A copied and pasted article, and EXACTLY why stalling foreclosures is a BAD THING!

Flawed Foreclosure Documents Thwart Home Sales
Richard Clark, left, with his agent, Kevin Corasio, is trying to buy a foreclosed home in Florida.
Chip Litherland for The New York Times
OCALA, Fla. — Amanda Ducksworth was supposed to move in to her new home this week, a three-bedroom steal here in central Florida with a horse farm across the road. Instead, she is camped out with her 7-year-old son at her boss’s house.
Richard Clark had a deal to buy this home in North Fort Myers, but it has been suspended.
Like many buyers across the country, Ms. Ducksworth was about to complete the purchase of a foreclosed house when it suddenly went off the market. Fannie Mae, the giant mortgage holding company that buys loans from commercial lenders, is pulling back sales of homes that might have been foreclosed in bad faith.
“I gave up my rental thinking I would have a house,” said Ms. Ducksworth, a 28-year-old catering assistant. “Now I’m sharing a room with my son. What the hell is up with that?”
With home sales this past summer at the lowest level in more than a decade, real estate is ill-prepared to suffer another blow. But as a scandal unfolds over mortgage lenders’ shoddy preparation of foreclosure documents, the fallout is beginning to hammer the housing market, especially in states like Florida where distressed properties are abundant.
“This crisis takes a situation that’s already bad and kind of cements it into place,” said Joshua Shapiro, chief United States economist for MFR Inc., an economic consulting firm.
Three major mortgage lenders — Bank of America, GMAC Mortgage and JPMorgan Chase — have said they are suspending foreclosures in the 23 states where they first need a judge’s approval. They are also waving off Fannie Mae from selling any of the foreclosed homes whose loans they sold to Fannie.
The companies say they are reviewing their operations after disclosures that employees signed documents without determining the accuracy of the material, as is required by law.
Those reviews are throwing into limbo hundreds of thousands of foreclosures and pending home sales, analysts estimate, though the lenders and Fannie Mae have been mostly silent about precise numbers and other specifics.
More broadly, the revelations about the sloppy paperwork are emboldening homeowners and law enforcement officials in many states to question whether lenders rightfully hold the notes underlying foreclosed properties — further chilling the housing market.
Distressed properties, many of which are in foreclosure, make up about a third of all home sales. “Foreclosures are going to slow to a crawl,” said Guy D. Cecala, publisher of the trade magazine Inside Mortgage Finance.
Of the 23 states where foreclosures need court approval, Florida has by far the most trouble — about a half-million cases clog its courts — and the moratoriums are having a noticeable effect.
Because most lenders sold their mortgages to Fannie Mae, it is largely that company that has been sending e-mails to real estate agents about putting off deals and removing
houses from the market. In most cases, the agents are being told the freeze will last 30 to 90 days, but agents say there is no way to know for sure.
A snapshot of the problems can be seen at the real estate agency that sold Ms. Ducksworth her home, Marc Joseph Realty, based in Fort Myers.
The agency had 35 deals that were supposed to close this month. As of Thursday, Fannie had postponed 11 of them. Another handful of homes that did not have offers or were being prepared for market had also been withdrawn.
“If this wipes out half my inventory, that’s a scary thing,” said Bill Mitchell, the agency’s closing coordinator.
As he spoke, his computer pinged and another message from Fannie came through about withdrawing a house. It had the subject line, “Unable to Market Notice.”
Another client of the agency, Richard Clark, is caught in the foreclosure vise on both ends.
A delivery truck driver, Mr. Clark has gone through several rough years: his wife lost her banking job and they eventually separated; a vending business did not succeed; he fell behind on his home payments; and CitiMortgage rebuffed his efforts to restructure the mortgage.
With the prospect of being tossed out of his house in a foreclosure of his own, Mr. Clark, 62, cobbled together $58,000 — most of it from his parents — and successfully bid on a house in North Fort Myers that was in foreclosure. His offer on the house, with three bedrooms and two baths, a Jacuzzi tub in the master bedroom and a Key lime tree in the backyard, was finally approved on Oct. 1.
“It’s been a rocky two years,” Mr. Clark, a stocky man with a short pony tail, wire-rim glasses and a gold hoop earring, said while touring the rambling one-story home. “It’s a dream house for me.”
Multimedia
At least, it was. On Tuesday, Fannie suspended the deal. Mr. Clark said he did not know what to do. “I’m kind of hoping I have a place to live,” he said. “Now, who knows?”
It is possible the foreclosure on his current house in nearby Cape Coral — he has a court hearing on Dec. 7 — will also become caught up in the current problems, but Mr. Clark said he was not pleased by the prospect of staying there any longer.
“I’d rather just get on with it, get on with my life,” he said.
In the states far from Florida where foreclosures are an equally large problem but there is no judicial review — Nevada, Arizona and California — there were early signs this week
that the document crisis was spreading. The only time a foreclosure in those states enters a courtroom is when the borrower sues the lender, something few of those in default have the money or the will to do.
In a telephone interview on Wednesday, Gary Kent, a foreclosure specialist in San Diego who has 80 listings, said he had not heard from Fannie or any lender about withdrawing a property. All his deals were on track, Mr. Kent said.
But a few hours later, Mr. Kent said he had received an e-mail about removing a home that was under contract.
The message was from his title insurer, who said that Pittsburgh-based PNC Bank was imposing a 30-day moratorium on all foreclosure sales. (PNC declined to comment to a reporter.)
Mr. Kent’s confidence was shaken. “My buyer’s upset, my agent’s upset and I’m a little nervous,” he said.
Several factors are likely to delay many more foreclosed houses from reaching the market and finding new owners.
Law enforcement officials in several states, including Texas, Maryland and Connecticut, are demanding a suspension of foreclosures until lenders can prove they are using legal methods.
It is unclear how many lenders will go along.
In a move that sets up a potential showdown in Texas, one major lender, CitiMortgage, is arguing that it is being considered guilty until proven innocent by the state attorney general.
“We have no reason to believe our employees are not following our process, and therefore have no reason to stop foreclosures,” a Citi spokesman said.
Another factor is the reaction of the title insurers, who defend homeowners in disputes over a home’s ownership. Lenders require title insurance before approving a mortgage.
The crisis took many title insurers by surprise, said Kurt Pfotenhauer, the chief executive of the industry’s trade group, the American Land Title Association.
One possibility the title insurers are discussing is obtaining warranties from lenders against errors in their foreclosures. Every title insurer, Mr. Pfotenhauer said, “understands there is a brand new risk that has to be evaluated. It’s not at all clear that courts across the country are going to be reversing their earlier decisions on foreclosures. But we don’t know.”
In the meantime, buyers like Ms. Ducksworth here in Ocala are at a loss for answers.
“She’s in a mess, actually,” said Jim Haston, Ms. Ducksworth’s agent.
“I really don’t know what to tell her,” he said.
Chip Litherland for The New York Times

Let's talk about these banks STOPPING foreclosures!!

Last week I talked about this on Facebook and the opinions varied greatly. I am 100% SURE there are some cases where people were wrongly foreclosed upon, but the majority, without a doubt were done fair and square. You see, the person signing the affidavit has to swear they have personal knowledge as to the accuracy of the documents. Now, the clever people out there have figured out that when these employees are signing hundreds of these affidavits every day, there is NO way they can personally know this to be true.

Don't let fear based media reporting sway you!

On Thursday, September 16th the Eugene Register Guard published yet another article aimed at causing fear and panic. Please read the article and then come back to read my rebuttal.

http://www.registerguard.com/csp/cms/sites/web/news/sevendays/25297620-35/percent-august-2009-bank-sales.csp

Rebuttal:
Diane needed to do more research and verification for her article. I do not know from where RealtyTrac gets their information, but it is not correct as interpreted. Right now county records show 665 foreclosed properties in Lane County. This includes banks and private parties. A 30 second search in RMLS shows me there are 259 bank owned properties in active or pending status, suggesting 38% of foreclosed properties are listed. This doesn't mean the other 62% are being held. It can take a month or longer to get a house on the market after the sale date. My latest REO listing was very clean and nice and it will still take weeks to get on the market, just due to procedures. Diane's article shows 10% being listed. My guess is RealtyTrac's information includes houses which are currently in default, not yet foreclosed.
What experience did the Broker interviewed have in the REO market? There are agents in the area who have sold hundreds of REO properties and would have been a great resource to ask for more information.
Right now is a GREAT time to buy. Rates will likely be going up in the near future, so over a 30 year term, payments on a home purchased now will be lower and gives the buyer more purchasing power. We need more articles stressing the advantages of buying a home and less articles spreading fear and dread.
This article is just one more example of irresponsible fear based reporting by The Guard and other media sources.

I have sent my comments above to the Register Guard's letter to the editor. I generally get published when I do, so be watching for it.

A Distressed Property Study, by ME!

I have a new REO listing in a newer subdivision in Eugene. Part of my due diligence for the asset manager I was researching the neighborhood. What i found was quite disturbing and I thought I would share it with you.

86 Lots in the subdivision
In the last 9 months 8 homes (10%) have sold
Of those 8 homes, 4 (50%) were fair market
Of those 8 homes, 4 (50%) were short sales or REO

Currently there are 4 homes (5%) on the market
Of those 4 homes 3 (75%) are fair market
Of those 4 homes 1 (25%) are distressed.

With the subject and property next door coming on market it will change to:

6 active listings (7.5%)
3 will be fair market (50%)
3 will be distressed (50%)

For the 4 current active listings: average days on market is 117, average price per square foot is $136

For the 8 sold listings: average days on market is 192, average price per
square foot is $128

What this does not count are the homes which are currently delinquent.
Also, it shows that 50% of the homes currently on the market, or sold
in the last 9 months were distressed in some way, which is very high.

Of these 14 listings 2 were/are short sales. Their average price per square foot is $114.

Of the 14 listings 7 were/are fair market transactions. Their average price per square foot is $139

The remaining 5 were/are foreclosures and sold for $123 per square foot.

What I find the most disturbing is the following summary information:
Average price per square foot for FORECLOSURE properties: $123
Average price per square foot for FAIR MARKET properties: $139
Average price per square foot for SHORT SALE properties: $114

If you are wondering what this means, well, let me tell you. It means, as I have been saying, short sales are KILLING property values. The bank would rather (if it makes sense) take the short sale than foreclose because the costs to foreclose are so much higher. In addition, government programs are giving banks rebates (so to speak) for doing short sales. So if the bank can get all or some of the deficiency between the short sale pay off and the full balance, it works better for them.

So where is the problem? The problem is for the people next door to the short sale transaction. Their property value goes down an additional $9 per square foot based on the averages I presented above. For a home with 1,800 square feet, that means $16,200 in lost equity.

How Does This Remain Legal?

Let's talk about a home owner in distress. An investor comes along and gets the owner to agree to sell their house to the investor. The investor then opens negotiations with the bank. The "buyer" in the offer is one of the investor's employees. They don't use their company name as the buyer. The bank is then given the buyer's phone number, which is the company's phone number. When a Realtor is called out to do the BPO (broker price opinion), they are only allowed in the property escorted by yet another employee of this investor. The investor's employee then gives the Realtor a packet of information. This generally includes misleading comparable properties they want us to use as well as information regarding the offer on the table. It gets worse. I have even been given copies of letters from junior lien holders with the owner's account numbers.


While the investor is negotiating with the banks, they put the house in MLS at a much higher price. They market it with themselves as the seller. They are looking for an end buyer who will pay more.


They secure the buyer, and then they close escrow on the property. They are now officially the seller, though in MLS they were already representing that they were.


Here is a sticky point. Oregon law only allows Realtors to hold an earnest money check for three days. Prior to the investor taking title, the title company can't open an escrow file for it. They can't have two files open on the same house at the same time. So, they are unable to hold the check. We have checks sitting around for weeks at a time, waiting for a home.


I welcome your thoughts and opinions...

The random pricing strategy for short sales.

I just completed a BPO on a really great property and as I was looking at the active and sold comps out there, steam was coming out of my ears.
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The random pricing strategy for short sale properties never ceases to amaze me. The following is mathmatecially accurate, but I have changed the names and numbers to protect the not so innocent. After you read it, tell me how you feel about short sales. I want you to also remember every sale recorded will impact the value of YOUR property. So, if your neighbor decides to no longer care and sell for below value, your value just went down.
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All comparable properties were within a one mile radius of the subject. Our market is fairly stable, we have had a decrease in activity since the end of the tax credit, but activity in April was artificially increased due to the tax credit, so the drops we are seeing are not as drastic as they seem.
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The subject's suggested value is $215,509 which is significantly higher than it's current listing price of $148,500. This is because the property is listed below value. In our area we have an alarming situation of homes being undervalued in short sale situations. The reason is because the seller doesn't care. When it comes to the point that the seller will be receiving no funds from the transaction their motivation to get the highest price possible is removed from the equation.
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In addition, we have listing agents who arbitrarily assign list prices without any thought to the actual value, again because it doesn't matter to them or the seller. Their primary goal is to get as many homes sold as fast as possible.
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The listing agent on this specific property is active in the short sale market and heavily solicits distressed property owners to short sale their homes.
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It is also important to take attention to the listing history. The subject was listed with this agent on June 7 2010 for $180,000. At 13 days on the market they dropped the price to $171,000. At 24 days on the market they dropped the price to $157,5000 and at 37 days on market it was dropped to $148,500, the current listing price. This is a well known strategy, list at a higher price and do frequent reductions. On the surface, Reliable Randy Realtor can then tell the loan servicing company that a higher value was tried and with consistent price reductions, they finally had to drop to such a low price due to lack on interest. The reality is that the property was not given a fair chance to receive an offer. 37 days is not enough time in our current market. In addition, buyers are shying away from short sales as they are tired of the inconsistency and lack of responses from banks. They are much more inclined to buy an REO or a fair market sale.
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That is all!

Why Open Houses are as Popular as Leaded Gasoline

As soon as a house is listed, sellers wonder “when is the first open house?”

Before we get into all the reasons why open houses are not the key to selling your home, let me share with you a statistic I came across:

On average less than 1% of all homes are sold by an open house.

Why are buyers not visiting open houses like they did in the past?

1. The internet. With expanded technology, high resolution digital photos, virtual tours and the like, buyers are able to see more on line than they ever could before.
2. Life, busy life. In our modern society many household have both adults working during the week. This leaves the weekend to run errands, do the shopping, attend and participate in sporting events, and all those kid activities like birthday parties. Buyers have such limited time that they want to schedule all their viewings at one time. Popping into one or two homes on Saturday, maybe one on Sunday and then maybe going out with their agent on Tuesday is just too much time. They want to do it all at once and go quickly.

So if potential buyers are not coming to look at the open house, who is? Well, not many people really. Traffic count at open houses has been decreasing steadily over the last few years. The majority of foot traffic in an open house are nosy neighbors, bored Sunday travelers, those looking for decorating ideas and people who are not serious about buying a home. Serious buyers are looking when the homes come on the market; they are not waiting for the weekend.

Why do some agents still do open houses? There are two reasons, same two reasons they have always had.

1. Because sellers want them and out of fear of losing the listing, they do them.
2. To pick up new buyers as clients.

What about the print ads which go with open houses?


1. Print ads are declining in popularity and soon will be as popular as leaded gasoline. Newspapers all over the country are closing their doors. Why? The internet (AGAIN). News is delivered to our Smart Phones, email, and web browsers in real time. Waiting until the next day to read the paper is just not done.
2. With declining readership, those ads are not read like they once were.

So, if open houses aren’t the thing, then what?

Instead of asking your real estate agent to hold your home open on Sunday, instead ask them to spend a few hours marketing your home online. If they don't know how or what else to do besides putting it on the MLS, you have a problem. It's probably time to interview a new agent. Internet marketing is number one in today's real estate market. Open houses were number one in yesterday's real estate market.