Wednesday, June 29, 2011

Youngstown, Ohio Foreclosure Rates Increase

Mortgage Foreclosure Rate Up in April
June 29, 2011 6:52 a.m.
YOUNGSTOWN, Ohio -- Foreclosure rates in Youngstown-Warren-Boardman metropolitan statistical area increased in April compared to the same month last year, reports CoreLogic.

The rate of foreclosures among outstanding mortgage loans was 4.72% in April, an increase of 0.66 percentage points compared to last April.

Foreclosure activity in Youngstown-Warren-Boardman was higher than the national foreclosure rate, which was 3.47% for April, representing a 1.25 percentage point difference, according to the newly released data.

Meanwhile, the mortgage delinquency rate decreased during April in the Youngstown-Warren-Boardman MSA. CoreLogic reports 8.24% of mortgage loans were 90 days or more delinquent in April compared to 8.53% for the same period last year, representing a decrease of 0.29 percentage points.

CoreLogic provides information, analytics and services to business and government. The company is based in Santa Ana, Calif.

Published by The Business Journal, Youngstown, Ohio.

Tuesday, June 28, 2011

Rampant Bank Fraud and Wrongful Foreclosures Extend to the Commercial Real Estate Market

Agoura Hills, CA (PRWEB) June 27, 2011
“Throughout the United States, reputable builders and commercial property owners have often been overlooked as victims of bank fraud and wrongful foreclosure in the Nation’s ongoing bank crises,” says 35-year trial lawyer and former prosecutor Michael S. Riley of Mitchell J. Stein & Associates LLP.

Mr. Riley, a Senior Partner of Mitchell J. Stein & Associates LLP and former governmental prosecutor for more than a decade, commented further that “the wave of significant and far reaching disclosures of horrible bank schemes against the core of our economy – middle America’s builders and commercial realty owners – are now going to begin hitting the national stage and its judicial system.”
Mitchell J. Stein & Associates LLP sees the problem as a logical one:

“In 2009, we predicted that fraudulent foreclosure practices would be hoisted upon home owners nationwide and the Firm filed suit against Bank of America in behalf of aggrieved Californians on March 12, 2009. This lawsuit (Ronald v. Bank of America) was the first of its kind to be filed nationwide and has since been the shepherd for the Firm’s several other lawsuits against the likes of JP Morgan Chase, Ally Bank (formerly GMAC), Wells Fargo, Onewest (formerly Indymac), U.S. Bank and Citibank. These lawsuits have become commonly known as “Mass Joinders”. Just a few months ago, in April 2011, the Department of Homeland Security, the FDIC, the Office of the Comptroller and other State and Federal Agencies have agreed that at least 14 bank servicers have committed wrongful and “unsafe” foreclosure practices since 2009, i.e., just as the firm predicted in the first quarter of 2009 as evidenced by the filing of Ronald v. Bank of America.

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Monday, June 27, 2011

N.J. foreclosures down but could be calm before deluge

forecloselogo033011_optBY BOB HOLT
Foreclosure filings are down 86 percent in 2011 from last year in New Jersey, but housing attorneys fear this is only the calm before the deluge.
Lenders will be looking to file an estimated 28,500 foreclosures, and another 55,000 mortgage loans are currently more than 90 days behind, according to LPS Applied Analytics.
Chief Justice of the New Jersey State Supreme Court Stuart Rabner announced in December that he would place a moratorium on foreclosures from major banks (Bank of America, Wells Fargo, JP Morgan Chase, One West Bank, Citigroup, and Ally Financial) unless they could document the accuracy of their foreclosure processes. According to, Rabner said these banks were being singled out due to a “public record of questionable practice”.
The New York Times reported that the banks admitted last fall that they had been illegally processing foreclosures by filing false court documents, but they said any delays in repossessions would be minimal. In April, the Office of the Comptroller of the Currency gave the banks 60 days to reform their foreclosure procedures.
According to, bankers in New Jersey have told the CEO of the New Jersey Bankers Association, that it now takes almost three years to complete a foreclosure. Retired Superior Court Judge Richard Williams will be reviewing the material from the banks and will report on whether they satisfied enough changes, but he has no deadline. LPS says it would take 49 years to clear up the foreclosures and delinquencies in New Jersey at their current rate.

Monday, June 20, 2011

The Next Crisis in Residential Mortgages – New Data Emerges

Back in the fall of last year, we commented to many that the so-called “foreclosure-gate,” or “document-gate” (remember, the Schwarzeneggerian term “robo-signers”) was going to prove to be a double edged sword for the large banks.

On the one hand, lying to judges and facing the possible voiding of mortgage collateral documents and the ability to foreclose is decidedly bad for business.  On the other hand, we pointed out that there would likely be sighs of relief (we were once, injudiciously, quoted as referring to the popping of champagne corks) at the notion that the recognition of losses connected with the bubble of pending home repossessions, that was then coming towards the end of the foreclosure snake, could again be delayed.

Over the past week, two intrepid investigative business reporters, at The Financial Times and The New York Times, respectively, have published stories that shed new light on this issue, in a manner that furthers our concerns about the banking sector.  More about the articles below (don’t miss this, keep reading).
In our view, the magnitude of pending foreclosures, together with housing prices that continued to decline through March, could potentially result in losses to banks that materially exceed existing provisions for such losses.  Moreover, if the backlog of foreclosures were to move through repossession and liquidation, the impact on the housing market would unquestionably be to accelerate the pace of falling prices (at least in many regions of the country).

Not surprisingly, in this environment, lender recoveries of loan principal through the liquidation of foreclosed mortgage collateral has been dismal – averaging between 35% and 40% of loan face amount (taking into consideration both selling price and all costs related to the foreclosure and liquidation) for years now and showing no signs of improving.

With home prices, per the S&P Case Shiller 20-City Index, having fallen 6.2% from the end of Q3 2010 through the end of Q1 2011, and now more than 33% below peak levels in July of 2006, the largest banks in the U.S. are therefore loath to repossess and liquidate defaulted home loan collateral.

Yet, apparently driven by a now-questionable view (possible, but by no means a certainty) that the American economy is positioned for a sustainable recovery, banks have been releasing provisions for losses on loans held in portfolio.  This has had a positive effect on bank earnings for several quarters. Although, with many banks trading below book value, the market seems not to believe either the sustainability of recent earnings or the recoverability of bank loan assets.

So the banks owning large residential loan portfolios have slowed the foreclosure process to a trickle and, at the same time, have been unwilling to restructure home mortgage loans in a manner that would lead to large scale principal reductions.  According to various studies, the best path to the maximization of defaulted mortgage recoveries runs through actions that keep people in their homes and paying instead of walking away.

And with regard to underwater borrowers (nearly a third of all mortgagors now) the best way to keep people paying is to renegotiate the original principal.  Recoveries on that basis promise numbers closer to 70% of face, than to liquidations yielding half that ratio.

The banks do have one further concern that is not entirely illegitimate.  The see moral hazard in the notion that aggressive principal modifications would trigger more widespread default, as borrowers who might otherwise pay will, literally in some cases, covet their neighbors principal reduction and default themselves in order to obtain the same treatment.  But we do not see the advantages of a stand-off over liquidations or modifications in a stable or declining price environment, in the absence of sustainable macroeconomic improvement.  We also note that it is somewhat painful to listen to moral hazard arguments from lenders who have recently been the beneficiaries of assistance themselves.

So that’s why we feel it important to highlight two pieces of journalism that have shed more light on these issues and promise further data to come.

Last Monday, Suzanne Kapner of The Financial Times wrote a small but interesting piece entitled Concern Rises over U.S. Mortgage Defaults which discloses that she has received some hitherto unpublished numbers from the Office of the Controller of the Currency (the principal regulator of large banks) that potentially suggest that delinquencies on bank residential mortge loans in portfolio may be higher than have been previously understood (and higher than what banks have disclosed for securities act purposes).  Some 20% of bank-held mortgage loans, according to Kapner, are 30-days or more past due, which we read as meaning loans that are about to miss two or more payments.  We are very interested in seeing more work from Ms. Kapner on this subject as banks hold nearly $3 trillion of mortgage loans in non-securities form on their books.  20% could be an alarmingly large number relative to existing loan loss provisions if such loans are eventually liquidated at anything near today’s prevailing recovery rates.

Yesterday, in a piece entitled Backlog of Cases Gives a Reprieve on Foreclosures, David Streitfeld of The New York Times writes extensively on the fact that the pace of foreclosure repossessions has slowed to a crawl throughout the country.  He quotes one Florida chief judge as noting, “We’re here to do what we’re asked to do. But you’ve got to ask. And the banks aren’t asking.” He further notes that, at the current pace, it would take years to liquidate even the homes that are presently repossessable – and that’s just in the so-called non-judicial states.  In states in which courts control the foreclosure process, it would take decades.
Yes, it is possible that these matters are coincidental and that the unfortunate situation merely looks as though large banks are kicking the can in order to avoid recognizing substantial losses for as long as possible.  Or, perhaps, the situation is exactly as is appears – only bank regulators know for sure.  And, like the rest of us, the regulatory establishment fears having the banking system fall back into disarray in a political environment in which renewed taxpayer assistance to the industry is by no means a certain alternative.

US Data Prev: Foreclosures Problems Cont. To Hurt Home Resales

WASHINGTON (MNI) - The National Association of Realtors' existing home sales report Tuesday is expected to show continued softening in the housing market, mainly driven by persistent weakness in the labor market and home buyers that remain wary of falling home prices.

Existing home sales figures for May, which the NAR will publish at 10:00 am ET, are expected to fall to 4.80 million according to a survey of economists by Market News International. Sales figures for April came in at 5.05 million.

Tuesday's existing home sales release will be of particular importance because May is traditionally one of the most biggest months of the year for home sales and if potential buyers decide not to buy in the spring they will often wait till next year.

The release of existing home sales data is usually preceded by data on pending home sales -- which declined by 11.6% in April, indicating home resales for May will be weak.

"We continue to see that home prices will continue to fall through the end of the year and then we will get some extremely modest upward momentum in the early part of 2012," Anika Khan, economist at Wells Fargo told Market News International.

"We need foreclosures to subside to get that downward pressure on home prices to kind of quell," Khan added.

Part of the problem with foreclosures is that there are still many home owners living in their homes but not making mortgage payments because their home is now worth less than the loan take to buy the house, often referred to as negative equity.

According to a June report by data analytics firm, CoreLogic, 22.7% of all residential properties with a mortgage had negative equity.

Banks are also now more hesitant to foreclose on properties for a number of reasons; one of which is an investigation by the State attorney generals into the banks' foreclosure practices. Some sort of settlement is expected, but the timeline of an agreement is not yet known.

Wells Fargo's Khan said it would be better if a deal between banks and the attorney generals got done sooner rather than later because that would speed up the process of working through the foreclosure backlog.

Another problem the NAR noted in last month's report is that appraisers continue to be very conservative, meaning sales that looked to be certainties fell through because of low appraisal values.

Khan concurred, saying "appraisal problem is clearly still an issue, you know appraisers are extremely conservative at this particular point of the housing market cycle and they will continue to be."

According to the S&P/Case Shiller house price indices, home prices fell 4.2% in the first quarter of 2011 after falling 3.6% in the fourth quarter of 2011.

"This month's report is marked by the confirmation of a double-dip in home prices across much of the nation," Chairman of the Index, David Blitzer said in the report released May 31.

"The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit. Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession," Blitzer said.

Khan said the future progress of the housing recovery boils down to jobs. Unfortunately recent data shows that the labor market remains weak.

Weekly jobless claims continue to tread above 400,000 after trending below that level in February and March, and the May employment report published by the Bureau of Labor Statistics showed only 54,000 new jobs were added in May, below even the most bearish of forecasts.

** Market News International Washington Bureau: (202) 371-2121 **

Friday, June 17, 2011

The Latest Foreclosure News

The housing crisis is far from over, regardless of what those in our government are so vehemently trying to tell us...

We will track the upcoming crisis here...