Last Friday, the U.S. House of Representatives voted to reject a mortgage "Cramdown" measure that is sure to impact homeowners here in Alameda. The piece of legislation would have given bankruptcy judges the freedom to change the terms of mortgages for distressed homeowners and modify loans without bank approval.
The banking industry had been vigorously fighting the measure known as "mortgage cramdown," not wanting the courts to control this portion of the induustry. The measure was defeated by more than 50 votes, in a 188-241 decision. The House had approved a similar measure in March over the objections of Republicans and bank lobbyists, but it died in the Senate.
Under present law primary residence can not have the debt reduced. The bankruptcy courts may reduce other loans for a car, vacation home or family farm.
This decision is a blow for those still on the verge of losing their home in Alameda and throughout the country. Just as it appears that parts of the housing market have stabilized hundreds of thousands of distressed homeowners now have one less option to save their home.
The industry counters that the legislation had the potential to do long-term damage to the mortgage market. In a letter to House Speaker Nancy Pelosi the Mortgage Bankers Association stated “Our primary goal should be to help keep more families in their homes and to unfreeze the credit markets,” the MBA letter said. “Cram down legislation fails on both marks. It will encourage more homeowners to opt for bankruptcy, and it will inject new risk into the mortgage market, thus making it more difficult for borrowers to buy, sell or refinance a home.”
The industry has a point. If all of the current homes that are on the verge of foreclosure file for bankruptcy, then credit will become harder to get for the rest of the homeowner community.
The MBA also wrote that the bill “directly undermines” the Obama administration’s Home Affordable Modification Program (HAMP). “We clearly need to work to refine and improve this program to increase the rate of permanent modifications, but we should not raise potential new problems for HAMP by layering the possibility of cram down on top of it,” the letter said.
The problem as I see it is that it appears Congress means to push the foreclosure crisis out and hope that a remedy will just come along and the “Banking Industry” has been slow to modify loans. Neither side has found a solution for the homeowner.
Without some type of solution the distressed properties will continue to slowly turn into foreclosures in 2010 and beyond. Combine the introduction of additional inventory with continued high unemployment and that is a receipt for a new glut of housing
I am not sure what the correct answer to the problem is, but a solution does need to be found. It may take more foreclosures that the Banks will need to put on their books and manage for the industry to move faster and upset former homeowners for politicians to find a workable solution.
Showing posts with label Mortgage Crisis. Show all posts
Showing posts with label Mortgage Crisis. Show all posts
Tuesday, December 15, 2009
Monday, November 30, 2009
Holiday Shopping Has Little Inventory
Hope everyone had a Happy Thanksgiving Holiday. It has been a crazy month and I have been a little scattered in posting the past three weeks. During that time I forgot that 94501 Real Estate just celebrated one year of publishing blog posts about Alameda Real Estate. I hope that I have another year in me, I had no idea what I was getting into what I started, but it has been tremendous fun.
So on to the Alameda Real Estate news. It is Monday and it is time to update inventory. The Alameda Inventory has been decreasing since mid-July and has bottomed this week to a record low since I started tracking the data a year ago. The Island has 111 units for sale; 67 of the units are single family residence.
Part of the reason for the low inventory is strong sales in September and October. Add in seasonality, winter is a slow selling season and we now have very little inventory.
So far, November is looking to be a slow month compared to last year. Early numbers show 25 sales so far for the month and unless we have a strong weekend of closings over the holiday weekend this will fall short of 2008’s 32 sales. So those units that are for sale right now are those that need to be sold.
As evidence of this, five properties were placed on the market during the Thanksgiving weekend; three of those properties were distressed. The new distressed properties are: two bedrooms, two bath foreclosed property at 343 Laguna Vista for $474,900, a three bedroom two and half bath foreclosed home at 801 Park Street for $539,500 and a short sale multi-family duplex (two units) at 1550 8th street for $350,000.
It looks as if the December will be slow in terms of transactions unless more homes come on the market.
Just one other item: A National story that has local impact in terms of homeowners that are struggling to hold on with their current home loan. Today the Obama administration said it will crack down on mortgage companies that are failing to do enough to help borrowers at risk of foreclosure. The Treasury Department said it will withhold payments from mortgage companies that aren't working with borrowers to make loan modifications permanent.
According to the Mortgage Bankers Association, about 14% of homeowners with mortgages were either behind on payments or in foreclosure at the end of September. This is at a record level for the ninth straight quarter.
A new group of homeowners now seem to be at threat of losing their home. A Congressional Oversight Panel reported last month that foreclosures are now threatening borrowers who took out conventional, fixed-rate mortgages and put down payments of 10% to 20% on homes that would have been within their means in a normal market. This is something to watch in the coming months.
So on to the Alameda Real Estate news. It is Monday and it is time to update inventory. The Alameda Inventory has been decreasing since mid-July and has bottomed this week to a record low since I started tracking the data a year ago. The Island has 111 units for sale; 67 of the units are single family residence.
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Part of the reason for the low inventory is strong sales in September and October. Add in seasonality, winter is a slow selling season and we now have very little inventory.
So far, November is looking to be a slow month compared to last year. Early numbers show 25 sales so far for the month and unless we have a strong weekend of closings over the holiday weekend this will fall short of 2008’s 32 sales. So those units that are for sale right now are those that need to be sold.
As evidence of this, five properties were placed on the market during the Thanksgiving weekend; three of those properties were distressed. The new distressed properties are: two bedrooms, two bath foreclosed property at 343 Laguna Vista for $474,900, a three bedroom two and half bath foreclosed home at 801 Park Street for $539,500 and a short sale multi-family duplex (two units) at 1550 8th street for $350,000.
It looks as if the December will be slow in terms of transactions unless more homes come on the market.
Just one other item: A National story that has local impact in terms of homeowners that are struggling to hold on with their current home loan. Today the Obama administration said it will crack down on mortgage companies that are failing to do enough to help borrowers at risk of foreclosure. The Treasury Department said it will withhold payments from mortgage companies that aren't working with borrowers to make loan modifications permanent.
According to the Mortgage Bankers Association, about 14% of homeowners with mortgages were either behind on payments or in foreclosure at the end of September. This is at a record level for the ninth straight quarter.
A new group of homeowners now seem to be at threat of losing their home. A Congressional Oversight Panel reported last month that foreclosures are now threatening borrowers who took out conventional, fixed-rate mortgages and put down payments of 10% to 20% on homes that would have been within their means in a normal market. This is something to watch in the coming months.
Thursday, August 6, 2009
Loan Mods Slow and Unproductive
Just a quick post today, I am off to Real Estate Connect in San Francisco a tech based real estate conference at the Palace Hotel. I will update any interesting items from the conference over at Twitter. To follow go to: http://twitter.com/johnoldham .
So on to the post . . .
So how is the Government’s loan modification program going?
In a nutshell slow and not very productive. The banks have been servicing very few of the eligible clients that could benefit from a change and according to government data released Wednesday, only 9 percent of an eligible 2.7 million borrowers had seen their mortgages modified under the new program as of the end of July.
The pace of loan modifications varies widely among lenders and servicers. The best results among large loan servicers came from Saxon Mortgage Servicers Inc. One in four of Saxon's 84,000 eligible borrowers has received a trial loan modification with a lower monthly payment. Aurora Loan Services, GMAC Mortgage and JPMorgan Chase all had one in five qualified borrowers in a trial loan.
Bank of America Corp and Wells Fargo & Co. — which have received billions in federal bailout money — were below average. BofA has modified just 4 percent of eligible loans under the program. Wells Fargo has modified 6 percent of eligible loans. Wachovia Corp., which was taken over by Wells Fargo last December, has modified just 2 percent. American Home Mortgage Servicing, with 153,000 eligible borrowers, was among the servicers that has not yet reported a single loan modification.
This could have a big impact on the Alameda Shadow inventory, those that are being threatened with foreclosure may not have the time need to modify their loans to save their homes. It seems that banks just do not know what to do, and in some case would rather have the property go into foreclosure than modify.
MSNBC had a great report on the lack of loan modifications.
So on to the post . . .
So how is the Government’s loan modification program going?
In a nutshell slow and not very productive. The banks have been servicing very few of the eligible clients that could benefit from a change and according to government data released Wednesday, only 9 percent of an eligible 2.7 million borrowers had seen their mortgages modified under the new program as of the end of July.
The pace of loan modifications varies widely among lenders and servicers. The best results among large loan servicers came from Saxon Mortgage Servicers Inc. One in four of Saxon's 84,000 eligible borrowers has received a trial loan modification with a lower monthly payment. Aurora Loan Services, GMAC Mortgage and JPMorgan Chase all had one in five qualified borrowers in a trial loan.
Bank of America Corp and Wells Fargo & Co. — which have received billions in federal bailout money — were below average. BofA has modified just 4 percent of eligible loans under the program. Wells Fargo has modified 6 percent of eligible loans. Wachovia Corp., which was taken over by Wells Fargo last December, has modified just 2 percent. American Home Mortgage Servicing, with 153,000 eligible borrowers, was among the servicers that has not yet reported a single loan modification.
This could have a big impact on the Alameda Shadow inventory, those that are being threatened with foreclosure may not have the time need to modify their loans to save their homes. It seems that banks just do not know what to do, and in some case would rather have the property go into foreclosure than modify.
MSNBC had a great report on the lack of loan modifications.
Visit msnbc.com for Breaking News, World News, and News about the Economy
Monday, June 15, 2009
Moratorium Begins Today For Troubled Alameda Homeowners
Starting today, Alameda and California homeowners who are behind on their mortgages, will benefit from a 90-day moratorium being imposed by the State.
The law was enacted to make lenders/banks work harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.
Many experts and supporters of the legislation do not believe this will help the vast majority of homeowners currently behind on payments. The California Foreclosure Prevention Act is trying to stop thousands of foreclosures already in the system and the couple hundred here on the Island. There have been more than 365,000 foreclosures in California since early 2007.
For us locally, Alameda has seen just a small portion of the meltdown. According to RealtyTrac, 106 Alameda properties are in Pre-foreclosure, 57 are in Trustee Sale, and 71 are Banked owned. The Act is focused on those in pre-foreclosure.
The California bill passed in February is similar to the Obama administration's “Making Home Affordable Program” that began in March and has now just expired. The programs are to encourage lenders to cut interest rates or rewrite loans to affordable levels. Under the Act, Banks in California cannot foreclose a mortgage without either renegotiating the loan or giving the homeowner three months notice.
According to State Assemblyman Ted Lieu, the Torrance Democrat who authored the bill, “California is ground zero for foreclosures. We’re getting about 80 to 90,000 foreclosure filings every month. That’s one every 30 seconds, so until we start mitigating the number of foreclosures, our economic recovery is going to be hampered.”
California is second in the Nation for foreclosures.
The Alameda Inventory report is below.
Video from Mortgage Brokers Association
KCBS Radio Report
Link to chart
The law was enacted to make lenders/banks work harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.
Many experts and supporters of the legislation do not believe this will help the vast majority of homeowners currently behind on payments. The California Foreclosure Prevention Act is trying to stop thousands of foreclosures already in the system and the couple hundred here on the Island. There have been more than 365,000 foreclosures in California since early 2007.
For us locally, Alameda has seen just a small portion of the meltdown. According to RealtyTrac, 106 Alameda properties are in Pre-foreclosure, 57 are in Trustee Sale, and 71 are Banked owned. The Act is focused on those in pre-foreclosure.
The California bill passed in February is similar to the Obama administration's “Making Home Affordable Program” that began in March and has now just expired. The programs are to encourage lenders to cut interest rates or rewrite loans to affordable levels. Under the Act, Banks in California cannot foreclose a mortgage without either renegotiating the loan or giving the homeowner three months notice.
According to State Assemblyman Ted Lieu, the Torrance Democrat who authored the bill, “California is ground zero for foreclosures. We’re getting about 80 to 90,000 foreclosure filings every month. That’s one every 30 seconds, so until we start mitigating the number of foreclosures, our economic recovery is going to be hampered.”
California is second in the Nation for foreclosures.
The Alameda Inventory report is below.
Video from Mortgage Brokers Association
KCBS Radio Report
Link to chart
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Thursday, May 28, 2009
More Homeowners Fall Behind
Today, the Mortgage Bankers Association reported 12-percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. The wave of foreclosures isn't expected to crest until the end of next year, and the foreclosure rate on prime fixed-rate loans doubled in the last year. This now represents the largest share of new foreclosures.
From the Press Release:
According to Census 2000 Alameda a little more than 9,000 of the 12,085 homes had a mortgage. The Census data is really old, but the ball park number is 75% of homes carry some financing. Given that number that means that up to 1,200 home owners on the Island could be behind based on the National number.
Given that the Alameda market has been fairly stable compared to the Nation and California as a whole, I believe that percentage is on the high side for our little community. But if we take just quarter, 3%, that is still 272 homeowners with payment troubles. That's significant compared to the existing inventor would be a huge impact to pricing.
The news on housing this week has been fairly ominous, but as I have said before we just have to continue to watch and see what happens.
From the Press Release:
At the same time, almost half of all adjustable-rate loans made to
borrowers with shaky credit were past due or in foreclosure.
The worst of the trouble continues to be centered in California, Nevada, Arizona and Florida, which accounted for 46 percent of new foreclosures in the country. There were no signs of improvement.The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan
modifications.
According to Census 2000 Alameda a little more than 9,000 of the 12,085 homes had a mortgage. The Census data is really old, but the ball park number is 75% of homes carry some financing. Given that number that means that up to 1,200 home owners on the Island could be behind based on the National number.
Given that the Alameda market has been fairly stable compared to the Nation and California as a whole, I believe that percentage is on the high side for our little community. But if we take just quarter, 3%, that is still 272 homeowners with payment troubles. That's significant compared to the existing inventor would be a huge impact to pricing.
The news on housing this week has been fairly ominous, but as I have said before we just have to continue to watch and see what happens.
Tuesday, February 17, 2009
As The World Turns
I thought this was must viewing as 60 Minutes took a look at one piece of the foreclosure meltdown.
The story focuses on a local East Bay company, World Saving. World was a small savings and loan in the San Francisco Bay area when it was purchased in 1963 for $4 million by Herbert and Marion Sandler and it was sold at the top of the market.
Golden West, which operated branches under the name World Savings Bank, was the second largest savings and loan in the United Stateswhen it was acquired by Wachovia. 60 Minutes makes the case that the collapse of Wachovia was in part do to World's lending practices, a loan product called "Pick-A-Pay." The fall of Wachovia led it to be acquired by Wells Fargo, which in turn caused Wells to apply for TARP funds. A big mess.
Wednesday, February 11, 2009
Millions, Billion, Trillions . . .Oh My
Yesterday, the Senate passed as part of the stimulus bill a $15,000 tax credit if home shoppers buy within the next year. As that was going on, in a separately action, Treasury Secretary Timothy Geithner outlined plans for spending much of the $350 billion in financial bailout money recently cleared by Congress, and the Federal Reserve announced it would commit up to $1 trillion to make loans more widely available to consumers.
All these actions are suppose to get buyers off the fence to complete a purchase, free up the credit markets and make money available for mortgages. So here is what you need to know about all three actions.
The tax credit in the Senate's version of the plan sweetened the current $7,500 homebuyer tax credit provision (that is basically a loan), doubling it to $15,000 or 10% of the home's purchase price (whichever is lower) in
Here are the bullet points of the Senate Plan:
- No income limit
- The credit does not have to be paid back
- The tax credit is also non-refundable, this means, if your tax obligation is less than the credit, you only receive an amount equal to your tax bill, no more
- The Senate credit is good for one year following its enactment
- No retroactive feature. Homebuyers who make purchases before the credit takes effect cannot claim it.
- Buyers must live in the home for two years or forfeit the credit.
The National Association of Realtors estimated the Senate measure will attract an additional one million buyers who would otherwise have remained on the sidelines. "Consumers will view the tax credit as they do lower home prices," said Lawrence Yun, NAR's chief economist. "And more people will qualify [for buying homes]."
My personal belief is the Senate version will not survive when they confer with the House and come up with a compromise plan.
The financial stability plan will include a comprehensive housing program that will provide $50 billion for foreclosure prevention programs. Secretary Geithner released details of the new financial stability plan, a successor to the much maligned Troubled Asset Relief Program (TARP). The main purpose of the new TARP Plan is to prevent more foreclosures, decrease interest rates and find a place for toxic mortgages. (The video is a little TARP humor)
To drive down mortgage rates, Geithner also alluded to a possible expansion of a $600 billion Federal Reserve program that purchases mortgage backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae.
The final piece is a $1 trillion program aimed at stimulating lending to consumers and businesses. The program expands on a $200 billion to lend money to investors to purchase securities backed by debt such as credit cards and auto, student and small business loans. The goal is open up all credit.
It is way to early to know what the impact will be, especially since the Senate version of the tax credit still needs to survive its current form, but if all three programs move forward we could see buyers jump back in to buying mode. Exactly what the Obama administration wants. Till then we will have to wait and see what happens.
Thursday, January 29, 2009
Can You Find Money or a Deal
A couple of housing stories, the first is on the stagnant mortgage market and the second takes a look at the increase nationally in December home sales. The mortgage story is the most interesting because even if you want to buy in today's market you may find that it will be very difficult. Donald Trump is interviewed and reminds you its even tough for millionaires. The sales story focus on falling home prices in places like Phoenix and California. Just a reminder that in Alameda December sales saw no spike.
Tuesday, December 16, 2008
Additional Pressure on Mortgage Industry
Saw a 60 Minutes story, Sunday Night, on a looming second mortgage crisis that is being forecast by Whitney Tilson. Tilson believes that we are only half way through this meltdown and even a bigger fall is ready to hit because of two other kinds of exotic mortgages that became popular during the boom, called "Alt-A" and "option ARM. Not sure how many Alameda Homes were bought with these types of loans but I thought is was a valuable to learn more and share the story. For me it was good learning moment since I was not aware of these additional types of loans. (my favorite quote is the "Ninja Loan")
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