Archives for November 2009

National Foreclosure Activity Slows For Third Straight Month

Nearly all market indicators point to positive signs that housing conditions are beginning to moderate from the free falling days of the past few years, and even foreclosure statistics now support that notion. The pace of foreclosures slowed again in October for the third month in a row, RealtyTrac reported Thursday.

According to the company’s October 2009 U.S. Foreclosure Market Report, foreclosure filings – including default notices, scheduled foreclosure auctions, and bank repossessions – were reported on 332,292 U.S. properties during the month. That number means one in every 385 homes received a filing.

Although the month-to-month tallies are showing improvement, the number of homeowners facing the loss of their home is still disconcerting and represents a 19 percent increase over October 2008.

“Three consecutive monthly declines is unprecedented for our report, and on first blush an indication that the foreclosure tide may be turning,” said James J. Saccacio, CEO of RealtyTrac.

Saccacio warns, though, that the fundamental forces driving foreclosure activity in this housing downturn – high-risk mortgages, negative equity, and unemployment – continue to loom over any nascent recovery, with foreclosure activity still substantially elevated in most states.

Nevada posted the nation’s highest state foreclosure rate in October, despite a 26 percent decrease in activity from the previous month and the state’s first year-over-year decrease since January 2006. A total of 13,842 Nevada properties received a foreclosure filing last month, representing one in every 80 homes. According to RealtyTrac, a new foreclosure mediation program implemented by state law in July may be slowing the inflow of distressed properties into the foreclosure pipeline.

With one in every 156 housing units receiving a filing in October, California posted the nation’s second highest state foreclosure rate for the second month in a row. A total of 85,420 California properties received a foreclosure filing during the month, a decrease of 1 percent from the previous month but nearly 50 percent above the total reported in October 2008. This time last year, though, lenders in California were in the midst of a three-month trough after a state law took effect mandating extra notification before initiating foreclosure, and this likely explains the big year-over-year increase.

Florida reported the third highest state foreclosure rate, with one in every 168 homes receiving a filing in October. A total of 51,911 Florida properties received a foreclosure filing during the month – down nearly 6 percent from the previous month and a decrease of 4 percent compared to October 2008. It was the first year-over-year decrease in overall Florida foreclosure activity since July 2006.

Other states with foreclosure rates ranking among the nation’s 10 highest were Arizona, Idaho, Illinois, Michigan, Georgia, Maryland, and Utah.

According to RealtyTrac’s market data, four states accounted for 52 percent of the nation’s total foreclosure activity in October: California, Florida, Illinois, and Michigan.

Home Buyers $8,000 Tax Credit Extended

The U.S. House of Representatives decided Thursday to extend and expand the federal homebuyer tax credit. The legislation passed with a vote of 403 to 12.

It cleared the Senate Wednesday, with unanimous approval. President Obama is expected to pen his name to the bill on Friday.

The $8,000 tax incentive for first-time homebuyers, which had an expiration date of November 30, will be extended through April 30 of next year.

The tax break has been expanded to include a new category of buyers – those who have lived in their current home for at least five years, but want to purchase a new home as their primary residence. The credit amount for these buyers will begin on December 1 and is $6,500.

The April 30 deadline is the date by which buyers must have signed a purchase contract, eliminating the mad frenzy to eek closing out by the sunset date. Another 60-day window beyond the end of April is allowed to complete the closing of the deal.

The credit is available for the purchase of primary residence homes costing $800,000 or less – in other words, no tax break for vacation homes or investment properties.

The measure raises the income limits for those able to claim the credit to $125,000 for an individual and $225,000 for a couple.

Sen. Johnny Isakson, a former real estate agent himself, has pressed his fellow lawmakers for a meaningful tax credit for homebuyers since January of last year.

“Tax credits like this only work by creating the sense of urgency to take advantage of them,’ Isakson said. “This is the last extension of the homebuyer tax credit, and I urge all Americans whether they’re first-time buyers who’ve always dreamed of having a home of their own or someone who’s been gridlocked in the failure of our move-up market to take advantage of this opportunity.”

The legislation also includes anti-fraud language that gives the Internal Revenue Service greater oversight during the processing of the return rather than waiting for an audit situation. The amendment requires the taxpayer claiming the credit to be 18 or older, and requires a HUD-1 settlement statement to be attached when claiming the credit.

Robert E. Story, Jr., CMB, chairman of the Mortgage Bankers Association (MBA), called the passage of the tax credit extension a critical step in sustaining the momentum that’s beginning to emerge in the housing and mortgage markets.

“The existing credit for first-time homebuyers has helped move a segment of potential homebuyers off the sidelines and into their first homes,” Story said. “By expanding it to qualified existing homeowners, we can help stimulate even more home purchases for qualified buyers.”

Story also commended lawmakers for including provisions in the bill that will help eliminate fraudulent use of the tax credit.

Will Fannie Mae Become Your Landlord? The New Deed For Lease Program

Fannie Mae announced Thursday that it is implementing a program under which qualifying homeowners facing foreclosure will be able to remain in their homes as renters if they voluntary transfer the property deed back to the lender.

The GSE’s new Deed for Lease Program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under the program, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at market rate.

“The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications,” said Jay Ryan, Fannie Mae’s VP. “This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.”

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Investor properties with tenants are also eligible for the program.

Prospective renters must show that they can afford to pay the new market rental rate and must be able to document that the rental payment is no more than 31 percent of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period.

A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.

Archives for November 2009

National Foreclosure Activity Slows For Third Straight Month

Home Buyers $8,000 Tax Credit Extended

Will Fannie Mae Become Your Landlord? The New Deed For Lease Program

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Archives for November 2009

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