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The Treasury Department says servicers participating in the Home Affordable Modification Program (HAMP) are getting better at evaluating homeowners for the program, including noticeable improvement in assessing borrower income to determine program eligibility and calculate the amount of their modified payments.
HAMP performance reviews evaluate servicers based on three categories: identifying and contacting homeowners; homeowner evaluation and assistance; and program reporting, management, and governance. Treasury said it agreed to release withheld incentives for past deficiencies as part of the $25 billion
federal-state mortgage servicing settlement announced last month, but officials stress that they retain the right to withhold incentives in the future should the results of HAMP compliance reviews warrant such remedial action. As of the end of January, participating servicers had granted 951,319 permanent HAMP
modifications to distressed borrowers. There are an additional 76,343 HAMP trials currently in active status.

Fourteen Democrats joined 80 Republicans in the Florida House of Representatives on Wednesday to pass a bill aimed at streamlining the foreclosure process.  The 94-17 bipartisan vote comes after two months of protests from a committed group of activists, many of them foreclosure defendants who say the bill limits their ability to defend their cases.  For the bill to become law, the Senate must pass its version by the end of session, March 9. Supporters say the bill is necessary to put abandoned homes back on the market and to speed up home foreclosures, which take nearly two years on average to grind through the courts in Florida.  They propose cutting the number of court hearings from two to one and allowing any lien holder, including homeowners’ associations, to initiate the process. It also outlines steps for determining if a house or condo unit is vacant, clearing the path for a lender to foreclose.  Several Democrats said Rep. Kathleen Passidomo, R-Naples, convinced them her bill actually protects consumers. The passage was a major success for the first-term

Republican.  Passidomo worked to reduce the statute of limitations on deficiency judgments from the current five years to one. A deficiency judgment seeks payment from a borrower for the outstanding mortgage balance over the value of the home.

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 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.  ”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. 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. California foreclosure-related sales claimed a 43% share, Georgia 39%, Arizona 38% and Michigan 33%.

The Banking and Finance Committee voted 5-2 in favor of sending the substitute to House Bill 110 to a full vote, which could happen as soon as this week.  According to the proposal, the bill would authorize cities and counties to create foreclosure registries that would have statewide requirements. The fee to register a property would not exceed $175, and the penalties for failing to register properties would be limited to $500 a month and $2,000 total.  The proposal does not preempt city or county ordinances requiring registration of foreclosed properties for repeated violations that remain uncorrected for at least 60 days, but would it would stop any other local foreclosure registries currently in existence.  Banking Committee Chairman Sen. Jack Murphy said such a law is needed to prevent cities and counties from treating fees associated with foreclosures and vacant properties as a cash cow.  ”It can’t become a revenue source,” Murphy said. “That’s a tax. We need something standardized that everybody has to go by. That will keep abuse from occurring.” Murphy cited reports that DeKalb County raked in more than $550,000 in fees in less than a year.

The original legislation was sponsored by state Rep. Mike Jacobs, a Republican lawmaker whose district includes DeKalb County.  The bill is a carryover from last year, when it stalled as lobbyists for cities and counties raised concerns that the bill could have unintended consequences. Several people representing groups who opposed the original version remarked that they had not seen the updated proposal until Monday’s committee hearing and were still evaluating whether it is an improvement.  ”County and city elected officials are hearing a lot from the public about this,” said Clint Mueller, a spokesman for the Association of County Commissioners of Georgia. “There are a lot of foreclosed and properties that are not being taken care of. We have no idea where to even begin to find out who is responsible.”  Still, Mueller said it is important to ensure that municipalities are not punished in an effort to address the issue through state legislation.  ”It could have far-reaching effects if it’s not done right,” he said.  If approved, the law would take effect July 1.

While data on the number of loans either seriously delinquent or in the foreclosure process suggested that an increase in the number of residential properties lost to foreclosure this year was a “slam dunk,” incoming data suggest that in fact the numbers will be down significantly from 2010, and will in fact probably come in at the lowest level since 2007! Short sales and DILs, in contrast are likely to be up in 2011 compared to 2010, at least according to estimates derived from Hope Now data.
Unfortunately, Hope Now data doesn’t allow for an estimate of SS/DILs by occupancy type, and HN didn’t start releasing data that allowed one to derive estimated short sales/DILs until early 2010. Given the number of loans either seriously delinquent or in the process of foreclosure  at the beginning of the year, the number of completed foreclosure sales in 2011 is almost absurdly low, reflecting the complete screw-up of the mortgage servicing industry, and the resulting dramatic slowdown in foreclosure resolutions. As of the end of October, 2011 LPS estimated that there were 1.759 million seriously delinquent loans with the average number of days delinquent at 388 (compared to 192 days in January 2008), and there were 2.210 million loans in the foreclosure process that had been on average delinquent for 631 days.

According to a report re-leased Tuesday by the Colorado Division of Housing, foreclosure auction sales in Colorado’s metropolitan counties were up 7.9 percent in November compared to November of last year. Foreclosure sales in Larimer County rose 47 percent in November compared to a year ago but filings dropped 37 percent.  Overall, sales and filings dropped in Larimer County in the first 11 months of the year compared to the same time frame in 2010.  However, comparing the first 11 months of this year to the same period last year, foreclosure filings were down 28.6 percent through November while foreclosure auction sales were down 20.7 percent.  New foreclosure filings fell year over year during November with total filings dropping 21.7 percent from 2,932 filings in November 2010 to 2,296 filings in November of this year. Foreclosure auction sales increased during the same period from 1,195 to 1,290.  From October 2011 to November 2011, foreclosure filings fell 2.3 percent, and foreclosure sales at auction rose 37.5 percent.

Foreclosure auction sales through November fell year over year from 2010’s 11n-month total of 18,728 to 14,854 during the same period this year. Foreclosure filings were also down through November, falling to 23,556 filings year-to-date this year from last year’s 11-month total of 32,982.  Year-to-date through November, the counties with the largest decreases in foreclosure filings, year-over-year, were Mesa County and Denver County, where filings decreased by 35.2 percent and 32.2 percent, respectively. Pueblo County reported the smallest decline in filings with a decrease of 12.5 percent from the first 11 months of 2010 to the same period this year. All counties surveyed reported year-over-year decreases in foreclosure filings.  For the first 11 months of this year, all counties also showed decreases in foreclosure auction sales when compared to the same period last year.

The counties with the largest decreases in foreclosure auction sales, year-over-year, were Broomfield County and Adams County, where auction sales decreased by 40.3 percent and 27.0 percent, respectively. Pueblo County reported the smallest decline in auction sales with a decrease of 9.1 percent from the first eleven months of 2010 to the same period this year.  The county with the highest rate of foreclosure sales during November was Adams County with a rate of 681 households per foreclosure sale. Mesa County came in second with 792 households per foreclosure sale. The lowest rate was found in Boulder County where there were 3,402 households per foreclosure sale.

After more than 175,000 foreclosures in metro Phoenix in the past several years, mortgage lenders in Arizona have done an about-face, approving a record number of short sales.  Rather than taking back homes and selling them at auction, bankers say, they are more frequently allowing distressed owners to sell the homes for less than the borrowers owe.  The trend could lead to rising sales prices, because short sales in metro Phoenix tend to sell for higher prices than homes taken back by lenders and resold.  The consensus among lenders and housing-market experts at the standing-room only event Thursday was that short sales would continue to climb in the Phoenix area and foreclosures would continue to fall. The trend could lead to a rise in the median home value as soon as next year, because it decreases the number of homes sold for bargain prices at auction.

A shift to short sales is momentous for lenders, which only two years ago handled delinquent mortgages almost exclusively by foreclosure. After taking the homes back, banks resold so many for such low prices that sales pushed the area’s median home price to a 10-year low.  Now, top lending executives say, they are seeing that while short sales mean a loss for the bank, that loss is less than they would suffer from a foreclosure auction. At the same time, housing-market indicators are showing positive signs.  Arizona’s mortgage delinquency rate is down 32 percent since 2009, a bigger drop than any other state, de Laveaga said. He said the fact that the nation’s three biggest lenders sent executives to speak to Arizona real-estate agents and mortgage brokers in the audience is a sign they want to do more to slow foreclosures.

Foreclosed homes and short sales are making up an increasingly large chunk of the housing market in Los Angeles, moving toward 50% in Glendale, according the latest real estate figures.  Salesof distressed homes made up 47.5% of total sales in Glendale in September. In Burbank, the ratio was almost 34%.  The figures were far higher than a year ago, when distressed homes made up about 36% of total sales in Glendale and nearly 16% in Burbank. The trend started in August as banks ended their self-imposed foreclosure moratoriums.  Short sales saw the most dramatic rise in Burbank, skyrocketing from about 4% in September last year to almost 18% last month.  In Glendale, the sale of bank-owned properties jumped from a little less than 11% in September 2010 to about 21% last month.  Average home sale prices continued to tumble in September with Burbank taking the biggest hit, dropping $87,530 when compared to September 2010.  The average price in Burbank was $446,655, a 19.6% slide from $534,185 in September 2010.  The number of new home sales also took a hit in September, decreasing from 74 a year ago to 56 last month. There were 63 new listings in September, dipping from 67 in September 2010. Glendale fared better, though it was still in decline. The average home sale price was $504,244, a 7.1% decrease from $540,258.  New home listings decreased by 15, from 102 in
September 2010 to 87 last month. New sales dropped slightly from 64 to 61.  In La Cañada Flintridge, the average home sale price was about $1 million in September, a 2.7% drop from roughly $1.1 million the same month last year.   In the La Crescenta-Montrose area, the bright spot was the number of new home sales, which came in at 37, up from 29 last year. But the average home sale price was $516, 621, about a 1% dip from $520,964 last year.

Time is running out on homeowners who want to take advantage of Bank of America’s recently announced short-sale incentive program.  To collect up to $20,000, qualified sellers must get their homes listed for sale by the end of November.  The bank, which services 1.1 million Florida mortgages, says it is not limiting the offer to delinquent borrowers. Homeowners with good payment histories could also qualify, said Christina Beyer Toth, a Tampa-based Bank of America spokeswoman.  When the nation’s largest lender announced the program offer last week, it didn’t specify which homeowners would qualify or whether the bank wanted to only dump toxic loans it acquired from Countrywide Financial in 2008.

Here’s what else Bank of America mortgage holders need to know about the program:

Q.  When do the homes have to be listed for sale?

A.  Between
Sept. 26 and Nov. 30. The deal must close by Aug. 31, 2012. Sales
already under contract are not eligible for the cash assistance.

Q.  Can homeowners with good payment histories qualify if their
loans are under water?

A.  Yes. Bank of America selected Florida
for the test-and-learn program to determine whether the
additional incentive increases the use of short sales instead of
other more expensive, and perhaps less dignified, transitions
like foreclosure. If it works in Florida, the bank might roll it
out in other parts of the country.

Q.  How will the payouts be determined?

A.  Qualified homeowners
will get 5% of the unpaid balance as of August 2011, with a
minimum payout of $5,000, Bank of America says. For instance, a
homeowner who owes $100,000 as of August would get $5,000 (5% of
$100,000). A homeowner who owes $200,000 would get $10,000. And
so on up to a maximum of $20,000. The sales price does not impact
the payout.  To sweeten the deal further, Bank of America will
consider waiving the deficiency on the loan, which allows
homeowners to sell the house for less then they owe without
having to make up the difference to the bank. That can save
homeowners thousands of dollars and enable them to buy another
home quicker.

Q.  Will the program impact a homeowner’s credit rating?  It
depends on whether the loan is delinquent or current when the
home is sold. The short sale will be reported as any other short
sale is reported, in line with national credit reporting
standards, Bank of America says. If “short sale” is listed on a
credit report, the score will drop by at least 100 points,
experts said. But some short sales are being listed as “paid in
full,” which wouldn’t have the same detrimental impact on a
credit rating.

Q.  Are the cash payouts government funded?

A.  No. Bank of
America will pay all incentives.

Q.  How can homeowners get more information?

A.  Bank of America
has set up a dedicated team of short-sale specialists to answer
questions related to this test-and-learn program. The number is
(877) 459-2852

Bank of America (BOA), the nation’s largest mortgage servicer, is offering Florida homeowners up to $20,000 to short sale their homes rather than letting them linger in foreclosure.  The limited time offer has received little promotion from the Charlotte, N.C.-based bank, which sent emails to select Florida Realtors earlier this week outlining basic details of the plan. Only homeowners whose short sales are submitted for approval to BOA before Nov. 30 will qualify. The homes must have no offers on them already and the closing must occur before Aug. 31, 2012. Realtors say the BOA plan, which has a minimum payout amount of $5,000, is a genuine incentive to struggling homeowners who may otherwise fall into Florida’s foreclosure abyss.  The current timeline to foreclosure in Florida is an average of 676 days – nearly two years – according to real estate analysis company RealtyTrac. The national average foreclosure timeline is 318 days.  Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance, called the short sale payout a “bribe.”"You can call it a relocation fee, but it’s basically a bribe to
make sure the borrower leaves the house in good condition and in an orderly fashion,” Cecala said. “It makes good business sense considering you may have to put $20,000 into a foreclosed home to fix it up.”  Homeowners, especially ones who feel cheated by the bank, have been known to steal appliances and other fixtures, or damage the home.

A spokesman for BOA said the program is being tested in Florida, and if successful, could be expanded to other states. Wells Fargo and J.P. Morgan Chase have similar short sale programs, sometimes called “cash for keys.”  Wells Fargo spokesman Jason Menke said his company offers up to $20,000 on eligible short sales that are left in “broom swept” condition. Although the program is not advertised, deals are mostly made on homes in states with lengthy foreclosure timelines, he said.  And caveats exist. The Wells Fargo short sale incentive is only good on first lien loans that it owns, which is about 20% of its total portfolio.  BOA’s plan excludes Ginnie Mae, Federal Housing Administration and VA loans.  Similar to the federal Home Affordable Foreclosure Alternatives program, or HAFA, which offers $3,000 in relocation assistance, the BOA program may also waive a homeowner’s deficiency judgment at closing.  A deficiency judgment in a short sale is basically the difference between what the house sells for and what is still owed on the loan.  HAFA, which began in April 2010, has seen limited success with just 15,531 short sales completed nationwide through August.