firsttuesday online reports that “40% of all California resale activity in the first quarter of 2011 can be attributed to real estate owned (REO) inventory — 3% lower than the same period in 2010. REO resales varied significantly from county to county, from rates as low as 12% in San Francisco County to as high as 61% in Stanislaus County.

68,239 Notices of Default (NODs) were recorded in California in the first quarter of 2011, down from 81,054 in the first quarter of 2010. By percentage, the most notable drops in NODs took place in Imperial (-41%), Merced (-28%), San Benito (-28%), and Monterey (-27%) counties.

This is the lowest number of NODs issued in any quarter since the second quarter of 2007. NOD volume peaked in the first quarter of 2009 with 135,431 NODs recorded. 2010’s peak was the third quarter, with 83,261 NODs recorded.

Also in the first quarter of 2011, a total of 43,052 homes were foreclosed upon. This is up from the recent low of 35,431 in the fourth quarter of 2010, and slightly higher than the 42,857 homes forclosed on one year earlier.

Statewide, high-tier regions (zip codes with median home prices higher than $800,000) saw an 8% increase in foreclosures from the fourth quarter of 2010, and a 2% drop over the preceding year. Foreclosures in low-tier areas (zip codes with prices lower than $200,000) rose 23% from the fourth quarter of 2010, dropping 2% from one year earlier. Low-tier neighborhoods continue to see the highest concentration of both NODs and foreclosures.

The most recent data indicates that it takes an average of nine months to complete a trustee’s sale following the recording of the NOD. One year earlier, foreclosure proceedings generally elapsed over an average period of seven and a half months. MDA Dataquick, a real estate information service, sees the extended processing time as a product of legal complications and lender backlogs combined with the pursuit of loan modifications and short sales to circumvent foreclosure.

It is estimated that 24% of homes sold at trustee’s sales were bought by individuals other than the lender or government groups — almost unchanged from 25% last year, indicating that speculators are not yet gone from the real estate market.”

I’d bet that the drop in the overall number of foreclosures is becasuse the “sub-prime” folks are already far into the foreclosure system – thus new” foreclosures aren’t impacted by them. So where are the numbers coming from? STRATEGIC defaulters. That’s my bet. It’s the folks that have homes so far underwater that it makes no sense to continue to pay the mortgages – even if they can afford to do so. And many can. Many could have – but used up all their savings doing so. If only they had let it go to default sooner?

The mess continues.

Much of this article is reprinted from the first tuesday Journal Online — firsttuesdayjournal.com P.O. Box 20069, Riverside, CA 92516

Lance Churchull writes:
“One thing I have wondered about in the past is why the two government-sponsored entities, Fannie Mae and Freddie Mac, found it necessary to have different rules for short sales, but then I remembered that the “G” in GSE stood for government and, of course, the government usually makes things more complicated than they should be. Well, on April 28, 2011, the Federal Housing Financing Agency (FHFA), which has been overseeing Fannie Mae and Freddie Mac since their near financial collapse, decided it would be better if they had uniform rules for delinquent mortgages. The FHFA has directed that Fannie Mae and Freddie Mac align their guidelines for servicing delinquent mortgages they own or guarantee with the stated purpose of creating an updated framework that will establish uniform servicing requirements for how delinquent mortgages are handled, including the short sale process. The director of FHFA said, “Once fully implemented, the enterprises’ aligned policies will require earlier contact, more frequent communication and prompt decisions.”

The aligned guidelines will also govern the “dual track” foreclosure process by requiring the servicers to immediately contact delinquent borrowers in an effort to resolve a delinquency. The foreclosure process may not commence if the borrower and the servicer are engaged in a good faith effort to solve the delinquency. In the event that the property is referred to foreclosure, financial incentives would be provided to encourage the servicers to help continue the borrowers pursue a foreclosure alternative such as a short sale.

Freddie Mac and Fannie Mae must issue the new guidelines to their servicers on or before September 30, 2011. Having reviewed the actual and very detailed servicing announcements by both Fannie Mae and Freddie Mac that seems like an awfully long time to implement the new rules. However, given the fact it took Fannie Mae and Freddie Mac eight months to implement a HAFA program that was nearly the same as the Treasury Department’s program, I guess it is reasonable for them to take five months to align their loss mitigation rules.

One of the new policies that agents will like is that Fannie Mae and Freddie Mac will have the same borrower package for borrowers to be considered for all workout and foreclosure avoidance solutions, including HAMP modifications and short sales. When the borrower’s package is received, it is required that at the beginning of the process there be a simultaneous evaluation of borrowers for both the HAMP and HAFA programs. An additional new standard that agents will applaud is that there will be a uniform case escalation process which requires acknowledgement of an escalation request within three business days after receipt and adherence to a 30-day maximum total time to resolve an escalated case.

Since Fannie Mae and Freddie Mac short sales constitute a large portion of the short sale market, new uniform short sale guidelines and procedures for non-HAFA short sales would certainly be welcomed by the real estate industry. Let’s hope that the new guidelines, when they are issued, will actually simplify and expedite the process, and that the servicers will effectively implement the new rules. Stay tuned for updates on this topic, but don’t hold your breath in anticipation of seeing the newly aligned Fannie Mae and Freddie Mac short sale rules very soon.”

I couldn’t agree more.

Big words – pure Bullshit.

Here’s what one lawyer is peddeling in Southern Califirnia.

“Here is some info that we send out to brokers. Our fundamental principal under which we work is the “educated supposition” that a preponderance of real estate loans having been originated by the banking industry in the last several years were, at least in part, predatory in nature and fraught with myriad blatant illegalities, errors and omissions in their construction and execution. We find as well that many of the documents which purport to secure these alleged loans with ownership in your real estate, have been lost or destroyed in favor of creating the more convenient and legally protective electronic mortgage recording system (MERS): thereby rending certain of the documents largely unavailable and unenforceable under the law. Our primary contention is that a copy of a negotiable instrument is not a valid instrument. Irrespective of the production of such items as “Certified Copies” or “Affidavits of Lost Document”, a certified copy of a dollar-bill will obviously not buy you a dollar’s worth of anything: as well, an affidavit saying your dog ate your dollar-bill won’t buy anything either.
During the examination (forensic auditing) phase of your transaction, we generally discover that your “lender” never made you a “loan.” We find instead that your signature and averred obligation to pay was in fact sold for a large profit well before your “loan” documents were presented to you. We find that in fact no money was ever expended by your “lender” on your behalf: thereby inferring that your negotiable and highly valued signature did in effect retire your so-called mortgage obligation well before your payment-stream was established.

Since its inception, your alleged loan has most likely been sold and re-sold several times before it was purchase by a Wall Street stock brokerage and fractionalized to securitize international stock market purchases (mostly by foreign investors, who, at the time, had an exaggerated faith in the US tock and real estate market, but who long-since have accepted their losses). For the most part, these unfortunate folks have moved on and have no expectation of recompense of any kind. Ergo, one might ask: “So where does all the money go when I am evicted for non-payment and my bank sells the property for top dollar?” The answer lies with each party in the line succession: i.e., those who purchased, re-sold and fractionated your loan by including it in a multi-million (or billion) dollar bundle of other mortgages. Each party in the queue have long since been paid far more from their acquisition of your loan than they paid for it, and in effect will have lost virtually nothing as a result of a homeowner’s inability to pay.”

Ya just gotta wonder where teh State Bar is in shutting these types down. They are as bad as the banks that started this in the first place.

April 11, 2011 … Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corp (FDIC), Office of Thrift Supervision (OTS) and Federal Housing Finance Agency (FHFA) all ganged up on Mortgage Electronic Registration System MERS. And I mean ganged up on it.

A consent decree was issued this Tuesday telling MERS it had 30, 60 and 90 days (respectively) to get all kinds of things done – all boiling down to:

GET YOUR ACT TOGETHER!

Seems the Government doesn’t like the way the foreclosure process is working out. Oh, and it’s costing everyone a LOT of money to clean up.

It appears that the nutty court cases across the country – and maybe the recent 60 Minutes segment – all have gotten the attention of our “leaders” in Washington.

But Wait; There’s More!

April 13, 2011 … In the ever increasing number of cases impacting MERS, the Federal Bankruptcy Court (Southern District – California) came out roaring – again. The case: In re Salazar . The holding: A MERS membership agreement is not the same as an assignment of the Deed of Trust. So, bye, bye, US Bank. It didn’t get the right to foreclose on Ms. Salavar. Why? Because no assignment of the beneficial interest in the Deed of Trust was recorded to US Bank before the foreclosure.

Ah, those pesky little details. They’ll getcha every time.

…and were made privy to the offerings of 2 dozen or so vendors (like HLF).

What I found encouraging is that – even in the face of one of the most difficult markets in my career life (35 years — how did that happen?) – the level of enthusiasm remained high.

Sure, we’re all working twice as hard for half the money. But that’s what separates a professional from a wanna-be.

Keeping on top of your game, keeping informed of what’s going on. That’s the key to success in this, and in every, market.

Freddie Mac bulleting 2011-05 states No More MERS foreclosures.
MERS must transfer the interest it holds as indentured trustee (or whatever) to the actual loan services.

I wonder how much money MERS just lost on all those fees it was generating?

And how will the true servicers will feel about having to foreclose the old way?

According to Fair Issac Company (My FICO) a company that provides analytic, decision making, and credit scoring services for financial service companies a credit score will go down by 40 to 110 points after being 30 days late. Further, the scoring drop will increase to 70 to 135 points after 90 days late on a mortgage payment.

The average scoring drop in a short sale, foreclosure or deed in lieu is 85 to 160 points. You need to keep in mind that in both short sales and foreclosure it is possible that the credit score drop could be closer to 200-300 points.

Credit scoring factors vary from individual to individual. The scoring change is heavily dependent on where the credit score was before the negative event took place. Both a short sale and foreclosure are considered a loan that was not paid as agreed.

March 10, 2011

An important message from the CALIFORNIA ASSOCIATION OF REALTORS®:

I write on behalf of the CALIFORNIA ASSOCIATION OF REALTORS®, whose 170,000 members continue to witness the devastating consequences the home foreclosure crisis is having on California’s families, neighborhoods, and communities on a daily basis.

The number of families affected by foreclosure is staggering. During the past three years, more than 640,000 Californians have lost their homes. With the number of homeowners who owe more than their home is worth hovering at 30 percent, experts predict there will be many more foreclosures in 2011 and 2012. Unless we take immediate, aggressive action to assist these homeowners, any meaningful recovery in the housing market and overall economy will continue to be delayed.

Tragically, only a fraction of those who face foreclosure will remain in their homes when all is said and done. Those whose incomes and financial circumstances meet strict guidelines may qualify for a loan modification that will reduce their monthly payment to more affordable levels. Yet the federal Home Affordable Modification Program (HAMP) is expected to prevent only 700,000 to 800,000 foreclosures nationwide before it expires at the end of 2012, and the program does little to help those homeowners who are unemployed or otherwise no longer able to meet their financial commitments. Their last hope is to sell their home, which often means convincing their lender or the investor who “owns” the loan (and, in many cases, the holder of a second mortgage lien and the mortgage insurer) to accept a “short sale.”

With a short sale, homeowners with a proven hardship negotiate an agreement to sell their home for less than the balance owed. Although not every homeowner or mortgage is eligible, those who are able to finalize a short sale avoid a foreclosure on their credit record and can move on with their lives. Last year, 20 percent of home sales in our state involved short sales.

Short sales can play an important role in our state’s economic recovery by accelerating the pace of home sales and reducing the inventory of bank-owned homes on the market. There are other benefits as well. Homebuyers who can qualify for a mortgage at today’s low interest rates also are able to purchase a home at below-market prices. Banks get a nonperforming asset off their books and avoid the headaches associated with disposing of assets they don’t want to own in the first place. Neighborhoods have fewer abandoned homes, and local businesses have more customers with money to spend.

Unfortunately, many homeowners are unable to successfully negotiate a short sale. According to a recent survey of 2,150 California REALTORS® who have assisted clients with a short sale, only three out of five transactions closed – even when there was an interested and qualified buyer.

What’s the problem? For one, no two mortgage agreements are the same, so it can be difficult to standardize short sale processes and procedures. Many homeowners have second mortgages, which further complicate matters. Then there’s the challenge of convincing multiple parties to take a financial loss or, in the case of loan servicers, to forego fees they otherwise might earn during the course of the foreclosure process. Poor and slow service by many banks and servicers has only exacerbated the problem. Horror stories abound from potential homebuyers and REALTORS® forced to wait 90 or more days for a response to a purchase offer or being required to fax short sale applications or other paperwork as many as 50 times. These delays discourage potential homebuyers from considering a short sale purchase and undermine the process for those who short sales are intended to benefit – the hundreds of thousands of families facing foreclosure.

Increasing the number of closed short sales by speeding up and streamlining the short sale process is one important way we can help California families avoid foreclosure and move our economy closer to recovery. That’s why the California Association of REALTORS® is taking steps to enable more families to arrange a short sale. Recently, we advocated for improvements to short sale guidelines established under the federal Home Affordable Foreclosure Alternative (HAFA) program. We’re meeting with major banks, U.S. Treasury officials, government-sponsored entities (including Fannie Mae and Freddie Mac), and others to urge them to standardize processes, comply with federal guidelines, improve communication with other stakeholders and increase staffing with the goal of eliminating service issues. We’ve also offered our members training in every aspect of the short sale process so they can assist their clients.

But we can’t do it alone. That’s why we’re focusing the spotlight on short sales and calling on regulators, elected officials, nonprofits, business organizations, companies, and individuals with a stake in California’s economic future to resolve this issue and others that get in the way of a recovery. It won’t be easy, and some compromises will be required. The important thing is that we need to act today. Our families and our communities can’t wait any longer.

Sincerely,

Beth L. Peerce
President
CALIFORNIA ASSOCIATION OF REALTORS®

While there will always be opportunities for the knowledgeable and dilligent to make money flipping properties, declining prices and increasing loan costs will shrink the profit margins available as flippers find it harder to re-sell.

First it was the (unreasonable) restriction on the number of loans an investor could get, then it was the (reasonable) restriction of Uncle Fluffy purchases. The Fed only wants you to flip so many, you see.

In contrast, those who buy for their home or for rental investment could benefit from 1) locking in the profit margin between current prices and actual value (I know, whatever THAT is?); and 2) potentially higher rental values as the ranks of renters swell with people who cannot obtain a loan to buy their own home.

So, “right now” may be the ideal time to buy real estate, not for quick profit but for the long-term stability and financial growth that real estate has historically provided as a part of an overall financial plan.

The California court of appeal has spoken!  No more of the nonsense about MERS not having the ‘right’ to foreclose because it doesn’t hold the note.

 In Gomes v. Countrywide Home Loans (decided last week) the court ruled that California’s Civil Code relating to non-judicial foreclosures, which specifically allows ‘an agent of the beneficiary’ to act in the beneficiary’s stead – and instructing the Trustee of a Deed of Trust to foreclose – is one of those permitted ‘acts.’

 This takes away one of the MANY arguments that borrowers make in often futile attempts to prevent the inevitable.