Home to Loan

January 26, 2012, 12:10 PM EST

By Dan Levy

Jan. 26 (Bloomberg) — Foreclosure and distressed sales fell to 20 percent of U.S. home buys in the third quarter of last year as legal scrutiny of property seizures cut-rate the number of deals, according to RealtyTrac Inc.

Transactions involving bank-owned property and small sales, where lenders accept less than the amount owed, were down from 22 percent of total home buys in the second quarter and 30 percent a year before, the Irvine, California-based data peddler said today in a proclamation.

“The sooner the market gets more clarity about accepted foreclosure procedures, primarily through the long-promised settlement linking multiple states attorneys general and foremost lenders, the sooner the market can more efficiently dispose of these distressed properties,” RealtyTrac Chief Executive Officer Brandon Moore said in the proclamation.

Foreclosure sales and initially-time default notices have declined in view of the fact that banks and servicers were accused more than a year ago of using flawed citations to repossess homes. A proposed settlement with lenders including Bank of America Corp., JPMorgan Chase Co., Citigroup Inc., Wells Fargo Co. and Ally Financial Inc. is getting closer to resolving the complaints, Iowa Attorney General Tom Miller said Jan. 24.

Properties in the foreclosure administer or already seized by lenders sold for an average $165,322 in the third quarter, up 1 percent from the second quarter and down 3 percent from a year before, RealtyTrac said. The price represents an average discount of 34 percent compared with a non-foreclosure property, unchanged from the second quarter and down from a 37 percent difference a year before, the company said.

Repossessions to Increase

As lenders resume foreclosures, home repossessions are likely to rise about 25 percent this year from the more than 804,000 properties seized in 2011, Daren Blomquist, a RealtyTrac spokesman, said in an interview before this month. Banks had already begun to accelerate default and repossession proceedings in the second half of 2011, according to Moore.

A total of 221,536 homes that sold in the third quarter were in some stage of foreclosure, meaning they had received notices of default, auction or repossession, RealtyTrac said. That was down 11 percent from a revised second quarter total and 5 percent from a year before. Bank-owned homes made up 128,712 of those sales, and pre-foreclosure transactions, including small sales, accounted for 92,824.

Pre-foreclosure deals augmented 68 percent from a year before in Michigan, 44 percent in North Carolina, 43 percent in Ohio and 35 percent in Georgia. Such transactions outnumbered bank-owned sales in Colorado, Florida, New Jersey and New York, according to RealtyTrac.

Largest in Nevada

Nevada had the largest impart of foreclosure-related sales of any state, at nearly 57 percent of total home buys in the third quarter. The 13,992 bank-owned and pre-foreclosure sales represented a 24 percent increase from a year before, RealtyTrac said.

The impart of foreclosure sales in California was 44 percent, with the state’s 62,583 transactions up 7 percent from the third quarter of 2010. The proportion in Arizona was 43 percent, with 21,619 such buys up 19 percent.

In Florida, where courts oversee property seizures by lenders, foreclosure sales plunged to 19 percent of all deals from 39 percent in the third quarter of 2010.

Foreclosure-related transactions as a impart of total sales were 34 percent in Georgia, 26 percent in Colorado and 23 percent in Michigan.

RealtyTrac sells default data from more than 2,200 counties representing 90 percent of the U.S. population. Compilation of property-title transfers delays exposure of foreclosure sales data by a quarter.

–Editors: Daniel Taub, Josh Friedman

To contact the reporter on this tale: Dan Levy in San Francisco at dlevy13@bloomberg.net

To contact the editor responsible for this tale: Daniel Taub at dtaub@bloomberg.net

Article source: http://www.businessweek.com/news/2012-01-26/foreclosure-properties-decline-to-20-of-home-purchases-in-u-s-.html

The nation’s five largest mortgage lenders have offered a draft settlement to pay out as much as $25 billion to cover new terms for homeowners driven out by foreclosure, but government officials said Monday the states won’t be able to close the deal before President Obama’s State of the Union address on Tuesday. 

The banking industry offer includes changes in foreclosure practices, which is a foremost goal of the Obama administration in the talks. But some states have resisted before, and Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, who is leading the talks, said his counterparts are “just meeting to talk about proposed terms” and don’t expect an announcement this week.

A Housing and Urban Development spokesman told Fox Business Arrangement that “negotiations are still ongoing … we hope to announce something soon.” The spokesman said remarks from Housing Secretary Shaun Donovan last week — in which he said the lenders and states were “very close” to an arrangement that would help up to 1 million homeowners modify mortgages — “still stand.”

According to the terms offered by the banks, those who lost their homes to foreclosure are unlikely to get them back or benefit much financially from the settlement. But about 750,000 Americans — roughly half of the households who might be eligible for help under the deal — will likely receive checks for about $1,800.

Roughly 1 million homeowners could see the size of the mortgage cut-rate by an average of $20,000.

Two sources familiar wi the negotiations tell Fox Business that the settlement could even reach $35 billion with the additional participation of about 10 smaller, regional banks.

The agreement could also reshape long-standing mortgage lending guidelines and make it simpler for those at risk of foreclosure to restructure their loans. 

The five foremost banks — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial — would apply the settlement only to privately held mortgages issued linking 2008 and 2011.

Sources and analysts said they do not expect any foremost refinance program through Fannie and Freddie, the nation’s quasi-government agencies that own about half of all U.S. mortgages, roughly about 31 million U.S. home loans.

Trying to change Fannie and Freddie’s programs would be extremely intricate and there is a risk it could cost taxpayers more bailout money if not structured correctly. 

But sources told Fox Business Arrangement to expect the president to announce a new rental program in Fannie and Freddie to allow struggling homeowners to stay in repossessed homes as tenants. This would help keep foreclosed home off the market.

Obama is likely to mention the proposals during his State of the Union address in an effort to push the talks, which started more than a year ago, to conclusion. But a top bank lobbyist said the deal won’t be reached in time for the president to make an announcement at the annual address to Congress.

Sources said they do expect the president to push for more refinancing and modifications. The template for the president’s speech is his economic address in Kansas last week in which he said the crisis has left “a huge deficit of trust linking Main Street and Wall Street. And foremost banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit of trust.”

In the speech, Obama said “at minimum,” the banks should be “remedying past mortgage abuses that led to the financial crisis.” That meant helping responsible homeowners remain in their homes, give more time for unemployed homeowners to find work to pay for their homes and increase access to lower interest tariff. 

Nearly 8 million Americans have faced foreclosure in view of the fact that the housing bubble burst. In some cases, companies that administer mortgages failed to verify the information on foreclosure documents. The worst practices, known collectively as “robo-signing,” included employees signing documents they hadn’t read or using fake signatures to sign off on foreclosures.

But some say the proposed deal doesn’t go far enough. They have argued for a thorough investigation of potentially illegal foreclosure practices before a settlement is hammered out.

“Wall Street again is trying to pass the buck. Instead of criminal prosecutions, we’re talking about something that’s not more than a slap on the wrist,” said Sen. Sherrod Brown, D-Ohio, who has been critical of the proposed settlement.

Democratic attorneys general were meeting Monday in Chicago to discuss the deal with Housing Secretary Donovan. Republican attorneys general were ti be briefed about the deals via conference call later in the day.

Under the deal:

– $17 billion would go toward reducing the principal that struggling homeowners owe on their mortgages.

– $5 billion would be placed in a reserve account for various state and federal programs; a part of that money would cover the $1,800 checks sent to those homeowners affected by the deceptive practices.

– About $3 billion would to help homeowners refinance at 5.25 percent.

In October 2010, foremost banks temporarily suspended foreclosures following revelations of widespread deceptive foreclosure practices by banks. Discussions then started over a national settlement.

Some states have disagreed over what terms to offer the banks. In September, California announced it would not agree to a settlement over foreclosure abuses that state and federal officials have been working on for more than a year.

New York, Delaware, Nevada and Massachusetts, which sued five foremost banks before in December over deceptive foreclosure practices, have also argued that banks should not be protected from future civil liability. The deal will not fully release banks from future criminal lawsuits by individual states.

And both sides have also fought over the amounts of money that should be placed in the reserve account for property owners who were improperly foreclosed upon. Many of the larger points of the deal, including a $25 billion cost for the banks, have long been worked out, officials say.

The Associated Press contributed to this report.

The nation’s five largest mortgage lenders have offered a draft settlement to pay out as much as $25 billion to cover new terms for homeowners driven out by foreclosure, but government officials said Monday the states won’t be able to close the deal before President Obama’s State of the Union address on Tuesday. 

The banking industry offer includes changes in foreclosure practices, which is a foremost goal of the Obama administration in the talks. But some states have resisted before, and Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, who is leading the talks, said his counterparts are “just meeting to talk about proposed terms” and don’t expect an announcement this week.

A Housing and Urban Development spokesman told Fox Business Arrangement that “negotiations are still ongoing … we hope to announce something soon.” The spokesman said remarks from Housing Secretary Shaun Donovan last week — in which he said the lenders and states were “very close” to an arrangement that would help up to 1 million homeowners modify mortgages — “still stand.”

According to the terms offered by the banks, those who lost their homes to foreclosure are unlikely to get them back or benefit much financially from the settlement. But about 750,000 Americans — roughly half of the households who might be eligible for help under the deal — will likely receive checks for about $1,800.

Roughly 1 million homeowners could see the size of the mortgage cut-rate by an average of $20,000.

Two sources familiar wi the negotiations tell Fox Business that the settlement could even reach $35 billion with the additional participation of about 10 smaller, regional banks.

The agreement could also reshape long-standing mortgage lending guidelines and make it simpler for those at risk of foreclosure to restructure their loans. 

The five foremost banks — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial — would apply the settlement only to privately held mortgages issued linking 2008 and 2011.

Sources and analysts said they do not expect any foremost refinance program through Fannie and Freddie, the nation’s quasi-government agencies that own about half of all U.S. mortgages, roughly about 31 million U.S. home loans.

Trying to change Fannie and Freddie’s programs would be extremely intricate and there is a risk it could cost taxpayers more bailout money if not structured correctly. 

But sources told Fox Business Arrangement to expect the president to announce a new rental program in Fannie and Freddie to allow struggling homeowners to stay in repossessed homes as tenants. This would help keep foreclosed home off the market.

Obama is likely to mention the proposals during his State of the Union address in an effort to push the talks, which started more than a year ago, to conclusion. But a top bank lobbyist said the deal won’t be reached in time for the president to make an announcement at the annual address to Congress.

Sources said they do expect the president to push for more refinancing and modifications. The template for the president’s speech is his economic address in Kansas last week in which he said the crisis has left “a huge deficit of trust linking Main Street and Wall Street. And foremost banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit of trust.”

In the speech, Obama said “at minimum,” the banks should be “remedying past mortgage abuses that led to the financial crisis.” That meant helping responsible homeowners remain in their homes, give more time for unemployed homeowners to find work to pay for their homes and increase access to lower interest tariff. 

Nearly 8 million Americans have faced foreclosure in view of the fact that the housing bubble burst. In some cases, companies that administer mortgages failed to verify the information on foreclosure documents. The worst practices, known collectively as “robo-signing,” included employees signing documents they hadn’t read or using fake signatures to sign off on foreclosures.

But some say the proposed deal doesn’t go far enough. They have argued for a thorough investigation of potentially illegal foreclosure practices before a settlement is hammered out.

“Wall Street again is trying to pass the buck. Instead of criminal prosecutions, we’re talking about something that’s not more than a slap on the wrist,” said Sen. Sherrod Brown, D-Ohio, who has been critical of the proposed settlement.

Democratic attorneys general were meeting Monday in Chicago to discuss the deal with Housing Secretary Donovan. Republican attorneys general were ti be briefed about the deals via conference call later in the day.

Under the deal:

– $17 billion would go toward reducing the principal that struggling homeowners owe on their mortgages.

– $5 billion would be placed in a reserve account for various state and federal programs; a part of that money would cover the $1,800 checks sent to those homeowners affected by the deceptive practices.

– About $3 billion would to help homeowners refinance at 5.25 percent.

In October 2010, foremost banks temporarily suspended foreclosures following revelations of widespread deceptive foreclosure practices by banks. Discussions then started over a national settlement.

Some states have disagreed over what terms to offer the banks. In September, California announced it would not agree to a settlement over foreclosure abuses that state and federal officials have been working on for more than a year.

New York, Delaware, Nevada and Massachusetts, which sued five foremost banks before in December over deceptive foreclosure practices, have also argued that banks should not be protected from future civil liability. The deal will not fully release banks from future criminal lawsuits by individual states.

And both sides have also fought over the amounts of money that should be placed in the reserve account for property owners who were improperly foreclosed upon. Many of the larger points of the deal, including a $25 billion cost for the banks, have long been worked out, officials say.

The Associated Press contributed to this report.

HONOLULU (AP) — Foreclosures in Hawaii have plummeted 53 percent in view of the fact that the Legislature passed sweeping mortgage legislation last year, officials said Thursday.

Hawaii had the nation’s 11th highest foreclosure rate in 2010, prompting lawmakers to establish a Mortgage Foreclosure Task Force to look into all aspects of judicial and nonjudicial foreclosures in the state.

The task force’s 2011 findings helped shape legislation that provides extensive protections to residents in danger of losing their homes due to unfair or deceptive practices.

According to a recent RealtyTrac report cited by task force member Jeff Gilbreath, the law has already made an impact.

“(The report) showed a 53 percent decrease in foreclosures in the state of Hawaii that I reflect we can attribute to Act 48,” he said, speaking Thursday at an informational briefing before the House and Senate consumer protection committees.

The task force’s mandate for 2012 was to conduct further analysis of foreclosure rules and regulations and recommend refinements to make the law clear and equitable to all stakeholders in the foreclosure administer.

Panel Chairman Everett Kaneshige, deputy director of the state Department of Commerce and Consumer Affairs, said task force members broke into workgroups to go through Act 48 “line by line,” focusing on issues relevant to specific groups and addressing foreclosure issues unique to condominium and homeowner associations.

Lawmakers, who will consider the task force’s recommendations as they take up mortgage foreclosure legislation this conference, continue to raise concerns about protecting homeowners at risk of foreclosure.

Sen. Rosalyn Baker, who said she will introduce related legislation this conference, questioned whether more could be done to stop some of the fraudulent, high-profile advertising that preys on those so desperate to save their homes they’re willing to take imprudent risks. She suggested more could be done to prosecute those engaging in deceptive practices to “really shine a light on these folks.”

“They’re preying on the kupuna (elderly) and other people in the Hawaiian convergence,” said Baker, D-Honokohau-Makena.

To place a human dimension on the issue, Sen. Brickwood Galuteria questioned Gilbreath, who represents the mortgage counseling organization Hawaiian Convergence Assets, about the counseling administer: “Can you give a sense of what it’s like for the families, the diminished quality of life that happens when you might be losing your home?” questioned Galuteria, D-City center-Waikiki.

Gilbreath said he couldn’t quantify the how many people are now seeking counseling air force, but noted, “It’s certainly down.”

The task force’s 288-page report includes proposed legislation that would make any foreclosure violations subject to enhanced penalties, specify what deceptive practices and acts can void a foreclosure, and set a six-month timeline to take action to prevent a foreclosure sale.

The task force also not compulsory using education to help prevent borrowers from falling victim to unethical lenders. The report recommends a position or personnel at the state level that would act as a clearinghouse of financial education programs and air force across the state of Hawaii.