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U.S. Foreclosures Rise Sharply in July

August 21st, 2007 9:47 AM

Tuesday August 21, 8:19 am ET
By Alex Veiga, AP Business Writer

U.S. Foreclosures Rise Sharply in July With Nev., Ga. and Mich. Accounting for Highest Rates

LOS ANGELES (AP) -- Foreclosure filings rose 9 percent from June to July and surged 93 percent over the same period last year, with Nevada, Georgia and Michigan accounting for the highest foreclosure rates nationwide, a research firm said Tuesday.

The filings include default notices, auction sale notices and bank repossessions. The figures are the latest measure of the ailing housing market, which has seen defaults and foreclosures soar as financially strapped borrowers have failed to make payments or find buyers.

In all, 179,599 foreclosure filings were reported during July, up from 92,845 in the year-ago month, according to Irvine-based RealtyTrac Inc.

A total of 164,644 foreclosure filings were reported in June.

The national foreclosure rate in July was one filing for every 693 households, the firm said.

"While 43 states experienced year-over-year increases in foreclosure activity, just five states -- California, Florida, Michigan, Ohio and Georgia -- accounted for more than half of the nation's total foreclosure filings," said RealtyTrac Chief Executive James J. Saccacio.

Nevada posted the highest foreclosure rate: one filing for every 199 households, or more than three times the national average. It reported 5,116 filings during the month, an increase of 8 percent from June.

Georgia's foreclosure rate was more than twice the national average, with one filing for every 299 households. The state reported 12,602 foreclosure filings, up 75 percent from June.

Michigan reported 13,979 filings in July, a 39 percent spike from June.

California, Florida, and Ohio were among the states with the highest number of foreclosure filings in July, the firm said.

California cities continued to dominate top metropolitan foreclosure rates.

The state reported 39,013 foreclosure filings last month, the most by any single state, but the number of filings rose less than 1 percent from June's total.

The state's foreclosure rate was one filing for every 333 households, RealtyTrac said.

Florida's foreclosure filings fell 9 percent between June and July to 19,179. The July figure represents a 78 percent jump from a year ago.

RealtyTrac did not say if a single property received more than one notice. The company did not break out the exact property count.

In recent months, the mortgage industry has been battered by rising defaults and foreclosures, primarily driven by borrowers with subprime loans and adjustable rate mortgages.

Lagging home sales and flat or decreasing home prices have made it more difficult for homeowners who fall behind on payments to sell their homes and clear the debt, spurring the rise in foreclosure activity.

Posted by Christian Bennett on August 21st, 2007 9:47 AMPost a Comment (0)

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Subprime Mortgage Crisis Spreading to High-End Housing Market

August 29th, 2007 11:22 PM

Subprime Mortgage Woes Spreading
Wednesday August 29, 2:07 am ET

Subprime Mortgage Crisis Spreading to High-End Housing Market

NEW YORK (AP) -- The subprime mortgage crisis is spreading to a somewhat unexpected place: homes costing more than $500,000.

As lending has rapidly gotten more restrictive for borrowers taking out large loans, sales of expensive homes have fallen sharply around the country during what should be one of the busiest seasons for buyers and sellers, mortgage bankers and real estate agents say.

To some degree the change is due to difficulty getting financing, as borrowers are finding fewer lenders willing or able to fund "jumbo" mortgages, loans for amounts greater than $417,000. Such loans are too big to be guaranteed by government-sponsored housing finance agencies Fannie Mae, Freddie Mac or Ginnie Mae.

Given the troubles in the subprime sector, investor appetite for all types of mortgage loans not guaranteed by housing finance agencies has nose-dived.

Banks until recently were able to offload the risk of many jumbo mortgages by selling the loans to investors. But now, as investors burned by the subprime debacle have become extremely picky about what they will buy, banks are having to keep more of these loans on their own books and as a result are charging higher rates.

Some lenders -- such as Countrywide Financial Corp. -- have made a point of saying they're now most focused on making loans that can be guaranteed by Fannie and Freddie.

Other lenders have simply tightened up their lending standards, for example by no longer making jumbo loans to lenders who can't fully document their income, even if they make large down payments and have stellar credit histories.

The banks that are still making jumbo loans are charging substantially higher rates to compensate for the lack of investor demand. Borrowers who could have gotten rates as low as 6.5 percent in June are now having to pay as much as 9 percent.

But aside from the financial impact of higher rates, in certain high-priced real estate markets, the effect of the suddenly tighter lending environment is more psychological, mortgage bankers and real estate agents say, as buyers and sellers alike don't want to plunge into an uncertain future.

"Showings are down, contracts written are down, and sellers are just as backed away as buyers are," said Lou Barnes, a partner in mortgage bank and brokerage Boulder West Financial Services in Boulder, Colo. The company arranges for financing on many higher-priced condominiums and houses in the state.

"I think the psychological damage is worse than the financial damage" which is already bad enough, he said. Even for buyers who have plenty of cash or can easily afford higher mortgage rates, the sudden change in the financing environment reduces "the ardor to buy a house unless you have to," he adds.

With numerous buyers and sellers sidelined, the higher cost of big mortgages is bound to put downward pressure on home prices should the lending environment stay tight for a long period of time, said Ellen Bitton, president of Park Avenue Mortgage, a mortgage bank and brokerage that does business in several states, including New York, Florida and Utah.

In New York, the most pronounced effect so far has been at the very top end of the market, for properties priced $25 million and above, said Dolly Lenz, vice chairman with Prudential Douglas Elliman.

"Every single person I have at the highest end is on hold. They're going to wait and see what happens," she said. "It has nothing to do with them being able to afford" properties or not, Lenz added. "It's a confidence thing. They somehow feel poorer, whether they are or not."

In California, where the median home price is well above $500,000, jumbo mortgages are as much as 44 percent of all mortgages issued in certain metro areas, according to data from First American LoanPerformance.

In and around San Francisco, where the median home price is about $1.1 million, the tougher financing environment has created a "hesitancy" and has led to some canceled escrows for buyers around the $1 million range, said Rick Turley, president of the San Francisco and Peninsula Region for Coldwell Banker Residential Brokerage.

Posted by Christian Bennett on August 29th, 2007 11:22 PMPost a Comment (0)

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Home Sales Hit Slowest Pace in 5 Years

August 27th, 2007 11:53 PM

Home Sales Hit Slowest Pace in 5 Years
Monday August 27, 5:24 pm ET
By Martin Crutsinger, AP Economics Writer

Existing Home Sales Drop in July to Slowest Pace in Nearly 5 Years

WASHINGTON (AP) -- Sales of existing homes dropped for a fifth straight month in July while the number of unsold homes shot up to a record level.

Many analysts said the worst slump in housing in 16 years is likely to deepen in coming months, reflecting the recent turmoil in credit markets, which has caused lenders to tighten their standards.

The National Association of Realtors reported Monday that sales of existing homes dipped by 0.2 percent in July, compared to June, to a seasonally adjusted annual rate of 5.75 million units.

The median price of a home sold last month slid to $230,200, down by 0.6 percent from the median price a year ago. It marked the 12th consecutive month that home prices have declined, a record stretch.

On Wall Street, stocks retreated on Monday after the housing report renewed concerns about the strength of the economy. The Dow Jones industrial average dropped 56.74 points to close at 13,322.13.

The deep slump in housing, combined with recent severe turmoil in financial markets, has raised worries about a possible recession. But many economists believe the Federal Reserve will ward off a full-blown downturn by reducing a key short-term interest rate should financial market conditions fail to stabilize.

But economists said the report on existing home sales signaled further trouble ahead, given a big jump in the inventory of unsold homes which rose by 5.1 percent to a record level of 4.59 million homes.

Based on the July sales pace, it would take 9.2 months to exhaust the number of single-family homes on the market, the highest level in nearly 16 years, and 11.9 months to exhaust the level of condominiums on the market. The months supply of condos sitting on the market is 45.1 percent higher than a year ago.

The rising glut of unsold homes is putting downward pressure on prices. The median price of an existing home, the point where half of homes sold for more and half for less, has now fallen every month for a year, something that has not occurred before on Realtors' records going back to 1969. Economists said to expect more price declines in coming months.

"We are literally swimming in an ocean of homes for sale," said Mike Larson, a real estate analyst with Weiss Research Inc. "Until we work through this extremely large inventory glut, we're not going to see any momentum in home prices."

Analysts said the financial market turbulence that has occurred in August will mean further downward pressure on home sales as big investors such as hedge funds grow more leery about purchasing mortgages that have been packaged into securities for fear that the rising number of defaults will mean they won't get repaid.

Even before the latest market turbulence, banks and other lenders were tightening up on their loan standards in response to rising delinquencies, especially on subprime loans extended to borrowers with weak credit histories.

"With fewer buyers qualifying for loans and lots of unsold houses out there, that makes a choice recipe for further sales declines this fall and into the winter," said Stuart Hoffman, chief economist at PNC

Hoffman said there is a growing threat that the severe slump in housing and sagging consumer confidence will weigh on consumer spending in the second half of this year, presenting a significant risk to the overall economy. But he said he believed the country would be able to avoid an outright recession because the Federal Reserve will decide at its next meeting on Sept. 18 to cut the federal funds rate, the key benchmark rate for millions of consumer and business loans.

Hoffman said he expected the September Fed rate cut would be the first of several as the central bank steps up its efforts to combat the current turbulence. The Fed in the past two weeks has supplied the banking system with billions of dollars to encourage banks to keep making loans and on Aug. 17 announced a half-point cut in its discount rate, the interest it charges to make direct loans to banks.

Sen. Charles Schumer, D-N.Y., said the latest housing report showed the need for Congress to increase efforts to deal with the potential flood of foreclosures that are being projected over the next two years as nearly 2 million homeowners with adjustable-rate mortgages experience payment shocks as their loans reset in a weakening housing market.

"We need to deal with widespread uncertainty in the mortgage market and help to refinance borrowers who were duped into bad loans," said Schumer, who is sponsoring legislation to boost federal support for mortgage counseling services.

The 0.2 percent drop in July sales, compared with activity in June, marked the fifth straight monthly decline and left sales 9 percent below the level of a year ago. The sales pace was the slowest since November 2002.

By region of the country, sales fell by 2.2 percent in the Midwest and were unchanged in the South. Sales rose by 1.8 percent in the West and 1 percent in the Northeast.

Lawrence Yun, senior economist for the Realtors, said he viewed the rise in sales in the Northeast as a potentially hopefully sign of a national rebound since that was the region where sales and prices first started falling after a five-year boom which ended in 2006.

Posted by Christian Bennett on August 27th, 2007 11:53 PMPost a Comment (0)

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Navigating Today's Real Estate Market

August 23rd, 2007 11:44 PM

Sellers

Noticing a lot of "for sale" signs up in your neighborhood? You're not alone. Several parts of the U.S. are being flooded with houses. That makes it a much more daunting prospect if you're considering joining the fray.

Pricing your home right is of utmost importance when trying to stand out from the competition. "One thing to forget is the amount your home was worth last year," says Livingston. "Some cities are thriving right now while others are caught in a downward spiral."

For example, average home sale prices hit $115,800 in Beaumont-Port Arthur, Texas, during the first quarter of 2007, a 16.5% increase from the first quarter of 2006, according to the NAR. Meanwhile, average house prices in Elmira, N.Y., dropped 14.9% year-over-year to $75,300. To find out the average asking price in your neighborhood, call your broker or consult web sites like NAR's, which provides quarterly reports on state and metropolitan area home prices.

Sellers may also have more wiggle room with their realtors when it comes to price. You could offer to lower your selling price if they agree to lower their commission. "Realtors aren't selling as many homes now, so they're probably more willing to negotiate," says Livingston.

If your mortgage is higher than the value of your house, consider holding onto your house and renting it to a potential buyer, suggests Dr. Gala Gorman, a certified financial planner and realtor based in Brentwood, Tenn. "Allocate a portion of the monthly rent toward a down payment on the house. This way, you're putting the renter in a scenario where he or she is motivated to buy the home," says Gorman.

To help sell your house faster, clean up the yard and freshen up the paint job. Also, consider throwing in some personal items to sweeten the deal, suggests Livingston. For example, if you're moving to a condo, you probably won't need your lawnmower. Some sellers even offer to pay for the buyer's closing costs, typically around $2,000, according to HSH Associates, or to complete an unfinished basement.

"Many parts of the country have a lot of inventory," says Corcoran's Liebman. "As long as you make your home pretty and price it right, you'll be at the top of the list."

Homeowners Facing Foreclosure

Foreclosures have reached epidemic proportions. During the first six months of this year, there were 925,986 foreclosure filings in the U.S., up 55% since the year-ago period, according to RealtyTrac, an online marketplace for foreclosed properties. To put it in perspective, that's one foreclosure filing for every 134 U.S. households.

By far, the most effective way for a homeowner to avoid being part of those stats is to communicate with their lender. Lenders will be a lot more willing to work with you if you call them before you miss a mortgage payment. "Lenders can offer more options in the beginning before late fees and attorney fees kick in," explains Glen Daniels, director of REO at Foreclosure.com.

Homeowners who undergo a life-changing or disruptive event, such as a serious illness or divorce, should also have some luck making arrangements with their lenders. After all, the lender's goal is to get paid. "The bottom line is the lender doesn't want the house back," says Daniels.

Lenders might consider converting a loan from an adjustable interest rate to a lower fixed rate, says Daniels, or they may enter into a forbearance agreement, which relieves the homeowner of his or her mortgages payments for up to 12 months. Typically, this offer is given to individuals who lose their jobs or are unable to work because of a work-related injury. The 12 months are then tacked on to the end of the mortgage period when the homeowner should ideally have a better handle on their finances.

If you simply can't afford the payments, your best bet is to put the house on the market, says Daniels. In turn, your lender will probably lower your payments for a 180-day period. However, if you're at an immediate risk of foreclosure, it may be best to conduct a short sale where the lender agrees to a lower payoff figure than the amount due on the house. For someone in financial trouble, this is a much better option than ruining your credit record with a foreclosure.

Finally, you may be feeling desperate, but make sure to steer clear of the random rescue companies that may contact you. "This is a scam," says Nazur. "These firms claim they can stop your foreclosure immediately if you sign documents appointing them to act on your behalf. In reality, you're probably giving up your ownership of your property."

While the thought of losing your home is a scary one, don't allow that fear to paralyze you into complacence. "Don't be afraid to make the phone call to your lender. This is the best course to holding on to your home," advises Nazur.

Posted by Christian Bennett on August 23rd, 2007 11:44 PMPost a Comment (0)

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CONTACT FOR ALL YOUR FINANCIAL SERVICES

August 8th, 2007 11:09 PM

For all your Financial Services:

Please Contact

METLIFE

Robert Johnson

Financial Services Representative

Registered Representative

Tel 914-946-2524 ext. 511

bcjohnson@metlife.com