Mortgage Insider : The Orange County Register

Foreclosure sales are ’sizzling’

February 8th, 2010, 12:00 pm by Marilyn Kalfus, real estate reporter

Orange County’s housing mix has changed in a year, with more short sales and equity sellers and fewer bank-owned homes on the market compared to last January.

That comes from Steve Thomas of Altera Real estate, who does a bi-weekly analysis of the Orange County housing market.

In January, 29% of all sales were short sales vs. 19% in ‘09, 17% were foreclosures compared to 44% last January, and 54% were equity sellers vs. 37% a year ago.

As of Thursday, the active distressed home market — all short sales and foreclosures combined — dropped by 22 homes to 2,651, bucking a 12-week trend, he says.

He writes,

“That does not mean that there are fewer distressed homes coming on the market; rather, it means that the increased demand is eating up the active distressed inventories. Over the past month, the number of distressed and non-distressed homes to hit the market has been increasing, but many are going off the market as pending sales just as quickly as they are coming on.

“The number of foreclosures increased in the past two weeks from 355 to 375. The expected market time for foreclosures is a sizzling 0.90 months, a deep seller’s market. Foreclosures garner so much activity that they are like individual mini auctions and the successful buyer is really the successful bidder.

“The number of short sales on the active inventory decreased by 69 and now totals 2,249. The expected market time for short sales is 1.63 months, also a deep seller’s market. 33.7% of the active inventory is distressed. Last year at this time 44% of the inventory was distressed.”

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Here’s the breakdown:

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Slice	All inventory	Distressed	Share
By price…
O.C. $0-$250k	1,187	654	55.1%
O.C. $250-$500k	2,405	1,250	52.0%
O.C. $500k-$750k	1,653	461	27.9%
O.C. $750k-$1m	851	177	20.8%
O.C. $1m-$1.5m	640	68	10.6%
O.C. $1.5m-$2m	372	21	5.6%
O.C. $2m-4m	530	24	4.5%
O.C. $4m+	297	4	1.3%
All of O.C.	7,857	2,651	33.7%
Attached	3,000	1,292	43.1%
Detached	4,843	1,347	27.8%
County high share:
Rancho Santa Marg.	120	80	66.7%
Anaheim	373	239	64.1%
Aliso Viejo	114	73	64.0%
Portola Hills	11	7	63.6%
Foothill Ranch	43	25	58.1%
Talega	61	35	57.4%
Santa Ana	505	284	56.2%
La Habra	117	63	53.8%
County low share:
Seal Beach	216	5	2.3%
Corona Del Mar	165	9	5.5%
Laguna Woods	326	24	7.4%
Newport Coast	137	11	8.0%
Laguna Beach	300	28	9.3%

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Also by Marilyn Kalfus:

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Posted in: Distressed sales • numbers | 3 Comments »

Get real estate news on the go

February 7th, 2010, 5:00 pm by Jon Lansner

Text messaging isn’t just for teens! We think you’ll love to get your daily dose of Orange County real estate headlines on your cell phone.

The Register real estate news team is now text messaging every day the top Orange County housing and mortgage news directly to your cell phone. (Yeah, we wish we had a cool iPhone app, but that’s coming! Well, then, we wish we personally had a cool iPhone!)

Our midday wisdom comes to your mobile device by …

* Text “RENEWS” to 21321. (For the text message novices, those 5 digits are a short code address for our texting tool!)
* You will likely get a reply asking you to confirm your desire to get our news. Please replay affirmatively!
* Note: We don’t charge you. Your phone company may have text messaging fees.

Our plan? One text alert a day … but if something juicy breaks … we’ll let you know ASAP.

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Posted in: Uncategorized | 1 Comment »

Would you walk away from a mortgage?

February 7th, 2010, 6:00 am by Marilyn Kalfus, real estate reporter

When a home’s value falls below 75% of the amount owed, a homeowner starts to think seriously about just walking away, even if he or she has the money to keep up payments, according to a recent story in the New York Times.

By the Fall of 2009, it states, about 4.5 million homeowners had reached that threshhold, with their home’s value dropping below 75% of the balance. By June, that number is expected to increase to 10% of all homeowners with mortgages.

A mortgage broker from Scottsdale, Ariz., tells the Times that he’s already advised some 60 people to walk away. An economist argues that people should be held accountable for the contracts they sign. And the story spells out the perils, including botched credit scores and how that could affect the view of, say, prospective employers.

What do you think? Would you strategically default if you found yourself underwater by that amount?

Take our poll, and elaborate in the comments.

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Would you purposely default on a mortgage?

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Also by Marilyn Kalfus:

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Posted in: Defaults & Foreclosures • Strategic default | 92 Comments »

Investors treading water on $13-million property

February 6th, 2010, 1:00 am by Mathew Padilla

Randy Johnson, president of Independence Mortgage Co. in Newport Beach, author of “How to Save Thousands of Dollars on Your Home Mortgage” and a mortgage broker since 1983, answers questions…

Q. I believe your column is for home owners but perhaps you could answer this. I invested in a tenants-in-common (TIC) deal. It is a warehouse located in Ohio with one tenant paying the rent. Five years ago we paid about $13 million with about an $8 million mortgage. It has been cash flowing to us investors, but the loan is due to change from interest only to a higher rate which would wipe out all cash flow to us investors. If we put it up for sale today we are told we might get $7 million or perhaps $8 million, but all us investors would, of course, be wiped out. Our lender offered to raise the interest rate two points and take all the payments from the tenant and apply it to the principal, in exchange for, well as I see it, not foreclosing on us. Our only out would be to refinance with another bank on better terms. However, the market is, apparently, “frozen” so no one is making loans today.

A. First, let me admit that commercial financing isn’t my business. That said, I hear stories similar to yours that are indicative of problems brewing in the commercial market that are not much different from the residential market, and you know how bad that is.

The problem is that the securitized commercial loan market is just as frozen as the jumbo residential market. Nor do I see anything on the horizon that would make me feel good about a likely solution anytime soon. There will certainly be no Fannie Mae type solution. No new bank will come in and do a 100% loan-to-value loan. They will want cash flow to be 1.2 times the amortized loan payments and you are at 1 times cash flow now. You would need to find a loan for, say $6 million which would means contributing $2 million in capital, and that’s assuming you find a bank willing to do the deal. Perhaps you can find a partner who will contribute that capital in exchange for a percentage of the deal.

I would take the deal the bank has proposed but make sure that if they absolutely demand a pre-payment penalty, it is for as short a period as you can negotiate, say three years. Then grab a safety strap and hang on for the ride and hope time will provide a cure.

Q. I live in Midway City, and I recently lost my full-time status at work. I am working as a contract hire and that may expire in May. Also, my husband has died and so my income has gone down. I have a first at $198,000 and a second at $167,000. The houses in my neighborhood go from $300,000 to $450,000; mine’s probably worth about $350,000. I am able to make the payments, since I am working, but soon I think that will change and I will not be able to make the payments on both loans. I have tried to refinance both loans into one new loan and I cannot find anyone who can do that because I don’t have enough equity. I was told loan modification but that is not a sure thing from what I hear. Also I was told I could default on the second and still not lose my house if my first is current. Is that true?

A. I am sorry to hear of your trouble and I sympathize with all who are in a similar situation. If you default on either loan, that lender can foreclose. If the second forecloses, you still lose your house and that lender will pay off the first, if there is enough equity to do so. He will then sell it and take whatever is left over as his payoff.

Situations like yours where there is a second loan involved are difficult to manage because it seems as if neither lender wants to cooperate. Of course, the 1st lender will get 100 cents on the dollar so they aren’t worried.

All this said, do not give up. Contact both lenders and see if you can work something out. These days, you just never know.

That’s it. If you want Johnson to answer a question, email it to Julie Gallego at jgallego(at)ocregister.com. Include your name or nickname and the city you live in — that information will be published with your question. Johnson will answer up to three questions each week, so keep checking back for a response.

Read more questions and answers by clicking on the headlines below…

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Posted in: Mortgage Answers | 2 Comments »

These homes just got repo auction dates

February 5th, 2010, 6:00 am by Marilyn Kalfus, real estate reporter

First, in recent foreclosure news:

Every week, homes throughout Orange County go to foreclosure auctions. The owners can be millions of dollars in debt, or owe just a few thousand.

Often these homes revert to the lenders, who eventually put them back on the market. Sometimes the homes are bought by investors and resold.

Foreclosures affect more than the homeowners involved. They can impact entire neighborhoods. At the very least, they can affect nearby home sales.

All of these homes and addresses have been listed in the public notices, as required by law.

See Aliso Viejo HERE.

Anaheim HERE.

See Huntington Beach HERE.

Irvine HERE.

See Laguna Beach HERE.

See Laguna Woods HERE.

See Laguna Niguel HERE.

See Orange HERE.

See San Clemente HERE.

See Yorba Linda HERE.

To read about how these auctions work, CLICK HERE.

Trustee, trustor … what’s the difference? To see foreclosure terms and definitions CLICK HERE.

Top tips for buying investment properties CLICK HERE.

Note: There are foreclosures in other Orange County cities but so far we haven’t had enough available writers to regularly compile foreclosure information from them. We hope to add more cities in the future.

For a map with a partial list of other real estate listings around Orange County, click here

FORECLOSURE HEADLINES…

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Posted in: Auctions • Defaults & Foreclosures • distress | 10 Comments »

Is O.C.’s shadow inventory growing?

February 4th, 2010, 6:41 pm by Jeff Collins

New figures show that a rising number of Orange County home loans are in the foreclosure pipeline, but fewer are actually being seized by banks.

Orange County homes in foreclosure continued to rise through December, new figures from Santa Ana-based First American CoreLogic show.

But the number of bank-owned homes continued to fall.

Taken together, the latest figures may indicate that the county’s “shadow inventory” — or backlog of preforeclosure homes — is growing, while the number of homes seized by lenders is dropping.

: click to enlarge

The housing data firm reported:

90-Day Lates: The percentage of home loans in some stage of the pre- and post-foreclosure process increased to 8%, up from 4.6% in December 2008. By comparison, the U.S. rate was 8.4% in December, and the California rate was 11.4%.

This category includes a range of loans from those that are 90-days delinquent on monthly payments through those already seized by lenders.

Foreclosure Filings: The percentage of home loans in foreclosure and pre-foreclosure more than doubled to 2.8%, compared to 1.4% a year earlier. The U.S. rate was 3.2%, while California’s was 3.8%.

This category includes all pre-foreclosure loans and loans in foreclosure, but excludes loans on homes already seized by lenders.

REOs: The percentage of bank-owned homes that have been through foreclosure decreased to 0.3%, down from 0.8% a year earlier. The U.S. rate was 0.5%, while California’s was 0.8%. Read the rest of this entry »

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Posted in: Defaults & Foreclosures • First American • foreclosures | 9 Comments »

Final mortgage thoughts

February 4th, 2010, 1:00 am by Mathew Padilla

Folks, this is my last day writing for the Orange County Register and this blog. I am leaving for a job in corporate communications.

This county was home to a dramatic boom and bust in alternative mortgages, and it was entertaining, hectic and sometimes frustrating to try and tell that story to our readers. I wrote dozens of stories about the mortgage meltdown for the Register and co-authored a book, which was just released in paperback.

But the story is over.

Until investors again buy securities backed by alternative mortgages, Orange County’s once mighty lending industry will remain dormant.

So it seems a good time to try something different. Good luck to everyone laid off or struggling with an unaffordable mortgage.

And thank you to all who bothered to say a kind word or two in the comments or via email. See you in the blogsphere. I may post, under a false name perhaps, on this blog, LoRe or Calculated Risk.

The Register’s editors are still debating what to do with this blog, but I have a hunch it will be around for a while. So check back from time to time.

Take care,
-Matt

P.S. In my final poll, please rate my performance over the past three years.

How did I do?

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Posted in: Open Forum | 41 Comments »

O.C. woman ordered to pay $46 million

February 3rd, 2010, 1:40 pm by Marilyn Kalfus, real estate reporter

In case you missed it because it was an L.A. story: A former Beverly Hills real estate appraiser who last week was sentenced to 3 years in prison and ordered to pay more than $46 million for her role in an extensive mortgage fraud scheme is an Orange County resident.

The scheme cost banks tens of millions of dollars in losses, the U.S. Attorney’s office says.

Lila Rizk, 43, was convicted last summer on conspiracy, bank fraud and loan fraud charges.

Some records show her having owned a large home with a swimming pool on a cul de sac in Coto de Caza, though the news release says that she’s now from Rancho Santa Margarita.

The judge in the case warned that if other real estate appraisers inflate appraisals and lie about home values, “there is an overwhelming likelihood that they will be caught and go to prison,” the release stated.

It read, in part:

“The evidence presented at Rizk’s trial last summer showed that she was part of a wide-ranging and sophisticated scheme that obtained inflated mortgage loans on homes in some of California’s most expensive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla.

“Members of the conspiracy sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars more than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.

… Rizk profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the scheme. Her appraisals typically valued the homes three times higher than what the homes really cost. In order to supposedly justify these inflated values, Rizk used “comps,” or comparable homes, that were far bigger, more luxurious, and in better neighborhoods than the homes she appraised. Once she had inflated a few dozen homes, she then used those homes as “comps” to supposedly justify inflated prices for homes later in the scheme.”

Ten other real estate professionals were convicted in connection with the scheme, including these Orange County residents:

Jamieson Matykowski, of Laguna Niguel, who found houses for the scheme, and is scheduled to be sentenced on March 29
Timothy Holland, of Santa Ana, an escrow officer, who is scheduled to be sentenced on July 19
L. Scott Robinson, of Dana Point, an appraiser, who is scheduled to be sentenced on April 2

Rizk’s lawyer said she could have gotten up to 10 years in prison, according to a story by Nathan Olivarez-Giles on latimes.com. He quoted the attorney, Alan Baum, as saying, ”The judge, in sentencing her to three years, recognized that she’s not an evil person and that she had a very minor role in all this.”

How much money she will pay ultimately will be determined by her income once she’s out of prison, Baum said. He also said she is considering appealing the verdict.

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Also by Marilyn Kalfus:

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Posted in: Crime | 23 Comments »

Future in doubt for O.C. lender

February 3rd, 2010, 12:00 pm by Mathew Padilla

My colleague Mary Ann Milbourn writes that Ditech.com is losing more than 200 jobs. (Her blog tracks job losses and gains in Orange County.)

Jeannine Bruin, a GMAC mortgage spokeswoman, said most of the workers affected are sales agents and back office personnel who support the Ditech brand.

Ditech will remain part of GMAC’s mortgage business, Bruin said, but most of its activities will be moved to GMAC’s mortgage operations headquarters in Fort Washington, Penn.

Borrowers pay credit cards before mortgages

February 3rd, 2010, 7:29 am by Mathew Padilla

TransUnion today said borrowers, especially in California, continue to focus on credit card payments and ignore their mortgages.

This is at least the company’s second study showing the same trend.

The percentage of consumers current on credit cards and delinquent on mortgages first surpassed the percentage of consumers current on their mortgages and delinquent on credit cards in the first quarter of 2008. That earlier TransUnion study examined data between the third quarter of 2006 and the first quarter of 2008.

The latest study examined 30-day credit card and mortgage delinquency data between the second quarter of 2008 and the third quarter of 2009. TransUnion noted the trend increased: with the percentage of consumers who are delinquent on their mortgages and current on their credit cards rising to 6.6 percent in Q3 2009 from 4.3 percent in Q1 2008.

Conversely, the percentage of consumers who are delinquent on their credit cards and current on their mortgages has decreased to 3.6 percent in Q3 2009 from 4.1 percent in Q1 2008.

The shift in payment priorities are even more pronounced in California and Florida — the biggest housing bubble states. Within California, the percentage of consumers delinquent on their mortgages but current on their credit cards increased from 3.5 percent in Q3 to 2007 to 10.2 percent in Q3 2009. In Florida, the rate increased from 5.1 percent in Q3 to 2007 to 12.4 percent in Q3 2009

Over the same period, the United States saw an increase from 4.0 percent in Q3 2007 to 6.6 percent in Q3 2009.

In contrast, the number of California consumers delinquent on their credit cards but current on their mortgages declined from 3.3 percent in Q3 2007 to 2.7 percent in Q3 2009.

Ezra Becker, director of consulting and strategy in TransUnion’s financial services business unit, said, “The implosion of the mortgage industry over the last 24 months, the resetting of adjustable-rate mortgages and the weak job market have all come together to redefine how consumers are managing their finances and meeting (or not meeting) their credit obligations.”

To conduct its study TransUnion used its database of 27 million anonymous consumer records randomly sampled every quarter.

No link to the study, since I got this via email.

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Posted in: Credit Cards • Credit Crunch • Meltdown • Mortgage Demand | 15 Comments »

Loan mods as shadow inventory?

February 2nd, 2010, 1:00 am by Mathew Padilla

Are all these loan modifications we keep hearing about actually helping homeowners avoid foreclosure, and thus helping the housing market and economy?

Matthew Monks, writing for American Banker and National Mortgage News, notes delinquent loans seem to be near a peak at certain lenders and recently fell on the books of JPMorgan Chase and a few others.

On the surface, the better numbers indicate that the massive losses banks have taken in their consumer and commercial loan books are peaking.

But skeptics worry that improving nonperformer totals are deceptive because they generally do not include modified loans, which have been rising.

And a key quote (bold added):

Tom Mitchell, a senior analyst who covers financial stocks at Miller Tabak & Co., agreed that banks’ modified loans may be skewing the picture.

“We now have to consider the [modified loans] as a kind of shadow group of nonperforming assets,” Mitchell said. “It’s reasonable to say that for most banks, if the loans had not been [restructured], they would have been nonperformers.”

Time will tell.

LATEST HEADLINES…

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Posted in: loan mods | 10 Comments »

Mortgage demand softens

February 1st, 2010, 4:13 pm by Mathew Padilla

Demand for real estate loans has dipped in recent months, according to the Federal Reserve’s survey of lenders.

And some banks continued to tighten loan standards on property lending, while banks are mostly done turning the screws on other types of loans. Here’s a clip (bold added):

Banks continued to tighten standards on residential real estate loans over the past three months. In line with recent patterns, a small net fraction of banks tightened standards on prime residential real estate loans over that period, and somewhat larger net fractions of banks tightened standards on nontraditional residential real estate loans. In addition, a moderate net fraction of banks reported weaker demand from prime borrowers for residential real estate loans. Demand from customers seeking nontraditional mortgages also weakened further over the survey period. Only a small net fraction of banks reported having tightened standards on revolving home equity lines of credit over the past three months, but a large net fraction of banks continued to report lower demand for such loans.

Read the survey HERE.

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Posted in: Fed • Loan volume | Post a Comment »

Get a ‘mulligan’ after foreclosure?

February 1st, 2010, 1:00 am by Marilyn Kalfus, real estate reporter

What do you think of Christopher Thornberg’s “mulligan rule?”

The California economist brought it up Saturday at a foreclosure summit in Anaheim hosted by longtime real estate brokers Tom Moon of Huntington Beach and Hugh Elder of Corona. The event drew real estate agents from around the country who either deal with bank-owned properties and short sales or want to.

Thornberg

Thornberg, who as many know was one of the first predictors of the housing crash and the recession, was winding down the lengthy power-point triage on the state and national economy that he’s been delivering to various groups when questions from the real estate agents turned to the nuts and bolts of what to do with all the foreclosures still to come.

It was a recurring theme throughout the day. Who can qualify to buy up all these bank-owned homes, anyway?

So Thornberg offered up his “mulligan rule”.

(For those who know nothing about golf, a mulligan is a do-over after a crappy shot, usually just allowed in a recreational game or charity event.)

As Thornberg explained, the program would work this way:

“If you have kept your nose clean, if your debt to income ratio is fine, you’re still paying your credit cards off … your credit is clean but for a foreclosure on your record, you can still get a Fannie or Freddie loan, no problem … They have to give your credit score sans the foreclosure.”

So people who’ve gone through a foreclosure in the last few years would get a fresh start, of sorts, and there would be buyers for all those homes the banks own, plus those coming down the pike.

“That’ll clear the system,” he said.

What do you think? Love it? Hate it? Weigh in. And elaborate in the comments!

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The 'mulligan rule' is ...

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Reader has four properties and wants more

January 30th, 2010, 4:53 pm by Mathew Padilla

Randy Johnson, president of Independence Mortgage Co. in Newport Beach, author of “How to Save Thousands of Dollars on Your Home Mortgage” and a mortgage broker since 1983, answers questions…

Q. I currently own four properties with mortgages on them. I would like to purchase a few more homes with financing from a bank. I have excellent credit and can put 30% or more down. Unfortunately, I am being told by realtors and lending brokers that banks will not make loans to individuals if they have mortgages on four or more properties. Is this correct? If so, is there any way around this, such as incorporation?

A. Fannie Mae and Freddie Mac relaxed that rule of having only four properties with loans on them. It’s back up to 10 properties now. That was good because it is clear that investors are helping us get out of this mess faster than if we just relied upon new homebuyers.

However, there are additional restrictions, such as a minimum FICO score of 720. Also some lenders are still sticking with the four-property rule and other lenders are only offering 30-year fixed and 5/1 ARM loans under the new multiple property rule. You will really need to do your homework in choosing a lender to make sure they offer the program you need.

Q. I am living in Las Vegas, Nevada and got preapproved for a HUD home for $115,000. I turned in all the documents they need, and now the deadline has expired and my earnest money of $1,000 has been forfeited to HUD. My realtor filed for an extension to waive the late fees due to the delay of the lender. It is now 45 days later and still not closed yet. Each time they keep asking for current bank statements and paycheck stubs. I don’t know what is actually holding up the loan. Is there a chance I will get me earnest money back if the lender denies my mortgage?

A. Obviously your lender does not seem committed to helping you. When choosing a lender, it is important to determine how busy they are so as to avoid this. I am not a lawyer and I have not seen the contract but I’ll try to help anyway.

Purchase contracts specify a closing date and if you didn’t close on time, the seller has the right to cancel the contract and keep your Earnest Money. If your lender denied your loan, you can cancel and get your money back but it has to be within a period defined by the contract. That said, they usually will not have a problem extending it if they believe you can perform but you have to make the case that you can do so, and soon. You have a right to an answer from your lender and I would be most insistent with them, like asking to speak with a manager. This business really isn’t so difficult as to leave you hanging like that.

That’s it. If you want Johnson to answer a question, email it to Mathew Padilla at mapadilla(at)ocregister.com. Include your name or nickname and the city you live in — that information will be published with your question. Johnson will answer up to three questions each week, so keep checking back for a response.

Read prior questions and answers by clicking on the headlines below…

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Posted in: Mortgage Answers | 2 Comments »

Orange County Register

Foreclosure sales are ’sizzling’

Get real estate news on the go

Would you walk away from a mortgage?

Investors treading water on $13-million property

These homes just got repo auction dates

Is O.C.’s shadow inventory growing?

Final mortgage thoughts

O.C. woman ordered to pay $46 million

Future in doubt for O.C. lender

Borrowers pay credit cards before mortgages

Loan mods as shadow inventory?

Mortgage demand softens

Get a ‘mulligan’ after foreclosure?

Reader has four properties and wants more

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