November 7th, 2009, 1:00 am by Mathew Padilla
The latest foreclosure figures from First American CoreLogic show a growing divergence in what’s happening to problematic mortgages in Orange County.
The ratio of bank-owned houses and condos, known as REO, against all outstanding first mortgages declined for the 13th straight month to just 0.26% in September — the lowest in 26 months. That sounds like a good thing for the housing market and economy.
But the number of bad loans in limbo continues to escalate.
In fact, the proportion of 90-day late loans has increased each month for more than three years (beginning in April 2006) and hit 6.96% in September.
The chart below shows REOs, 90-day lates, and properties with some kind of foreclosure filing. (Note: 90-day lates include the other two categories.)
 - click to enlarge
The chart reflects a number of trends. For one thing, more troubled properties are selling at auctions, known as trustee’s sales, and thus are not going back to the bank as REO.
Sam Khater, senior economist with First American CoreLogic, said in an email:
The reason REOs have declined is that flow of distressed properties into REO has been artificially restricted due to local, state and GSE foreclosure moratoria, loan modifications and servicer backlogs. This has led to a drop in the supply of REO properties, while at the same time sales (including REO sales) increased due to the artificially low rates and first-time homebuyer tax credits, which further depleted the supply of REOs. This dynamic has led to the rapid improvement in home prices over the last six to eight months.
However, the mortgage distress is high and rising as is evident by the 90+ day category, which means the pending supply is building up due to high levels of negative equity and rising unemployment. So we have a situation where at the back end (ie REOs) it appears as if it’s getting better, but it’s really a mirage as we know that the pending supply pipeline default (ie 90+ day DQs) is looming larger.
Yup, at some point, we should see more short sales and foreclosures. Maybe early next year?
More from this blog…
Posted in: Defaults & Foreclosures | 5 Comments »
November 6th, 2009, 7:50 pm by Jon Lansner
Bank regulators late Friday closed United Commercial Bank of San Francisco — with 3 branches in Orange County. Details …
- It’s the 120th U.S. bank to fail this year and 14th in California.
- All deposit accounts, excluding certain brokered deposits, have been transferred to East West Bank of Pasadena.
- United’s branches will open starting Saturday as East West offices. O.C. branches are 2 in Westminster and 1 in Irvine.
- Federal Deposit Insurance Corp. estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.4 billion.
- FDIC press release IS HERE!
- Information for customers IS HERE!
- 4 other banks failed Friday. STORY HERE!
Posted in: Uncategorized | Post a Comment »
November 6th, 2009, 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…
Debra in Irvine asks:
Q. My husband and I are retired (ages 75 and 68). We have a home in the desert and a small condo in Orange County. Due to the cost of supporting two homes (we do not want to sell the O.C. condo; there is no mortgage on it), we are thinking about refinancing our desert home with a five-year interest-only loan at 4.4%. Refinancing would give us an additional $600 each month for the next five years. At that time, we will probably sell our home (and the condo also) since mortgage rates will be much higher and purchase a smaller home in Orange County with the funds from the sales. But what if after five years we decide we are not anxious to sell? We are concerned we might be forced to sell if rates for a new loan are much higher in five years. We are not quite sure if we are making a wise move with this new interest-only loan. We would appreciate your thoughts on this matter.
A. In my discussions with clients, my objective is to help them find a comfortable balance between risk and cost. Getting a five-year interest-only loan, while it has a lower payment than a 30-year fixed rate loan, seems inappropriate because of the higher risk you clearly see. Do you really want to have to refinance when you are 80 and 73?
Some loan officers just don’t listen to the client’s concerns. They are taught to “push” programs the company thinks that customers might want. An interest-only loan appeals to people who focus on getting a lower payment, even if for a shorter period of time. In your case, I think taking a longer term view would leave you risk-free and more comfortable.
Dooski in Anaheim Hills asks
Q. How many times can you do a modification on your home loan? And why are companies like BofA not abiding by Obama’s law of ‘if your mortgage is more than 31% of your income, the lender is supposed to lower it if you qualify,’ which we do and they aren’t modifying?!? How can they get away with that?
A. In my view, the entire industry has been incredibly unresponsive in doing loan modifications. That hurts millions of people and puts the housing recovery in jeopardy. This may be due in part to the fact that your “lender” just may collect payments for the ultimate lender. He may not have any power to modify loans. But it is clear that not enough modifications are being done and those that are being done fall short of real help.
The big lenders talk about the number of people they hire to do loan modifications; they say they are doing them by the tens of thousands. But it is hard to find borrowers who have been helped. Perhaps they look at participation in the government’s modification programs as “optional.”
The Home Affordable Modification Program had the goal of helping 3 million to 4 million homeowners but a review of the program by the government’s General Accounting Office (http://www.gao.gov/new.items/d1016.pdf - see page 92) showed as of September 25 for loans not owned or guaranteed by Fannie Mae or Freddie Mac only 209,000 modifications had been started and only 1,080 borrowers had successfully completed the program. (Editor’s note: Treasury reported that through September all participating lenders and servicers had 487,081 trial and permanent modifications underway, or roughly 16% off all eligible loans 60 days or more past due.)
We would sincerely like to hear stories from anyone who has actually been helped by a modification. Tell us your story. In the meantime, I would keep calling BofA.
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…
Find out more about: MORTGAGE ANSWERS | MORTGAGE RATES | FORECLOSURES | HOME PRICES | INVENTORY | RENTS | FED |
Posted in: Mortgage Answers | 20 Comments »
November 5th, 2009, 12:00 pm by Marilyn Kalfus, real estate reporter
First, in foreclosure news this week:
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 Coto de Caza HERE.
See Huntington Beach HERE.
See Irvine HERE.
See Ladera Ranch HERE.
See Laguna Beach HERE.
See Laguna Niguel HERE.
See Rancho Santa Margarita 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 — including Orange and Anaheim — 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.
More from this blog…
For a map of real estate listings and foreclosures, click here
Posted in: Auctions • Defaults & Foreclosures • Uncategorized • distress | Post a Comment »
November 5th, 2009, 8:23 am by Mathew Padilla
Federal Housing Administration insured loans have accounted for about 25% of purchase home loans in Orange County over much of this year, after the loan limit was raised to nearly $730,000 in high-cost areas like this county. FHA’s market share has also grown nationwide.
With FHA’s insurance pool covering many more loans and much bigger loans, some critics are worried a taxpayer bailout may be necessary someday soon.
The release of an independent audit by Integrated Financial Engineering (IFE) was supposed to end the speculation. But the Washington Post reported yesterday that FHA abruptly delayed the audit’s release, citing “problems with the accuracy of some of the study’s economic models.”
FHA Commissioner David H. Stevens said the delay was related to economic scenario tests that the agency requested “above and beyond” what was originally to be included in the audit so that the FHA could “better understand a broader range of risk scenarios.”
“Based on these results, we raised questions about the accuracy of IFE’s modeling, and IFE therefore advised us that we should not treat the report as final,” Stevens said. “IFE is now running additional tests to ensure that the final report is accurate.”
Delaying the report right before it was supposed to be released is bad timing. And I wonder what the auditor thought of FHA’s ability to withstand those “risk scenarios” Stevens is talking about.
IFE said it will address the issues and finish the report as soon as possible.
More from this blog…
Posted in: Bailout Buzz • FHA | 15 Comments »
November 4th, 2009, 3:50 pm by Mathew Padilla
The Federal Reserve today left a key short-term interest rate unchanged at near zero percent and said again it will wind down purchases of mortgage securities through March. Here’s how some market watchers reacted to the statement:
Jeff Atlman, partner with WestCal Mortgage Corp. in Tustin
“I think it was the right move on the Fed’s part. With inflation being benign and the economy at a crossroad where we are not sure if it can sustain a long-term recovery, they really have limited options. They will continue to purchase mortgage-backed securities and at some point the economy has to show a lifeline of its own. I personally have always said that Washington must realize that our economy will not turn around until jobs return and the housing market turns around. The brains in Washington D.C. are placing laws into effect that are actually hurting consumers (HVCC law, MDIA law etc.). Extending the homebuyer credit would be a positive, but they need to add an incentive to the people who are responsible homeowners and offer them a fixed tax credit as well, such as $6,000 or $6,500.”
Jack Kyser, founding economist of The Kyser Center for Economic Research, LAEDC
“This decision wasn’t unexpected. Our reading of the local economy is that it has hit bottom, but there isn’t much upward momentum yet. Small-to-medium sized businesses complain that they can’t get bank loans. They are also concerned about potential costs imposed by healthcare reform. So it is still tough out there, and keeping rates low is a good decision.”
Jeff Lazerson, a mortgage broker and founder of Mortgage Grader in Laguna Niguel
“We should consider ourselves lucky if inflation pressures force the Fed to raise rates by 4th quarter of 2010. Banksters are being scrooges when it comes to small business lending as well as commercial and residential property lending. We will be stuck in double digit unemployment for some time. The good news here is that Federal Reserve Chairman Ben Bernanke is learning the game of posturing. He didn’t say anything to upset the markets.”
More from this blog…
Posted in: Bailout Buzz • Fed | 36 Comments »
November 4th, 2009, 9:07 am by Mathew Padilla
The Mortgage Bankers Association today reported on the market last week:
- Its refinance application index increased 14.5 percent from the previous week and the purchase application index decreased 1.8 percent from one week earlier. I wonder if uncertainty about the future of the first-time buyer tax credit contributed to the drop in purchase demand. It appears Congress is moving closer to extending the credit into next year.
- The four-week moving average is down 5.0 percent for purchase index and down 5.7 percent for the refinance index.
- The refinance share of mortgage activity increased to 66.1 percent of total applications from 62.3 percent the previous week. The adjustable-rate mortgage share of activity decreased to 6.1 percent from 6.9 percent of total applications from the previous week.
- The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.97 percent from 5.04 percent, with points decreasing to 1.01 from 1.25 (including the origination fee) for 80 percent loan-to-value loans that can be sold to Fannie Mae or Freddie Mac.
Read more from this blog on:
FORECLOSURES | MORTGAGE ANSWERS | MORTGAGE RATES | POLLS | DISTRESSED SALES | AUCTIONS
Posted in: Loan volume • Mortgage Demand • Mortgage rates | Post a Comment »
November 3rd, 2009, 3:15 pm by Jeff Collins
 click to enlarge The percentage of sales involving homes that had been through foreclosure during the prior 12 months continued to fall in September, down to 25.1% of home resales, MDA DataQuick reported.
That’s foreclosures’ lowest share of resales since February 2008.
And while it’s not surprising to note that falling foreclosures are tied to this year’s price surge, it is interesting to see how closely two trends — median home prices and foreclosures’ share of resales — correlate. (See chart at right)
A comparison shows:
- Foreclosures’ share of resales began to climb two years ago in O.C., rising from 6 percent in August 2007 to 46 percent last January.
- The median home price here fell to $370,000 from $642,000 in that time, a 42 percent decline.
- Foreclosures’ share of resales since have dropped steadily, corresponding to a 16 percent rebound in median home prices, which increased to $429,000 in September.
Forecasters have debated how an expected revival in the foreclosure rate will impact home prices next year.
Anil Puri, dean of Cal State Fullerton’s Mihaylo College of Business and Economics projected that 2010 home prices in O.C. will rise no more than 2 or 3 percent because of high joblessness and a possible increase in foreclosures.
But economist Mark Schniepp, author of the UCLA Orange County economic forecast, predicted that the next wave of foreclosures won’t be big enough to derail housing’s recovery.
More on distressed home sales:
Posted in: Defaults & Foreclosures • Distressed sales • dataquick | 16 Comments »
November 3rd, 2009, 1:00 am by Jeff Collins
Aliso Viejo broker Steve Thomas of Altera Real Estate reports that it would take just 21 days to sell all the bank-owned homes in Orange County based on the current sales pace. And competition to buy those homes is so stiff that accepted offers are averaging 3% over the asking price, he said.
Fewer than one in 20 of the county’s 7,749 listings on Thursdays were repossessed homes taken by banks through foreclosure.
But short sales — homes selling for less than their debts — accounted for more than one in four O.C. listings, “a major player in today’s marketplace,” Thomas said. The chart below shows the long-term trend:
 click to enlarge In addition, Thomas reports:
- There are currently only 314 foreclosed homes for sale in all of Orange County, a decrease of eight in the past two weeks.
- There are currently 2,075 short sales on the market, a decrease of just one in the past two weeks. Short sales currently represent 27 percent of the listings.
- The expected market time for short sales — the theoretical time to sell all the listings at the current sales pace — is 56 days, vs. nearly seven months a year ago.
- Overall, the total number of distressed listings — foreclosures and short sales — was 2,389, or 30.8 percent of the total number of homes for sale.
- That’s down just nine homes from two weeks ago, but way down from a year ago. At the end of October 2008, there were 5,801 distressed homes on the market, accounting for 43.8 percent of the total listings.
Here’s a look at various slices of the O.C. market as of last Thursday: total listings; distressed listings; and percentage of all listings that are distressed … Read the rest of this entry »
Posted in: Defaults & Foreclosures • Distressed sales | 27 Comments »
November 2nd, 2009, 6:53 pm by Jon Lansner
Freddie Mac’s quarterly refinance report for Q3 shows nationwide …
- Share of refinance loans resulting in new mortgages that were 5% or more higher than the paid-off first mortgage balance — a measure of “cash-out” refinancing — fell to a six-year low of 36%.
- In the first three quarters of this year, total equity cashed out was approximately $60 billion. Adjusting for inflation, smallest since 2000.
- Half of borrowers who refinanced a conventional loan lowered their annual mortgage interest rate by at least 17% as new interest rate was about 1.1 percentage points below the old rate.
- All told, the interest-rate reduction adds up to about $3 billion in payment savings over the first 12 months of the new loan.
- In the first nine months of 2009, interest rates on 30-year fixed-rate mortgages have averaged 5.1 — lowest in the 38-year history of Freddie Mac’s mortgage survey.
- These estimates come from a sample of properties where Freddie Mac has funded at least two successive loans
Posted in: Fannie & Freddie • Refi | 3 Comments »
November 2nd, 2009, 1:00 am by Mathew Padilla
National Mortgage News reports that Home Mortgage Disclosure Act figures for 2008 show that minorities “were big losers in the market contraction last year.”
And with credit still tight, the outlook for minority access to home loans this year and next looks bleak.
But is that a bad thing?
Subprime lending enabled more minorities to become homeowners during the boom, but many of those folks got mortgages they couldn’t afford. The result: record foreclosures.
Mark Fogarty writes:
Lenders made $342 billion in mortgages to minorities last year, out of a total of some $2.1 trillion. That’s just 17% of the total, down from 20% in 2007 and 22.6% in 2006.
With the U.S. having a minority population of 33% in the 2000 Census, much of the progress made toward serving the underserved market in recent years seems to have unraveled.
The vaporizing of the subprime mortgage market, which targeted minorities (for better or for worse) is a major factor in the downturn. The merger of Countrywide Home Loans, Calabasas, Calif., and Bank of America, Charlotte, N.C., last year may have had some impact as well, as Countrywide lost its spot as top lender to minorities last year after many years of holding the lead position.
…
Lending to Hispanics fell by more than half, from $266 billion to $130 billion. African Americans also registered a sharp drop in mortgages last year, from $170 billion in 2007 to $96 billion, a more than 40% drop in dollar terms. Asian mortgage loans dropped to $95 billion from $145 billion in 2007, or approximately a third.
So what do you think of the data. Here’s a two-part survey:
Are minorities underserved by banks?
Should government expand lending programs directed at minorities?
More from this blog…
Posted in: HMDA • Polls | 79 Comments »
October 31st, 2009, 1:00 am by Mathew Padilla
Some companies that advertise help avoiding foreclosure are trying to avoid a ban on advance fees by charging consumers in steps, according to loan brokers and state regulators.
That’s illegal, said Tom Pool, a spokesman for the California Department of Real Estate (DRE).
The bill, dubbed SB 94, clearly prohibits loan modification companies from collecting any money until all services are performed, Pool said. He said the DRE will investigate any consumer complaints related to companies skirting the advance-fee ban.
“We knew folks were going to be looking for ways around the bill, and we are seeing these creative and clever approaches,” Pool said. “We are not buying it.”
Consumers, however, must pay close attention to the loan-modification contract, Pool said. (A loan mod is when a lender changes the terms of a loan to make it more affordable instead of foreclosing on the borrower.)
For example, it could say that all service is complete once an application for a loan mod has been submitted to a lender, regardless of the outcome, he said. A fee could be collected at that time in compliance with SB 94, he said.
“It begs the question, Who is going to sign up for that?” Pool said. “Who is going to spend $3,000 on a crap-shoot.”
There are alternatives to paying a third-party for loan help.
Homeowners can attempt to negotiate their own loan modification or can seek free help from a nonprofit organization approved by the U.S. Department of Housing and Urban Development.
More on loan mods…
Posted in: Crime • loan mods | 1 Comment »
October 30th, 2009, 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…
Ed in Yorba Linda asks:
Q. We have a 740 FICO credit score, more than ample reserves, no consumer debt, very good income-to-debt ratio, can qualify with full documentation and yet we own too many homes (more than 10) to qualify for a loan. We are not interested in hard money loans of short duration. We are long-term, buy-and-hold real estate investors. We can put a 30% down payment on the right property. Any ideas of where we can go for a non-owner-occupied loan?
A. The rule applies to Fannie Mae and Freddie Mac loans, but the entire rest of the mortgage world keys on what they do so it is not likely that you can find another lender who will swim upstream. Not only that, some lenders are still working off the four-property limit that was established early this year and later rescinded. My point is that you have to ask. Jumbo lenders don’t have that restriction, but it’s even worse. The ones I know about are only doing principal residence loans.
You might think about this strategy. The rule applies only to properties with loans on them. If you have 12 rental properties but only eight have loans on them, you can buy two more. If you have enough equity in one property, you can refinance the loan on it and have enough cash to pay off a loan on another property. That leaves you with an opportunity to buy one more. Once I did a big loan on a client’s home and we paid off loans on a half-dozen rental properties.
Mike in Mission Viejo asks:
Q. We bought a home in June 2008 for $400,000 in Mission Viejo. We put $80,000 down; the mortgage being $320,000 at 6% for 30 years, with monthly payments of $1,917. The balance is now $316,070. Although the lender, Wells Fargo, says in a form letter that we can reduce our payment by $142, when I spoke to their rep last month, he indicated that the costs involved wouldn’t make it practical to refinance at this time. My question is: Can we refinance at a lower rate that would reduce our monthly payment without having to pay up-front costs that negate the savings?
A. The answer is a qualified, “Yes.” It depends first on the value of your home. There has obviously been a further decline in the market since you purchased. That would mean you would have to pay mortgage insurance (PMI) because you would be over 80% loan-to-value. That would make it unattractive to refinance.
However both Fannie Mae and Freddie Mac have special programs that allow you to refinance with over 80% LTV without paying PMI. To see if Fannie Mae owns your loan, go HERE to and the Freddie Mac Web site is HERE.
Assuming you loan is owned by one of them, you can reduce the interest rate by over 1%. (Editor’s Note: Rates may have changed since Johnson answered this question.) That is an attractive opportunity because you would earn back your upfront costs in less than two years. That’s a great deal. Don’t rush in and take a no-point deal. It’s much more attractive to pay a point and buy down the rate even further.
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…
Find out more about: MORTGAGE ANSWERS | MORTGAGE RATES | FORECLOSURES | HOME PRICES | INVENTORY | RENTS | FED |
Posted in: Mortgage Answers | 8 Comments »
October 29th, 2009, 11:59 am by Marilyn Kalfus, real estate reporter
First, in foreclosure news this week:
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.
Huntington Beach HERE.
See Irvine HERE.
See Ladera Ranch HERE.
See Laguna Beach HERE.
See Laguna Hills HERE.
See Laguna Niguel HERE.
See Rancho Santa Margarita HERE.
See San Juan Capistrano 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 — including Orange and Anaheim — 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.
More from this blog…
Posted in: Auctions • Defaults & Foreclosures • distress | Post a Comment »
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