CoreLogic has just introduced a new software program designed to catch real estate brokers and agents who commit short sale fraud by providing a low bid to lenders in order to get a second commission by flopping the property to a higher bidder.

The new CoreLogic Short Sale Monitoring Solution is designed to help lenders maximize what they are earning on short sales by alerting lenders about all offers made on the property.  The software also monitors the property after the sale is complete.  If it is “flopped” for a higher price, the lender is notified and can pursue the agent or broker involved for fraud.

CoreLogic says it estimates that lenders are currently losing over $40,000 per short sale transaction – or a total of $310 million in 2010.  The company estimates there will be in excess of 400,000 short sales negotiated through real estate agents this year.

Buy and bail – where a homeowner buys a new house before his credit is trashed by walking away from the old one – is on the rise, according to a recent Bloomberg report.

According to the article, those most likely to “buy and bail” have a large income and low debt, enabling them to qualify for a mortgage – now at historic lows – on another home.  Once they purchase that home, they then walk away from the old home that likely carries a much larger mortgage payment at a much higher interest rate on a property that is worth considerably less than they paid for it.

A Morgan Stanley report noted that those most likely to walk away are debtors with the best credit scores and jumbo loans that exceed the Fannie and Freddie cap limits for mortgages.  They have typically lost more than $100,000 in property value.

Both GSEs put protections in place two years ago to thwart buy and bailers, but a Freddie Mac spokesman quoted in the Bloomberg piece said, “it still seems to be going on.”

Of course, if buy and bailers use false information to qualify for a loan on that next house, that’s called fraud.  And the FBI is working with local housing agencies to conduct investigations.

California Governor Arnold Schwarzenegger’s latest movie, The Expendables, is a summer hit and Californians are now waiting for him to morph into the homeowners’ hero by signing SB 1178, the bill extending anti-deficiency protection for consumers facing foreclosure who refinanced their original mortgage loans that was approved by the California Sate Assembly earlier this month.

Currently, if a homeowner defaults on a mortgage loan, their liability is limited to the property itself.  However, homeowners who refinanced their original mortgages did not have the same protection.  Sponsored by the California Association of Realtors (C.A.R.), SB 1178 was passed to protect homeowners in foreclosure from lenders suing for the difference between the value of the foreclosed property and the outstanding balance on the loan.

If the Governor signs the bill, it will become law effective June 2011.

You know it can’t be good news when an article about home sales starts out like this:  Analysts’ estimates for July home sales aren’t even close.

And it wasn’t good news.

According to HousingWire.com, the sale of new single family homes hit an all-time low of 276,000 units for the month of July, down over 12 percent from the revised June estimates of 315,000.

That’s 35 percent lower than one year ago.

NAR reported a 27 percent decline in existing home sales for July, which is the lowest in more than a decade.  The estimate on the street had been a 12 percent decline.

Not surprisingly, real estate brokers and agents are feeling the pain.  NAR and other state realtor associations are reporting double-digit drops in membership.  NAR alone has lost 200,000 members since 2006.  Some California agents are reporting business is off some 65 percent from peak years.

At a conference held last week to discuss the overhaul of housing finance, Treasury Secretary Timothy Geithner said that the Obama administration was not looking to perform “radical surgery” on the system, but was focused instead on creating a “new and improved” version of the current system where the government would subsidize mortgage loans made by private lenders.

The administration convened the conference with dozens of leading experts on housing finance, who were largely of two minds:  some want to do away with the current system altogether, with the government taking a more limited role by offering insurance for catastrophic losses only.  Others argue that mortgage lending will not recover unless the government plays a more active role, providing the guarantees necessary to attract investors.

Left largely unsaid was the fate of Fannie and Freddie, which now guarantee 90 percent of all new mortgages.  While most agree that they are unlikely to survive in their current form, there are so far no suggestions on what to do to get rid of them and their vast portfolios of troubled loans.

For the New York Times coverage of the conference, go here.

An analyst from Lender Processing Services, a default services analytics group, is predicting that foreclosure and REO issues could continue to plague the housing market recovery until late 2013.

During the LPS annual conference in Denver last week, LPS Applied Analytics managing director Kyle Lundstedt said that well-intended programs designed to keep borrowers in their homes were having unintended consequences, and that those in the default industry need to be prepared for troubled loan inventory to continue to rise.

“If current trends persist, it will take about 12 months before foreclosure proceedings are initiated,” once borrowers become delinquent, Lundstedt said in an REO Insider report. “It takes a heck of a long time to get into foreclosure at this point. When you are in foreclosure, it doesn’t get much better. Today, if you entered foreclosure, it would be 16 months before you got out. How many people think that is a good thing? It’s tragic.”

The Center for Responsible Lending, a nonprofit research center and borrower advocacy group, reports that Latinos account for almost half of the foreclosures in California.

The CRL says that Latino borrowers make up 48.2 percent of the over 700,000 California homes currently in the foreclosure process, based on their analysis of data from ForeclosureRadar and Catalist.  According to the U.S. Census Bureau, Latinos make up 37 percent of California’s total population.

White/Non-Hispanic homeowners accounted for 34.6 percent of foreclosures in California, and African-Americans were 7.6 percent.  Asians accounted for only 6.4 percent of California foreclosures.

According to a REO Insider article, lenders and servicers have taken notice of this trend, and some are targeting minority-owned brokerages for their REO listings.  In addition, a Fannie Mae executive said that hiring real estate agents and brokerages that serve minority communities is one of its key strategies.

A new University of Texas-Virginia Tech study says that while foreclosures may “destabilize and disorganize” communities, they do not directly affect the neighborhood crime rate.

Researchers said that instead of affecting crime, foreclosures are — like crime — symptomatic of a community’s lack of political clout, poverty and segregation.

The study used data on foreclosures and crime in Chicago during an eight-year period, from 2000 to 2008.  During that time, foreclosures tripled in the study area.  Researchers examined the consequences of the rising foreclosure rates, and the effects on crime and the structure of the study area.

Many housing experts had thought that foreclosures increased property crime since abandoned homes were easy targets for vandalism and burglary.  David Kirk, assistant professor in the UT Department of Sociology and lead researcher on the study, said, “We suggest that our results provide a more informed depiction of the complex relationship between community conditions, foreclosures and crime in Chicago.  We were able to statistically adjust for confounding influences such as segregation, the political hierarchy of communities and other unobserved factors predictive of both foreclosures and crime.”

Bank of America has announced a co-op short sale program, targeted at homeowners who have failed to qualify for mortgage modifications under HAMP or HAFA.

BofA is launching the new program with 2,000 homeowners who have already been pre-screened because they applied for mortgage modifications under HAMP or HAFA.  The bank is offering them the short sale as an alternative to foreclosure.

Letters to homeowners asking them to participate in the new short sale program have been sent out.  They have 120 days to list their property.  BofA says it will assign a short sale specialist to work with homeowners and their real estate agents on each short sale.

Once the home is sold, the homeowner gets a $3,000 relocation fee, and the agent receives a six percent commission on the sale.  If the home does not sell, the bank will accept a deed-in-lieu of foreclosure.  BofA is also waiving deficiencies.

To learn more about the program, go here.

New research from The Urban Institute’s MetroTrends, which reports on social and economic trends in urban America, shows that despite a drop in home prices, affordability continues to be a problem for many Americans, especially in coastal metro areas.

According to the MetroTrends data, the share of American households spending more than 30 percent of monthly income on housing costs rose from 30 percent in 2000 to 40 percent in 2008.

The research also showed that residents of coastal communities have been especially affected, particularly those in California, Florida, the Northeast and Mid-Atlantic.  According to the report, 12 metro areas in central and southern California have 43 percent or more of their populations spending more than 30 percent of monthly household income on housing costs.

Researchers said that most of the coastal metros suffered a double whammy of unemployment and house price declines, but the impact was particularly severe in Western metros, particularly Los Angeles county, which continues to lead the state in foreclosures.