RealtyStore Foreclosure Blog

Reuters writer, Joanne Morrison, reviews the US single-home market using short term economic indicators to predict future trends for our housing market.

Prices of U.S. single-family homes plunged a record 14.4 percent in March from a year earlier, while consumer confidence slumped to its lowest in 16 years in May as gasoline prices surged.

The Standard & Poor’s/Case Shiller composite index of 20 metropolitan areas released on Tuesday showed prices of previously owned homes fell 2.2 percent in March, deepening their year-on-year decline.

Separately, the Conference Board said its consumer confidence index slumped to 57.2 this month from 62.8 in April as rising gasoline costs and falling home prices made Americans increasingly nervous both about current conditions and the future.

“In terms of prognosis, there remains no reason for the situation to stabilize and every reason for it to continue to deteriorate yet further with price declines accelerating,” said BNP Paribas economist Richard Iley, referring to the record declines in the S&P report.

Prices of U.S. Treasury securities fell on Tuesday, weighed by ongoing concerns about inflation amid persistently high energy prices. U.S. stocks ended higher with the Dow Jones industrial average up 68 points. The dollar rose against major currencies.

Falling home prices have led to a wave of foreclosures that is expected to grow worse before it gets better. The crisis in foreclosures, which pressure prices even lower, has spurred plans by regulators and lawmakers to keep borrowers in their homes by forgiving a portion of their loan principal.

Read the full article at Reuters - Single-Family Home Prices Tumble in March

It may be the biggest case of legal thievery of the U.S. consumer in history. The real estate crisis is turning out to be anything but a normal market correction. The national foreclosure epidemic has topped 2.4 million foreclosures and like a locomotive it’s racing full speed ahead.

America’s foreclosure epidemic has widened and its tentacles now span across all income levels into the conventional mortgage market. A forecast 5.6 million properties will be foreclosed unless government powers intervene. The crisis has gotten so out of hand that many homeowners are beginning to fight back in what ever way they can.

Housing Predictor explores the crisis and details the story of one man, who is representative of at least hundreds of thousands in the throws of foreclosure. Howard bought a home only to become unable to handle higher mortgage payments when his adjustable rate mortgage reset.

Victimized by bad timing and nearly impaled by conditions beyond his control, he refinanced his home only to become a victim of a bank. Now he’s stopped making payments on his home in California and may well soon be foreclosed. His story is representative of millions of American homeowners who have been caught in the web of deceit by the nation’s home mortgage business.

Former mortgage consultant and Housing Predictor columnist Tony Evans chronicles Howard’s plight in his new column entitled “Banking Trickery Revealed.” Tony reports from the insider’s viewpoint on the plight of what could turn into America’s greatest financial nightmare.

Through its team of researchers and independent journalists, Housing Predictor forecasts more than 250 local housing markets in all 50 U.S. states, and provides the inside track for consumers to understand the nation’s most challenging economic crisis in modern history.

To read Tony’s new column, check your markets forecast and search for many of the best deals in real estate visit http://www.housingpredictor.com

In a recent article, North County Times writer, Zach Fox, predicts the fate of the California housing market through the end of this year.

“Just as April’s sales data was the best in months and provided some encouragement for real estate agents, the month’s huge foreclosure numbers offered more ammunition to housing market bears who see San Diego County’s housing recession dragging on for two or three years. All indications are that North County will see more foreclosures, not fewer, come up for sale over the next six months:

Fewer than half of San Diego County variable-rate subprime loans - where interest rates jump after a set period and typically carry high payments because of a borrower’s poor credit score or low down payment - have already seen payments escalate, according to a report by the New York Federal Reserve Bank.

Read the full article at: NCTimes - HOUSING: Foreclosure crisis to grow before it shrinks

Matt Woolsey with Forbes.com alerts people of foreclosure scams who are interested in purchasing a foreclosure property.

“Delinquent homeowners looking to break free from default notices are getting tricked by brokers promising to save them from foreclosure, only to make off with thousands in fees or what home equity is left.

“Take rent-to-buy scams. In cases like these, a fraudulent rescue company convinces a homeowner to sign over the title while building equity as a renter. The homeowner avoids foreclosure, but risks being evicted by the very firm that promised to save his home.

“The situation is bad enough in Florida, one of the nation’s foreclosure capitals, that State Attorney General Bill McCollum has filed suit against National Foreclosure Management, a mediation company, for allegedly defrauding troubled homeowners; fraudulent rescue companies in Illinois have been increasingly penalized, while in Massachusetts the for-profit practice of foreclosure rescue transactions has been banned.”

Read the full article at Forbes - Foreclosure Scams Lurking in Your Neighborhood

Union-Tribune staff writer, Emmet Pierce, covers the San Diego foreclosure market. In his latest article, he states:

“Nearly 50 San Diego County dwellings per day were lost to foreclosure in April, as the tally of mortgage failures rose 169 percent above last year, DataQuick Information Systems reported yesterday.

Buckling under the weight of risky adjustable-rate loans, many borrowers are giving up on ever bringing their debt current.

Serafina Jahries and her husband, Chris want to buy a foreclosed home. Most of the prospects they’ve seen need extensive repairs. “Some of the people have lost their jobs and they can’t afford their payments, but a lot of them just don’t want the home anymore,” said Linda Ring, a real estate agent who specializes in foreclosures. “They don’t want to ride out the storm.”

April was the county’s 37th consecutive month of year-over-year increases in foreclosures and notices of default, the start of the foreclosure process, the DataQuick research firm reported. There were 1,413 residential foreclosures countywide, a 35 percent increase from March but a rise of nearly 170 percent over April 2007.

The surge in loan failures underscored that it’s too soon to expect an end to the region’s housing problems, despite recent upticks in home sales and prices. DataQuick previously reported that the county’s median home price rose $5,000 in April to $400,000 after falling for nine months in a row.

The full article can be read at SignOnSanDiego.com - Foreclosure Forecast Grim

CNNMoney.com writer, Les Christie, criticizes the U.S. government’s plan to help homeowners from foreclosure.

“Several months ago the Bush administration came up with a great plan to fix the foreclosure problems plaguing the U.S.: The FHA Secure Loan. This loan was to be made available to homeowners who were having, or had, their variable interest rates adjusted and needed to refinance in order to keep making payments. So just how many people has the FHA Secure program helped avoid foreclosure since its inception? Try 3,000, according to an CNN Money.

“Though only 3,000 people have been saved from foreclosure, the FHA Secure program has become widely popular, with over 200,000 loans issued to date according to CNNMoney. While the program was meant to help people avoid foreclosure it has turned out to be a great program for people looking to refinance. The average homeowner refinancing with an FHA Secure loan is saving approximately $400 a month, according to the article.

“Many of the people using the FHA Secure program could continue to make their payments without a problem, and additionally many of them even had other options for refinancing out of their existing mortgages. For a program that was meant to help prevent foreclosure, I’m just not sure how effective it is. It is certainly helping people save money, but when the time comes that the government has to start coming good on these guarantees, taxpayers are going to have to foot the bill. Lending out at high LTVs to high risk homeowners is not appealing to banks for a reason, so if we think we are going to avoid having to pay up when all is said and done, we are sadly mistaken.”

The full article can be read at CNN Money

Dean Baker and Liz Chimienti from the Center for Economic and Policy Research share their view on the foreclosure crisis.

The government is stepping up to help home owners keep their houses while protecting the economy from going deeper into recession as the US housing market declines. With foreclosure rates rising every day there are many government regulations that could help stop the foreclosure crisis. Of those regulations, here are three things that will not help end the foreclosure crisis:

1. Subsidies for Home Buyers

“Homeownership can be a useful way for families to accumulate wealth and to provide good secure housing. However, if families are buying homes with bubble-inflated prices, then they are not likely to accumulate any wealth in their home, since the price is likely to fall back to its trend level before they sell their home. (The median period of homeownership for moderate-income families is just four years.) Furthermore, they are likely to pay far more in housing costs each year, than they would to rent a comparable unit.”

2. Artificial Price Floors

“This has nothing to do with linoleum, and everything to do with how prices get set for homes that are refinanced and backed by FHA loans as proposed in legislation being considered by Congress.

If home prices continue to decline, and the government issues guarantees of mortgages at prices that are near current levels, then the government is likely to face a substantial cost associated with a high default rate. The most important factor determining both the default rate and the cost of each default is the movement in house prices.”

3. Incentives to Build More Homes

“Not letting prices fall back to their equilibrium (see above), or giving generous tax credits to homebuilders will encourage them to build more homes. The more homes that get built, the greater the over supply. This will imply a longer adjustment process and a larger price decline. There is no public interest in taking any steps that can delay the process of price adjustment in the housing market. This process is very painful, but delaying it will only make it more painful.”

Read the full article

More housing news can be read at CEPR

Home owners who get into investment real estate should be very careful about exceeding their spending limits, like Shawn Forgaad. Read his 9 home foreclosure story…

“Shawn Forgaad, software product manager from Santa Cruz, Calif., says he speculated in a major way during the boom, buying nine houses with Pay Option or negative amortizion loans. Now his house of cards is crashing down.

One out of every 519 homes nationally received a foreclosure filing in April, RealtyTrac figures. Some 53,000 were repossessed. The country, meanwhile, marches on to what could be one million foreclosures for the entire year. Washington debates what to do to fix the mess.

California cities account for six of the ten U.S. markets with the highest foreclosure rates. Forgaad, the speculator, says he’s learned his lesson and is moving his family to lower-cost North Carolina where they can start fresh.”

Read the full article:

http://www.businessweek.com/the_thread/
hotproperty/archives/2008/05/one_man_nine_fo.html

RealtyStore (www.realtystore.com), the nation’s leading provider of foreclosure listings, released its quarterly Nevada Foreclosure Report.

RealtyStore.com recorded 17,307 notices of default (NODs) statewide for Q1 2008. This was a 32% increase from those recorded in Q4 2007 and a 139% jump over Q1 2007. An NOD is filed by the lending institution, when a homeowner falls behind on mortgage payments. NODs provide important information about which homeowners have home loans they cannot afford. Nevada has maintained the nation’s highest foreclosure rate for nearly two straight years. For Q1 2008, 1 out of every 52 households in Nevada received a default notice, which is more than 7 times the national average.

“For almost two years running, Nevada has been plagued with the highest foreclosure rate in the nation. This is a result of the dramatic increase in speculative building starting in 2004 when home prices soared 47%,” said Tim Chin, CEO of RealtyStore. “Now, as the housing market corrects, investors are running for the hills as inventory mounts and prices rapidly decline.”

More than 90% of the foreclosures in Nevada are occurring in Clark County. Clark County, home of the gaming capital, better known as Las Vegas, started off the first quarter with 15,876 defaults. This was more than double the 6,651 default notices for Q1 of last year. The foreclosure problem in Las Vegas resulted from home buyers gambling on prices continuing to climb. Speculators used adjustable-rate-mortgages (ARMs) and sub-prime loans to get their foot in the door hoping to use the home’s projected appreciation to later refinance under more affordable fixed-rate loans. Unfortunately, the tide turned and Nevada’s housing market has crumbled.

With a huge wave of hybrid ARMs due to reset this spring, many Nevada homeowners will find their payments ballooning by as much as 50%. With property values dropping almost 20% since last year, distressed borrowers will have little opportunity to refinance into more affordable loans. Left to drown in their mortgage payments, an increasing percentage of homeowners will enter the foreclosure process. This will further suppress housing prices as bargain-priced foreclosures take a bigger share of the Nevada home sale market. In Las Vegas, nearly half of all homes currently on the market are foreclosures. With inventory increasing and home sales at their lowest levels in 13 years, the Nevada housing market will get worse before it gets better.

About RealtyStore.com: Founded in 2005, RealtyStore.com is the fastest growing, most trusted provider of foreclosure listings and information in the nation with over 1 million pre-foreclosure, foreclosure auction, bank-owned, and tax sale property listings. Collected from hundreds of public and private sources, RealtyStore’s proprietary database includes extensive property characteristics (including pictures and maps), default and tax information, comparable home values, and neighborhood demographics information. For more information, visit http://www.realtystore.com.

Foreclosure flood: 1,000 auctions per day in California

LA Times reports in April there were one thousand home auctions per day in California. “California’s foreclosure crisis passed another ominous milestone in April, when more than 1,000 foreclosed homes were auctioned off every weekday at courthouses across the state”.
http://latimesblogs.latimes.com/laland/2008/05/foreclosure-flo.html

According to our California Foreclosure Report, California’s foreclosure activity has increased 38% in the first quarter of 2008. Our California foreclosure statistics is broken by county and shows the change from the fourth quarter of 2007 to the first quarter of 2008.

Q1 2008 California Foreclosure Statistics