Hotsheet – Page 368 – Parsons Realty

Negative Sentiment Towards Buying Foreclosed Properties Decreasing

A recent survey conducted by Trulia and RealtTrac found that the negative sentiment towards buying foreclosed properties has decreased compared to one year ago. With 78 percent of U.S. adults believing there are downsides to buying foreclosed properties compared to 85 percent in May 2009. Among those who think there are negative aspects to purchasing a foreclosed home, the top concerns about purchasing a foreclosed property between May 2010 and May 2009 include:

Negative Sentiment	May 2010	May 2009
Hidden Costs	68 percent	71 percent
Process is risky	49 percent	46 percent
Home will lose value	35 percent	31 percent

“Although fewer consumers expressed interest in buying a foreclosed home than a year ago, the actual sales of bank-owned properties (REOs), along with sales of properties in the foreclosure process, continue to increase — accounting for more than 30 percent of total sales in the first quarter of 2010 according to our data,” said Rick Sharga, senior vice president for RealtyTrac. “We anticipate that there will be an increased number of both REO purchases and short sales throughout the rest of the year as the most active buying segments – first time home buyers and investors – continue to look for bargains.”

“It appears that potential homebuyers are taking a more realistic view of foreclosure purchasing,” Sharga continued. “Buying a foreclosure property still provides an opportunity for dramatic savings on a home, but the time and effort involved in executing a short sale, bidding against other buyers for an REO, or the need to do renovations may be issues for buyers not as focused on getting the best price.”

The Bank-Owned Discount

The survey also found that 18 percent of U.S. adults expect bank-owned homes to offer a realistic price discount of less than 25 percent off the value of a similar home that was not in foreclosure. However, not all consumers have realistic expectations, with 36 percent saying that they expect to receive a discount of 50 percent or more when purchasing a bank-owned property. Most consumers (95 percent) would expect to pay less for a foreclosed home than for a similar home for sale that is not in foreclosure.

The survey also found some interesting demographics of who is buying the foreclosed homes.

Renters are showing strong interest in buying foreclosed properties, with 57 percent at least somewhat likely to purchase a foreclosed home in the future. In comparison, only 40 percent of current homeowners would consider buying a foreclosure in the future. Additionally, the likelihood to consider purchasing a foreclosure decreases with age: 65 percent of renters ages 18-34, 63 percent of renters between the ages of 35-44, and 54 percent of renters ages 45-54 are at least somewhat likely to consider purchasing a foreclosure, compared to only 31 percent of renters 55 years and older.

Fannie Mae Improves “First Look” Program for REO Property Sales

First Look program helps owner occupant home buyers get first opportunity over investors to buy Shasta County bank owned (REO) properties.

Fannie Mae’s First Look, initially started in late 2009, is designed to provide owner occupants a “first look” at Fannie Mae homes. Under this policy, Fannie Mae will only consider offers from owner occupants and buyers using public funds during the First Look marketing period which is typically the first 15 days a property is listed. If the property is still for sale after the First Look Marketing period expires, investor offers may be submitted and will be considered. Properties in the First Look marketing period will have a timer with the number of days remaining on the Fannie Mae Home Path property details page.

To start searching for Foreclosures and Bank owned properties in Redding and Shasta County.

Fannie & Freddie To Help Renters Of Foreclosed Homes

Freddie Mac & Fannie Mae are preparing a plan that will allow renters who live in bank repossessed properties to stay in their homes. They expect to have the plan completed before their self imposed moratorium on foreclosures expires on January 31^st.

The plans were revealed in the letter Federal Finance Housing Agency (FHFA) Director James Lockhart sent to Senator Christopher Dodd, chairman of the Committee on Banking, Housing, and Urban Affairs, accompanying the FHFA’s Foreclosure Prevention Report.

In addition to Freddie Mac’s proposed policy, the letter said Fannie Mae will offer monetary support for tenants that do not want to sign a new lease with the Government Sponsored Entity.

The report, which covers both Fannie Mae and Freddie Mac’s combined 30.6 million residential mortgages it secures, was filed last week, but covers last year through the month of October. It said:

– Loans 60+ days delinquent as a percent of all loans increased from 1.46 percent as of March 31 to 1.73 percent as of June 30 to 2.21 percent as of September 30 and to 2.39 percent as of October 31.

– Loans for which foreclosure was started as a percent of loans 60+ days delinquent declined from 8.29 for the first quarter, 7.81 percent for the second quarter and 7.12 percent for the third quarter to 6.44 percent for October

– Loan modifications completed increased to 5,639 for October from a monthly average of 4,475 for the third quarter – an increase of 26 percent.

– For modifications completed in October, 57.8 percent were modified with an interest rate reduction, and 43.2 percent were completed with a change to another term.

– The loss mitigation ratio for October was 52.6 percent versus a year-to-date monthly average of 54.4 percent. The ration is calculated at the total mitigation activities (payment plans, HomeSaver Advances, loan modifications, short sales, deeds in lieu, assumptions, and charge-offs) divided by the total of loss mitigation activities plus foreclosures completed and third-party sales.

Under the Economic Stabilization Act of 2008, Federal Property Managers, like the FHFA as GSE conservator, are required to report to Congress about the number and type of loan modifications and the number of foreclosures during the reporting period.

Foreclosures Increase 81% In 2008

RealtyTrac an online marketplace for foreclosure properties released its 2008 Foreclosure Market Report, which shows a total of 3,157,806 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 2,330,483 U.S. properties during the year, this represents an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006. The report also shows that 1.84 percent of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03 percent in 2007.

Foreclosure filings were reported on 303,410 U.S. properties in December, up 17 percent from the previous month and up nearly 41 percent from December 2007. Despite the spike in December, foreclosure activity for the fourth quarter was down nearly 4 percent from the previous quarter but still up nearly 40 percent from the fourth quarter of 2007.

RealtyTrac publishes the largest and most comprehensive national database of foreclosure and bank-owned properties, with over 1.5 million properties from over 2,200 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate and The Wall Street Journal’s Real Estate Journal.

“State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth quarter numbers overall, but that effect appears to have worn off by December,” said James J. Saccacio, chief executive officer of RealtyTrac. “The big jump in December foreclosure activity was somewhat surprising given the moratoria enacted by both Freddie Mac and Fannie Mae, along with programs from some of the major lenders and loan servicers aimed at delaying foreclosure actions against distressed homeowners.

“Clearly the foreclosure prevention programs implemented to-date have not had any real success in slowing down this foreclosure tsunami. And the recent California law, much like its predecessors in Massachusetts and Maryland, appears to have done little more than delay the inevitable foreclosure proceedings for thousands of homeowners.”

The California law (SB1137), which required lenders to provide written notice of their intent to initiate foreclosure proceedings 30 days prior to issuing a notice of default (NOD), resulted in a reduction of NODs from 44,278 in August to 21,665 in September. Notice of Default filings then surged by 122 percent, to over 42,000, in December. Similar patterns have occurred in other states, such as Massachusetts and Maryland, where similar types of foreclosure prevention legislation has been enacted.

30% of U.S. Homebuyers Expect At Least A 50% Discount When Purchasing Foreclosure Properties.

Trulia & RealtyTrac released the results of a new study conducted on their behalf by Harris Interactive ® showing notable decreases from their previous survey in the willingness to buy foreclosed properties with three-quarters of respondents expecting a discount of at least 25 percent on a foreclosure purchase. In the previous survey conducted seven months ago, 54 percent of all U.S. adults surveyed said they would consider purchasing a foreclosed home, whereas now 47 percent of U.S. adults would consider purchasing a foreclosure, a drop of seven percentage points in only seven months. These findings are part of a regular series of surveys conducted by Trulia to better understand consumer sentiment around housing issues.

During the last seven months, negative sentiment around buying a foreclosure rose. In April of 2008, 69 percent of U.S. adults originally felt that there were negative aspects to purchasing a foreclosed home (www.trulia.com). In this recent study, conducted during a three-day period in November, 80 percent of U.S. adults are now concerned with negative aspects, citing hidden costs, risky process, home losing value and personal connection with foreclosure as the core concerns. To compensate for perceived risks, consumers expect hefty discounts on foreclosed homes. More than 75 percent of consumers think they should pay at least 25 percent less for a foreclosed home, with three in ten consumers expecting a major discount of at least 50 percent less than a comparable home not in foreclosure.

“What’s significant about our findings is that just as the market is being flooded with more foreclosures, homebuyers are more hesitant to buy them. Misinformation around foreclosures abounds and that’s dangerous for the market and for homebuyers,” said Pete Flint, co-founder and CEO of Trulia. “Information is power and at Trulia we are giving homebuyers the information they need to make a fully informed decision about whether a foreclosed property is a good buy or investment for them.”

“The results of this study are eye-opening and highlight the need for consumer education about foreclosures. Being that the sale of foreclosed properties has been on the rise due to the increased inventory and discounts available on foreclosed homes, it is somewhat counterintuitive — although not totally unexpected — that consumers are more hesitant to purchase a foreclosed property,” said Rick Sharga, senior vice president of RealtyTrac. “We expect that foreclosures will continue to dominate the market in 2009, and well-educated consumers will be able to find great deals on these properties.”

Some Groups Now Less Inclined to Consider Purchase
The results of the most recent Harris Interactive ® survey provide nuanced insight into the shift in confidence for consumers looking to purchase a foreclosed home. In particular:

56 percent of single/never married adults were at least somewhat likely to consider purchasing a foreclosed home, down from 60 % in April.

43 percent of married adults were at least somewhat likely to consider purchasing a foreclosed home, down from 50% in April.

42 percent of divorced/separated/widowed adults were at least somewhat likely to consider purchasing a foreclosed home, down from 50% from April.

Foreclosures Decrease 7% In November

RealtyTrack released its November 2008 Foreclosure Market Report which shows foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 259,085 U.S. properties during the month, a 7 percent decrease from the previous month but still up 28 percent from November 2007. The report also shows one in every 488 U.S. housing units received a foreclosure filing in November.

“Foreclosure activity in November hit the lowest level we’ve seen since June thanks in part to recently enacted laws that have extended the foreclosure process in some states, along with more aggressive loan modification programs and self-imposed holiday foreclosure moratoriums introduced by some lenders,” said James J. Saccacio, chief executive officer of RealtyTrac. “There are several indications, however, that this lower activity is simply a temporary lull before another foreclosure storm hits in the coming months.

“Delinquencies on loans not yet in the foreclosure process jumped to nearly 7 percent in the third quarter, a record high, according to the Mortgage Bankers Association,” Saccacio continued. ”And more than half of the homeowners who received loan modifications to reduce monthly mortgage payments in the first half of 2008 are already delinquent on their loans again, according to the U.S. Office of Thrift Supervision. Many of these delinquencies could turn into foreclosures next year.”

California, Florida, Michigan post highest foreclosure totals

Foreclosure filings were reported on 60,491 California properties in November, the most of any state and a 6 percent increase from the previous month following two consecutive monthly decreases. The state’s foreclosure activity was up 51 percent from November 2007, and one in every 218 housing units received a foreclosure filing during the month — more than twice the national average.

See the full report at RealtyTracks website.