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In the Nick of Time

A family facing foreclosure has found the key to saving their home in a box of relics in their basement: a rare Superman comic book estimated to be worth more than a quarter million dollars.

Vincent Zurzolo, co-owner of ComicConnect.com and Metropolis Collectibles Inc. in New York, which is handling the auction of the comic book — Action Comics No. 1 from June 1938, the Man of Steel's first appearance — said the family has asked to remain anonymous.

Zurzolo also would not identify the bank that had been foreclosing on the home. He said he and his business partner, Stephen Fishler, have been able to persuade the bank to hold off on the foreclosure of the family's home after showing it the prices similar comics have garnered at recent auctions.

"They're willing to wait," Zurzolo said of the bank. "I think this bank really saw the right thing to do."

While packing up their home, the family found several old comics, including the copy of Action Comics No. 1, considered to be the most valuable comic book. Zurzolo says there are probably about 100 copies of Action Comics No. 1 in existence.

This particular copy has been given a grade of 5, on a scale of 1 to 10, by a third-party grading service. This spring, a copy of Action Comics No. 1 with a grade of 3 was sold for $300,000, Zurzolo said. Recent auctions of copies with grades of 8 and 8.5 took home $1 million and $1.5 million, respectively.

The family's copy goes up for auction on ComicConnect.com from Aug. 27 through Sept. 17.

"We're expecting a very strong result with it," Zurzolo said. "The astonishing thing about this is this book has been sitting under their noses for so long."

More of Less

With the economy weak and the homebuyer tax credit no longer available, purchase loans are harder to come by. It doesn't help lenders that more homes are being bought for all cash.

PHH Corp. said Tuesday that its mortgage unit is getting more business from a partnership with Realogy Corp., which licenses the Century 21 and Coldwell Banker brands to real estate agents around the country. But fewer of those agents' customers are using any lender.

"Penetration is going up in what amounts to a declining piece of the pie, because of the increased purchases done by cash," Luke Hayden, the president of PHH Mortgage, a top-10 lender, said during a conference call with investors.

About 35% of PHH's volume came from Realogy brokers last year.

All-cash deals have increased as more investors return to the market, buying up foreclosed properties, according to the National Association of Realtors. A survey of nearly 2,000 Realtors found that about 24% of home purchases in June were made in all cash, up from 13% a year earlier.

Bose George, an equity analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., said it's unlikely this will be a prolonged trend.

"Over time, I'm assuming it goes back to a little more of a normal number," George said of the percentage of all-cash deals.

PHH lost $133 million during the second quarter, compared with a profit of $106 million a year earlier.

The loss was attributed to a drop in the fair value of mortgage servicing rights resulting from a decline in interest rates during the period.

Excluding extraordinary items, core earnings nearly doubled from a year earlier, to $28 million, even though origination volume declined, as margins on new loans improved.

Time to Suck It Up?

If John Marecki, the vice president of East Coast foreclosure operations at Prommis Solutions LLC, is right, the day of reckoning for banks is near.

Foreclosure moratoriums are over, borrowers are redefaulting en masse on modified loans and short sales are not turning out to be the panacea the housing industry had hoped for.

Now banks and mortgage servicers have few choices but to repossess the massive backlog of distressed properties while trying to sell them at even lower prices, said Marecki, who joined Prommis, an Atlanta provider of loss mitigation services, in July.

"Over the next three quarters is when the industry as a whole will try to right the ship," said Marecki, a former senior vice president of default administration at Flagstar Bank. "There is so much inventory out there that it will take three quarters to get it all into the system and then it will take its toll."

In 2008, when the moratoriums were put in place, the industry "got into a panic mode" and worried about "all these loans going into foreclosure and driving [home] prices down," he said.

In the end, that is the most likely scenario for a majority of defaulted borrowers, said Marecki, who predicts that states like Florida and Georgia will be processing high volumes of foreclosures into 2012.

"Had we bitten the bullet earlier we would have been through this already," he said.

In a short sale, a borrower sells the property for less than the amount owed on the mortgage, and the lender accepts a discounted payoff. Losses on such "preforeclosure actions" can be less than on a foreclosure, and the government also offers monetary incentives to lenders that allow short sales.

Nevertheless, many lenders have been reluctant to do so — particularly those with junior liens that stand in line to get paid after the first mortgage.

"A lot of deals go south because second and third lienholders are not getting a share of the money," Marecki said. "So by not doing the short sale, they aren't selling the houses, they're foreclosing and running the market down further."