TheREALTYgram Blogger

New Foreclosure Data Released;Lehigh Valley Ranks 81 On National List

RealtyTrac™ has released its first annual 2006 U.S. Metropolitan Foreclosure Market Report, which ranks the foreclosure rates of the top 100 metropolitan areas. This year’s report, based on data captured over the first quarter of 2006, shows  Indianapolis, Atlanta and Dallas having the highest foreclosure rates among the nation’s largest 100 metropolitan areas. Cities in the Sun Belt and Rust Belt generally had the highest foreclosure rates in the first quarter of 2006, while cities in the Northeast and Gulf Coast documented some of the lowest.

"Indianapolis documented a foreclosure rate of one foreclosure for every 69 households, while Atlanta’s foreclosure rate was one foreclosure for every 70 households. Other top-10 foreclosure rates ranged from one foreclosure for every 99 households in Dallas-Fort Worth to one foreclosure for every 140 households in Canton, Ohio and Las Vegas."

The Lehigh Valley (PA) area ranks 81 on the list.

“Indianapolis narrowly edged out Atlanta as the city with the highest foreclosure rate in Q1,' said James J. Saccacio, chief executive officer of RealtyTrac. 'Most of the cities with the highest foreclosure rates have above-average unemployment rates and below-average home price appreciation. Unemployment is a major reason why homeowners stop making mortgage payments, and slow home price appreciation can make it harder for homeowners in default to refinance or sell to stop foreclosure.'

 

"Saccacio added that other economic factors such as decreasing affordability, rising interest rates and speculative buying can also fuel foreclosures. He cited Jacksonville, Fla. and Las Vegas Nevada, both of which documented foreclosure rates in the top 10 despite below-average unemployment and above-average home price appreciation.“Because of the high home prices in many areas, more home buyers have stretched themselves financially with creative, and often risky financing that involves adjustable interest rates, interest only and negative amortization loans' he said. 'Home buyers with these types of loans are more susceptible to default and foreclosure when interest rates move higher."

 

NAR Reports Rising Revenues In Ancillary Services;But Still Wants To Keep Banks Out Of Real Estate

Revenues are up at large real estate offices that offer a menu of services including  mortgages, home warranties, title insurance, and homeowner's insurance, according to a report by the National Assn. of  REALTORS^®. The report pointed to Howard Hanna Smythe Cramer of Pittsburgh, which posted a total sales sales volume in 2005 of 53,649 transactions, and income derived from ancillary services that accounted for some 43% of the firm's income.

NAR's stance against banks in real estate remains the same. The group continues to demonstrate a colossal  HQ (hubris quotient) in this regard.

Who's Kidding Whom, Anyway?Foreclosure Rates Are Going To Skyrocket In 2006!

  A recent article in Inman News, parroted yesterday by REALTOR^® Magazine Online, points to a 25% national increase in foreclosure rates from the first quarter to the last quarter of the year. RealtyTrac CEO James Saccacio points out that the number of properties entering foreclosure represents fewer than one percent of American households. He offers the following comments:

"Over the past few years, we've seen historically low mortgage rates, consistently escalating home prices, and steady, strong employment. This has translated into relatively low levels of foreclosure properties, particularly bank-owned properties. With interest rates rising and an apparent slowing of property valuations in most markets, we'll be watching closely to see if there's a material effect on the number of foreclosures in 2006."

Instead of watching interest rates, I suggest that that we watch what happens in bankruptcy courts this year. Congress delivered a bankruptcy bill last year that will make it very hard to consumers to pay their credit card debt and attorneys in the trenches expect that foreclosure rates will escalate as a consequence.

I track the foreclosures in the Lehigh Valley through the multiple listing service. (There is a link in the right column titled  Bank Properties that is a link to bank properties available through the Lehigh Valley Multiple Listing Service.) Today there are 88 bank properties available for sale. The number has almost doubled since September:

Sept. 30, 2005 there were 46 bank properties on the market
Oct. 21, 2005 there were 52 properties for sale
Nov. 25, 2005 there were 73 bank properties for sale
Dec. 30, 2005 there were 81 bank properties on the market

Language Barrier Removed In Lehigh Valley Lending Arena;Mortgage Pro Takes Apps In 150 Languages

One of the most frustrating parts of the real estate game is the struggle with languages with immigrants. Leading Lehigh Valley mortgage expert Tom Flad of First Horizon Home Loans in Allentown, PA, rolled out his Language Line service for one of my clients whose first language is Vietnamese. Tom engaged his translators and took a fully documented application to underwriting in less than two days, in a process that typically takes two to four weeks. His service can handle 150 languages. Tom handles all the govvies...FHA, VA, PHFA first-time homebuyer loans, and lots of good conventional products. He knows his stuff...give him a call if you need financing help 1-800-258-8518  x 222

Foreclosures Are Up In California;REO Rush May Start Here

BusinessWeek Online Hot Property blog reports that foreclosures are up in California:

"Lending institutions sent default notices to 12,568 California homeowners during the July-to-September period, up 3.5% from last year's third quarter."

I'm predicting that the foreclosure market will enjoy a new renaissance, even when the rest of the market is cool, thanks to the bankruptcy bill that put new rules into effect last month. Bankruptcy attorneys tell me that many consumers who are not able to get relief from credit card debt will not be able to stay current on their mortgage payments and they forecast a huge increase in foreclosures.

David Lereah, chief economist of The National Assn. of REALTORS^®, told reporters that he is uncertain about the impact of the bill on the foreclosure rate, but that it is an open question and he will study the issue. We look forward to his findings. We just wish that NAR had the wisdom to ask their economic talent about such things before supporting that terrible bill in such a wholehearted fashion. (Note: This post appears also on the Real Estate Blog Squad. Typically I do not double post articles, but the nature of the material is so compelling and disturbing that I made an exception in this case.)

FHA Loan Default Rate Skyrockets;Zero-Down Mortgage Program Unlikely

Spiraling FHA default rates prompted a U.S. Senate Appropriations Committee to authorize only $50 million for the American Dream Down Payment Assistance program. The White House had requested $200 million. Prospects appeared to dim the chances for a zero-down-payment FHA loan product offering in the near future. National Mortgage News reports:

"Senate appropriators are concerned that the Federal Housing Administration single-family program is becoming a 'lender of last resort' and needs to do a better job of educating homebuyers. 'FHA is clearly becoming a lender of last resort, taking on the most risky mortgages, especially those likely to default,' according to a report that accompanies the Department of Housing and Urban Development fiscal year 2006 appropriations bill. The FHA default rate has increased from 2.99% in fiscal 2000 to 6.9% in fiscal 2004, while claims have increased from $5.5 billion to $8.5 billion over the same period. In approving the Treasury, Transportation, and HUD appropriations bill, the Senate Appropriations Committee directed HUD to educate FHA homebuyers about the value of a home inspection. Without a home inspection, these purchasers may find themselves responsible for high-cost repairs that that they cannot afford, thus "putting the home at risk of foreclosure," the committee report said."

Real Estate JobCom Site Launched

Job seekers for residential real estate positions sales, property management, and mortgage industries have a new resource to post their resumes anonymously at GreatRealtyJobs.com. The web venture is the brainchild of an Atlanta real estate professional who says he simply could not find enough qualified people the “traditional” way. “As a sales and marketing consultant, I was hired to recruit and train staff for builders, developers and property management companies,” says Pratt Farmer, company founder and CEO of GRJ. According to Farmer, he relied on want ads primarily, and when the need arose, he would visit properties until he found someone to fit the bill. “Both of these methods were costly, time consuming and not always effective,” Farmer said. Job seekers will not be charged; companies seeking to fill a position will pay a flat monthly fee.

Celebrate Jessica's Birthday With Grab BagOf Online Goodies--Calculators And Maps

Everyone gets a goodie bag at Jessica Swesey's online birthday bash! Here some online calculator links at Bankrate, Microsoft Office, Fannie Mae, and Home Loaning Center. There are dozens of calculators behind these links--calculate mortgages, affordability, amortization schedules, cost of living comparison, gain on home sale, closing costs, kitchen remodel costs, and ARM vs. fixed mortgage comparison. And don't forget your FREE satellite maps from Mr. Google.

Mortgage Fraud Blogger Provides Rich ContentFor Mortgage Bankers Assn. Web Site

Here is a great example of excellent blogging taken to the next level. Blogger/attorney Rachel Dollar, author of the The Mortgage Fraud Blog,  has partnered with Interthinx (a source of fraud prevention and decision support tools for the mortgage industry) to be exclusive providers of news content for the Mortgage Bankers Assn. Mortgage Fraud Against Lenders Resource Center. The site offers a resource library of reports and links, including a comprehensive list of state and federal agencies for filing fraud reports, and information about legislation. There's even a handy consumer link for reporting fraud.

Colorado RE/MAX 100 Agent, Loan OfficersBusted On Home Loan Forgery Charges

A district attorney in Colorado  has indicted RE/MAX 100 real estate professional Ricardo Medina and independent loan officers Nancy Rios and Perla Alvarado on charges of forgery, theft, and conspiracy under the Colorado Organized Crime Control Act, according to the National Assn. of REALTORS^®. (Note that NAR has already stripped the REALTOR^®  designation from Medina in its press release.)

The charges stem from their involvement in a scheme that provided $6.5 million in federally insured home loans to undocumented Hispanics. Medina is accused of targeting Hispanics who would not have qualified otherwise and then working with Rios and Alvarado to forge documents such as loan applications, credit letters, check analyses, W-2 employment forms, utility bills, and employment verification letters in order to secure loans backed by the Federal Housing Administration for applicants.

"They didn't even have to come up with any money," says Scott Storey, Jefferson County District Attorney, adding that some of the loans went into default. Doug Anderson, president of Washington Park Mortgage in Denver and former president of the Colorado Association of Mortgage Brokers, says loan fraud remains a problem because the state does not require licensing for mortgage brokers.

From The Denver Post:

"Certain banks in Colorado and across the nation allow undocumented workers to take out home loans if they have an Individual Taxpayer Identification Number, which the IRS issues to workers regardless of immigration status.

"But many Hispanics, even with an ITIN number, fail to qualify for loans because they lack a credit history or cannot prove sufficient employment - and that's where forged documents come in.

" 'There's a huge number of these kinds of transactions and it's happening under our noses,' said Doug Anderson, president of Denver-based Washington Park Mortgage.

"Bob Brown, of the Colorado Bureau of Investigation, said Medina, Rios and Alvarado each lived "lavish lives," with salaries of several hundred thousand dollars a year."