Home Prices Have Been Rising for Three Months: Report

Standard & Poor’s reported Tuesday that it’s closely watched Case-Shiller index declined in January for the fifth straight month, with both the 10-city and 20-city composite readings slipping 0.8 percent from December.

But according to John Burns Real Estate Consulting (JBREC), that’s stale news and doesn’t reflect what’s actually happening in the market right now. In fact, the independent research company says home prices are rising.

JBREC conducted its own analysis of home prices in 97 markets and found that over the January-to-March period prices are up in 90 of them. The average price increase over the last three months is 1.1 percent, or a 4.5 percent annual rate, according to data issued by JBREC just before S&P’s Case-Shiller release.

The company also found that home prices have been trending up nationally since January, and even more markets have turned positive recently, with 93 of the 97 markets it analyzed showing appreciation over the last month.

So why are other industry indices still painting a picture of the doom and gloom of freefalling home prices? Wayne Yamano, VP and director of research for JBREC, says it’s because most price indices are on a three-month lag.

Yamano explains that after hundreds of hours of research vetting 23 data sources and running calculation after calculation, JBREC developed the Burns Home Value Index (BHVI), which calculates home values based on prices that are set at the time purchase contracts are negotiated and signed.

Nearly all other indices are based on when the purchase transaction closes, he says, which is typically two months after the purchase contracts were negotiated. Then, it takes one to two months for the closing price data to be compiled and reported, according to Yamano.

He contends that the BHVI is a better assessment of current changes in home prices and precedes median price data from the National Association of Realtors by three months and the S&P/Case-Shiller index by four to six months.

“It is current because it uses what is happening in MLS databases all over the country, as well as some leading indicators we have determined are reliable,” Yamano explained. “We call it a Home Value index because it is partially based on an ‘electronic appraisal’ of every home in the market, rather than just the small sample of homes that are actually transacting.”

JBREC has calculated BHVI index values for the United States and 97 major metro areas, with history going back to January 2000.

“The slow housing market recovery is underway, and it can accelerate or turn down quickly,” said Yamano. “The future is uncertain, and it is even more uncertain when you are using data that is three months old.”

 

Source DsNews.com By : Carrie Bay 03/27/12

Foreclosure Market Trends Report - March 2012

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FHA to raise insurance premiums in April

 

The Federal Housing Administration will raise mortgage insurance premiums this April in order to repair the health of its emergency fund.

The FHA upfront mortgage insurance premium will increase to 1.75% from 1% of the base home loan amount. This will apply regardless of the term or loan-to-value ratio beginning in April.

The annual mortgage insurance premium will increase by 10 basis points for loans under the $625,500 limit beginning April 1 and by 35 bps for home loans above that amount starting in June, the FHA said Monday. Authority for these raises come under the payroll tax cut extension agreed to last fall.

The FHA said the changes will boost the Mutual Mortgage Insurance Fund by $1 billion.

The UFMIP can still be financed into the mortgage. The increase to the upfront premium will cost new borrowers roughly $5 more per month.

Reverse mortgages and borrowers in special loan programs would be exempt from the changes, according to the FHA.

Last week at the Mortgage Bankers Association servcing conference in Orlando, FHA Commissioner Carol Galante said there would be upcoming insurance premium changes for the streamline refinance program. An FHA spokesman said these changes would be included in a letter to lenders due soon.

The MMI fund slipped below the Congressionally mandated 2% threshold in 2008, and in slipped to 0.2% last year. According to an analysis of President Obama's budget, the fund could have declined further in 2013 and possibly needed a bailout from the Treasury Department. Nearly $1 billion in revenue from settlements with mortgage servicers announced in the last few weeks will also keep the fund from needing assistance, according to FHA.

"After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market," Galante said. "These modest increases are one of several measures we are taking towards meeting the congressionally mandated 2% reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers."

Source : HousingWire

By Jon Prior

• February 27, 2012 • 6:05pm

 

FHA to deny mortgage backing for credit disputes above $1,000

 

Beginning April 1, potential borrowers with ongoing credit disputes totaling more than $1,000 will not be able to get a mortgage insured by the Federal Housing Administration.

The rule marks a significant belt-tightening at the FHA whereas the adminstration earlier held no such requirement that disputed credit accounts needed to be paid off. Before this rule, a direct endorsement underwriter could determine if any of the borrower's outstanding debts should impact the approval of the FHA-backed mortgage.

After April 1, the borrower must either pay off the outstanding balance on these collections accounts or document a payment arrangement that the lender must then submit to the FHA before closing. The payment arrangement will be counted into the debt-to-income ratio for the new home loan.

Jeremy Radack, a real estate attorney who helps builders in Houston get buyers financed, expects between a 33% and a 50% reduction in FHA originations this year because so many borrowers in the 650 to 680 FICO score range have a past due collections account.

"Take the 750 borrower with a medical collection outstanding from five years ago when they were in college for $5,000. Is that really a bad loan? I don't think FHA looked at how much of their performing borrowers have collections accounts," Radack said. "There are so many other things they could do to mitigate risks to the fund."

The rule excludes disputed accounts from more than two years ago, along with those related to theft. But the lender must document an identity theft or police report on the fraudulent charges.

The unintentional consequences could be severe for those still originating mortgages.

"We expect this revision will certainly kick some buyers out of the marketplace, and we’re in ongoing efforts to quantify how extreme the impact will be," said Lisa Jackson, senior vice president of research at John Burns Real Estate Consulting. "We did a quick sample of some of our builder clients focused on the entry level. They cited impact to varying degrees, with one reporting the new rule would disqualify 60% to 84% of his buyers currently under contract at specific communities."

An FHA spokesman said the rule was designed as another protection for the FHA emergency fund. The fund levels slipped to 0.2% of at-risk insurance last year, well below the 2% mandated by Congress. The FHA will raise insurance premiums on April 1 as well to boost the fund by $1 billion.

"When performing loan-level reviews of FHA loans, we found that many borrowers with mortgage payment delinquencies had prior credit deficiencies including unpaid collections and unresolved disputed accounts prior to the approval of their loan," the spokesman said. "This change was made to eliminate this layer of risk to FHA-insured loans and help protect our insurance fund."

Because of the FHA insurance premium raises to 1.75%, Radack expects the more qualified borrowers to go to Fannie Mae or Freddie Mac loans, which have smaller charges for private market insurance premiums.

"FHA is not going to be in my vocabulary," Radack said.

Source HousingWire, March 26, 2012 ,By Jon Prior

 

 

Survey Suggests More Homeowners Are Open to Strategic Default

 

An alarming number of homeowners see strategic default as a viable option should their home continue to depreciate. Almost half of the homeowners participating in an online poll from Housing Predictor say they will walk away from their mortgage obligation if falling home values persist.

Five years into the housing downturn, and Housing Predictor found that 47 percent of those surveyed would intentionally stop making their mortgage payments even if they could afford to in order to get out from under the sinking investment of home-sweet-home.

The number of mortgage borrowers open to strategic default has risen sharply since Housing Predictor last surveyed public opinion on the issue roughly a year-and-a-half ago. In October 2010, 36 percent of homeowners participating in the poll said they would throw in the towel should housing prices continue to drop.

Housing Predictor says the foreclosure crisis, falling home prices, and lingering doubts that the value of homes will increase over most homeowners’ lifetimes are contributing to the increase in mortgage holders who say they will walk away.

Housing Predictor’s results are based on responses provided by 1,000 visitors to the company’s website.

A recent study commissioned by the Mortgage Bankers Association called attention to the fact that the vast amount of media coverage dedicated to the financial crisis and the persistent woes of the housing market has made homeowners take note of their equity position.

For those who owe a great deal more on the mortgage than the home is now worth, the idea of simply walking away before the situation worsens has its allure. A market report issued by Moody’s Analytics last July warned of the growing risk of strategic default among loans that have always performed, meaning the borrower has remained current since taking out the loan.

Moody’s analysts explained that as home prices fell over the previous year, the loan-to-value ratios (LTVs) of these always-performing loans began to approach, and in many cases surpass, average LTVs for loans that have defaulted since 2009. They point out that this is a departure from what they’d seen up until the middle of 2010, during which LTVs for always-performing loans had stayed flat or even decreased slightly.

Back in July, Moody’s analysts identified between 12 percent and 24 percent (depending on the asset type) of always-performing loans with LTVs that were higher and had risen more steeply than those of defaulted loans.

“Rapid rates of LTV increases may themselves be a factor in a borrower’s decision to strategically default, since they may quickly erode any remaining confidence in borrowers that they could ever restore positive equity in their property,” Moody’s said in its report.

FICO estimates strategic defaults to be more than a $20 billion problem annually.

Source : DsNews, by Carrie Bay 03/21/12

Existing-Home Sales Dip in February as Prices Rise, Inventories Increase

 

Existing-home sales fell in February from an upwardly revised January sales pace, the National Association of Realtors (NAR) reported Wednesday.

February sales – completed transactions – were down 0.9 percent from January to a seasonally adjusted annual rate of 4.59 million. January’s total was revised up to 4.63 million from 4.57 million. The February 2012 sales pace was up 8.8 percent from February 2011.

The median price of an existing home in February was $156,600, up 0.1 percent from the previous month and up 0.3 percent from February 2011. The month-over-month price increase was the first since last June. After appearing to stabilize at low levels in the first half of 2011, prices are dipping again.

The slip in sales came despite an increase in the pending home sales index which as improved 9.5 percent in the last quarter of 2011and another 2 percent in January while homes sales have not improved at the same pace.

According to the NAR, distressed homes – foreclosures and short sales sold at deep discounts – accounted for 34 percent of February sales (20 percent were foreclosures and 14 percent were short sales), down from 35 percent in January and 39 percent in February 2011.

Total housing inventory at the end of February rose 4.3 percent to 2.43 million existing homes available for sale, a 6.4-month supply at the current sales pace, up from a 6.0-month supply in January, but down from an 8.6-month supply a year ago and still well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories are 19.3 below their year ago level. Anecdotal evidence though suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.

Although inventories seem to have declined to close to their “normal” level, the large number of distressed properties combined with a substantial shadow inventory of unsold homes continues downward pressure on home prices. Though the data seems to imply that there is a relative balance between buyers and sellers, the level distressed properties remains a stumbling block.

Regionally, existing-home sales fell in February in the Northeast and the West, 20,000 and 40,000 (seasonally adjusted annual rate) respectively, while improving in the Midwest (10,000) and South (10,000). The sales pace in all four regions though is ahead of the pace a year ago.

The median price of an existing home rose in three of the four regions month-month, falling only in the Midwest. Prices are down year-over-year in the Northeast and Midwest, but up year-over-year in the South and West, according to NAR data.

“The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market,” offered Lawrence Yun, the NAR’s chief economist. “Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving economy.”

Source DsNews, By Mark Lieberman, Five Star Institute Economist 03/21/12

BofA Offers Leasing Program to Select Customers Facing Foreclosure !

 

In select hard-hit markets, Bank of America is introducing a program that will give some of its customers who are facing foreclosure the option to remain in their homes as a tenant rather than as a homeowner.

The Charlotte, North Carolina based-bank made the announcement Thursday in a release. The program, called Mortgage to Lease, will solicit fewer than 1,000 customers who qualify; there will not be opportunities to volunteer or apply for the program.

“When homeowners are struggling to make payments, owe more on their mortgage than their home is worth and face certain foreclosure, one of their greatest anxieties is the transition process they face in moving from their home,” said Ron Sturzenegger, Legacy Asset Servicing executive of Bank of America. “This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support. This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance.”

The current test markets are in three hard-hit states: Arizona, Nevada, and New York. Selected pilot participants will transfer their property title to the bank and have their outstanding mortgage debt forgiven.

Customers can lease their home for up to three years, and the rental payment will be less than the existing mortgage payment.

BofA will work with property management companies to oversee the rental properties. If the program is successful, it may expand and involve real estate investors who can purchase the properties and keep the previous homeowners as renters.

The announcement follows a recent government initiative to sell REO properties to investors and have them converted into rental units. In February, the first bulk of 2,490 REOs went up for sale, with 85 percent of the properties already occupied by tenants.

According to a recent report from Zillow, rent prices rose 3 percent from January 2011 to January 2012, while home values dropped 4.6 percent during that same period.

“Our priority is designing a solution that helps our customer,” said Sturzenegger. “If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market.”

As a foreclosure alternative, Fannie Mae offers a Deed-for-Lease program that allows struggling homeowners to transfer their title to the GSE and in turn, sign a lease to remain in the home for up to a year.

Eligibility requirements for Mortgage to Lease

• Loan owned by Bank of America
• Delinquent for more than 60 days
• Already exhausted modification solutions or have not responded to alternatives to foreclosure, including short sale and deed-in-lieu
• A high loan balance compared to current property value
• Face considerable risk of foreclosure
• No junior liens
• Still occupying home
• Adequate income to make rent payment

Souce: DsNews by Esther Cho 03/23/12

Negative equity gap nears $4 trillion

 

The U.S. housing market contains a nearly $4 trillion-dollar negative equity hole, according to Williams Emmons, an economist with the Federal Reserve Bank of St. Louis.

Emmons made that statement while speaking at HousingWire's 2012 REthink Symposium. 

The Fed Bank economist said it would take $3.7 trillion, much more than the $25 billion mortgage servicing settlement and other federal  housing initiatives, to get homeowners with mortgage debt back to preferred loan-to-value ratio levels.

Emmons' data estimates the average LTV for those with mortgage debt is currently 94.3%.

That compares to preferred LTV levels among mortgage debt holders of 58.4%, which was the average struck among mortgaged homeowners in the period stretching from 1970 to 2005. Emmons told the crowd there is no easy way to fill that gap, and the deep hole is hardly discussed among the media and policymakers.

"We are sort of stuck in this," he told the crowd. "It's a sweat box we're in, and we can't get out. We are not talking about this very much … it's just too ugly."

He added, "It is like the debt that is outstanding is crushing the equity that is there."

Emmons said the only viable option to narrow the gap is letting home prices fall until they eventually reach levels that entice buyers, bringing private capital back in. A home-price boom or a government bailout would help, of course, but both those scenarios are unlikely. 

At this point, home price appreciation would need to rise 62% to narrow the gap to the ideal LTV level, Emmons said. Significant government intervention also is unlikely given the fact it would take a $3.7 trillion bailout, or 24% of GDP, to narrow the gap, according to Emmons' data. 

He says that amount makes other federal initiatives launched to band-aid the housing market so far look like "peanuts" in comparison.

With that in mind, the only alternative is that we have "millions of weak homeowners exit, replaced by new private owners with equity to recapitalize the housing sector."

Emmons said that option will still be painful since he believes another reduction in home prices is needed to attract new buyers.

"The asset class is not priced attractively yet," Emmons said. "You need to get the value down to where it looks like a screaming buy."

Emmons in his report said with the assumption that another 20% decline in national home prices is required to bring in new buyers, the amount of mortgage debt that must be eliminated then is $4.97 trillion, or 50% of current face value. 

Source HousingWire by By Kerri Panchuk

Freddie Mac Reports Net Income Gain for Q4

Freddie Mac reported a gain in net income for the fourth quarter and less losses overall for the year 2011 compared to the previous year, according to the GSE’s fourth quarter and year 2011 report released today.

Freddie Mac reported a net income of $619 million for the 2011 fourth quarter. A net loss of $4.4 billion was reported for the third quarter, which ended September 30, 2011.

Freddie Mac will still need to request $146 million from the U.S. Treasury for the company’s fourth quarter net worth deficit due to “senior preferred dividends paid of $1.7 billion,” the report stated.

For the 2011 third quarter, $6 billion was requested after the GSE reported its largest quarterly loss in over a year.

The report stated that the shift from a net loss for the third quarter to net income for the fourth quarter of 2011 is due to lower derivative losses as a result of less borrowers refinancing into lower, long-term interest rates.

According to the report, Freddie Mac has requested $7.6 billion from the Treasury for the year 2011 and 13 billion in 2010.

“We continue to take actions to protect the investment American taxpayers have made in Freddie Mac and build a stronger foundation for the future housing finance system,” said Freddie Mac CEO Charles E. Haldeman, Jr. in the report. “This included cutting about $180 million in expenses over the last two years, and continuing to build a strong new book of business – which now accounts for about half of our single-family portfolio.”

Since the beginning of 2008, Freddie Mac has recorded a provision for credit losses of $73.2 billion, with the majority of the losses associated with loans originated between 2005 to 2008, according to the report. As of December 31, 2011, loans originated in 2005 to 2008 represented 32 percent of the single-family portfolio, while loans originated after 2008 accounted for 51 percent.

Freddie Mac workouts

Loan modifications
109,174 (2011); 170,277 (2010)

Repayment plans
33,421 (2011); 31,210 (2010)

Forbearance agreements
19,516 (2011); 34,594 (2010)

Total home retention actions
162,111 (2011); 236,081 (2010)

Short sales & deed-in-lieu of foreclosure transactions
46,163 (2011); 39,175 (2010)

Total single-family loan workouts
208,274 (2011); 275,256 (2010)

By: Esther Cho -DSNews.com

 

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Foreclosures made up one in four home sales !

Short sales are rising as banks start to shun foreclosures.

NEW YORK (CNNMoney) -- Homes in some stage of foreclosure accounted for nearly one in four homes sales during the fourth quarter, according to RealtyTrac.

During the three months that ended December 31, homes that were either bank-owned or going through the foreclosure process accounted for 24% of all home sales, up from 20% in the previous quarter and down only slightly from a year earlier when foreclosures accounted for 26% of sales, RealtyTrac said.

In total, 204,080 distressed properties were purchased during the fourth quarter, down 2% from the year-ago quarter. For all of 2011, foreclosure-related sales were down 2% year-over year to 907,138, accounting for 23% of all home sales.

"Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures," said Brandon Moore, chief executive officer of RealtyTrac, referring to the delays cause by the robo-signing scandal that broke in late 2010. "Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year."

"We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months," said Brandon Moore, CEO of RealtyTrac.

Short sales on the rise

Short sales are starting to become the preferred method for banks to dispose of properties in default. In short sales, borrowers who owe more on their mortgages than their homes are worth agree with their bank to sell their homes at the lower market value. In return, the bank agrees to absorb the loss.

During the last quarter of 2011, there were more than 88,000 short sales, up 15% compared with a year earlier, according to RealtyTrac. Short sales comprised 10% of all homes sold during the quarter.

Meanwhile, sales of bank-owned homes fell 12% year-over-year to 116,000, comprising 13% of all sales during the quarter.

Steal this house: 7 foreclosure deals

"That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans," said Moore.

Short sales have become a more attractive option since all parties agree on the terms, leading to fewer legal issues, said Daren Blomquist, RealtyTrac's director of marketing.

They also offer better returns. During the quarter, the average short sale sold for $184,221, while the average foreclosure sold for $149,686. And banks typically don't have to spend a mint maintaining a short sale home like they do a foreclosure, where they have to pay more in legal fees, property taxes, maintenance and insurance, said Blomquist.

Short sale deals also get completed more quickly. During the fourth quarter, it took an average of 308 days, to complete a short sale. Foreclosures, meanwhile, can take years to complete.

Quicker approvals mean fewer buyers get discouraged and withdraw their offers. Blomquist said some banks even pre-approve prices so deals close very fast.

Short sales already outnumber REO sales in several "bellwether markets," including Los Angeles and Phoenix, where, in both cities, they exceeded 20% of all sales.

Million-dollar foreclosures rise as rick walk away

Some lenders have even incentivized short sales in Florida and other hard-hit foreclosure states. They offer large cash rewards -- as much as $35,000 -- to delinquent borrowers in return for co-operating on these transactions.

Distressed properties continue to make up a large portion of the sales inventory in many housing markets. In Nevada, they accounted for 56% of all sales during the quarter, the highest percentage of any state.

Source: “Foreclosures Made Up One in Four Home Sales,” CNNMoney

By Les Christie @CNNMoney March 1, 2012: 5:50 AM ET

 

 

Warren Buffett: It’s Time to Buy Real Estate !

Warren Buffett appeared live on CNBC’s Squawk Box this week. During the interview, he was asked about the current real estate market and whether he felt now was the time to buy. His response was rather emphatic and has been used as a headline in hundreds of articles since the interview:

“If I had a way of buying a couple hundred thousand single-family homes I would load up on them.”

However, throughout the interview, he addressed the market from a few angles. Here is what he said:

Why invest in real estate now?

“It’s a way, in effect, to short the dollar because you can take a 30-year mortgage and if it turns out your interest rate’s too high, next week you refinance lower. And if it turns out it’s too low, the other guy’s stuck with it for 30 years. So it’s a very attractive asset class now.”

Is buying your own home better than investing in stocks right now?

“If I knew where I was going to want to live the next five or 10 years I would buy a home and I’d finance it with a 30-year mortgage… It’s a terrific deal.”

Should we buy multiple houses?

“If I was an investor that was a handy type and I could buy a couple of them at distressed prices and find renters, I think it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.”

Over the last couple of months, there have been more and more financial analysts coming to the same conclusion: It’s time to buy real estate.

by The KCM Crew

Posted via email from Chicago & Suburbs Short Sale & Foreclosure News !

House Sales in the U.S. - Source NAR 2/2012

Posted via email from Chicago & Suburbs Short Sale & Foreclosure News !

Foreclosures account for 24% of 4Q home sales: RealtyTrac info

• March 1, 2012 

Homes in some state of foreclosure represented 24% of all U.S. home sales in the fourth quarter, up from 20% of all sales in the third quarter and down 26% from a year earlier, RealtyTrac said Thursday. 

The Irvine, Calif.-based foreclosure data firm said third parties acquired 204,080 homes classified as distressed or bank-owned in the fourth quarter, down 2% from the same period a year earlier. 

"Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures," said Brandon Moore, chief executive officer of RealtyTrac.

Total foreclosure-related sales in 2011 hit 907,138 transactions, down 2% from 2010. 

The average sale price of a home in foreclosure or a bank-owned property hit $164,944 in the fourth quarter, a 5% decline from the fourth quarter of 2010. 

"Foreclosures accounted for nearly one in every four sales during the quarter and for the entire year," Moorse said. "We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months."

Moore added that trends show a shift towards pre-foreclosure sales and short sales and away from REO sales. 

During the fourth quarter, third parties acquired 88,303 pre-foreclosure properties scheduled for auction or in default, down 5% from the previous quarter but up 15% from a year earlier. In addition, 115,777 bank-owned homes in the fourth quarter were acquired, down 10% from the previous quarter and 12% from the fourth quarter of 2010. 

Pre-foreclosure sales in 2011 rose more than 20% from the year earlier in Michigan, Georgia, Arizona, Washington, Nevada, Oregon, Illinois, Ohio, California and Texas.

Nevada, California and Georgia had the highest percentage of foreclosure sales. Distressed properties  accounted for 56% of all residential sales in Nevada.

California foreclosure-related sales accounted for 43% of all fourth-quarter property sales, followed by Georgia, where foreclosures or distressed sales accounted for 39% of all fourth-quarter home sales.

By Kerri Panchuk/ HousingWire

Posted via email from Chicago & Suburbs Short Sale & Foreclosure News !

Fannie REO inventory declines 27% in 2011

By Jon Prior

The year-end inventory of foreclosed homes at Fannie Mae fell for the first time since the housing downturn.

In 2011, Fannie reduced its REO inventory 27% to roughly 118,500, according to its fourth quarter financial filing. Levels increased every year since 2007.

For the first time since the collapse, Fannie sold more REO than it repossessed. In 2011, the government-sponsored enterprise acquired nearly 200,000 properties and sold more than 243,000, the most in the company's history.

Total repossessions of REO homes declined nearly 24% from the year before, due mostly to the slowdown caused by servicers correcting affidavit and other documentation problems.

Fannie vendors continued to sell REO for slightly more than half of the unpaid principal balance left on the loan before foreclosure. In 2011, REO net sales price equaled roughly 55% of the UPB on the loan, down from 57% the year before. In 2006, it was 83%.

The Federal Housing Finance Agency began a pilot program in February to more efficiently sell bulk REO held by Fannie and Freddie Mac to investors.

More than 23% of the Fannie Mae REO inventory is located in California, the most of any other state at the end of last year. The next closest is Florida, at 11.5%.

However, Fannie waited the longest on Florida foreclosures.

According to the filing, the average amount of days between the last mortgage payment and the completion of the foreclosure process was 890 days in Florida on Fannie Mae loans. California, a nonjudicial state, was second at 529 days.

According to RealtyTrac, the longest foreclosure timeline in the country resides in New York at more than 1,000 days. But New York loans make up just 5.6% of the Fannie single-family book of business, according to the filing.

jprior@housingwire.com

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