Foreclosures fall to lowest level since 2007

Foreclosure filings and repossessions fell to their lowest level since 2007 last year.
Total filings, including default notices and bank repossessions were down 33% for the year to 2.7 million, according to RealtyTrac, the online marketer of foreclosed properties.

 

 

One in every 69 homes had at least one foreclosure filing during the year, while 804,000 homes were repossessed. That's a significant improvement from the peaks reached in 2010 -- when 1.05 million homes were repossessed -- and the lowest levels seen since 2007.
More than 4 million homes have been lost to foreclosure over the past five years.
While the declines seem like good news for the housing market, where a flood of foreclosed homes has depressed home prices, much of it is due to processing delays caused by fall-out from the "robo-signing" scandal that broke in late 2010.
During the year, banks spent more time making sure paperwork was legal and proper, creating a backlog in the foreclosure pipeline. As a result, the average time it took to process a foreclosure climbed to 348 days during the fourth quarter, up from 305 days a year earlier.
"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year," said Brandon Moore, chief executive officer of RealtyTrac.
However, Moore said there were "strong signs" during the second half of the year that lenders are working through foreclosure backlogs in certain markets. He expects foreclosure activity to rise above 2011's level but remain below the peak hit in 2010.
Low rates offer some help for homeowners
Early in 2011, many forecasters were predicting a wave of foreclosures due to resetting adjustable-rate mortgages, but low mortgage rates helped many borrowers refinance into more affordable loans, said Moore.
The government helped as well, through efforts like the Home Affordable Refinance Program (HARP), which made refinancing easier for borrowers who owe more on their mortgage than their homes are worth.

Turning foreclosures into rentals

Government foreclosure prevention programs, including HARP and the Home Affordable Modification Program (HAMP), have started about 5.5 million mortgage modifications since April 2009, according to the U.S. Department of Housing and Urban Development.
"Programs like HAMP and HARP have definitely made a dent in the foreclosure problem," said Moore "However, they are certainly not living up to their billing of preventing several million foreclosures. In addition, many [HAMP] homeowners fall back into foreclosure later on."
Of course, there were still plenty of factors working against homeowners in 2011, including the continued erosion in home prices. Falling prices rob homeowners of home equity, which they can tap if they need emergency cash.
Foreclosure hot spots
Hot spots for foreclosures remain mostly in "bubble states," where speculative investors helped drive up home prices beyond their fundamental values during the mid-2000s housing boom.
Nevada, where one out of every 16 households received some kind of default notice during the year, was the worst hit of all, a distinction it has held for the fifth consecutive year.

Foreclosure free ride: 3 years, no payments

Arizona had the second highest foreclosure rate and California came in third. Florida, which had been running neck-and-neck with the other "Sand States" in past years, fell to seventh, behind Georgia, Utah and Michigan.
Among metro areas, Las Vegas suffered from the highest foreclosure rate in 2011. California put seven cities in the top 10, led by Stockton in the second slot. Other cities in the top 10 included Phoenix, which finished sixth, and Reno, Nev. was eighth. 

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4 signs that housing is off to a good start in 2012

4 signs that housing is off to a good start in 2012

Out with the old, in with the new. The start of a new year always seems to bring along aspirations of improvement. Whether that’s losing weight or refinancing your mortgage, new year’s resolutions are often short lived and quickly forgotten.
While your new and improved diet may not be lasting as long as you had hoped, optimism surrounding a better year in the mortgage and real estate markets is holding strong (at least for now).

Here are four examples that show how housing is off to a strong start in 2012:

1. Mortgage rates: We begin the year at record lows

Whether you’re shopping for mortgage rates for a purchase or refinance, as far as rates are concerned, it doesn’t get any better than this. Once again, mortgage rates have achieved new record lows.
According to HSH.com’s latest mortgage rate report, the “Weekly Mortgage Rate Radar,” rates on the most popular types of mortgages moved downward, closing the Wednesday-to-Tuesday wraparound weekly survey at  record lows. The average rate for conforming 30-year fixed-rate mortgages fell by 4 basis points (0.04 percent) to 4.03 percent, while conforming 5/1 hybrid ARM rates decreased by 6 basis points, to an average of 2.96 percent.
“We’ve been holding near record lows for a number of weeks, so it took only a little downward blip to get us to new record levels,” said Keith Gumbinger, vice president of HSH.com. “Potential borrowers who were waiting to get through the busy holiday season before getting refinances or purchases started have been rewarded for their patience.”

2. Mortgage applications pick up

Speaking of potential borrowers waiting out the holiday season, the Mortgage Bankers Association reported this morning that mortgage applications rose 4.5 percent for the week ending January 6. The industry group said that the January increase comes after a significant slide in applications at the end of December.
While low rates and increased activity is a healthy sign for the embattled housing sector, these improvements could come at a cost.
 “Should these [mortgage] rates attract enough borrowers, the increased demand might cause rates to firm up a little in coming weeks,” said Gumbinger.
What’s the solution? Act now, explains Gumbinger, “there’s little point in waiting to get a refinance started.”

3. Housing-related stocks are performing well

Is the stock market betting that housing has bottomed and poised for an uptick? One financial writer seems to think so.
Igor Greenwald, Senior Editor for MoneyShow.com, wrote last week that stocks geared toward the housing and home improvement sectors are translating into a turn for the better.
“The iShares Dow Jones US Home Construction ETF (ITB) combining homebuilders, home-improvement chains, and some of the remodeling plays is up by 33% in three months, vs. a 14% gain for the Dow Industrials,” wrote Greenwald recently.
“But even that doesn’t do the move justice. Housing plays, a sliver of the U.S. stock market by capitalization, are demonstrating some of the very best momentum around.”

4. Freddie Mac is providing needed relief

Two recent moves by Freddie Mac should help homeowners in need. First, Freddie announced that there will no longer be a minimum credit score requirement for borrowers with at least 20 percent equity who refinance through their current servicer.
While announced back in October, this change went into effect last Thursday. The old rules stated that borrowers must have a minimum score of 620.
On Tuesday we reported that Freddie Mac introduced a new mortgage forbearance option for unemployed homeowners. It states that servicers “must” assist borrowers experiencing a financial hardship due to unemployment.
“Previously, Freddie Mac had asked lenders to consider unemployment relief,” wrote HSH.com blogger Peter Miller. “This represents a big change, given that the new program is now a must.”
Before the change, Freddie Mac had allowed their servicers to grant up to three months of mortgage forbearance without their approval. With Freddie’s permission, the no-payment relief period could be extended to six months.
Freddie’s improved plan allows mortgage servicers to approve forbearance periods for Freddie borrowers for six months without prior Freddie approval, and a period of up to a year with Freddie’s approval.
Want to learn about what’s in store for housing and real estate in 2012? Be sure to read .

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