Foreclosure backlog to ‘take decades to complete’

Foreclosure backlog to ‘take decades to complete’
Thursday, December 29th, 2011, 8:43 am



The number of seriously delinquent mortgages in the nation’s largest metropolitan areas slowed this year, according to a new study from the Urban Institute. But foreclosures remain a burden on the housing market, prompting the policy research group to call for a resolution to the housing crisis to ensure the foreclosure backlog is cleared out in a reasonable time period.

The institute said the serious delinquency rate in the 100 largest metro areas slowed to 9.3% in June from 10.4% in December 2009, according to data from The Urban Institute said the serious delinquency rate is classified as the share of loans in foreclosure, plus all of those that are more than 90 days in arrears.

“The foreclosure inventory that is building up is going to take an incredibly long time for lenders to clear,” said Leah Hendey, research associate at the Washington firm. “At the current pace of foreclosure sales, we are looking at a process that could take decades to complete. It is critical that the status of these properties be resolved quickly if we want to stabilize communities and housing markets.”

This decline was driven by a drop in delinquent loans, which fell to 3.7% in June from 5.5% in December 2009.

In hard-hit areas like Riverside and Stockton, Calif., the foreclosure rate declined significantly, dropping 1.9 percentage points and 1.7 percentage points from the peak two years ago.

Florida, New York and Illinois experienced a different shift in the market with foreclosure rates climbing in cities throughout those states.

In Tampa, the foreclosure rate jumped 2.8 percentage points, and in Chicago, it grew 2.3 percentage points. Those three states are judicial foreclosure states, which force a court to make a final decision before a property can leave the process. This leads to a growing backlog, the Urban Institute said.

Mortgage originations are down in all of the 100 metro areas surveyed, as well. Some of the largest drops occurred in Buffalo, N.Y., where originations fell 39% this year, and Miami, where new home loans fell 82%, the report said.


Write to Kerri Panchuk.

Equator saw 1.17 million short sales initiated

Equator saw 1.17 million short sales initiated


Default servicing technology company Equator says nearly 1.2 million short sales were initiated through its module over the past two years.

The company tracks this data through its default servicing platform, which helps mortgage industry clients deal with loan modifications, short sales, deeds-in-lieu, foreclosure processing and REOs.

Los Angeles-based Equator said Wednesday that more than $150 billion in assets have been sold using its technology platform over the past eight years. Analyzing trends from the recent fourth quarter, Equator said servicers heading into 2012 are focused on compliance issues.

“The needs of our clients have focused on the demands for stricter compliance and infrastructure security,” said Chief Operating Officer John Vella.

As the firm transitions into 2012, it’s prepping the launch of the REvolution software program, which will provide real estate professionals with a system to track both distressed and traditional properties.

The company said the software gives agents enough flexibility to automate their daily work-flow cycles from a single portal, removing the need for agents to employ more than one software system to handle various asset types and sales functions.

Major Lenders Offering Perks on Short Sales

Major Lenders Offering Perks on Short Sales



The nation’s leading mortgage lenders are extending extras for short sale transactions employed as an alternative to foreclosure – both in the form of monetary incentives for borrowers and streamlined procedures for real estate agents.

Wells Fargo says it has been making “enhanced financial relocation assistance offers” that can be as much as $10,000 or $20,000 to certain borrowers who choose to go through with a short sale or transfer the title back to Wells via a deed-in-lieu.

This extra incentive is being offered to distressed borrowers in Florida and other states where the foreclosure process is lengthening, a spokesperson for Wells Fargo explained. The exact amount of the relocation funds provided to individual borrowers varies based on a number of factors, the company says.

Wells Fargo noted that this type of additional relocation assistance is only available on first-lien loans that the company itself owns – which represent only about 20 percent of the loans Wells Fargo services. The company must follow investor guidelines for the remaining loans it services.

JPMorgan Chase is also offering a range of incentives to borrowers that agree to a pre-foreclosure sale “because if we can’t work out a modification, a short sale is a better result for the borrower, the servicer, the investor, and the neighborhood than a foreclosure,” the company said in a statement.

Chase says the amount of the offer “depends on a number of factors” but declined to share specific details on how much money it’s been providing to short sellers.

One agent in Florida confirms that he has indeed received a letter from Chase offering $20,000 to a borrower he’s representing in a short sale transaction.

Another agent in California says he closed a short sale with Chase where the borrower was paid $30,000 at closing for cooperating with the short sale.

“I have closed over 200 short sales and this was the most I have seen paid to a borrower,” the agent said.

Citi has confirmed that its average incentive offer is currently $12,000 for borrowers in cases where Citi owns the loan.

“Incentives are offered to customers experiencing financial hardship who need funds to proceed with the short sale,” a spokesman for the lender explained.

The amount, which is agreed upon upfront, varies according to the borrower’s individual circumstances and loan characteristics, Citi said. It is disbursed to the homeowner when the short sale is completed.

Bank of America says it is “committed to improving the short sale process” and has made procedural changes to cut some of the red tape for agents working with the bank on pre-foreclosure sales.

The lender now allows real estate agents to submit a backup offer on a transaction if the original buyer has walked away from the sale.

This means that agents no longer have to initiate a new short sale if the buyer changes, Bank of America explained. Instead, agents can move ahead with the original transaction in the Equator system, BofA’s short sale technology platform of choice, and continue to work with the same short sale specialist.

Bank of America says this policy change will save its agents time by not having to repeat a number of process steps.