Irvine Housing Blog

Fewer mortgages going bad but foreclosures expected to increase

The Mortgage Bankers Assn. says it could take three or four years to return to a normal pattern of delinquencies and foreclosures.

November 18, 2011|By E. Scott Reckard, Los Angeles Times

Fewer home loans are in trouble these days, but despite some improvements, the nation is not even halfway through cleaning up the foreclosure mess, industry experts said.

It could take three or four years to return to a typical pattern of delinquencies and foreclosures, the Mortgage Bankers Assn. said in releasing its quarterly delinquency report Thursday.

An economist for the trade group declined to estimate how many households had lost their homes since the mortgage meltdown four years ago, or how many more foreclosures were to come.

But the Center for Responsible Lending, a nonpartisan advocacy group that accurately predicted a foreclosure tidal wave in 2006, issued its own assessment Thursday: 2.7 million American households had lost their homes as of February, with an even greater number to come.

The advocacy group, which analyzed 27 million home loans made from 2004 through 2008, estimated that an additional 3.6 million mortgages were in foreclosure or likely to fail.

“That means the nation is not yet midway through a foreclosure crisis that mires the economy,” the Durham, N.C., group said in releasing its study.

The mortgage industry stopped funding high-interest subprime mortgages and other risky loans in 2007, when the meltdown made it impossible to sell them. But the backlog of soured mortgages from that era was enormous and has been compounded by lingering unemployment of about 9% nationally and about 12% in California.

Things are slowly improving, said Mike Fratantoni, the mortgage bankers’ economist. The number of borrowers who had missed at least one payment but were not yet in foreclosure dropped below 8% for the first time since the fourth quarter of 2008. Just a year ago, it was 9.13%.

The percentage of home loans mired in the foreclosure process was up slightly from a year earlier at 4.43%, compared with the 1% that once had been considered normal, Fratantoni said.

The backlog remains high in part because lenders eased up on foreclosures for much of 2011 after revelations that they had mishandled legal paperwork and procedures when repossessing homes in the past.

The regulatory pressures on home lenders include a lengthy investigation by a task force of state and federal officials. California Atty. Gen. Kamala D. Harris is also pursuing a separate probe in hopes of forcing more write-downs of principal for troubled California borrowers.

Longtime industry observer Guy Cecala, publisher of Inside Mortgage Finance, said he believes it will take at least two more years to resolve the crisis.

“A lot depends on how fast banks … can clear out defaulted mortgages and foreclosed properties,” he said.

Fratantoni said that with the industry more confident that it has fixed its foreclosure procedures, “a couple of big servicers” he didn’t identify had recently stepped up foreclosures. Many of those, he said, involved boom-era subprime loans that had been modified at least once but fell back into delinquency.

Reflecting this push, the percentage of loans on which foreclosure actions were started during the third quarter was 1.08%, up from 0.96% in the second quarter. California had the nation’s fifth-highest rate of new foreclosures: nearly 1.5% in the latest quarter.

The statistics also reflected a much higher backlog of unresolved foreclosures in states where they are handled in the courts, compared with states like California that do not normally require court approval.

The rate of homes in foreclosure was highest in Eastern and Midwestern states that route all home repossessions through the courts, with Florida at more than 14% and New Jersey at 8%.

California, which for years had one of the highest rates of loans in foreclosure, fell to 19th on the list at a bit over 4%. Of states that handle foreclosures without court procedures, Nevada was the only one high on the total foreclosure-rate list, with nearly 8% of its mortgages in foreclosure.

In a separate report Thursday, mortgage finance giant Freddie Mac said the typical rate on a 30-year fixed-rate home loan this week was an even 4%, a statistically insignificant rise from 3.99% a week earlier. The 15-year fixed loan rates rose to 3.31% from 3.30%.

Expressing some optimism about the business, Frank Nothaft, a Freddie Mac economist, said the economy “is showing potential for further gains in the near term” as the near-record-low mortgage rates persist.

“Realtors blame banks for failing to inflate a replacement housing bubble”

That’s like:
1. Crackheads blaming the govt for not supply enough drugs.
2. Obesity on the farmers for producing low cost food in America.
3. Creating a disease so there will be a market for a cure.

Any others to list?

Happy Thanksgiving.

Why, in this day of the internet and blogs such as this one do I (as a potential buyer) even need a Real Estate agent?

Does a R/E agent [as a buyer] even represent my best interests?

It seems to me that a Real Estate *attorney* could just as easily handle the legal details.

I have posed this very question to agents at open houses wanting to know if I am “working with someone”

I have never received a clear cut answer other than somehow R/E agents have access to “secret” information [like non MLS listed homes] that no one else does.

The SF version of Irvine’s “North Korea Towers” is the Ritz-Carlton Residences condo development.

Units were originally sold for $2 million, but current resales are half that, shocking for SF.

A big part of the reason is the $2,621/month HoA.

Socketsite.com: Following In The Footsteps Of A 52 Percent Drop At The Ritz-Carlton

“PMI Group filed for bankruptcy on Wednesday, listing debts of $736 million, triggered by the meltdown of a housing market that has yet to halt its decline.

Walnut Creek-based PMI was forced into bankruptcy following a judge’s decision that upheld the takeover by Arizona state regulators of PMI’s primary unit to insure mortgages.

PMI pays lenders after a homeowner defaults and a foreclosure fails to recover enough to cover the mortgage.

The company is losing money amid the worst slump in U.S. housing prices since the Great Depression.

Arizona regulators took control of PMI’s mortgage insurance unit in August.

The subsidiary was ordered to cease writing new policies, which erased a vital revenue stream for PMI.

“PMI listed assets of $225 million. The company filed for a Chapter 11 in a quest to reorganize its finances.

“Continued high unemployment in the United States and the slow economic recovery in U.S. residential and mortgage and housing markets” have contributed to PMI’s losses, L. Stephen Smith, PMI’s chief executive officer, said in a court filing.”

PMI files for bankruptcy, listing $736 million in debts amid rough housing market

Realtors in and around Central Texas are doing better this year than they were last and the year before. Since the interest rates went down a few months back, sales this winter have been taking off in Austin. Houses that sat for sale for a hundred days or more have actually gone pending and closed—most in the low 4s. We do still have zero down loan products for some price points, but that doesn’t explain it. Our lack of meddlesome regulation and our unrivaled support of local commerce brings people to Austin from California and it’s keeping our houses appreciating every year while they tank everywhere else. No Realtors here worrying about bubbles!