Shortsighted?
Real estate agents are stepping up pressure on mortgage servicers to reform the short sale process.
On Wednesday, the California Association of Realtors placed full-page ads in seven California newspapers calling for servicers and regulators to make changes to the short sale process, such as requiring banks to respond promptly to short sale offers.
"Horror stories abound from potential homebuyers and realtors forced to wait 90 or more days for a response to a purchase offer or being required to fax short sale applications or other paperwork as many as 50 times," said Beth Peerce, the president of the California Realtors group, in an open letter to consumers. "These delays discourage potential homebuyers from considering a short sale purchase and undermine the process for those who short sales are intended to benefit — the hundreds of thousands of families facing foreclosure."
In January the Realtor group created a task force to investigate why there are three different versions of the government's Home Affordable Foreclosure Alternatives program, which was designed to encourage short sales.
In a short sale, the home is sold for less than the amount owed on the mortgage and the lender accepts a discounted payoff rather than incur the cost of foreclosure.
Double Dip in West
Most indicators show that the housing market still has a long way to go before a sustained recovery, particularly in Western states.
Though home prices have actually risen 4.2% nationally over the past two years, the West is poised for a double dip in housing prices by the end of the first quarter, according to Alex Villacorta, director of research and analytics at Clear Capital, a Truckee, Calif., data provider.
Perhaps not surprisingly, Las Vegas had the largest two-year home price decline in February, down 22.2% from a year earlier, followed by Tucson, down 20.8% and Phoenix, with a 17.1% drop.
Of the 15 worst-performing markets, eight are in the West. Moreover, five of those eight have real estate owned saturation rates above 40%, meaning close to half of the homes on the market were repossessed properties.
More than half of all homes sold in Las Vegas last month were bank-owned, Clear Capital found in its monthly home data market report, which is scheduled for release Thursday.
Other markets that had been doing well such as Seattle, where prices dropped 17% last month, and Portland, which registered a 15% drop, are only now posting major price declines roughly a year after other markets dropped.
Even the gains in San Francisco over the past two years are quickly being eroded by losses in the past year.
Fewer Foreclosures
Foreclosure filings posted their biggest year-over-year drop since 2005 last month, according to RealtyTrac Inc., but that doesn't mean the housing market is recovering.
Default notices, scheduled auctions and bank repossessions fell 27% in February from a year earlier largely because of problems that servicers have had processing foreclosures.
James Saccacio, RealtyTrac's chief executive, said servicers are going through "a major overhaul" that "has severely restricted the capacity to process foreclosures."
Moreover, the 27-page settlement proposal by state attorneys general and federal regulators is expected to further delay the foreclosure process as the industry is forced to increase loan modification efforts.
Nevada still leads the nation with the highest foreclosure rate for 50 consecutive months with one in every 119 homes receiving a foreclosure filing last month. Ten states accounted for 70% of all foreclosure filings. Arizona ranked second and California third.
RealtyTrac, of Irvine, Calif., is set to release the statistics Thursday.
He Said 'Vexatious'
A Detroit judge fined a plaintiff's attorney $12,000 this month for making a "vexatious appeal" in an effort to delay an eviction in a foreclosure case.
Detroit District Court Judge Robert J. Columbo had denied a stay of eviction in late 2008 for Asha Tyson. Her attorney, Vanessa Fluker, appealed citing a pending federal discrimination lawsuit against Charter One Bank, a unit of Royal Bank of Scotland.
Though Fluker raised the Center for Community Justice and Advocacy's 2009 Fair Housing Act complaint against the bank as a defense against her client's eviction, the judge dismissed the homeowner's case and sanctioned the attorney. Fluker is appealing.
"She was fined for a vexatious appeal, we believe incorrectly," Fluker's attorney, Jerry Goldberg told American Banker on Wednesday. "She had been fighting for this client's rights to stay in the home and a previous case in front of the judge had already been dismissed."
Quotable …
"This is the 'don't ever be a servicer of a delinquent loan' code, because it will be punitively expensive."
