The May 2011 U.S. Foreclosure Market Report from RealtyTrac showed a surprising decrease of 33% in year-over-year foreclosure filings. They recorded 214,927 foreclosure filings, which consist of default notices, scheduled auctions and bank repossessions. This monthly total is the lowest level the market has seen in 42 months. The findings also show a 1.98% decrease from the previous month’s numbers.
Illinois hasn’t budged from its top-ten position in states suffering the most, and Chicago in particular remains the third worst city for foreclosures.
Bank of America recently sent a foreclosure notice to a gentleman for his failure to pay $0.00. Unsurprisingly, the man sent repeated inquiries to the bank asking how one “pays” zero dollars and got no help solving the problem from the bank.
It wasn’t until television station WWLP got involved that the bank took any action. Unfortunately his credit score takes a hit for receiving a foreclosure notice. BofA paid the man a princely sum $150 for his troubles and vowed to repair his credit.
• I’ve personally witnessed this kind of thing happening all over the country. Homeowners, trapped in a nebulous foreclosure/short sale process and are seriously delinquent in their payments wait out the situation in a rent free home. While the folks in the piece are still struggling, the glut in non-payers has created a kind of hidden economic stimulus, with people who would otherwise be spending money on over-priced mortgages spending money elsewhere.
• I get a little sick to my stomach when I hear financial reporters/mouthpieces for the financial industry tut-tutting about the “morality” of defaulting on your mortgage. People like the bald yahoo twist everything to blame the individual, when the banks willingly engaged in high risk loans on a giant real-estate bubble, and often pushed people into loan structures that were terrible for them. It was a financial decision made by the signee, not a moral one. Morality definitely did not come into play when they foreclosed on a families hundreds of times every day. So why do we ask the homeowners to carry the burden of “financial morality”? They’re the least able to afford it!
If the housing recovery proves to be obscenely slow, as Federal Reserve Vice Chairman Janet Yellen predicts, then we can expect more and more people having no choice but to walk away from their homes. With Washington ruling out any government action that isn’t cutting upper-income taxes, there is certainly no help in the forseeable future. One’s hope is that the continuing housing crisis and the ongoing unemployment rate don’t feed off each other to drag us into a double-dip recession.
Bank of America tried to foreclose on a Collier County, Florida couple recently. The problem, though, was that the couple paid for their home in cash and never held a mortgage with the bank. After wrestling with the bank in court for more than a year, the couple won the case and BofA was ordered to pay the legal fees incurred during the clusterf*** they call their foreclosure process.
The bank, though, neglected to pay the debt owed to Warren and Maureen Nyerges, so in a delightful little episode, their attorneys sent Sheriff’s deputies, movers, and their foreclosure defense lawyer to the local branch to start collecting what was theirs.
Their attorney instructed the movers to “go in and take desks, computers, copiers, filing cabinets, including cash in the drawers,” according to WINK News. The bank manager eventually cut a check for the money owed, but not until after a heated hour-long stand-off.
The housing recession lingers on with home prices falling three percent in the first quarter of this year, down a total of 8.2 percent from March 2010.
Much of the decline in prices can be attributed to the glut of foreclosures entering the market, which, along with short sales, are dragging prices into the gutter.
With any hope of a robust housing recovery hinging on the number of foreclosures dropping, or at the very least stabilizing, policy makers and mortgage executives need to get serious about how serious of a drain on the economy the foreclosure crisis truly is.
Propublica has a must read article on Banks slipping clauses into the fine print of mortgage refinances that requires the signers to waive their right to sue in a potential grievance. Regulators have banned the practice, but banks have continued the practice. Propublica found:
eight banks and other mortgage servicers who offer help that limits homeowners’ ability to sue or fight foreclosure. When we contacted them, they offered a variety of responses. Some said the inclusion of the waivers had been a mistake and would stop. Some argued that language that seemed to waive the homeowner’s rights didn’t actually do so. One argued that a loophole in a rule barring the practice meant their inclusion in certain agreements was proper.
Many of these waivers are also being attached to agreements that don’t even offer a permanent solution to homeowners problems. The practice is terribly unfair to people unable to obtain legal representation either through free services or make too little money to hire one on their own.
• Folks defaulting on loans are providing a hidden boost to consumer spending when they default on their loans. By going delinquent on their mortgage payments, particularly those facing huge jumps in payment, homeowners have been able to save more and pay down other debts.
• Money magazine has some helpful tips on how to sell your home in the current market. There is some tough advice here, and a bit general, but it’s stuff people need to hear. I would argue, that the acceptance of reality regarding the housing market is something the banks need to come to terms with as well.
• And in some relatively unrelated news. Crain’s Chicago Business is reporting the owners of the most ugliest hotel in the Chicago, Lincolnwood’s Purple Hotel, are now facing foreclosure on the site. This news follows a series of hurdles to the owners of the property, who have have been wrangling with city officials since its closing in 2007.
Having previously worked near this establishment, and frequented its former sports bar, which could be best described as “sticky,” I can only say that if they tear the hotel down, it will be a loss. As in a loss of physical matter that previously existed in a space. Not a loss in any other way.
• The Chicago Tribune looks at the troubles and benefits of short sale by chronicling the efforts of a family underwater on their mortgage. Unsurprisingly the author finds that the experiences vary wildly, with banks often tying up sales for months, sometimes years, with the seller never really knowing why. A must read.
• CNN Money looks at the profits of real estate investment companies invested in rental properties and those of storage facilities and concludes, to quote from their attention grabbing headline, that we’ve become a “nation of renters and hoarders.” I would say it’s better to be renters and hoarders than, say, owners of obscene square footage and hopelessly in debt again, right?
• And to follow that last link with another from the same place, we have a story saying affordable rental homes are getting harder and harder to find. My opinion is that the market will begin to adjust to this as more of the houses locked up in the bank miasma described in the first story are pushed back onto the market as either homes for sale or rent.
According to RealtyTrac, 1 out of ever 439 homes in the state of Illinois received a foreclosure notice in March. Cook county saw even worse rates at 1 out of ever 341 homes. As bad as they are, foreclosure rates nationwide have decreased by roughly 27% from the first quarter of last year. But the signs of recovery have been tough to see. New home sales sales are slightly above Febuary’s all-time low of 270,000 (since the government started tracking data in 1963), with March showing an 11% with 300,000 in new sales.
The encouraging news comes from sales of existing homes, which, according to the National Association of Realtors, saw a 3.7% increase in sales from February. A government report released last Tuesday shows an encouraging increase in development. Building permits saw an increase of 11% from February, although still down from 2010. New home sales and construction will continue to suffer as the market is saturated with distressed and vacant properties.
The hope for the future is that continued growth in the economy will lead the housing market out of the doldrums. Commerce Secretary Gary Locke pointed to the improvement in unemployment numbers as hope for the future, with people seeing their financial outlook as more secure wading back into the housing market.
