Thread: U.S. Housing

First time homebuyers do not put the current economy in a reversal, PERIOD.
Actually they are even more risky to the banks than ever, in the current unemployment uptrend.

The main concern issue here is not whether you have a job or not, BUT how long is this job will be with you.

this is just awful,……………

Foreclosure crisis far from over for South Florida

Nearly one in four home loans in Florida are delinquent -- the highest rate in the nation. And thanks to the recession, another wave has begun.

HARD TIMES: At top, Marise Bazelais, who lives with 14 other family members, packs up family belongings ahead of a Monday deadline to move out. Their Lauderhill house was foreclosed on in May. At bottom, Chasity Ferrer peers through the window of her cousin's forclosed Malibu Bay home just a few down from her own (which is not in foreclosure).

If you think the torrent of foreclosures affecting every city and nearly every neighborhood and street in South Florida is as bad as it can get, here is a harsh new reality:

There's a new wave of foreclosures making its way through the courts that has nothing to do with exotic subprime loans, real-estate flippers out to make a quick buck or people who bought way more house than they could afford.

Now, double-digit unemployment, sagging home prices and a lingering recession are to blame.

(big snip)

Those statistics are played out daily in neighborhoods such as Malibu Bay, a gated community in Homestead where property values have plummeted. A two-bedroom, two-bath home that sold for $242,000 in August 2006, for example, is now listed for $70,000, said Karen Klores, a Realtor at The Keyes Company.

Malibu Bay is a quiet, well-manicured community of sand-colored homes with no foreclosure signs in sight. But as in many South Florida neighborhoods, that serene picture masks secrets: In a 200-yard stretch of Northeast 11th Drive in the Ventura section of Malibu Bay, 14 out of 48 townhomes are in some stage of foreclosure.

(snip)

At courthouses in Miami-Dade, Broward and Monroe counties, judges and the staff have been overwhelmed by the deluge. More than 90,000 new foreclosure cases were filed through September of this year in the three counties.

``It's pretty bad,'' said Elizabeth le Sueur, a Miami-Dade County court operations officer whose staff used to handle an average of 9,000 foreclosure cases a year.

In August, the backlog got so severe that new cases and pleadings were stuffed in 70 cardboard boxes and mail bins scattered throughout the courthouse's ground level. With 4,972 new foreclosure filings in September, Miami-Dade's year-to-date tally climbed to 49,325.
``There is no end in sight right now,'' le Sueur said.

Circuit Judge Jennifer D. Bailey, who heads a state foreclosure task force, said she is bracing for the crisis to continue well into next year. ``Now what we are seeing is people in trouble because of changes in life, loss of their income, not changes in their loan,'' she said.

Snip

Industry experts say the foreclosure crisis won't end until housing prices recover, not just flatten -- and until the employment situation improves.

``I've read guesstimates that some properties might not be back to the price borrowers paid for them for 10 to 12 years,'' Gumbinger said. ``It could be ugly for a while yet.''

The Andinos hope it's not too late for them to save their home. They have sold a vehicle and other property, cut back on cable, cellphone service and their annual Orlando trip with the kids, and now are at the mercy of their lender.

``I'm crossing my fingers every day and praying every night,'' Jose Andino said. ``We just need a second chance.''

For Marise Bazelais and her large extended family, which includes 11 children, it's already too late. After getting a four-day extension from the sheriff's office, they have until Monday morning to leave their Lauderhill house, which was foreclosed on in May. Bazelais said they have no money, no place to go.

``For now, to tell you the truth, my option is to take the kids in my car and live in my car with them. We don't have any idea,'' Bazelais said.

Story: http://www.miamiherald.com/business/economy/v-fullstory/story/1288053.html

Interesting....foreclosed houses.....are not taken back by the lender....

Link at top:

Drop in foreclosures called ‘very scary’

By Ken McCall, Staff Writer 9:00 PM Saturday, October 17, 2009

Lenders’ actions show they think properties are not worth pursuing.

Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they can’t be identified in searches of public real estate and court data without individually pulling case files, experts say.

But nobody questions that they are on the increase.

David Rothstein, a researcher with Policy Matters Ohio, summarized the way they occur like this:

• The lender files a foreclosure, gets the foreclosure judgment in court, takes the property to sheriff’s auction but doesn’t bid on it if no one else does.

• The lender files as above, gets the judgment, sets the sheriff’s auction, then cancels the sale at the last minute.

• The lender files as above but then never requests a sheriff’s auction.

• The lender doesn’t even bother to file foreclosure.

All of these actions leave the foreclosed property in the hands of the original owner who, in many cases, has moved out and is unaware the lender hasn’t taken it.

One indicator of the trend in walkaways is the gap between the number of foreclosure filings by lenders and the number of properties actually sold at sheriff’s auction.

A Dayton Daily News analysis of Montgomery County records found that, through September, foreclosure filings are on a pace this year to decrease by 8 percent. Meanwhile, foreclosed properties sold at sheriff’s sale will be down more than 21 percent. Over the three years an average of 2,500 foreclosure filings have not made it to sale at auction.

A foreclosure filing may not make it to auction for a number of reasons, including owners coming up with the money or lenders working out deals with them. But, Rothstein said, the growing difference between filings and sales suggests walkaways are playing an increasing role.

“When we look at the numbers, it’s not like thousands of people are getting loan modifications that would lift them out of the foreclosure process,” he said. “So what’s happening to those other properties?”

Another indicator is the falling number of properties that banks are repossessing, said Daren Blomquist, a spokesman for RealtyTrac, Inc. Data from RealtyTrac shows that bank repossessions, called REOs, have been steadily declining in Montgomery County over the last three years. The 2009 monthly average for repossessions is only 43 percent of what it was in 2007, a newspaper analysis of the data show.

“There’s something happening once the properties enter foreclosure that is at the very least slowing down the process,” Blomquist said. “Maybe not to that (Montgomery County’s) extreme, but we’re seeing a similar pattern nationwide.”

We're in the hearf of the foreclosure issue. Expect more big news in about January/February.

Here's a lot at now:

Foreclosures: 'Worst three months of all time'

Despite signs of broader economic recovery, number of foreclosure filings hit a record high in the third quarter - a sign the plague is still spreading.



By Les Christie, CNNMoney.com staff writer
Last Updated: October 15, 2009:


Foreclosure crisis


The number of homes receiving foreclosure filings is skyrocketing across the country. Here's the rate in your state.More

NEW YORK (CNNMoney.com) -- Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report issued Thursday.

"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes.

During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

Link & Entire: Foreclosures hit record in third quarter 2009 - Oct. 15, 2009

Many people will end up homeless then.

The ARM is a prise example of the use of "smoke & mirrors" used to screw the publc.

This is an UGLY number:

http://www.nytimes.com/2009/11/20/bu...0mortgage.html

Mortgage Delinquencies Reach a Record High

By DAVID STREITFELD
Published: November 19, 2009

The number of people at least one month behind on their house payments rose to a record in the third quarter, the Mortgage Bankers Association said Thursday.

Nearly 10 in 100 homeowners are delinquent, according to the association’s data, up from about seven out of 100 in the third quarter of 2008.

These numbers do not include those who are actually in foreclosure, a figure that also rose sharply. The combined percentage of those in foreclosure as well as delinquent is 14.41 percent, or about one in seven of mortgage holders.

“Despite the recession ending in mid-summer, the decline in mortgage performance continues. Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP,” Jay Brinkmann, the association’s chief economist, said in a statement.

The data indicates that borrowers in trouble are no longer just those who took out subprime loans. High-quality prime fixed-rate mortgages now represent the largest share of new foreclosures.

The survey is based on a sample of more than 44 million mortgage loans serviced by mortgage companies, commercial banks, thrifts, credit unions and others. The association’s records date back to 1972.

http://globaleconomicanalysis.blogsp...insurance.html Attached Images

Won't peak until, next year. This has all been in the math, for a few years, at least.

Economy Watch Live Updates on the Financial Crisis Problem mortgages hit new high at 14 percent

Data mean foreclosures may not peak until next year


By Renae Merle
Washington Post Staff Writer
Friday, November 20, 2009

More than 14 percent of borrowers were in trouble on their mortgage during the third quarter, a new record, according to an industry survey released Thursday, which also suggests that the foreclosure rate is likely not to peak until next year as unemployment rates continue to rise

Link & Entire: washingtonpost.com - nation, world, technology and Washington area news and headlines

Based on what has been the press for the past couple of months, and what I saw driving around LA last week and South Florida this week, commercial real estate is completely, to use the technical term, fucked.

There is an abundance of commercial real estate in my area that is brand new and has been standing empty for literally years... Someone is losing their ass...

things are...not so cheery as these "economists" predicted.

This looking "up" according to these economists:

Report: Almost 1 in 4 borrowers underwater

Wall Street Journal report says situation may threaten the housing recovery


msnbc.com staff and news service reports
24, 2009

WASHINGTON - Nearly one in four U.S. borrowers owe more on their mortgage than their home is worth, a worrisome sign that the housing recovery could be threatened by a wave of defaults, the Wall Street Journal reported on Tuesday.
The newspaper said almost 10.7 million households, or 23 percent of mortgage holders, were underwater in the third quarter, and 5.3 million have mortgages that are 20 percent higher than the value of their home as prices have plummeted since the recession began.

The report cited a survey by First American CoreLogic, a Santa Ana, Calif.-based real estate information company, which said more than 520,000 of the borrowers have received a default notice.

Link & Entire: Report: Almost 1 in 4 borrowers underwater - Real estate- msnbc.com

Now this is quite clever:-

Wall St. Finds Profits by Reducing Mortgages

As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess.

Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.

While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.

For instance, a fund might offer to pay $40 million for a $100 million block of mortgages from a bank in distress. Then the fund could arrange to have some of those loans refinanced into mortgages backed by an agency like the F.H.A. and then sold to an agency like Ginnie Mae. The trick is to persuade the homeowners to refinance those mortgages, by offering to reduce the amounts the homeowners owe.

The profit comes when the refinancings reach more than the $40 million that the fund paid for the block of loans.

The strategy has created an unusual alliance between Wall Street funds that specialize in troubled investments — the industry calls them “vulture” funds — and American homeowners.

But the transactions also add to the potential burden on government agencies, particularly the F.H.A., which has lately taken on an outsize role in the housing market and, some fear, may eventually need to be bailed out at taxpayer expense

http://www.nytimes.com/2009/11/22/business/22loans.html

I think the concept of bundling and buying back mortgages at a discount- whilst offering discounted terms back to the suffering mortgage payers is fundamentally sound. Something in it for everyone. The 'value added' profits will of course be made by the Investment bankers, but thats the payoff for being smart.

My longer term thought is that the inflationary aspect of real estate was fundamentally unsound, at least to the extent it happened. And the borrowings permitted off this unsound paper inflation obviously are a large part of the problem now. So pegging real estate back in price, i.e deflating it, via such transactions makes sense to me.

Sorry SAB but maybe I dont understand it right, but it sounds like by transferring the risk to the taxpayers while Wall Street pocket the profit, that it's just yet another Wall Street scam made more edible by seemingly aiding home-owners ?? but if it all goes wrong the usual suspects can walk away without getting their feathers ruffled.

^ Pretty much- the saving grace being the 'remortgage' is at a considerably lower debt level- so a loss is taken on the previous, inflated mortgage by the issuing bank. But if real estate continues to fall, then yes below a certain level someone like GNMA is left holding the can.

I'm not qualified to know the details of the specifics on this argument. Of course the mortgage companies were greedy and also deceitful in many cases. Bankers seem very dodgy - well, are, dodgy.

But the people who took out these loans were very stupid. Over-borrowing, using their house as an ATM, taking on teaser rates, ARMs, pick-a-pay mortgages.

Where does the buck stop? With both I think.

The lenders and borrowers were both myopic, greedy and foolish. Both deserve to get burned, and perhaps this is what is actually happening.

This professor's advice is a strategic, and not a moral one. And for some, it certainly makes sense to walk away.

Brent T. White, a University of Arizona law school professor, says that it's in the homeowners' best financial interest to stiff their lenders and that it's not immoral to do so.

Reporting from Washington - Go ahead. Break the chains. Stop paying on your mortgage if you owe more than the house is worth. And most important: Don't feel guilty about it. Don't think you're doing something morally wrong.

That's the incendiary core message of a new academic paper by Brent T. White, a University of Arizona law school professor, titled "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis."

White contends that far more of the estimated 15 million U.S. homeowners who are underwater on their mortgages should stiff their lenders and take a hike.

Doing so, he suggests, could save some of them hundreds of thousands of dollars that they "have no reasonable prospect of recouping" in the years ahead. Plus the penalties are nowhere near as painful or long-lasting as they might assume, he says.

"Homeowners should be walking away in droves," White said. "But they aren't. And it's not because the financial costs of foreclosure outweigh the benefits."

Sure, credit scores get whacked when you walk away, he acknowledges. But as long as you stay current with other creditors, "one can have a good credit rating again -- meaning above 660 -- within two years after a foreclosure."

Better yet, homeowners can default "strategically": Buy all the major items they'll need for the next couple of years -- a new car, even a new house -- just before they pull the plug on their current mortgage lender.

"Most individuals should be able to plan in advance for a few years of limited credit," White said, with minimal disruptions to their lifestyles.

What kind of law school professorial advice is this? Aren't mortgages legal contracts? In so-called anti-deficiency states such as California and Arizona, mortgage lenders have limited or no legal rights to pursue defaulting homeowners' assets beyond the house itself, White said. In other states, lenders may decide that it is not worth the legal expense to pursue walkaways, or consumers may be able to find flaws in the mortgage documents, disclosures or underwriting to challenge the original contract.

The main point, he said, is that too often people's emotions get in the way of clear financial thinking about mortgages, turning them into what he calls "woodheads" -- "individuals who choose not to act in their own self-interest." Most owners are too worried about feelings of shame and embarrassment after a foreclosure, and ignore the powerful financial reasons for doing so.

Buttressing these emotions is a system that White labels "the social control of the housing crisis" -- pressures and messages continually sent to consumers by the "social control agents," namely banks, government and the media. The mantra that these agents -- all the way up to President Obama -- pound into owners' heads, White said, is that "voluntarily defaulting on a mortgage is immoral."

Yet there is an inherent imbalance in the borrower-lender relationship that makes this morality message unfair to consumers, White says: Banks set the rules during the housing boom, handing out home loans with no down payments, no income checks and inflated appraisals. Now that property values have dropped 20% to 50% in many areas, banks have been slow to modify troubled mortgages and reluctant to reduce principal debts.

Only when homeowners cut through the emotional fog and default strategically in large numbers, White argues, will this inequitable situation be seriously addressed.

How does White's 52-page manifesto go over with mortgage lenders? Predictably, not well. Officials at Fannie Mae and Freddie Mac -- investors who fund the bulk of all new mortgages in the country -- disputed White's characterization of how quickly after foreclosure a walkaway borrower can obtain a new loan. It's not three years, they said, it's a minimum of five years, absent extenuating circumstances such as medical or employment problems that caused the foreclosure.

"Borrowers who walk away from their mortgage obligations face serious consequences," including severely depressed credit scores for extended periods, said Brian Faith of Fannie Mae.

In addition, he said, "there's a moral dimension to this as homeowners who simply abandon their homes contribute to the destabilization of their neighborhood and community."

http://www.latimes.com/classified/re...C3801270.story

Worth watching again! The next wave of foreclosure will begin in about 6 weeks. Look at the credit suisse, chart.

The commercial real estate shoe is now dropping.

U.S. Commercial Property Falls to Lowest in 7 Years (Update3)


By Brian Louis

Dec. 21 (Bloomberg) -- Commercial property values in the U.S. declined in October to the lowest level in more than seven years as unemployment reduced demand for apartments, offices and retail space.

The Moody’s/REAL Commercial Property Price Indices fell 1.5 percent in October from September to the lowest since August 2002. Prices were down 36 percent from a year earlier and are 44 percent below the peak in October 2007, Moody’s Investors Service Inc. said in a statement.

Values are dropping as U.S. unemployment climbs and consumers cut spending. Office vacancies may approach 20 percent next year as employers hold off hiring, commercial property brokers Jones Lang LaSalle Inc. and Grubb & Ellis Co. said last month.

“The number-one issue facing commercial real estate right now is the value declines that we’ve seen since prices peaked,” Matthew Anderson, a partner at Foresight Analytics LLC in Oakland, California, said before the data were issued. “I tend to think that the size of the declines moving forward is going to be smaller.”

An estimated $1.4 trillion of commercial real estate debt is scheduled to mature over the next five years and Foresight estimates that 53 percent of it is “underwater,” meaning the value of the property is less than the mortgage, Anderson said.

More Declines Forecast

Commercial property values may decline by a total of 50 percent from the peak to the bottom, Anderson said.

“This is the worst that we’ve seen since World War II,” Anderson said.

Prices in the New York area office market fell 38.1 percent over the past four quarters, Moody’s said today.

The delinquency rate for U.S. commercial mortgage-backed securities rose to 4.47 percent as of the end of November, Moody’s Investors Service said on Dec. 10. That’s almost six times the year-ago rate of 0.75 percent.

Delinquencies for commercial real estate mortgages held by banks may rise to 5.6 percent in the fourth quarter and reach as much as 8 percent next year, Anderson said.

The U.S. unemployment rate fell to 10 percent in November from a 26-year high of 10.2 percent in October, according to the Labor Department.

To contact the reporter on this story: Brian Louis in Chicago at blouis1[at]bloomberg.net.
Last Updated: December 21, 2009 12:30 EST

http://www.bloomberg.com/apps/news?p...d=aHtqsgJE35sU

Source is at the bottom. Folks, this WILL be ugly.

Originally Posted by Milkman

Source is at the bottom. Folks, this WILL be ugly.

This is the one they were talking about on 60 Minutes, right? I can't believe this is happening when everyone was so sure that real estate prices would just keep inflating forever, like a magic balloon. That's what happened in Japan, right? A public toilet in Ginza is still of equal value to all of mid-town Manhattan. . .no?