There’s no story here; move along…
Countrywide cuts 500 mortgage jobs.
Countrywide Financial Corp., the nation’s largest mortgage lender, said Monday it has eliminated about 500 jobs as it tries to ride out problems from a credit crunch that has rocked the home loan industry.U.S. foreclosures rise sharply in July.…The Calabasas-based company also tried to reassure its banking customers that their money was safe. Countrywide ran full-page ads in U.S. newspapers, including the Los Angeles Times and Detroit Free Press, in which it asserted “the future is bright” at Countrywide Bank FSB.
…Countrywide said last Thursday it had borrowed $11.5 billion so it could keep making home loans.
Foreclosure filings rose 9 percent from June to July and surged 93 percent over the same period last year, with Nevada, Georgia and Michigan accounting for the highest foreclosure rates nationwide, a research firm said Tuesday.If you’re in California, Florida, Michigan, Ohio or Georgia, keep those blinders on — those states account for over 50% of the foreclosure filings.…The figures are the latest measure of the ailing housing market, which has seen defaults and foreclosures soar as financially strapped borrowers have failed to make payments or find buyers.
In all, 179,599 foreclosure filings were reported during July, up from 92,845 in the year-ago month, according to Irvine-based RealtyTrac Inc.
33 Responses to “Foreclosures up 93% from same period last year”
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In my line of work (ready-mixed concrete supply), I always check the real estate markets, and one trend I’ve noticed is that a whole lot of very new houses are on the market again, with ads like “two years young” and “built in 2004,” and they are almost always for expensive houses.
The easy credit and low rates of 2001-2005 helped a lot of people buy big, bigger than they thought they could afford. If they took out an adjustable rate mortgage (and anyone who did so in those years who wasn’t planning a two year flip was just plain stupid), the increase in interest rates drove up their monthly mortgage payments a couple hundred dollars, and all of a sudden a budget that was balanced at the breaking point was out of balance.
But even those people who got fixed rate loans wound up with problems as property taxes rose, as they seem to have done almost everywhere. One little hiccup in their income stream and they were behind, and unable to recover.
Even now, the prices I see for homes going on the market are unjustifiable for the markets they are in.
Let’s just try to track just how much of this
foreclosure surge
predatory sub-prime lending
and bankruptcy lock-out
targeted your
‘melanin UNchallenged’.
[I just love that label, however twisted]
How much of the fiasco will turn out to have been…
In fact - racially focused
apurpose or… otherwise, don’ matter.
This is very, very bad and not gonna get better quickly. We bought our very beat-up farmhouse on 2 acres for $36k over a decade ago; now you can’t touch a house lot for that in our town. I feel lucky as hell and glad to fix up my old junker. A mobile home on its own lot here is at least 75-100k. Rents are impossible to find, let alone afford.
I’m very worried about where this is all heading. When 2 people knock on my door (in a very small town) to ask for a gallon of gas because they ran out while on the way to the store 2 DAYS IN A ROW, it says something about the economy. (And in both cases, they replaced the gas) $3 gallon gasoline the past few years is driving up the costs of everything we buy and it’s destroying people- it’s just starting to catch up finally.
Ironically, property taxes are probably going to start falling next.
Next assessment cycle, our township is going to be unable to justify its 600K assessment of our house (bought at 400K in 2004) when nicer, larger homes in ours subdivision are barely crawling off the market at 450K.
The median home price in Los Angeles has gone down by 7.4% in the past twelve months. That means that it will “only” cost $528,000 for a home in Los Angeles.
Not that the housing market in California is overpriced or anything. No sirree. And I’m sure it has nothing to do with the fact that our property taxes are kept artificially low by our state constitution.
hp, Ed Rendell promised property tax relief when he ran for governor in 2002: he was going to raise the state income tax, but, not to worry, he was going to get property taxes cut, so it would be pretty much of a wash. Of course, the state income tax is under the control of the governor and legislature, but local property taxes aren’t — and thus Governor Rendell was able to keep half of his promise.
In New Jersey, Governor Jon Corzine and the state legislature worked to provide property tax rebates for lower income property owners, which they did. And then some of the localities went right ahead and raised property tax rates, since they knew there was now financial “room” to do so.
If your property tax comes down, that’ll be great — but it will also be a very rare experience. Bad thing is, while your township might not be able to justify the assessment, depending on where you live they could simply raise the millage.
There are legal caps on how much they can raise the percentage a year, but no caps on how much they could raise the assessment a year. That’s really how our subdivision got into the situation it is currently in–since nothing in our subdivision went on the market and sold for over 2 years, the township simply raised all our assessments at the max rate of increase they could find elsewhere in our county, and told us all “tough shit, you have no local sales to challenge with.”
Everyone has been betting on housing market horse in non-wise manners.
Any one with eyes could see this coming. I used to work part time at a title company, and we saw all sorts of these crazy financing packages like the 100 percent financing combined with big closing cost payments and down payment “gifts” by the sellers (which essentially meant the actual purchase price was lower than the stated price and final loan amount). The market was skewed by these inflated purchase prices, contributing to the current bursting bubble.
Even worse for the buyers, they were starting out in their homes with negative equity, which means they can’t sell the house without bringing money to the closing table. When it costs $10,000 cash to get out of house, people opt for foreclosure. They deal with the credit hit and just make it the bank’s problem.
There are a lot of fingers that can be pointed. People accepted loans without truly understanding what they were getting into, and mortgage brokers pushed these (very profitable) loans without fully explaining the potential problems. Honestly, I’m not sure a lot of the brokers even understood the problems. In our state, most were unlicensed and got their training from the companies who wanted to push the loans. Financial literacy was minimal. Ultimately, the problem comes back to the underwriters who kept approving loans that were insane. They’re the ones who should have known better.
I don’t know about elsewhere, but in the DC area, it’s not just the “melatonin-challenged” who are affected. There have been many articles over the last several years talking about how the “average” two-income household with an annual household income of $80k is struggling to obtain affordable housing. For those of us who are single, and make an “average” $40k/year income or less, home-ownership here is a non-starter.
When exactly did mortgage companies turn into carny barkers?
The outfit that now holds my 20-year, 6% fixed-rate mortgage keeps having telemarketers call me, trying to get me to convert to an ARM.
My last bill had an added twist. They proposed an alternative payment schedule that, for a mere $375 one-time fee, would knock three years and more than $10,000 interest off the life of my loan.
If you looked at the figures they provided, it seemed like they were merely asking you to split your existing payment and pay half on the 15th, half on the last day of the month. Good deal, right?
You had to read the fine print and do the math to realize that they would make you pay the equivalent of an extra mortgage payment per year.
In other words, they want me to cough up $375 to do something I can do perfectly well on my own, FOR FREE. Oh, yeah, they would throw in the cheapest, crappiest iPod on the market to sweeten the deal.
I swear, the checks I pay with must have “stupid” in the watermark.
(I had been thinking about paying a little extra each month anyway, just like the financial books advise you to do. Now I’m definitely going to do it, just to spite them.)
Just a word of caution, Bitter Scribe: Check and make sure that your 20-year fixed isn’t subject to “pre-payment penalties.” Lots of mortgage lenders like to write a penalty for pre-payment and/or early payoff into your mortgage contract so that they can wring every possible penny of interest from the loan.
If you’re like me, and pay your credit card bills in full within days of them arriving in the mail each month, your creditors and mortgage lender hate you and will always be on the lookout for ways to punish that kind of financial responsibility.
One of the things that has convinced me that people runnng banks and mortgage companies are either insane or have no goal of long term solvency for thier companies is that they are so quick to forclose and boot people out of these properties.
It makes absolutly no sense to forclose on a property and get *no* cash flow, and knowing that the property, when sold by the bank (if it can be sold), will receive nowhere near the outstanding amount owed on the loan. It would seem that it would be better to keep an owner in place, working with them to do some payments on the interest owed.
Instead the properties will go begging, and be empty, and will fall apart in place. And it doesn’t matter that the loss can be taken as a deductable expense — if the expense is greater than the income it won’t help.
Of course, we could just see another bailout of the lending institutions — but suggest a bailout” of the borowers, and you will hear no end of “they don’t deserve it — it’s their own fault o getting into that prediciment.”
HP — in the city where I live (in Massachusetts ), last year the property assesments for the entie housing stock was raised, without actiually looking at the properties. Thus, all three-family homes had their assessments raised by 33%.
(I had been thinking about paying a little extra each month anyway, just like the financial books advise you to do. Now I’m definitely going to do it, just to spite them.)
Read your agreement very carefully first. A lot of mortgage companies will slap you with a penalty if you try to pay more. Yes, that’s right, if you try to give them their money faster, they will charge you for it.
And what jobs are being cut? As loans go into default you need MORE loan servicers. If they cut jobs in loan servicing they are going to make their situation worse.
Of course, we could just see another bailout of the lending institutions — but suggest a “bailout” of the borrowers, and you will hear no end of “they don’t deserve it — it’s their own fault for getting into that predicament.”
That’s exactly what will happen. The banks and mortgage companies and investors who made terrible financial decisions will get our tax money to keep them solvent while the mortgage holders get screwed by the new bankruptcy bill.
Not having to pay a penalty for your stupid actions? It’s the Republican way! (Not that idiot Democrats didn’t do their part to help them along, of course.)
Mesobub and Mnemosyne: Oh, I made quite sure there would be no prepayment penalty when I took out the loan. Otherwise, it’s next to impossible to sell your house.
Oh, look:
Mortgage Job Losses Surpass 40,000
That can’t be good.
Craig R wrote:
My late, sainted mother worked her way up from nothing to become the vice president of a mid-sized mortgage company, and I often heard he speak about the restrictions mortgage companies faced when it came to foreclosures. A borrower had to be at least 91 days in arrears, and even then, the mortgage company was required, by law, to try to assist the borrower in getting current. (This was in Kentucky, and the laws differ somewhat in other states, but I don’t believe that any of them give mortgage companies the option to be “quick” to foreclose.
You have to look at the big picture to understand why banks are foreclosing quickly nowadays. One of the problems is negative amortization. As more properties are foreclosed on the number of properties on the market creates a price reduction - thus the amount of the original mortgage is greater then the value of the home. Lenders, fearing a decreasing market, are trying to get out of questionable properties sooner then later. The other problem relates to general cash flow or asset valuation. Banks and mortgage lenders rely upon very short term loans for day to day operating cash. To secure those loans they have been using MSOs (essentially bundled mortgages in a security form). If the mortgage becomes questionable — either because of repayment issues or because of negative amortization the MSOs become less valuable — or of questionable value all together. This is what was referred to last week as the ‘liquidity crisis’ — which really had nothing to do with liquidity.
Now that the Fed has stepped in and said they will accept questionable MSOs to secure overnight loans it is likely we will see the time to foreclosure lengthen, but I believe the overall rate will remain steady for the next quarter or two
You have to look at the big picture to understand why banks are foreclosing quickly nowadays. One of the problems is negative amortization. As more properties are foreclosed on the number of properties on the market creates a price reduction - thus the amount of the original mortgage is greater then the value of the home. Lenders, fearing a decreasing market, are trying to get out of questionable properties sooner then later. The other problem relates to general cash flow or asset valuation. Banks and mortgage lenders rely upon very short term loans for day to day operating cash. To secure those loans they have been using MSOs (essentially bundled mortgages in a security form). If the mortgage becomes questionable — either because of repayment issues or because of negative amortization the MSOs become less valuable — or of questionable value all together. This is what was referred to last week as the ‘liquidity crisis’ — which really had nothing to do with liquidity.
Now that the Fed has stepped in and said they will accept questionable MSOs to secure overnight loans it is likely we will see the time to foreclosure lengthen, but I believe the overall rate will remain steady for the next quarter or two.
You have to look at the big picture to understand why banks are foreclosing quickly nowadays. One of the problems is negative amortization. As more properties are foreclosed on the number of properties on the market creates a price reduction - thus the amount of the original mortgage is greater then the value of the home. Lenders, fearing a decreasing market, are trying to get out of questionable properties sooner then later. The other problem relates to general cash flow or asset valuation. Banks and mortgage lenders rely upon very short term loans for day to day operating cash. To secure those loans they have been using MSOs (essentially bundled mortgages in a security form). If the mortgage becomes questionable — either because of repayment issues or because of negative amortization the MSOs become less valuable — or of questionable value all together. This is what was referred to last week as the ‘liquidity crisis’ — which really had nothing to do with liquidity.
Now that the Fed has stepped in and said they will accept questionable MSOs to secure overnight loans it is likely we will see the time to foreclosure lengthen, but I believe the overall rate will remain steady for the next quarter or two.
You have to look at the big picture to understand why banks are foreclosing quickly nowadays. One of the problems is negative amortization. As more properties are foreclosed on the number of properties on the market creates a price reduction - thus the amount of the original mortgage is greater then the value of the home. Lenders, fearing a decreasing market, are trying to get out of questionable properties sooner then later. The other problem relates to general cash flow or asset valuation. Banks and mortgage lenders rely upon very short term loans for day to day operating cash. To secure those loans they have been using MSOs (essentially bundled mortgages in a security form). If the mortgage becomes questionable — either because of repayment issues or because of negative amortization the MSOs become less valuable — or of questionable value all together. This is what was referred to last week as the ‘liquidity crisis’ — which really had nothing to do with liquidity.
Now that the Fed has stepped in and said they will accept questionable MSOs to secure overnight loans it is likely we will see the time to foreclosure lengthen, but I believe the overall rate will remain steady for the next quarter or two.
You have to look at the big picture to understand why banks are foreclosing quickly nowadays. One of the problems is negative amortization. As more properties are foreclosed on the number of properties on the market creates a price reduction - thus the amount of the original mortgage is greater then the value of the home. Lenders, fearing a decreasing market, are trying to get out of questionable properties sooner then later. The other problem relates to general cash flow or asset valuation. Banks and mortgage lenders rely upon very short term loans for day to day operating cash. To secure those loans they have been using MSOs (essentially bundled mortgages in a security form). If the mortgage becomes questionable — either because of repayment issues or because of negative amortization the MSOs become less valuable — or of questionable value all together. This is what was referred to last week as the ‘liquidity crisis’ — which really had nothing to do with liquidity.
Now that the Fed has stepped in and said they will accept questionable MSOs to secure overnight loans it is likely we will see the time to foreclosure lengthen, but I believe the overall rate will remain steady for the next quarter or two.
hmm . . . my comment seemed to disappear - test?
That’s weird — let’s try again:
It makes absolutly no sense to forclose on a property and get *no* cash flow, and knowing that the property, when sold by the bank (if it can be sold), will receive nowhere near the outstanding amount owed on the loan.
You have to look at the big picture to understand why banks are foreclosing quickly nowadays. One of the problems is negative amortization. As more properties are foreclosed on the number of properties on the market creates a price reduction - thus the amount of the original mortgage is greater then the value of the home. Lenders, fearing a decreasing market, are trying to get out of questionable properties sooner then later. The other problem relates to general cash flow or asset valuation. Banks and mortgage lenders rely upon very short term loans for day to day operating cash. To secure those loans they have been using MSOs (essentially bundled mortgages in a security form). If the mortgage becomes questionable — either because of repayment issues or because of negative amortization the MSOs become less valuable — or of questionable value all together. This is what was referred to last week as the ‘liquidity crisis’ — which really had nothing to do with liquidity.
Now that the Fed has stepped in and said they will accept questionable MSOs to secure overnight loans it is likely we will see the time to foreclosure lengthen, but I believe the overall rate will remain steady for the next quarter or two.
Ok - try again:
You have to look at the big picture to understand why banks are foreclosing quickly nowadays. One of the problems is negative amortization. As more
properties are foreclosed on the number of properties on the market creates a price reduction - thus the amount of the original mortgage is greater
then the value of the home. Lenders, fearing a decreasing market, are trying to get out of questionable properties sooner then later. The other problem relates to general cash flow or asset valuation. Banks and mortgage lenders rely upon very short term loans for day to day operating cash. To secure those loans they have been using MSOs (essentially bundled mortgages in a security form). If the mortgage becomes questionable — either because of repayment issues or because of negative amortization the MSOs become less valuable — or of questionable value all together. This is what was referred to last week as the ‘liquidity crisis’ — which really had nothing to do with liquidity.
Now that the Fed has stepped in and said they will accept questionable MSOs to secure overnight loans it is likely we will see the time to foreclosure lengthen, but I believe the overall rate will remain steady for the next quarter or two.
hmm . . . quoting problem?
To Craig R:
You have to look at the big picture to understand why banks are foreclosing quickly nowadays. One of the problems is negative amortization. As more properties are foreclosed on the number of properties on the market creates a price reduction - thus the amount of the original mortgage is greater then the value of the home. Lenders, fearing a decreasing market, are trying to get out of questionable properties sooner then later. The other problem relates to general cash flow or asset valuation. Banks and mortgage lenders rely upon very short term loans for day to day operating cash. To secure those loans they have been using MSOs (essentially bundled mortgages in a security form). If the mortgage becomes questionable — either because of repayment issues or because of negative amortization the MSOs become less valuable — or of questionable value all together. This is what was referred to last week as the ‘liquidity crisis’ — which really had nothing to do with liquidity.
Now that the Fed has stepped in and said they will accept questionable MSOs to secure overnight loans it is likely we will see the time to foreclosure lengthen, but I believe the overall rate will remain steady for the next quarter or two.
Dana —
It’s gotten easier for the borrowers to forclose than it ued to be. And 91 days in arrears is piddling when someone is struggling to make payments. And a lot of the lenders these days seem to think “helping the borrower get current” is to threaten them with foreclosure unless they get current NOW.
It also helps to define what “arrears” is. Some lenders start the clock at the first late payment, and keep the clock running until everything is paid current — thus a missed payment in January is still classed as “in arrears” even though regular payments (or even larger payments, but not full enough to clear the back payment) may have been made in Feb, March and April.
Another trick some lenders would be would be to hold payments in suspense if they are not the exact amount expected, and not to credit it against the loan, and only of the borrower is willing to fight can the “late charges” (because the payment was held in suspense and not creditied) be reversed.
In all deference to your Mum, but I have no sympathy for the bulk of the current crop of mortgage holders and lenders.
They were morons if they didn’t understand the programs, and dishonest if they didn’t explain. My husband works at a brokerage and EVERY client gets a full explanation of what lenders are offering the best deals AND what the pros and cons of each package is.
There was a recent article I read where an expert was interviewed that I agreed with– brokers need to be regulated to be either agents for the lenders or agents for the buyers. Right now the role is so nebulous that yes, many of them do push the loans that give them the big kickbacks, acting as the lender’s agent while representing themselves as the buyers agent. OTOH, my husband’s brokerage pushed straight dealing with clients and all agents were told to represent the buyer, even if it wasn’t as profitable, because word-of-mouth builds business.
Steve, comments on this thread will go into moderation because so many words are the same as Spammers use.
But your comment is so informative, I can see why you were eager to get it to show. I had been wondering why there was such a huge problem, as that high-level financial stuff is invisible to most people.
Steve,
Don’t cut and paste and re-post. Sometimes things just get stuck in moderation, what appears to be the post disappearing altogether. We’ve all had it happen to us.
Just a not for future stuff. It’ll show up eventually.
The reason a lot of mortgage companies foreclose quickly is because they are insured. They are guaranteed to get a certain amount back (that’s what PMI is for).
In Texas, you can start a foreclosure the first day they miss a payment. If their payment is due (for instance) on August 15 and they didn’t make the payment (and their note didn’t have a “grace period”), they can notify an attorney. The attorney will send a 20 day “Notice of Intent” (only 10 days required if it’s a commercial property) which states “you owe these payments plus attorney’s fees, pay within 20 days or we intend to accelerate the note and post it for foreclosure”. If they do not pay current within that 20 days, the attorney sends an “Acceleration letter” which states “you didn’t pay what we told you to pay in our last letter, now you must pay the full balance of the note which is $X principal and $X interest plus attorney’s fees (normally 10%) enclosed is a copy of the Notice of Sale we posted at the courthouse. You have 21 days to pay the full amount due or we will auction the house on the courthouse steps”. So, if the payment was missed in August, the letter was sent today (August 22), then you could have a foreclosure sale on October 2 (always the first Tuesday of the month in Texas).
Less than 60 days from first missed payment to sale. AND, if the lender suspects that you don’t have insurance or that you haven’t paid your taxes (not all loans are escrowed) you can even be current in your payments to the lender and they can legally foreclose.
(Disclaimer, I am not an attorney and I am only speaking for Texas. States that have a “mortgage” instrument rather than a “Deed of Trust” instrument require a judicial foreclosure and that is more difficult and more time consuming.)
I think part of the problem we’ve seen is that mortgage brokers get paid per closing - with no reduction in their pay if the loan doesn’t perform. Same for inhouse loan officers - they get bonuses for closing more loans, even if those loans later default. If there were a delay where brokers and employees didn’t get all their money until the loan had performed well for an extended period of time, then I think we’d see them writing fewer bad loans.
Hi,
This is the biggest land-grabbing scheme since the XIX Century. Now the blame game will go to “unscrupulous” bankers and “ignorant” borrowers.
The truth is Alan Greenpan recommended to the American Public to take ARMs and the Banks will pass the land to the land-owner class.
Hope it’s not spam, but I would like to discuss ideas at http://services.thebankruptcynews.com/blog/.