It looks like it is starting with this mortgage debt is not being discharged through foreclosure and instead it is lingering on the ex-homeowners credit, adding up taxes and fees along the way. It should be called “zombie debt” as well as “zombie homes”.
Now with the fraudulent robo-signing scandal being settled and in some cases settled out of court. The banks are feeling like they have a free hand to collect or not on this inflated mortgage debt from the real estate bubble years. I advocated many times, this is why you needed to default this debt and let real estate prices fall to sustainable levels (1.5 – 2 times annual income of your area). We have not only kept real estate prices artificially high, now we have debt attached to people that is artificially high and accruing interest and fees.
Yes, the borrowers are not off the hook, because they did sign the paperwork and took on these bad loans, but in the same token, where did this bad credit for real estate purchases come from??? The banks and other financial institutions. Settling with the Department of Justice or state agencies is one thing, but also we need to settle with the common person, not only borrowers but people who did not engage is this type of borrowing that some day would like to own a home and not have to pay and artificially high price and interest on top of that over 15-30 years.
It is quite funny that the banks can give away bad loans to homes, jack up the prices, foreclose and claim title to the real estate, decide not too and instead stick it to the borrower and get bailed out by the same taxpayers through the government and central bank. This is why precedence is so important and now we have some that are so out of whack that the security of the entire system is at risk. People will at some point say enough is enough and that will be a day you will not want to be on the other side of that collective and popular anger. Greed is not always good.
The Globe and Mail - Joseph Keller doesn’t expect he’ll live to see the end of 2013. He blames the house at 190 Avondale Avenue.
Five years ago, Mr. Keller, 10 months behind on his mortgage payments, received notice of a foreclosure judgment from JPMorgan Chase & Co. In a few weeks, the bank said, his three-story house with grey vinyl siding in Columbus, Ohio, would be put up for auction at a sheriff’s sale.
Here is one of statistics mentioned yesterday. The Commerce Departments release these and revised July slightly down. The comment I like is that this is “another step forward in a long staircase”. There is a good chance we have hit bottom in the real estate market for now. The bigger question is can we actually have gains without the massive government support to keep interest rates so low that most projects “pencil” with the banks as long as you have your down payment? At this point I would say no. We have not demonstrated we can support a self-sustaining real estate market.
We likely have around 15% unemployment when you count people who have given up or are working part-time. We need to figure out how we get these people to work and at the same time, deal with our deficit spending problem. If we do all of those, then we may have a real recovery. A long hard road ahead of us, I know we have it in us to make the tough choices, we just need to believe we do.
Reuters - The Commerce Department said on Wednesday housing starts increased 2.3 percent to a seasonally adjusted annual rate of 750,000 units. July’s starts were revised to show a 733,000-unit pace instead of the previously reported 746,000.
Economists polled by Reuters had forecast residential construction rising to a 765,000-unit rate. Compared to August last year, residential construction was up 29.1 percent.
We should be looking at all creative areas to help homeowners go through this restructuring process with the goal of making it as least painful as reasonable possible. At the same time we want to assist the banks in reducing their debt load. Setting more realistic real estate prices are another effect of clearing all the delinquent inventory.
Even allowing homeowners to temporary rent and repurchase the home at a normalized fair market plan would be an equitable option for people who still want to retain their home. Outside of prosecuting crimes that caused this overhang, getting prices and inventory down is a priority at this point. This is a principle that can be applied globally. This is what I would consider real financial innovation, you need a real problem before you can truly innovate in most cases.
USA Today - The number of homes that received an initial notice of default — first step in the foreclosure process — was 6% higher in July than last year, foreclosure listing firm RealtyTrac said Thursday. Filings of initial default notices have increased on an annual basis three months in a row.
The Federal Housing Finance Agency (FHFA) today announced that the winning bidders in a real estate owned (REO) pilot initiative have been chosen and transactions are expected to close early in the third quarter. Market response has been robust with strong qualified bidder interest.
“FHFA undertook this initiative to help stabilize communities and home values in areas hard-hit by the foreclosure crisis,” said Edward J. DeMarco, Acting Director of FHFA. “As conservator of Fannie Mae and Freddie Mac, we believe this pilot program will assist us in achieving our objectives and help to maximize the benefit to taxpayers. We are pleased with the response from the market and look forward to closing transactions in the near future.”
Bloomberg - Foreclosure filings in the U.S. fell to a five-year low last month as lenders sought to avoid seizing property and a housing recovery showed signs of taking hold.
The number of default, auction and seizure notices sent to homeowners in April totaled 188,780, down 14 percent from a year earlier and 5 percent from the previous month, according to RealtyTrac Inc. It was the lowest tally since July 2007, before the onset of the biggest housing crash in seven decades, the Irvine, California-based data seller said today in a report.