Foreclosures At Record Highs

From the New York Times:

In a move that provides relief to thousands of renters who face eviction but draws the federal government even deeper into the housing market, the loan giant Fannie Mae said Sunday that it would sign new leases with renters living in foreclosed properties owned by the company.

It is the first nationwide effort to provide widespread relief to renters ensnared by the unfolding mortgage crisis, and it will effectively transform Fannie Mae — a government-controlled mortgage finance company — into a national landlord. It may also increase pressure on private lenders to establish similar programs and on lawmakers to pass renter relief.

“There are renters all around the country who have been holding up their end of the bargain and paying their rent faithfully, but the landlord got into trouble, and so the renter is now unfairly facing eviction,” said John Taylor, president of the National Community Reinvestment Coalition, a consumer advocacy group. “It’s really good news that Fannie Mae is doing this. Now the question is whether private sector will follow suit.”

In recent months, skyrocketing foreclosure rates have exposed as many as 70,000 renters to evictions, even though many never missed rent payments, according to analysts who track housing data. In many cities and states, renters can be evicted after their home goes into foreclosure, regardless of how long their lease stretches into the future.

Many financial institutions — including JPMorgan Chase and Bank of America — have policies to evict renters after foreclosure, company representatives said.

Fannie Mae’s initiative is expected to initially benefit as many as 4,000 renters living in foreclosed homes owned by the company. Fannie Mae has traditionally only bought and sold mortgages. But when a loan held by the company goes into foreclosure, Fannie Mae gains ownership of the underlying property until it is resold to new investors.

REPORT:

PHILADELPHIA (Reuters) – Fannie Mae will allow tenants to remain in their homes and avoid eviction even if the building's landlord goes into foreclosure, The Wall Street Journal reported on Sunday.

Fannie Mae, a government-controlled mortgage finance company, previously had said it would not evict tenants during the year-end holiday season.

Despite that pledge, Fannie Mae came under pressure from a legal-aid group that threatened to sue over recent evictions in Connecticut, the newspaper said in its electronic edition.

Fannie Mae plans to sign new leases with renters living in foreclosed properties owned by the company. It also would ensure that its holiday moratorium on new evictions was being followed until the new policy becomes effective in January.

FROM THE WSJ:

"We're delighted that Fannie Mae has agreed to change their policy," said Amy Marx, an attorney with New Haven Legal Assistance in Connecticut. "And we're hopeful others will follow suit."

In late November Fannie Mae and Freddie Mac said they would suspend tenant evictions temporarily during the year-end holidays. New Haven Legal Assistance said that despite the pledge, Fannie Mae was proceeding with more than a dozen new eviction cases in Connecticut. The advocacy group said the evictions would violate legislation passed earlier this year to rescue the two mortgage-finance giants that required them "to permit bona fide tenants who are current on their rent to remain in their homes under the terms of their lease."

In his letter Sunday to the New Haven group, Fannie Mae General Counsel Curtis Lu wrote: "As far as we know, this will be the first nationwide program of its kind." Copies of the letter were sent to Christopher Dodd (D., Conn.), chairman of the Senate Banking committee and Barney Frank (D., Mass.), House Financial Services Committee chairman.

Freddie Mac hasn't announced a similar policy reversal, though a spokesperson said they are "currently evaluating additional actions."

FROM THE LA TIMES:

Foreclosure filings — that includes default notices, auction sale notices and bank repossessions — were reported for 60,491 California residences in November, according to Irvine-based RealtyTrac, the most of any state. That was up 6% from the previous month (after two months of decreases) and a 51% increase from November 2007.

Just what are we talking about here? That translates into 1 in every 218 houses or more than two times the national average.

Some of the California metro areas making the U.S. Top 10 list for foreclosure filings and where they ranked:
Upland 3. Merced, 1 in 76
4. Modesto, 1 in 93
5. Stockton, 1 in 94
6. Riverside-San Bernardino, 1 in 107
9. Bakersfield, 1 in 129
10. Vallejo-Fairfield, 1 in 133

Nationwide, RealtyTrac showed a 7% decrease in November foreclosure filings (1 in 488) from October, but a 28% increase since November 2007.

As to why there was a November decrease nationally, RealtyTrac CEO James J. Saccacio cited state laws that have extended the foreclosure process, loan modification programs and holiday foreclosure moratoriums. "There are several indications, however, that this lower activity is simply a temporary lull before another foreclosure storm hits in the coming months."

FROM BLOOMBERG:

“The labor market is facing its worst crisis since 1982, and it is certainly not over yet,” said Harm Bandholz, a U.S. economist at UniCredit Markets and Investment Banking in New York.

Home prices have fallen by about a fifth from the mid-2006 peak, according to the S&P/Case-Shiller home price index.

‘Devastating Consequences’

“The decline in prices and its devastating consequences” will continue next year with no indication of when they will stabilize, Hall said. Programs that modify the terms of loans, including efforts by Fannie Mae, Freddie Mac, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. can’t help thousands of borrowers, he said.

“Something like 70 percent of subprime foreclosures are beyond the reach of modification programs because the owners are investors, because the owner is in default for the second time on the property, or because the owner has disappeared,” Hall said.

The share of mortgages delinquent by 30 days or more in the third quarter rose to a seasonally adjusted 6.99 percent while loans already in foreclosure rose to 2.97 percent, both all-time highs, the Mortgage Bankers Association said in a Dec. 5 report. The gain in delinquencies was driven by an increase in loans with payments 90 days or more overdue.

No Improvement

“Until we see a turnaround in the job situation, we’re not going to see these numbers improve,” said Jay Brinkmann, chief economist of the Washington-based bankers group.

In November, one in every 488 U.S. households received a foreclosure filing, RealtyTrac said. Nevada had the highest rate for the 23rd straight month with one in 76 households in some stage of foreclosure, more than six times the national average. Filings more than doubled from a year earlier to 13,962.

Florida had the second-highest rate, one in 173 households, and the second-most filings at 49,190, an increase of 68 percent. Arizona had the third-highest rate, one in 198 households, and ranked fifth in total filings with 13,136, up 128 percent.

FROM THE BOSTON GLOBE:

As foreclosures go, so goes the rest of real estate market.

So any signs that banks may be finally starting to slow down with the until now frenetic pace of home auctions is good news.

A new RealtyTrac report for November shows foreclosures down 7 percent from October, though still up nearly 30 percent from a year ago.

Massachusetts is experiencing some of the biggest declines, with foreclosures down roughly 32 percent from this October and 37 percent from November 2007.

It?s the lowest number of foreclosures nationally since June. New laws in several states extending the foreclosure process, as well as aggressive loan modification efforts by lenders, may be starting to pay off, the RealtyTrac report suggests.

Yet with layoffs starting to mount ? just look at Bank of America?s stunning plan to slash 35,000 jobs ? is this just a temporary lull in the foreclosure storm?

Delinquencies on loans not yet in foreclosure jumped 7 percent in the third quarter, the report notes, citing recent numbers put out by the Mortgage Bankers Association. That's a record.

FROM THE USA TODAY:

"New York City and cities like us across the country cannot preserve this resource on our own," Donovan said at a June congressional hearing on affordable housing. "We need the commitment and partnership of the federal government."

Obama spokesman Nick Shapiro said Donovan, who needs Senate confirmation, was not available for interviews.

Obama, who was out with his daughters Sunday selecting a Christmas tree, has rapidly named Cabinet positions with oversight of the economy — including heads of the Treasury and Commerce departments. The Housing department, Obama said, will play a key role in his plans to create or save 2.5 million jobs in two years.

"To end this economic crisis, we must end the mortgage crisis, where it began," Obama said during his weekly address Saturday. "(Donovan) knows that we can put the dream of owning a home within reach for more families so long as we're making loans in the right way."

Donovan, a New York native, has master's degrees in public administration and architecture. He served as an assistant HUD secretary for multifamily housing under former president Bill Clinton. He also worked as a managing director of lending and affordable housing investments at Prudential Mortgage Capital Co.

Conrad Egan, president of the non-partisan National Housing Conference, said Donovan's selection means Obama's administration will put a greater emphasis on affordable housing than it has in past years.

"HUD has not been an articulate or persuasive spokesman for affordable housing in recent times," Egan said. "HUD, of all the Cabinet (departments), needs to take on that responsibility."

Howard Husock, vice president of policy research at the Manhattan Institute, called Donovan a "smart, capable and creative guy," but said the success New York has had creating affordable housing has been driven largely by the real-estate boom in New York.

Husock said he hopes Donovan can find ways to help more small landlords get into business.

"If he were willing to use his bully pulpit … I think it'd be an opportunity to help the private market address our current crisis," he said.