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Archive for October, 2010

Housing’s diminishing expectations

Monday, October 25th, 2010

Phoenix Business Journal – by Jan Buchholz

With apologies to Charles Dickens, Monday is beginning with not-so-great expectations. At least when it comes to the local housing market.

In the Monday Morning Report distributed by R.L. Brown Reports, the mood is decidedly subdued as far as ascertaining a return to normal in the market.

The West Valley-based researcher and consulting firm surveyed 86 housing professionals, asking them how long it will take for the housing market to recover. The firm defined recovery as the volume of sales reached in 2003 in Phoenix. The recovery also assumes that only minimal, if any, federal assistance is forthcoming.

Of the 86 participants, 24 said they expect a recovery to take another three years. The surprise might be in the number who think the recovery will take more than six years: 18 respondents or nearly 19 percent. Most, however, expect a three- to five-year timeframe.

Greg Burger, partner at R.L. Brown, issues a cautionary observation as it relates to housing and construction.

“The outlook doesn’t bode well in the near term for a revival of construction employment in the region, and construction employment has been a backbone of the economic health of the region for decades,” Burger said.

He ends with a plea to government officials and politicos: “This should suggest to government planners and to the political leaders that long-term solutions must be found for Arizona’s economic problems and that temporary fixes won’t work this time around. Will they get it?”

Debate rages over foreclosure freezes

Friday, October 22nd, 2010

Premium content from Phoenix Business Journal – by Jan Buchholz

Two Phoenix housing experts predict that a foreclosure moratorium would be a disaster for the state, while two Arizona politicians say something drastic has to be done to curb abuses by lenders.

Arizona Attorney General Terry Goddard is collaborating with attorneys general from other states to address alleged mortgage company misdeeds. He said that group has not called for a moratorium, but “the system is seriously broken.”

“The No. 1 complaint I receive at my office is that people have been negotiating modifications in their loan and all of a sudden they get hit with a foreclosure,” he said.

Goddard believes consent decrees through the judicial system would be the fastest way for states to straighten out the mortgage industry.

U.S. Rep. Gabrielle Giffords, D-Ariz., still is calling for a moratorium, despite statements from the White House

that President Bar-ack Obama will not support one. Giffords was one of the first federal lawmakers to come out in favor of a moratorium after it was disclosed that some banks might have signed off on foreclosures without reviewing property files. The “robo-signing” scandal led some banks to voluntarily halt foreclosures, at least temporarily.

“Congresswoman Giffords believes the White House is wrong,” said C.J. Kara-mar-gin, Giffords’ spokesman. “She believes a three-month (moratorium) is absolutely necessary.”

Giffords said lenders need to be “held accountable” and “thoroughly investigated” — thus, the need for time to sort things out.

But local residential real estate experts say a moratorium would wreak havoc on the housing market and eventually lead to an even greater foreclosure crisis.

In the Oct. 18 “Monday Morning Report,” Phoenix-based housing consultant R.L. Brown warns about the potential negative effects of a moratorium.

“In our view, the worst thing that could happen to the housing market at this point is to see a drawn-out moratorium on foreclosures that could essentially shut down housing, allow a further buildup of unsold inventories, and further damage consumer confidence concerning housing overall,” the report states.

Bank of America and JPMorgan Chase & Co. have stopped foreclosures temporarily, according to the Attorney General’s Office.

Bob Bemis, CEO of the Arizona Regional Multiple Listing Service, said a moratorium will erode investor confidence and dramatically slow the sales process.

Bank-owned properties that have been taken back through foreclosure represent a significant segment of the sales market, Bemis said. About 43 percent of home sales in September involved bank-owned properties.

A large portion of the buyers of foreclosed homes are investors, “because regular buyers are having trouble getting loans,” he said.

If investors are spooked by hints of a moratorium, the market will shrivel up again and another flood of properties will hit the market when the situation is fixed, Bemis said, adding that could create huge swings in home values, creating more instability.

Greg Burger, co-principal of R.L. Brown Housing Reports, said the U.S. Treasury Department needs to step in quickly to “lay down some rules and not spend a lot of money trying to figure out how we got to this point.”

Burger conceded the sit-uation is “a mess,” but he said it’s not clear whether fraud is involved or if the problems stem from a lack of oversight. Either way, he believes the U.S. Treasury Department should take the lead in

fixing it.

Goddard, who is running for governor, said there’s no time to wait for the federal government to act. He said states have had issues with lenders for a long time and have not received federal support to deal with the problem.

“This is not a new issue. The AGs are highly frustrated by (the lack) of federal action,” he said.

The Treasury Department and various regulatory agencies should have addressed lender issues a long time ago, he said.

Goddard said a steering committee of 12 state attorneys general is preparing a plan to address “more than just the robo-signing,” but those details have yet to be fleshed out. He said the goal is to get all of the nation’s lenders to agree to certain stipulations.

“And then a judge would impose the rules. That would be my preference,” he said, adding that plan could address the problems quickly. “I could see that being wrapped up by the end of this calendar year.”

Fannie, Freddie get ‘robo signing’ orders

Thursday, October 14th, 2010
Loan servicers must double-check foreclosure, REO filings
By Inman News, Thursday, October 14, 2010.

Fannie Mae and Freddie Mac’s federal regulator says loan servicers working for the companies must review affidavits filed in foreclosure proceedings before proceeding to judgment or selling foreclosed properties.

Guidance issued by the Federal Housing Finance Agency on Thursday directs Fannie and Freddie to require that all loan servicers working for the companies take steps similar to those already implemented by lenders implicated in the “robo signing” scandal.

Mortgage servicers working for Fannie and Freddie must not only review their foreclosure processes and remediate any problems they find, but recheck affidavits filed in ongoing foreclosure actions and on “real estate owned” (also known as bank-owned or REO) properties in Fannie’s and Freddie’s inventories before those properties can be sold.

The four-point policy framework “envisions an orderly and expeditious resolution of foreclosure process issues,” providing greater certainty to homeowners, lenders and investors, FHFA said in releasing the guidelines.

It’s unclear whether Fannie and Freddie’s marching orders will have much of an impact, since many loan servicers have already implemented similar measures.

At least five loan servicers — Bank of America, GMAC Mortgage, JP Morgan Chase, PNC Financial Services Group Inc. and Litton Loan Servicing — have temporarily suspended or curtailed foreclosure proceedings and sales of foreclosed properties in 23 states where courts have jurisdiction over the foreclosure process.

The loan servicers say they are reviewing their foreclosure procedures in the wake of allegations that employees handling court filings for some of the companies signed affidavits that contained information they had not personally verified.

Bank of America and GMAC Mortgage have expanded their reviews to non-judicial foreclosure states, and Bank of America has temporarily halted foreclosure sales in all 50 states.

So far, Bank of America and other loan servicers say their reviews haven’t turned up evidence that borrowers were foreclosured on improperly.

A Wells Fargo & Co. employee has testified in a Florida lawsuit that she signed hundreds of foreclosure affidavits a day without verifying the information in them, the Wall Street Journal reports. Wells Fargo says it has no plans to initiate a foreclosure moratorium, and that its affidavit procedures and daily auditing “demonstrate that our foreclosure affidavits are accurate.”

In the past, when lawyers for homeowners have fought foreclosures on such procedural grounds, they have mostly succeeded in delaying, rather than stopping, foreclosures.

But the “robo signing” scandal has raised the specter of a new onslaught of lawsuits, slowing the flow of foreclosed properties into REO inventories.

Attorneys general in all 50 states have formed a bipartisan group to investigate affidavits and other documents loan servicers have prepared in foreclosing on homeowners.

Some title insurers are balking at insuring title on foreclosed and REO properties. Bank of America has agreed to provide warranties to the nation’s largest title insurance underwriter, Fidelity National Financial Inc., and other companies are seeking similar assurances from other lenders.

The American Land Title Association, which has been working with FHFA, Fannie Mae, Freddie Mac, lenders and other stakeholders on the issue, said it supports the guidance issued by FHFA to Fannie and Freddie, but continues to look to lenders to provide “appropriate indemnities.”

Phoenix foreclosure share hits 2010 high

Wednesday, October 13th, 2010

Phoenix Business Journal – by Jan Buchholz

Foreclosures accounted for 46 percent of all existing single-family house transactions in the Phoenix area in September.

That’s the largest percentage in any month of 2010, according to a housing report released today by the W.P. Carey School of Business at Arizona State University.

The author of the report, associate professor of real estate Jay Butler, forecasts rough sailing ahead.

“The biggest issue is heightening uncertainty in the housing market throughout the country brought about by the evolving problems within the foreclosure process,” Butler said in a news release.

Currently some of the biggest lenders and some states have put a moratorium on the foreclosure process after allegations surfaced that the necessary due process has not been followed. The subject and what to do about it continues to be debated at both the local and national level.

Butler said the potential impact of a blanket moratorium could result in difficulties attaining title insurance and it could sour potential buyers on the whole home purchase process.

“In confronting potential uncertainty, the level of activity and prices could even be lower than generally expected as people await the review and resolution of the problems associated with the foreclosure process,” Butler said.

Here’s a look at some of the other numbers ASU released today:

There were 9,005 total resale transactions in the Valley in September. Of those, 4,100 were foreclosure sales.

The median home price for September was $135,000, the same as in August, but down from $140,000 in September 2009.

There were about 550 foreclosures in the townhouse/condominium category, down from 630 in August but up from 410 in Sept. 2009. The median price was $75,000, down from August when it was $80,000. It’s way down from Sept. 2009 when the median price was $100,000.

Click here for the full report.

Read more: Phoenix foreclosure share hits 2010 high – Phoenix Business Journal

Administration Officials Reject Idea of National Foreclosure Moratorium

Tuesday, October 12th, 2010

By Carrie Bay:

Evidence of several major servicers mishandling foreclosure paperwork and in some instances, breaking the law in their rush to work through the still-growing backlog of cases has cast a cloud of doubt over the entire industry and servicing procedures across the board.

Consumer advocacy groups and a number of state attorneys general have demanded a nationwide moratorium on foreclosures. But a senior White House official has indicated that the Obama administration will not support an all-out foreclosure freeze.

David Axelrod, one of President Obama’s top advisors, appeared on CBS’ Face the Nation this weekend, and the foreclosure paperwork debacle was Bob Schieffer’s topic of choice.

Axelrod acknowledged that the allegations of faulty foreclosure documentation are a “serious problem” and “thrown a lot of uncertainty into the housing market.”

But he quickly added, “I’m not sure about a national moratorium because there are, in fact, valid foreclosures that probably should go forward and where the documentation and paperwork is proper.”

“We are working closely with these institutions to make sure that they expedite the process of going back and reconstructing these and throwing out those that don’t work,” Axelrod said, noting that the administration’s hope is that the process will “move rapidly and get unwound very, very quickly.”

In an email to the Washington Post, David Stevens, commissioner of the Federal Housing Administration (FHA), echoed Axelrod’s stance.

“We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile

housing market,” Stevens wrote to the Post. “While we understand the eagerness to make sure that no American is foreclosed upon in error, we must be careful not to over-reach and apply a remedy that will make the underlying problem of foreclosures worse.”

So far, five companies have announced voluntary foreclosure suspensions because of potential deficiencies in the legal paperwork.

GMAC Mortgage was the first to halt foreclosures in 23 judicial states.

JPMorgan Chase and Bank of America followed suit two weeks later. On Friday, BofA announced that it is expanding its moratorium to include all 50 states.

PNC Financial and Goldman Sachs’ Litton Loan Servicing have also called for a stop to foreclosures in certain states.

The servicers contend that any errors made are procedural and have stated that they expect only minor and temporary delays in foreclosure timelines due to the suspensions, but others say the latest developments are sure to disrupt the already tenuous balance of the housing correction.

Mark Zandi, chief economist for Moody’s Analytics, told the Associated Press that the foreclosure paperwork scandal could prolong housing’s slump for at least several more years. A mere month ago, before the documentation mistakes came to light, Zandi was predicting that an upturn would be well under way by this time next year.

The Mortgage Bankers Association (MBA), along with several other industry trade groups, sent a letter to members of Congress on Friday expressing concern over the additional damage a blanket national moratorium would bring.

The letter stated, “It is important to note…that these are document process reviews; in almost all cases there are no factual disputes about whether the mortgage is delinquent, the amount of the arrears or whether foreclosure is proper. In the overwhelming majority of cases, we believe the facts presented to the courts in foreclosure proceedings about the debt amounts and delinquencies have been accurate.”

According to MBA’s letter, “A foreclosure moratorium would not change the ultimate outcome for borrowers impacted by this situation,” but only cause further harm to communities at risk, the unstable housing market, and the fragile economy.

Bank of America Halts Foreclosures Nationwide

Friday, October 8th, 2010

by Carrie Bay

The nation’s largest mortgage lender, Bank of America announced Friday that it is expanding its foreclosure moratorium from 23 states, as announced by the bank last week, to include all 50 states.

The company explained in a statement, “Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed.”

The company added, “Our ongoing assessment shows the basis for foreclosure decisions is accurate. We continue to serve the interests of our customers, investors, and communities. Providing solutions for distressed homeowners remains our primary focus.”

BofA was the third major lender to call for a halt on foreclosures in certain states when evidence surfaced that its internal staff may not have followed the letter of the law in reviewing and processing case paperwork.

Such actions were spelled out in black and white when the Associated Press uncovered court documents with testimony from one of BofA’s top executives from a bankruptcy hearing in Massachusetts in February. The exec admitted that she signed off on 7,000 to 8,000 foreclosure documents a month without even reading them or verifying their legitimacy.

Incidences of so-called “robo-signers” that have been blindly rubber-stamping approvals of foreclosure actions because of the sheer volume of cases landing on their desks has led at least two other big lenders to suspend foreclosures – and some in the industry warn that the problem could be more widespread than anyone wants to admit.

On September 20th, GMAC Mortgage was the first to halt foreclosures in 23 judicial states due to what it called an “internal procedural error.” JPMorgan Chase followed suit on September 30th. Its moratorium, too, is limited to 23 states…so far.

Wells Fargo Puts a Stop to Short Sale Extensions

Friday, October 1st, 2010

By: Carrie Bay

Wells Fargo will no longer delay foreclosure proceedings in hopes that a short sale deal will come through.

According to an American Banker report, the bank has stopped granting extensions for distressed homeowners to complete short sales.

The paper, citing a memo Wells emailed to short sale vendors, said the lender will no longer postpone foreclosure sales for borrowers who do not close on short sales by the date quoted in their approval letter.

The move will allow the bank’s foreclosure proceedings to advance, even if a short sale is already in negotiation. Wells says it changed its policy at the request of investors it services mortgages for, including the GSEs, according to American Banker.

Last month, Fannie Mae announced an initiative to crack down on servicers for letting delinquent loans languish too long without action.

The GSE issued a notice alerting servicers that it is monitoring all delinquent loans in its portfolio and mortgage-backed securities (MBS) pools, and will conduct on-site reviews and assess fines for poor servicer performance when it comes to completing foreclosures in a timely manner.

Short Sale 101 Videos

Friday, October 1st, 2010

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Arizona economic statistics

Friday, October 1st, 2010

Phoenix Business Journal

The following is a list of Phoenix Business Journal stories based on local and state economic reports beginning in November 2008. Stories are grouped by topic. Click on the links to see the full story (access to a few stories may be restricted to subscribers only for several weeks):

RESIDENTIAL REAL ESTATE

Sept. 22, 2010 – Arizona home affordability rides middle ground

Sept. 20, 2010 – ASU housing report relays gloomy news

Sept. 17, 2010 - Glut of Valley rental homes results in lower prices, lease concessions

Sept. 16, 2010 – Foreclosures hit record, Arizona third

Sept. 15, 2010 – Home prices flat nationally, down in Arizona

Sept. 9, 2010 – Zillow: Phoenix home values down across the board

Sept. 3, 2010 - Number of homes for sale in Phoenix area up 5 percent in August

Aug. 26, 2010 – Arizona State University report for July shows flat pricing for existing homes

Aug. 27, 2010 – Hotel occupancy declining in Phoenix area

Aug. 12, 2010 – Foreclosure numbers fall, but AZ still No. 2

Aug. 11, 2010 – ASU: Foreclosure share up, numbers down

Aug. 11, 2010 – Realtors: Home prices make gains in 2Q

July 30, 2010 – By the numbers: The Valley housing market, city by city

July 29, 2010 – Phoenix 7th highest for home foreclosures

July 21, 2010 – Home prices edge up in some areas, but likely to flatten

July 15, 2010 -Arizona remains in top ranks for foreclosures

July 8, 2010 – Phoenix foreclosures rise from May to June

June 30, 2010 - Phoenix home prices rise as tax credit wanes

June 16, 2010 – ASU: Home values likely to remain flat

Read more: Arizona economic statistics – Phoenix Business Journal