

By JAMES R. HAGERTY

Banks have fewer foreclosed homes to sell than previously believed, but those holdings are likely to grow gradually over the next couple of years, a new study by Barclays Capital says.

The investment bank's latest calculations support the view that the U.S. housing market is stabilizing but that a major recovery isn't imminent and there are still risks of falling prices.

Barclays estimates banks and mortgage investors including Fannie Mae and Freddie Mac owned 480,000 homes at the end of February. Barclays has acquired more data on mortgages and refined its methods for analyzing foreclosure trends. Under the bank's previous methods, the estimate for February would have been more than 600,000.

Barclays expects the inventory generally to rise over the next 20 months, peaking at 536,000 in January 2012, and then decline gradually.

Estimating the inventory of foreclosed homes remains tricky because thousands of banks and others that own the properties disclose those holdings in varying ways, if at all. RealtyTrac Inc., another data provider and one of the few other firms that regularly make such calculations, estimates banks and mortgage investors own 758,000 foreclosed homes.

To get a sense of how many more households will lose their homes to foreclosures or related actions, Barclays tallies what it calls a shadow inventory, consisting of homeowners 90 days or more overdue on mortgage payments or already in the foreclosure process. At the end of February, 4.6 million households were in that category.

Barclays expects 1.6 million "distressed sales" of homes—mainly foreclosures or sales of homes for less than the mortgage balance due—both this year and in 2011, then a slight decline to 1.5 million in 2012. Last year, Barclays estimates, such sales totaled 1.5 million. About 30% of all home sales this year and next will be foreclosure-related, forecasts Robert Tayon, a mortgage analyst at Barclays, who says that would be only about 6% in a normal housing market.

Barclays expects U.S. home prices on average will fall another 3% to 5% over the next couple of years, adding to a decline of about 30% already recorded since 2006. That forecast assumes a gradual decrease in the unemployment rate, to 8% within the next two years, from 9.7% in March. The home-price picture would worsen if job growth sputters or banks "push homes through the foreclosure pipeline faster than expected," Mr. Tayon says.

Efforts to avert foreclosures by offering many borrowers lower payments have slowed the flow of homes into bank ownership. In some parts of the country—such as the Las Vegas area and Orange County, Calif.—that has left bargain-hunters frustrated by what they see as a shortage of bank-owned properties in attractive neighborhoods.

In the Las Vegas area, foreclosed homes accounted for 56% of sales in March, down from 73% a year earlier, according to MDA DataQuick, a research firm.

Write to James R. Hagerty at bob.hagerty@wsj.com

California home default cases plunge

A 40.2% drop in the first quarter suggests that the foreclosure crisis is easing.

By Alejandro Lazo, Los Angeles Times

April 21, 2010

The California foreclosure crisis appears to be abating, new data show, as the federal government and big lenders step up efforts to keep troubled borrowers in their homes.

Mortgage default notices — the first step toward foreclosure — plunged 40.2% statewide in the first three months of the year compared with the same period in 2009, according to San Diego research firm MDA DataQuick.

Foreclosure sales dropped 1.7% from a year earlier and 16.1% from the last three months of 2009, DataQuick said Tuesday.

The numbers suggest that the housing market won't be flooded by a fresh wave of bank repossessions, which had been seen as a major threat to the market's recovery.

"It is surprisingly good news," said Gerd-Ulf Krueger, principal economist at Housingecon.com. "There is still a lot of supply lurking out there, but at this point, it looks like it is pretty much under control."

Stuart A. Gabriel, director of UCLA's Ziman Center for Real Estate, said the declining foreclosure numbers are "consistent with a broad range of indicators that are suggestive of not only a healing economy but the beginning of healing in the housing market."

Southern California home prices jumped 14% in March from the same month a year ago, to a median $285,000.

Even so, economists note that further gains statewide are jeopardized by continued high unemployment, particularly in the Inland Empire and the Central Valley.

Foreclosure activity remains concentrated in these inland areas, which suffer from above-average unemployment. DataQuick said mortgages were most likely to go into default in Merced, Stanislaus and San Joaquin counties. Conversely, defaults were least likely in the Bay Area counties of Marin, San Francisco and San Mateo.

"In coastal California, things are looking pretty decent," said Richard Green, director of the USC Lusk Center for Real Estate. "I still think if you get into the Inland Empire, Fresno, Bakersfield, Modesto, people are really struggling because the unemployment rate is so high — so that people just need help to get out from under."

California loan default notices peaked at 135,431 in the first quarter of 2009. Since then, the federal government has put increasing pressure on banks to work with homeowners behind on their payments. At the same time, experts say, banks have recognized that flooding the market with foreclosures weakens the value of the properties they have taken back and must resell.

Nestor Fabian, 44, and his wife, Ada, 41, are among those who are hoping for a break from their lender.

The couple bought a four-bedroom, three-bath home in Victorville in 2006 and said they owe Wells Fargo Bank about $305,000 on a property they believe is worth about $128,000. Ada lost her job at a Mervyn's store about two years ago and has since been jobless.

"I feel like a prisoner in my home," said Nestor Fabian, an audio technician who commutes to Pasadena. "Basically, I am asking for any peanuts they can give me."

Fabian is trying to arrange a lowered mortgage with Wells Fargo through the Obama administration's $75-billion effort to help troubled borrowers.

While the Fabians are hoping for relief, many others are still losing their homes. Paula Murray, 65, and her husband, Roger, 58, lost their Apple Valley home to a foreclosure sale in January. They are scrambling to find an apartment before they are evicted June 1.

But it isn't easy, Paula Murray noted, because both she and her husband are unemployed and the foreclosure has damaged their credit rating.

"It hurts me because the government gives all this money to these big rich guys to bail them out, bails out the banks, but the little guy can't get bailed out," Murray said.

In March, the Obama administration unveiled measures aimed at getting lenders to reduce principal balances on problem mortgages and refinance "underwater" borrowers, those who owe more on their home than it is worth. Another provision would allow many unemployed homeowners to get three to six months of reduced mortgage payments while they look for a job.

Kevin Stein, associate director at the California Reinvestment Coalition, said that although the program has added some uniformity to efforts to modify loans, it remains fundamentally flawed.

"Its main limitation is it continues to rely on voluntary participation and financial incentives for the banks to do what it is we all want them to do, which is work with families to avoid foreclosure," Stein said.

Foreclosures may also be slowing because banks are deliberately putting fewer homes on the market, experts said. It's now taking homes about 7.5 months on average to go from a default notice to a foreclosure sale. A year ago, it was 6.8 months, according to DataQuick.

"They may be a little bit reluctant to put homes on the market all at one time," said Celia Chen, a housing economist with Moody's Economy.com. "I also think the process is lengthy and there are many homes in the foreclosure process, and so the process may just be clogged up."

Across California, 81,054 borrowers received a notice of default in the first quarter of this year, down 4.2% from 84,568 in the fourth quarter of 2009. It was the fourth straight quarter in which default notices declined.

There were 42,857 foreclosure sales, a decrease of 16% from 51,060 in the fourth quarter of 2009 and 1.7% from 43,620 in the same period a year ago.

alejandro.lazo@latimes.com

Times staff writer E. Scott Reckard contributed to this report.

Copyright © 2010, The Los Angeles Times

Bank Of America Foreclosure Plan: Nine Months Of No Payments For Unemployed, If Approved

First Posted: 04-19-10

A new program from Bank of America could allow unemployed mortgage holders to go for up to nine months without making a house payment.

In return, Bank of America would make homeowners hand over the deed to their home if they can't get a new job before the end of the nine-month long period.

Only people receiving benefits would be eligible for the program, according to The Charlotte Observer. The newspaper reported on the bank's new effort Sunday and says that before becoming a reality, regulators must first approve it.

The plan could be good for Bank of America's balance sheet because it would avoid principal reductions for borrowers that manage to keep their homes. The Observer reports:

The bank is betting that giving up nine months of income will pay off by enabling customers to find jobs and restart payments. Nine months is also roughly the length of time it would take for delinquent borrowers to lose their home. So, if customers in the new program can't find jobs, the bank could end up in about the same position as it would have been. And, in theory, the bank and customers will have avoided the draining collection and foreclosure process.

Customers who get a job during the nine months would have the unmade payments added to their mortgage, spread over the length of the contract. If the new job is at lower pay, they'd be eligible to apply for a mortgage modification to reduce payments.

Customers who lose their home would get at least $2,000 for handing over the keys to Bank of America, reports Housing Wire.

Last week, Bank of America representatives testified before congress that they were in favor of a limited use of "cram down," a practice that allows bankruptcy judges to impose a reduction in a borrower's mortgage principal during bankruptcy restructuring. Bank of America and Citigroup stand out among the nation's big banks for their support of the practice.

Foreclosure Rates Surge, Biggest Increase In 5 Years

By Stephanie Sklar
Irvine : CA : USA | Apr 17, 2010

A record number of US homes were foreclosed on in the first three months of 2010, an indication that banks are beginning to wade through the backlog of troubled home loans at a faster rate, The Associated Press has reported.

On Thursday, RealtyTrac Inc. said that the number of US homes taken over by banks went up 35% in the first quarter from 2009. Moreover, households facing foreclosure increased 16% in the same period and 7% from the last three months of last year.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter dating back to at least January of 2005, when RealtyTrac started reporting the data.

“We’re, right now, on pace to see more than 1 million bank repossessions this year,” said RealtyTrac’s Senior Vice President Rick Sharga.

Foreclosures started to drop in 2009 when banks were pressured by the Obama administration to modify home loans for troubled borrowers. Moreover, some states enacted foreclosure moratoriums to give homeowners, who were behind in their payments, time to catch up. And, in a lot of instances, banks have had problems in coping with how to handle the glut of troubled loans.

In total, over 900,000 households, or one in every 138 homes, got a foreclosure related notice, RealtyTrac said. The firm tracks notices for defaults, scheduled home auctions, and home repossessions.

Homeowners continue to fall behind on payments due to losing their job or seeing their mortgage payment increase because of an interest rate reset. Many cannot refinance for the reason that they now owe more on their loan than their home is worth.

The Obama administration’s $75 billion foreclosure prevention program has only been able to assist a small amount of troubled homeowners.

Approximately 231,000 homeowners have completed loan modifications as part of the Obama administration’s flagship foreclosure prevention program through March. That’s approximately 21% of the 1.2 million borrowers who started the program over the past year.

But another 158,000 homeowners, who signed up, have dropped out – either due to not making payments or failing to return the necessary paperwork. That’s up from approximately 90,000 only a month ago.

In March, the administration expanded the program, launching a plan to decrease the amount that some troubled borrowers owe on their home loans and give unemployed homeowners a temporary break. But the particulars of those programs will take months to work out.

The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida, and California, with Nevada leading the pack, RealtyTrac said.

The state, specifically around the Las Vegas metropolitan area, is saddled with a glut of unsold homes.

One in every 33 homes in Nevada was facing foreclosure, over four times the national average, RealtyTrac said.

Foreclosure filings increased on a yearly and quarterly basis in Arizona.

One in every 49 homes there got a foreclosure related notice during the quarter.

Florida posted the third highest foreclosure rate, with one out of every 57 properties getting a foreclosure filing.

California accounted for the biggest slice, overall, of homes facing foreclosure – approximately 23% of the nation’s total. One in every 62 properties got a foreclosure filing in the first quarter.

FORECLOSURE ACTIVITY INCREASES 7 PERCENT IN FIRST QUARTER
By RealtyTrac Staff

New Quarterly Records for Scheduled Auctions and Bank Repossessions
All Foreclosure Types Spike in March, Which Posts Highest Monthly Total for Report

IRVINE, Calif. – April 15, 2010 — RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for Q1 2010, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 932,234 properties in the first quarter, a 7 percent increase from the previous quarter and a 16 percent increase from the first quarter of 2009. One in every 138 U.S. housing units received a foreclosure filing during the quarter.

Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.

“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 James J. Saccacio, chief executive officer of RealtyTrac. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.

“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.”

Foreclosure Activity by Type
During the quarter a total of 304,799 properties received default notices (Notices of Default and Lis Pendens), an increase of 1 percent from the previous quarter but down 1 percent from the first quarter of 2009. Default notices were down nearly 11 percent from a peak of more than 342,000 in the third quarter of 2009.

Foreclosure auctions were scheduled for the first time on a total of 369,491 properties during the quarter, the highest quarterly total for scheduled auctions in the history of the report. Scheduled auctions increased 12 percent from the previous quarter and were up 21 percent from the first quarter of 2009.

Bank repossessions (REOs) also hit a record high for the report in the first quarter, with a total of 257,944 properties repossessed by the lender during the quarter — an increase of 9 percent from the previous quarter and an increase of 35 percent from the first quarter of 2009.

Nevada, Arizona, Florida post top state foreclosure rates in first quarter
As it has for the past 13 quarters, Nevada continued to document the nation’s highest state foreclosure rate in the first quarter of 2010. One in every 33 Nevada housing units received a foreclosure filing during the quarter, more than four times the national average and an increase of nearly 15 percent from the previous quarter. Still, Nevada’s total of 34,557 properties receiving a foreclosure filing in the first quarter was down 16 percent from the first quarter of 2009.

Arizona foreclosure activity in the first quarter increased on a quarterly and annual basis, helping the state to post the nation’s second highest state foreclosure rate for the third consecutive quarter. One in every 49 Arizona properties received a foreclosure filing during the quarter — nearly three times the national average.

With one in every 57 Florida properties receiving a foreclosure filing during the quarter, the state posted the nation’s third highest state foreclosure rate for the second straight quarter. Florida’s Q1 foreclosure activity increased on a quarterly and annual basis.

California foreclosure activity decreased 6 percent from the first quarter of 2009, but the state still documented the nation’s fourth highest foreclosure rate — one in every 62 housing units receiving a foreclosure filing.

Utah foreclosure activity increased 75 percent from the first quarter of 2009, the highest annual increase among states with top-10 foreclosure rates and giving it the nation’s fifth highest state foreclosure rate. Foreclosure filings were reported on 10,756 Utah properties, a rate of one in every 88 housing units and an increase of 21 percent from the previous quarter.

Other states with foreclosure rates ranking among the top 10 in the first quarter were Michigan, Georgia, Idaho, Illinois and Colorado.

Ten states account for more than 70 percent of nation’s first quarter total
California alone accounted for 23 percent of the nation’s total foreclosure activity in the first quarter, with 216,263 properties receiving a foreclosure notice — the nation’s highest foreclosure activity total.

Florida’s total was second highest, with 153,540 properties receiving a foreclosure filing during the quarter, and Arizona’s total was third highest, with 55,686 properties receiving a foreclosure filing during the quarter.

Despite a nearly 5 percent decrease in foreclosure activity from the previous quarter, Illinois documented the fourth highest foreclosure activity total, with 45,780 properties receiving a foreclosure filing — still a 17 percent increase from the first quarter of 2009.

A total of 45,732 Michigan properties received a foreclosure filing during the quarter, the fifth highest state total. Michigan foreclosure activity increased nearly 11 percent from the previous quarter and was up nearly 38 percent from the first quarter of 2009.

Other states with foreclosure activity totals among the nation’s 10 highest were Georgia (39,911), Texas (37,354), Nevada (34,557), Ohio (33,221) and Colorado (16,023).

Report methodology
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the month and quarter — broken out by type of filing. Some foreclosure filings entered into the database during a month or quarter may have been recorded in previous months or quarters. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). For the quarterly report, if more than one foreclosure document is received for a property during the quarter, only the most recent filing is counted in the report. Both the quarterly and monthly reports check if the same type of document was filed against a property previously. If so, and if that previous filing occurred within the estimated foreclosure timeframe for the state where the property is located, the report does not count the property in the current month or quarter.

Signs seen of a housing rebound in Southern California

The median price paid for a home rose 14% in March to $285,000 from a year earlier, according to MDA DataQuick. Higher-priced coastal markets saw more activity, and fewer foreclosures were for sale.

By Alejandro Lazo

April 14, 2010

Southern California's housing market showed fresh signs of momentum in March with the median price and sales pace improving from the same month a year earlier as buyers hurried to take advantage of a soon-to-expire federal tax incentive, cheap prices and low interest rates.

The median price paid for new and previously occupied houses and condominiums in Southern California jumped 14% in March to $285,000 from the same month a year earlier, according to San Diego real estate research firm MDA DataQuick. The closely watched median -- the price at which half the homes sold for more money and half for less -- rose 3.6% from February.

In Orange County, the region's priciest market, the median rose 12.2% to $432,000 as the number of foreclosure properties on the market sank and more homes in expensive neighborhoods were sold.

"There is no question that prices at the lower end of the market have stabilized and are showing some increases," said Esmael Adibi, director of the Gary Anderson Center for Economic Research at Chapman University in Orange. "While this is welcome news, the word of caution is people should not really see this as the values of homes changing. It is mostly the mix we are seeing change" as sales pick up in more expensive areas.

Defaults have increased in higher-priced neighborhoods, motivating some sellers to put their homes on the market in those areas, DataQuick analyst Andrew LePage said.

The overall jump in the region's median reflects a rebound from the depths of the financial crisis a year ago, when fears of another Great Depression abounded and a glut of foreclosed homes hit battered markets such as the Southland. Those fears have receded, fewer foreclosures were in the region's sales mix last month, and more homes in higher-priced coastal markets were sold, contributing to the price jump.

"It's almost like a boom-year figure," said Ed Leamer, director of the UCLA Anderson Forecast. "But the numbers over the last several years have been influenced by the number of bank-owned properties, and the banks were selling their homes at rock-bottom prices."

Southern California's sales pace also improved last month from March 2009, up 5%, but not as robustly as usual for a March, DataQuick said. A total of 20,476 houses were sold in March, up from 19,506 sold in the same month a year earlier, but that was about 18% off the historical average.

Expectations remain mixed about housing's future as a series of government initiatives to bolster sales and stabilize values expire. Experts also remain concerned about a potential wave of foreclosures despite the Obama administration's efforts to keep struggling borrowers in their homes.

Foreclosure sales accounted for 38.4% of the Southern California resale market in March, down from 42.3% in February and 54.8% in March 2009. Foreclosures as a percentage of Orange County's resale market stood at 22.7% in March, the lowest of any Southland county and the lowest percentage since January 2008.

"Right now the question is not whether the housing market is in recovery. The real question is how sustainable that recovery is, and that is where the gray area resides," said Christopher Thornberg, principal of Beacon Economics. "The market is being driven by government policy and not by fundamentals, and now the government is starting to back off."

Last month the Federal Reserve ended its $1.25-trillion mortgage-bond-purchase program, and many economists expect interest rates to begin to rise as a result. The program, which has kept interest rates at rock-bottom levels, helped the Fed buy nearly all the mortgage bonds from housing finance giants Fannie Mae and Freddie Mac, replacing most private investors.

Also, the Federal Housing Administration, which has stepped up its support of low-interest mortgages for first-time buyers, has tightened its lending standards.

At the end of this month, a federal tax-credit program for first-time buyers and for some current homeowners is scheduled to expire. The program provides as much as $8,000 to first-time buyers and as much as $6,500 to current homeowners.

Last month California lawmakers decided to add to the stimulus package and approved a credit of up to $10,000 for first-time home buyers and those buying newly built homes. The credit will take effect May 1.

Haydee Cuervo, 33, and her husband, Yuri, 34, are hoping to take advantage of those tax credits as they sell their home in Arleta and close on a property in Granada Hills. They bought their Arleta home in 2001 and have built equity despite the decline in home prices. With two daughters, ages 6 and 3, Haydee Cuervo said it was time to look for a house with a bigger backyard and on a quieter street.

"We want a big treehouse and a play area, and the place that we found has a really cool private backyard," Cuervo said. "The new house was not only a better location for us, but it was kind of what we wanted for our girls."

alejandro.lazo@

latimes.com

California fights back against the foreclosure scourge

The California legislature is throwing its weight behind Obama’s ongoing efforts to stem the foreclosure crisis on a number of State and local government fronts. The latest efforts by Senator Mark Leno and President Tem Darrell include a Bill aimed at giving distressed home owners more opportunities to beat the foreclosure blues. The Bill was advanced by the California Senate Banking, Finance and Insurance Committee on Wednesday, removing one more impediment to it becoming law.

Leno and Darrell’s efforts had received further moral support the day before, when the San Jose City Council joined forces with the Housing Trust of Santa Clara County to unlock $25 million of pending Federal support waiting to assist neighborhoods under the foreclosure hammer.

Let’s hope these two initiatives thwart the tidal wave of foreclosures that are putting Californian Americans out of their homes while they cause severe collateral damage to the neighborhoods they once lived in.

The mortgage disaster, for indeed it has become one, is a matter for public debate and a test for public policy makers. Foreclosures are far more than a spat between financially irresponsible borrowers and unbending lenders – they’re also changing the social landscape as nearby neighbors face tumbling property prices and derelict yards around abandoned homes.

It’s just not good enough for banks to walk away from the mess they helped create. Whatever happened to the friendly socially responsible jingles they previously used to advertise their services?

Several San Jose neighborhoods including Alum Rock Edenvale have been savaged by foreclosure knock-on effects which have come on top of already shrinking budgets. Let’s hope the $25 million granted through the American Recovery and Re-Investment Act will be wisely spent and help as many Californian Americans as possible. With this in mind, Alum Rock has combined forces with the .Silicon Valley Housing Trust and Neighborhood Housing Services to create San Jose Neighborhood Stabilization Program, with the avowed intention of optimizing community participation. The new body plans to take over and rehabilitate approximately 250 foreclosed and abandoned homes oer the next three years before selling them on to low and moderate income buyers.

The pending Californian State Legislation contains two important provisions. When passed, all mortgage providers in the state will be legally compelled to complete loan modification evaluations before they will be allowed to start the foreclosure process. The second provision will put a stop to a gap in the law that currently prevents foreclosed borrowers from reversing foreclosures caused by service provider errors, and give them a way to right the wrong.

It’s hard to believe that, right now, lenders foreclose before the evaluation process has been completed, and walk away from their own mistakes leaving a family in the street. Let’s hope America will never be the same again.

That’s not to say that Federal homes programs haven’t moved the situation forward. At least the banks are finally beginning to feel the pressure, and, if all these efforts come together, we can start keeping Americans in their homes again.

Are you personally affected by the foreclosure crisis? There’s plenty more to read about it at www.foreclosureconnections.

Foreclosures Hit Rich and Famous

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.

Banks had scheduled a foreclosure auction of Richard Fuscone's Westchester County, N.Y., mansion this week. But the former top Wall Street executive declared personal bankruptcy, delaying the auction.

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 oreclosure 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 oreclosure 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.

Mr. Cage had tried to sell his 11,817-square-foot Bel-Air property for $35 million but failed to get any offers, said James Chalke, a real-estate agent who had the listing. At a foreclosure sale Wednesday, the property attracted no bids from investors and so was acquired by the foreclosing lender. Annett Wolf, a spokeswoman for Mr. Cage, said he had no comment.

A representative of Mr. Cecchi Gori, producer of more than 200 films including "Il Postino" and "Life is Beautiful," said his financial situation is improving. In Florida's Miami-Dade County, the three largest foreclosure filings initiated against homes in the past six months involved a 4,655-square-foot home in Sunset Islands; a 8,443-square-foot house in Coral Gables; and a condo in Miami Beach, according to Peter Zalewski, a principal of Condo Vultures. All three had mortgages of $3.5 million to $4 million.

Mortgage defaults began to surge in late 2006, mostly among borrowers with subprime mortgages, those for people with weak credit records or high ratios of debt income.

Over the next few years defaults spread rapidly to better-heeled borrowers, especially those who got loans without documenting their income. At the end of 2009, nearly eight million households, or 15% of those with mortgages, were behind on mortgage payments or in the foreclosure process. Wealthy people have the means to stretch out the distress process, sometimes for ears.

"It's very, very difficult for these people to believe they've had such a severe reversal of fortune," says Maggie Navarro, a real-estate agent in Pasadena, Calif.

“ Two of the three richest people on the planet: Warren Buffett and Carlos Slim, still live in their original modest houses. Every wonder how they got to be so rich? ”

—Michael Baldridge

Marc Carpenter, a San Diego-based foreclosure specialist, adds that while it's much harder for potential buyers to get loans, there are also fewer buyers who can pay for top-dollar properties. "The upper end is definitely a lagging indicator," he says.

In his bankruptcy filing, Mr. Fuscone provided a list of his debts, including ones to the Greenwich Country Day School, American Express, Mercedes-Benz, a local hardware store, a pet store, and Richards of Greenwich, a fine-clothing store."My background is in the financial-services industry and I have been personally devastated by the financial crisis which came to a head in March 2008," Mr. Fuscone said in his bankruptcy declaration. "I have been sued by Patriot National Bank" as part of a foreclosure action. "I currently have no income for the 30-day period" following his bankruptcy petition.

C.W. Kelsey, owner of Greenwich Hardware, was among the local merchants owed money by Mr. Fuscone, though he wouldn't say how much.

"Traditionally, the majority of our credit problems were contractors," he said. "Now there are people you'd never expect two or three years ago to have problems, who live in multimillion dollar homes."
—Nick Timiraos and Josh Barbanel contributed to this article.

Building inspector labors amid foreclosure crisis

By Chelsea Phua
cphua@sacbee.com
Published: Tuesday, Apr. 6, 2010 - 12:00 am

Sometimes the garbage comes up to Kyle Caluya's knees. Sometimes the flies are so thick that the wiry building inspector can hear them buzzing even before he enters an abandoned home.

"And the smell," Caluya said. "It knocks you over."

Few people experience the dirty underbelly of the home foreclosure crisis on a daily basis like Caluya, one of four field inspectors assigned to the city of Sacramento's vacant building program.

Launched in 2007 to combat urban blight, the program has grown from three employees and about 200 cases to a team of eight. There are now more than 500 cases, and Caluya said about 90 percent of those are foreclosed properties.

"It got worse with the foreclosure crisis," said Pat Melanson, the program's supervisor. "We just never got caught up. We are always behind."

The department sends letters to the "owners of record" and banks to inform them of the violations and penalty fees. But recipients often do not respond, said Ron O'Connor, code enforcement's operations manager.

The vacant buildings are susceptible to vandalism, theft and fires often set by transients trying to keep themselves warm. The inspectors secure the buildings, boarding them up – sometimes for a second or third time – to keep squatters out. Each building has to be inspected every 30 days to make sure it is not a hazard to the neighborhood.

"It's frustrating," Caluya said. "This is a repetitive type of enforcement we do."

Every day, Caluya inspects a dozen buildings in Oak Park, trudging through an array of debris – beer cans, hypodermic needles, used condoms and feces – that cover the floors of abandoned properties. He canvasses basements and attics, checking for exposed wires and other code violations.

"We never know what we get into," he said.

One sunny March afternoon, Caluya pointed out a yellow wire cutter and dismembered wires amid the debris in the basement of a white bungalow with green trimmings on 12th Avenue. Whoever was stealing the wires left in a hurry or plans to return for his or her tool, Caluya said. The copper wires can be recycled for cash.

It's common for Caluya to encounter a homeless person seeking refuge inside a dilapidated building. Some of them bolt through broken windows when they hear Caluya announce "building inspector" as he enters; others stagger out in a drunken stupor.

Once, Caluya said he came across a prostitute and her john in the backyard of an abandoned single-family home on Bigler Way, off Martin Luther King Jr. Boulevard.

Finding people in compromising situations isn't the best way to make friends, but Caluya has mastered the art of defusing potentially hostile confrontations with unpredictable down-and-out strangers.

"If we are not confrontational, if we allow them the chance to leave, they will," Caluya said.

After all, at 5-foot-10-inches tall and 160 pounds, Caluya does not cut an intimidating figure. On a few occasions, Caluya has had to call for police officers to evict belligerent squatters.

But he's on a first-name basis with some of the squatters that he sees regularly.

"I see them in one building. I kick them out and they go to the next street, a few blocks or yards away, and sometimes, even right next door," he said.

"Martin," a Latino in his late 30s, is one of the transients Caluya meets frequently. (Caluya doesn't know his last name.) Caluya said he once caught Martin house-hopping from a single-story white house in the 4700 block of 36th Street to a two-story tan stucco home across the street. Both were in foreclosure at the time. Caluya asked Martin to leave both buildings, only to find him an hour later in another nearby house on 23rd Avenue, stripping copper wires from its walls.

"What are you doing, Martin?" Caluya said.

"I'm recycling," Martin replied, according to Caluya.

"It's not yours to recycle," Caluya chided him in response.

In February, the two homes were damaged by fires believed to have been set by transients, underlying the dangers vacant properties pose to the neighborhood.

"It's been a nightmare," said Robbin Ware, who lives on 36th Street, close to the two homes. One was recently purchased by a new owner.

Code enforcement manager O'Connor said the department empathizes with the neighbors' frustrations.

"But there's only so much we can do," O'Connor said.

Freddie Mac to auction foreclosed homes
Thu Apr 1, 2010 5:31pm EDT

By Al Yoon

NEW YORK, April 1 (Reuters) - Freddie Mac (FRE.N) on Thursday said it would auction nearly 300 foreclosed homes in Las Vegas and Southern California this month, seizing on a federal plan that will help new borrowers with downpayments.

Freddie's plan will follow a similar effort by Fannie Mae to sell more than 85 homes at an auction in Phoenix on April 11.

Freddie Mac said buyers at its April 24-25 auctions may qualify for assistance under the federal government's Neighborhood Stabilization Program. Under the program, homebuyers may be eligible for closing costs and downpayment assistance when they buy distressed homes in designated hard-hit areas.

The auctions are timed ahead of the expiration of the first-time homebuyer $8,000 tax credit. Buyers must sign contracts by April 30 and close on the sale by June 30 to qualify for the credit.

Moving foreclosed properties is a priority for Fannie and Freddie, which were seized by the government in September 2008 and are relying on government support to help plug shortfalls caused by rising delinquencies and foreclosures.

Through auctions, Freddie Mac hopes to give individual homebuyers a greater chance of winning properties in markets where investors often have an upper hand with all-cash transactions, a spokesman said.

The inventory of homes owned through foreclosure by Freddie Mac rose 54 percent last year, to 45,047 as of Dec. 31. Fannie Mae's inventory rose 36 percent to 86,155. (Editing by Leslie Adler)

Good timing could reap double tax credits

Kathleen Pender

Thursday, April 1, 2010

More Net Worth

Some home buyers in California could get a federal tax credit worth up to $8,000 plus a new state credit worth up to $10,000 if they time their purchase just right over the next three months. But double-dipping will be tricky and won't come without risks.

One couple who lucked out are Sibel Demirmen and Scott Henry of San Francisco, who are purchasing a home, their first, in San Rafael's Terra Linda neighborhood.

They were planning to close escrow on April 30, and knew they qualified for an $8,000 federal home-buyer tax credit.

To get the federal credit, buyers must - among other things - close before May 1 or enter into a binding contract before May 1 and close before July 1.

Last weekend, they learned that if they could delay their close until after April 30, they could also qualify for the new California home-buyer tax credit, which was signed into law last week. The state credit is worth up to $10,000, spread over three years.

The seller agreed, and on Monday they signed an addendum to their contract postponing the closing until May 4.

"I was elated. I was ecstatic. I was thrilled," says Demirmen, a singer, music teacher and mother of two.

Although the prospect of double-dipping will excite many house hunters, "I don't think a ton of buyers will get both and benefit from both credits," says Renee Rodda, editor of Spidell's California Taxletter.

To get both, buyers must meet two sets of strict criteria. Timing it right will be tricky, especially in foreclosure or short sales, which can involve long lead times and many parties.

People who have already locked in a rate on a mortgage could lose the rate, or have to pay an additional fee to keep it, if they postpone their closing.

Matt Duffy is buying a home with his wife in Santa Rosa in a short sale, in which the purchase price is less than the debt on the home.

The seller accepted their offer in January. Last week, they heard that both lenders agreed to the deal as long as it closes by April 26.

"We said, 'Cool, we can do that.' We have our mortgage and the federal tax credit," he says.

After reading my Sunday column on the state credit, Duffy realized he could get that too if he delayed his close.

"As it turns out, we are not going to be able to do that. The second lender is demanding we close by April 26 or somebody has to pay an additional $20,000," he says.

"I am of course upset we can't move the date. But we don't want to lose the house. We will still get the federal credit, which is the better of the two credits."

The federal credit: The federal credit is 10 percent of the purchase price, up to a maximum credit of $8,000 for first-time home buyers or $6,500 for longtime homeowners who buy a replacement home. Either type of buyer can purchase a new or existing home.

Buyers claim the federal credit when they file their tax return (or amend the prior year's return). This credit is refundable: The full amount will be paid out, even if you have zero federal tax liability or the credit is bigger than your federal tax.

You cannot get the federal credit if your income is too high or the home was purchased after Nov. 6, 2009, and cost more than $800,000.

The state credit: The California credit is the lesser of 5 percent of the purchase price or $10,000. First-time buyers can purchase a new or existing home but repeat buyers can only purchase a new home that has never been occupied.

The California credit is spread over three years, up to $3,333 per year. It is not refundable: If you owe less than $3,333 in one (or more) of those years, you lose the difference that year. Even if you owed $3,333 before you owned a house, you might owe less after because of all the new tax deductions.

The state credit has no income or purchase-price limits. But here's the rub: Some buyers who fall below the income limits for the federal credit might not owe enough California tax to get the full benefit of the state credit.

To get the California credit, you must close escrow between May 1 and either Dec. 31 or whenever the money set aside for the program runs out, whichever comes first. The money is likely to run out long before Dec. 31.

Alternatively, you can reserve a state credit for new construction by entering into a binding contract between May 1 and Dec. 31 and closing before Aug. 1, 2011. People who do this won't get the federal credit because they entered a contract after April 30.

Getting both: Both credits require you to buy the home as your primary residence. Both define a first-time buyer as someone who has not owned a home in the three years prior to purchase.

In short, to get both credits you must be in contract on or before April 30 and close between May 1 and June 30 - and meet all other requirements.

Buyers who are already in contract and want to postpone their closing need to get the seller and lender to agree.

"Sellers might be flexible because it's still a buyer's market, but they may want something in return," says Richard Redmond, a mortgage broker in Larkspur.

"If you have a loan locked in with a close date in April and you want to extend it, you may have to pay a fee or get a higher interest rate," Redmond adds.

Buyers should consult a well-informed tax person and make sure they understand both credits.

Octomom Gets Reprieve From Foreclosure

3/25/2010
Octomom's home is saved.
Calvinita Brooks

"Octomom" Nadya Suleman was in danger of losing her home to foreclosure due to her inability to make her March payment and a $450,000 balloon payment.

Vivid Entertainment, a popular porn production company, offered to help out if Octomom made an appearance in an adult film for the final payment on her home.

As The Boston Herald reported, "[Amer Haddadin] said Suleman’s father purchased the home under a deal in which Haddadin would carry the $450,000 loan for a year until the family could gather enough money to provide a substantial down payment."

TMZ reports that Haddadin, who actually sold the house to the Octomom's father and still holds the mortgage, will work with Suleman provided she becomes more financially responsible in making payments over the next few months. In the meantime, Suleman's father is looking for a new loan.

Now that Nadya Suleman has received the good news, It appears that she will not lose her home after all; and she won't have to take her clothes off for Vivid.

Delinquent Borrowers Catch Up on Insured Mortgages

By Andrew Frye

March 31 (Bloomberg) -- Borrowers who caught up on overdue mortgages outnumbered people who became newly delinquent on insured home loans for the first time in almost four years. PMI Group Inc. led mortgage insurers higher in New York trading.

In February, 68,675 homeowners with privately insured mortgages fell into default, compared with 80,758 who got back on track, a report today from the Washington-based Mortgage Insurance Companies of America said. In January, MICA reported 52,528 new defaults and 31,616 cures. The trade group last reported that recoveries exceeded defaults in March 2006.

“The significance is substantial, it’s enormous,” said Matthew Howlett, an analyst with Macquarie Group Ltd. Recoveries outpacing new defaults “signals a turning point” for mortgage insurers, he said.

MGIC Investment Corp., the biggest U.S. mortgage insurer, No. 2 Radian Group Inc. and No. 3 PMI are facing fewer claims as the economy recovers and the Obama administration works with the nation’s biggest banks to prevent foreclosures. Philadelphia- based Radian, which has reported three straight annual losses, said in February that delinquencies were slowing and may fall this year.

“We know there has been a slowdown in new defaults,” Radian Chief Financial Officer C. Robert Quint said on a Feb. 23 conference call with analysts and investors. “I actually expect it to be flat and slightly down throughout the year.”

PMI, based in Walnut Creek, California, rose 88 cents, or 19 percent, to $5.42 in New York Stock Exchange composite trading. MGIC rose 84 cents, or 8.3 percent, to $10.97. Radian advanced $1.03, or 7.1 percent, to $15.64.

More Foreclosures

The U.S. Treasury Department reported on March 12 that lenders in the Home Affordable Modification Program led by Bank of America Corp. and JPMorgan Chase & Co. successfully converted 168,708 trial plans into permanent loan revisions through February, up from 116,297 a month earlier. More than 835,000 additional borrowers were in trial repayment plans, Treasury said.

“The government modification programs are starting to have an impact,” said Howlett of Macquarie. Howlett said the improvement in the so-called cure rate may allow insurers to reduce reserves and he expects Milwaukee-based MGIC to report its first quarterly profit in more than two years in the first three months of the 2010.

Mortgage insurers, which pay lenders when foreclosure fails to recoup costs, have suffered from a surge in claims as borrowers struggle to meet payments or refinance debts. About 2.82 million U.S. homeowners lost their properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc. said in January.

Foreclosure fund gets $600 million to help residents of 5 more states save homes


By Renae Merle
Tuesday, March 30, 2010

The Obama administration announced Monday that it is expanding by $600 million a fund aimed at helping states tackle the foreclosure crisis with locally tailored approaches.

Special report: Foreclosure

State housing finance agencies from North Carolina, South Carolina, Ohio, Oregon and Rhode Island will share $600 million to test new approaches to helping borrowers save their homes from foreclosure. That is in addition to $1.5 billion set aside for California, Nevada, Arizona, Michigan and Florida when the program was initially announced in February. Both initiatives will be financed through the government's Troubled Assets Relief Program.

While the first round of funding targeted states that had seen home values decline more than 20 percent, the second round of states were picked because they had high concentrations of people living in economically distressed areas, including counties where the unemployment rate exceeded 12 percent in 2009.

After the Obama administration announced the initial program, it immediately received pleas for help from other states hit hard by the foreclosure crisis, including Ohio. "This is a victory for Ohio's struggling homeowners," said Inez Killingsworth of Empowering and Strengthening Ohio's People, a nonprofit group that had lobbied for the state to be included in the program. "This is an important step, one that understands the great need in Ohio."

Again, the state housing finance agencies are tasked with developing innovative approaches to the growing challenge that unemployment and falling home prices have posed to mortgage relief efforts. That could include incentives for lenders that cut the principal owed by owners who owe more than their home is worth, known as being underwater. The "innovation funds" are expected to address gaps in the federal response to the foreclosure crisis.

"It's attempting to enable local innovation," said Herb Allison, a Treasury assistant secretary. Many of the programs are likely to be focused on helping unemployed borrowers, he said, but not all of them.

This comes after the Obama administration announced last week it was revamping its national approach to foreclosure prevention. The new federal guidelines require lenders to cut the payments of homeowners who can prove they have lost their job for at least three months. It also increases incentives for lenders to cut loan balances for borrowers who owe more than their homes are worth because of falling home prices.

Overall, government official have said, they hope their efforts will help up to 4 million borrowers avoid foreclosure. If that goal is reached, millions of borrowers will still lose their homes to foreclosure over the next few years but, officials said, perhaps enough will be prevented to generate some stability in the housing market.

March 28, 2010
Economists Eye Spring Boost in Home Sales
Approaching Expiration of Homebuyer Tax Credit Plus Low Prices and Interest Rates Mean It's a Good Time to Buy

(CBS) The White House says the new mortgage relief plan announced late last week will help homeowners struggling to refinance even if they owe the bank more than the house is worth. Meanwhile, a homebuying incentive already in place may soon start paying off, as CBS News correspondent Elaine Quijano reports.

Steve and Patricia Kuczek are on the fence...

"What we're looking at, with the tax credit, if this is the time, we should either remodel or go out and look for and buy something new," Steve Kuczek said.

For homebuyers in good financial shape, this could be the best spring in years.

The federal tax credit - up to $8,000 for first-timers, and up to $6,500 for current homeowners - will hit a deadline on April 30.

"With the added incentive of the homebuyer tax credit there could be some surging activity as the tax credit deadline approaches," said Lawrence Yun chief economist at the National Association of Realtors.

Mortgage rates, which the government has helped keep steady at a low 5 percent, are expected to rise to 5.5 or 6 percent by years end - another reason to buy sooner rather than later.

"The market right now, if you're looking to buy, looks great," said Jay Brinkmann, chief economist at the Mortgage bankers Association. "Prices are at or near the bottom of what we're going to see, interest rates are only going up at this point; it's a time to move if you've got that option."

But despite all that, and bottoming prices, a rebound in homes sales still depends on the willingness of people like Patricia Kuczek.

"It's scary," she said. "Because of the economic situation, you don't want to pour all your life savings into a house when you maybe should be holding onto your savings who knows what the future's going to bring."

Also scary is the threat of the next wave of foreclosures. Another 8 million homeowners are behind and 11 million owe more than their home is worth.

"There is a looming shadow inventory," Yun said. "The foreclosure rate for 2010 could be just as high as in 2009, which was the highest ever."

But this year it seems buyers are bidding on foreclosed properties

For the Kuczeks, there are lots of deals to choose from.

"I think it is an opportunity," Patricia Kuczek said. "Yes, I think it is."

But it's still a giant step.

Obama's Home Loan Modification - Do you qualify?
Who is eligible for Mortgage Relief Loan Modification?

* Have the primary mortgage of less than $729,000
* May be default or at risk of the default
* The home should be owner occupied

Who is NOT eligible?

* Speculators, who bought as investment property
* Not a jumbo mortgage loan
* Those who misrepresented their income in the home loan application

What you should do?

* If your total debt (like car loans etc) is more than 55% of your income, you are still eligible but should undergo debt counseling
* You should prove that you have income to make loan repayments.
* Check this Mortgage Modification Website to see if you Qualify for Any Loan Modification

Benefits you will get

* Refinance mortgage loan to low interest rates, rates cannot be less than 2%
* The lender will lower the monthly payment to 31% of the gross income.
* The refinance will last for 5 years
* Borrowers who are prompt in making loan repayments will get incentive bonus of $1000 per year for 5 years

It is estimated that this could benefit 8 to 9 million homeowners from the new home loan modification procedures. Even if you don't meet the above eligible requirements you might still qualify for other Mortgage Modification Programs.

Find if your mortgage Qualify for any Mortgage Modification Program

Some 650,000 troubled borrowers have been put into trial loan modifications under the president's foreclosure rescue plan, the Treasury Department said Tuesday. That number represents only 20% of eligible homeowners. Even if you don't meet the above eligible requirements you might still qualify for other Mortgage Modification Programs.

Every day you put loan modification off is probably costing you money. Homeowners whose loan have been scheduled for foreclosure or missed one or two payments should talk to their loan servicer immediately to postpone foreclosure. If you qualify for loan modification please reach out to your servicer or housing counselor. Please do not pay any upfront fees with out receiving any service.