First-quarter sales of foreclosure homes rise

  ALEX VEIGALOS ANGELES -- Homes in some stage of the foreclosure process saw their share of overall U.S. home sales grow in the first quarter even as sales of bank-owned homes fell.

The increase was driven by a spike in short sales, or homes that sell for less than what the owner owed on their mortgage, foreclosure listing firm RealtyTrac Inc. said Thursday.

Short sales make up the vast majority of homes sold while still in the foreclosure process. Those that aren't sold or auctioned off typically end up being repossessed by banks, what most people commonly think of as foreclosures.

In the first quarter, short sales grew 25 percent from a year earlier, hitting a three-year high. In contrast, sales of bank-owned properties declined 15 percent versus the first three months of last year, the firm said.

The trend indicates a greater likelihood that home prices will continue to soften, as foreclosures and short sales typically sell at sharp discounts to other homes.

It also suggests a shift in the way lenders handle mortgages that have gone unpaid.

Lenders may be favoring short sales versus waiting for troubled loans to go through the foreclosure process to take back the homes securing the loan, said Daren Blomquist, a vice president at RealtyTrac.

"A short sale is a safer alternative to avoid any potential problems that they face because of the way they're processing foreclosures," Blomquist said.

Last year, mortgage lenders grappled with allegations that they had been processing foreclosures without verifying documents. The pace of foreclosures slowed sharply as the nation's biggest mortgage lenders worked to hammer out a settlement with state and federal officials.

They reached a $25 billion settlement in February, clearing the way for banks to take action on unpaid mortgages.

All told, 233,299 bank-owned homes or those in some stage of foreclosure sold in the first quarter, making up 26 percent of all U.S. home sales in the period, the firm said.

That's the highest percentage of overall sales since the figure hit 28 percent in the third quarter of 2010, before the foreclosure abuse claims against mortgage lenders surfaced.

Foreclosure sales made up 22 percent of all sales in the last three months of 2011 and one-fourth in the first quarter a year ago.

As of end of April, there were 637,668 bank-owned homes yet to be sold, representing a 17-month supply, Blomquist said. Another 722,467 were in some stage of the foreclosure process.

Sales of all previously occupied homes jumped in January to the highest pace in nearly two years, but declined slightly the next two months. Sales rose 3.4 percent in April from March to a seasonally adjusted annual rate of 4.62 million, according to the National Association of Realtors. That nearly matched January's pace of 4.63 million, but was below the nearly 6 million that most economists equate with healthy markets.

While rising, the share of foreclosure sales remains well below its first-quarter 2009 peak of 45 percent of all sales. They comprised less than 1 percent of all sales in 2005, at the height of the housing boom.

More foreclosure sales also means potentially more pain for homeowners, who could see the value of their homes erode further as neighboring foreclosures sell.

Combined, bank-owned homes and those still in the foreclosure process sold for an average of $161,214 in the first quarter. That's down 1 percent from the fourth quarter of last year and down 2 percent from the first quarter of 2011.

Compared to non-foreclosure homes, the average price of a foreclosure sale was 27 percent below the average sales price of a home not in foreclosure or owned by a bank during the quarter. That discount is unchanged from the fourth quarter last year, but is down from a discount of 29 percent in the first quarter of 2011.

---
Get Eyewitness News Delivered

Facebook | Twitter | Newsletters | Text Alerts

(Copyright ©2012 by The Associated Press. All Rights Reserved.) Get more Business »

business

View the original article here

80 cent loan mistake puts man in foreclosure

  Marjie Mohtashemi, Eyewitness NewsLARGO, Florida (WABC) -- A man fears he may lose his home over an 80 cent mistake.

Tom Mudie struggled to make payments on his house in Largo, Florida since losing his job.

Bank of America said to consider him for a loan modification he'd have to make three payments, in full and on time.

But while paying by phone, he hit accidentally hit zero instead of 8, underpaying by 80 cents.

The bank said his only option was foreclosure.

After a local reporter intervened, the bank said it would approve his loan modification.

Mudie is still waiting to see it in writing.

---
GET THE LATEST NATIONAL AND INTERNATIONAL NEWS FROM ABCNEWS.COM

---
Get Eyewitness News Delivered

Facebook | Twitter | Newsletters | Text Alerts

(Copyright ©2012 WABC-TV/DT. All Rights Reserved.) Get more U.S. & World News »

foreclosure, u.s. & world news

View the original article here

Gov't eases foreclosure rules for unemployed

An auction sign is posted at a house under foreclosure in East Palo Alto, Calif., Thursday, June 5, 2008. Home foreclosures and late payments set records over the first three months of the year and are expected to keep rising, stark signs of the housing crisis' mounting damage to homeowners and the economy. (AP Photo/Paul Sakuma)

  By DEREK KRAVITZWASHINGTON -- The Obama administration is making it easier for out-of-work homeowners to stay in their homes, as it tries to revamp its troubled foreclosure-prevention program.

Starting Aug. 1, the Federal Housing Administration will extend the period for unemployed homeowners to miss mortgage payments to a full year from three or four months. That will allow qualified homeowners to go without making a monthly payment for 12 months before the foreclosure process begins.

The extended grace period only applies to FHA-backed loans, which are usually given to low- and middle-income borrowers and represent about 14 percent of all active mortgages and roughly 25 percent of new mortgages. The grace period also applies to homeowners in the government's Home Affordable Modification Program.

But the change will likely only help "tens of thousands" of homeowners, Housing and Urban Development Secretary Shaun Donovan said Thursday.

Last year, roughly 17,000 homeowners received a government-supported delay on their mortgage payments. About 3,500 borrowers with FHA-insured loans fall behind on their mortgages each month due to unemployment, officials said, and another 10,000 unemployed homeowners have taken advantage of a three-month delay in mortgage payments in the past year.

Donovan said administration officials hope private lenders and government-controlled mortgage companies Fannie Mae and Freddie Mac, which back 90 percent of all new mortgages, will adopt a similar policy.

"Our hope is that this will have broader effects," Donovan said during a conference call.

But Fannie and Freddie signaled they would not be adding a broader, industrywide rule, saying they were confident in their existing policies for homeowners.

New rules already going into effect Oct. 1 for the mortgage giants allow for long-term forbearance when a home or a place of employment has been destroyed; if the homeowner or a dependent has a long-term disability or illness; or if the borrower has died and the property is in probate.

Mortgage payments can be put off for up to a year in those cases.

"We think these guidelines provide the appropriate tools to prevent foreclosure whenever possible for unemployed homeowners," said Andrew Wilson, a Fannie Mae spokesman.

The government launched its chief foreclosure program in 2009 by lowering monthly payments of homeowners at risk of foreclosure.

Borrowers start with lower payments on a trial basis. But the program has struggled to convert them into permanent loan modifications.

More than 1.6 million troubled homeowners received trial modifications over the past two years. But a majority of the applicants, about 854,000 homeowners, have dropped out of the program entirely.

In recent weeks, administration officials have acknowledged that housing has become a significant drag on the economy. President Barack Obama said the housing market has "been most stubborn to us trying to solve the problem," during a town-hall-style meeting Wednesday on Twitter.

He acknowledged that the government's programs to help homeowners were "not enough" and said the administration was "going back to the drawing board."

Homeowners accepted into the foreclosure assistance program receive interest rates as low as 2 percent for five years. They can repay their loans over a longer period. The median savings for those who remain in the program is about $526 per month.

Those who have their payments delayed must repay them, with interest.

But many homeowners have complained that the program has been a bureaucratic mess. Some have said they were disqualified after banks lost their documents and failed to return their phone calls.

Banks have blamed homeowners for failing to submit needed paperwork.

Last month, the Obama administration blamed the three largest U.S. mortgage lenders for the failures of the foreclosure program, saying they hadn't done enough to help people at risk of losing their homes. The Treasury Department said it was withholding financial incentives that amounted to up to $1,000 per permanent loan modification, arguing the three lenders had incorrectly determined that many people were ineligible for assistance.

The lenders, Wells Fargo & Co., Bank of America and JPMorgan Chase & Co., disputed the data, saying they were based on old reports, not audits from the first quarter of the year as the government claimed.

(Copyright ©2011 by The Associated Press. All Rights Reserved.) Get more Business »

business

View the original article here