Foreclosure Market Trends Report - October 2012

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Bank Of America Reaching Out to Select Borrowers for 2nd Lien Forgiveness

As part of Bank of America’s deal in the national mortgage settlement, the bank announced Friday it plans on offering full forgiveness for second liens to certain homeowners.

The bank is in the process of mailing about 150,000 letters to pre-qualified homeowners with offers to wipe out their second liens.

The vast majority of customers who are eligible for the program are behind on their second mortgage, but some borrowers who are current on their second lien can qualify if they are associated with a first lien that is severely delinquent and meets the program criteria.

The intention of the program is to reduce monthly debt obligations for homeowners and help borrowers stay in their home.

Eligible customers must also have a second lien owned and serviced by BofA, and they must also meet certain threshold delinquency or property value criteria.

BofA sent letters through Federal Express or certified mail, and only those who receive the letter are eligible.

Customers can decline the offer within 30 days of receiving the letter.

BofA also reminded customers that forgiven mortgage debt is taxable. While the Mortgage Debt Relief Act of 2007, which is set to expire at the end of this year, does allow for forgiven debt related to a foreclosure to be exempt as taxable income, BofA urged customers to seek advice from a tax professional.

Source DSNews By : Esther Cho

CoreLogic: Home Prices Sustain Recovery with 4.6% Yearly Gain

Home prices continued to trend upwards in August, posting both yearly and monthly gains for the sixth consecutive month, CoreLogic reported Tuesday.

When including distressed sales, home prices in August rose 4.6 percent from a year ago, marking the biggest yearly gain since July 2006. Month-over-month, prices were up 0.3 percent from July to August.

When excluding distressed sales, which are short sales and REO transactions, prices were up yearly and monthly by 4.9 percent and 1 percent, respectively.

CoreLogic’s Pending HPI points to further increases into September. Prices including distressed sales are expected to rise by 5 percent yearly and 0.3 percent monthly.

“Sustained economic recovery in the U.S. requires a healthy housing market. You cannot have a healthy housing market without price stabilization and ultimately home price appreciation,” said Anand Nallathambi, president and CEO of CoreLogic, in a release. “Improving pricing trends over the past few months and our forecast for continued gains in September bode well for a progressive rebound in the residential housing market.”

On a state-by-state basis, all but six states saw price gains.

Including distressed sales, the five states that appreciated the most over a one-year period were Arizona (+18.2 percent), Idaho (+10.4 percent), Nevada (+9.0 percent), Utah (+8.9 percent) and Hawaii (+8 percent).

Rhode Island led with the biggest decline, where prices fell 2.6 percent, followed by Illinois (-2.3 percent), New Jersey (-1.4 percent), Alabama (-0.7 percent) and Connecticut (-0.5 percent).

Phoenix continued to outshine other metros, rising 21.8 percent from August 2011. Houston ranked second, but was still far behind, gaining 6.3 percent during the same period. Washington D.C. (+4.8 percent), Dallas (+4.3 percent), and Los Angeles (4 percent) were also among the top five.

Souce DsNews By : Esther Cho

Foreclosures Decline but Remain High, Prepayments Surge: LPS

Foreclosure inventory continues to decline but remains more than eight times what it was in the decade prior to the housing crisis, according to the latest report from Lender Processing Services (LPS).

Noncurrent loans make up 10.9 percent of all loans as of August, demonstrating a year-over-year change of -7.6 percent, according to LPS.

As of August, the delinquency rate stands at 6.9 percent, and the foreclosure rate is 4.0 percent.

There remains a large gap in the foreclosure rate between judicial states and non-judicial states. In fact, in judicial states the rate remains near an all-time high of 6.49 percent, while the foreclosure rate in non-judicial states is 2.28 percent.

The amount of loans 90 or more days delinquent is near half of its January 2010 peak. The majority of these loans are more than nine months delinquent. About 43 percent are at least 12 months delinquent.

The overall delinquency rate declined 2.3 percent in August.

States ranking highest for non-current loans include Florida, Mississippi, New Jersey, Nevada, and New York.

States with the lowest percentages of non-current loans include Montana, Alaska, South Dakota, Wyoming, and North Dakota.

LPS noted prepayment activity was up “significantly” in August, nearing levels last reported in 2005.

The annualized prepayment rate at the end of August was almost 25 percent, according to LPS’ findings.

Prepayment was highest among loans with higher combined loan-to-value ratios (CLTVs). For example, among loans with more than 120 percent CLTV, prepayment increased more than 65 percent year to date.

According to LPS, this trend is significant because prepayments are an indicator of refinance activity.

In August, 2011 vintage loans experienced a 23 percent increase in prepayments over the month.

Loans with vintages from 2007 and earlier experienced a prepayment increase of just 9 percent, which LPS interprets as signs of a “refi burn out.”

“[I]t is also becoming evident that loans originated in 2007 and earlier have diminished prospects for conventional refinancing opportunities,” stated Herb Blecher, SVP of applied analytics at LPS.

“Fewer than 30 percent of these vintages remain both active and current, and on average, they are marked by larger negative equity positions and lower credit scores,” Blecher explained.

 

Source DsNews by : Krista Franks Brock

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