Americans brace for next foreclosure wave

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Ever notice that you never see headlines like "Canadians brace for next forclosure wave" ???
Now - who's going to be the first bone-head to full-quote the entire text of this post just to add one line?
======================================== http://www.reuters.com/article/2012/04/04/us-foreclosure-idUSBRE83319E20120404
Americans brace for next foreclosure wave Wed Apr 4, 2012 6:22pm EDT
(Reuters) - Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end.
House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.
But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.
"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio.
"Last year was an anomaly, and not in a good way," he said.
In 2011, the "robo-signing" scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.
Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.
Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.
More conclusive national data is not yet available. But watchdog group, 4closurefraud.org which helped uncover the "robo-signing" scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash
Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo's rose 68 percent and Bank of America's, including BAC Home Loans Servicing, jumped nearly seven-fold -- 251 starts versus 37 in the same period in 2011. Bank of America said it does not comment on data provided by other sources. Wells Fargo and Deutsche Bank did not comment.
Housing experts say localized warning signs of a new wave of foreclosure are likely to be replicated across much of the United States.
Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).
RealtyTrac CEO Brandon Moore said the "numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed."
One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products -- with high interest rates where banks asked for no money down or no proof of income -- is that today it's mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.
"The subprime stuff is long gone," said Michael Redman, founder of 4closurefraud.org. "Now the folks being affected are hardworking, everyday Americans struggling because of the economy."
"HARD TO CATCH UP"
Until December 2010, Daniel Burns, 52, had spent his working life in the trucking industry as a long-haul driver and manager. When daily loads at the small family business where he worked tailed off, he lost his job.
Unable to cover his mortgage, Burns received a grant from a government fund using money repaid from the 2008 bank bailout. That grant is due to expire in early 2013 and Burns is holding out on hopeful comments from his former employer that he might get his job back if the economy recovers.
"If things don't pick up, I will be out on the street," he said, staring from his living room window at two abandoned houses over the road in the middle-class Cleveland suburb of Garfield Heights, the noise of traffic from a nearby Interstate highway filling the street.
Underscoring the uncertainty of his situation, Burns' cell phone rings and a pre-recorded message announces that his unemployment benefits are due to be cut off in April.
A bit further up the shore of Lake Erie, Cristal Fell, who works night shifts entering data for a trucking company in Toledo, has fallen behind on her mortgage a second time because her ex-husband lost his job and her overtime was cut.
"Once you get behind it's so hard to catch up," she said.
Fell, a mother of four, hopes the economy will gather enough speed to help her avoid any risk of losing her home. Her ex-husband has found a new job and she is getting more overtime, so she hopes she can catch up on her mortgage by the fall.
Burns and Fell are the new face of the U.S. housing crisis: Middle class, suburban or rural with a conventional 30-year fixed mortgage at a reasonable interest rate, but unemployed or underemployed. Although the national unemployment rate has fallen to 8.3 percent from its peak of 10 percent in October 2009, nearly 13 million Americans remain jobless, meaning many are struggling to keep up with their mortgage payments.
Real estate company Zillow Inc says more than one in four American homeowners were "under water" or owed more than their homes were worth in the fourth quarter of 2011. The crisis has wiped out some $7 trillion in U.S. household wealth.
"We're seeing more people coming through who have good loans with reasonable interest rates," said Ed Jacob, executive director of non-profit lender Neighborhood Housing Services of Chicago Inc, which provides foreclosure counseling. "But in many households only one person works now instead of two, or they had their hours cut."
"The answer to the housing crisis now is job creation."
EARLY SIGNS OF UPTICK?
Zillow expects the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes will contribute to a 3.7 percent national decline in prices before the market hits bottom in 2013 and stays there until 2016.
"The hangover from this crisis will far outlast the party of the boom years," said Zillow chief economist Stan Humphries.
Getting through the remaining foreclosures and dealing with the resulting flood of homes on the market in the wake of the bank settlement is a necessary part of the healing process for the U.S. housing market, he added.
According to leading broker dealer Amherst Securities, some 9.5 million homes are still at risk of default and in February it said it expected to see the uptick in foreclosures start to hit in March and April.
There is other evidence that many of the foreclosures that did not happen in 2011 will happen this year.
A January report by the Neighborhood Economic Development Advocacy Project in New York found that in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete.
"Now the banks have a settlement, foreclosure numbers for 2012 are going to be high," said NEDAP co-director Josh Zinner.
A recent survey by the California Reinvestment Coalition, an umbrella group of nearly 300 non-profit groups in the state, of member agencies found 75 percent of respondents expected increased demand for their foreclosure prevention services in 2012 but more than a third had to scale back services because of funding cuts.
"Funding is a major concern given what our members expect for this year," said associate director Kevin Stein.
All this has non-profits intensifying calls for the Federal Housing Finance Agency to drop its opposition to allowing the government-backed mortgage giants Fannie Mae and Freddie Mac it regulates to reduce principal for underwater homeowners.
Principal reduction involves reducing the amount borrowers owe in order to make a loan modification affordable for struggling homeowners. Republicans and the FHFA oppose principal reduction because of the risk of "moral hazard"- that homeowners who do not need help will seek to abuse largesse and have their mortgages reduced too.
ESOP in Ohio engages in "hits" on Chase branches -- they say Chase is the least accommodating major bank when it comes to working with struggling homeowners -- where they try to hand letters to bank mangers calling on chief executive Jamie Dimon to lobby FHFA head Edward DeMarco for principal reductions. A Chase spokeswoman said the bank has made "extensive efforts" to work with homeowners, helping 775,000 borrowers stay in their homes since early 2009, avoiding foreclosure "more than twice as often as we have had to foreclose." Housing groups like ESOP maintain, as they have throughout the housing crisis, that unless the FHFA embraces widespread principal reduction, many more under water borrowers face losing their homes.
"Until banks engage in meaningful principal reduction as a matter of course," ESOP's Seifert said after a recent protest at a Chase branch in Cleveland, "this crisis will not end."
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On 4/4/2012 6:42 PM, Home Guy wrote:

The OECD says Canada has the second highest rate of overvaluation of homes in the developed world.... And that the USA is undervalued at 9%
http://www.businessinsider.com/the-most-overpriced-housing-markets-in-the-developed-world-2012-2 #
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Duesenberg wrote:

http://www.businessinsider.com/the-most-overpriced-housing-markets-in-the-developed-world-2012-2 #
No wonder Canadian government is tightening the regs. on housing market. Mortgage and financing. Latest survey shows about 60% of people said they can withstand housing market crash. Also the risk level is different between regions. Over all, it won't be as BAD as U.S. if and when worst comes. I don't care, all my 3 properties are paid for long ago.(House in the suburb, condo in down town, cabin in the mountain)
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On 4/5/2012 2:26 AM, harry wrote:

They use the classic measures to calculate housing value and affordability: compare the price paid/rental value and price paid/average annual income. For investors, the standard rule of thumb for buying rental property is to pay no more for it than what you'll earn from it as 10-12 year's annual rental income. For homeowners, the standard rule of thumb for most locations is to pay no more than 2.5-3 times your annual income. So, to gauge what should be the average home value in any given area, look at the average cost to rent and the average annual income. Compare that to the average value of a property and you'll get a good idea as to whether it is over- or under-valued.
Problem is, the larger the area you look at using these factors, the more variation and thus the less reliable your data will be. It works very well on a neigborhood/city basis, but as has already been mentioned with regards to Canada, prices may be much higher than average in one city or province, but not show that trend (or as great a trend) nationwide. And that 2.5-3 x income measure used for calculating home affordability just doesn't work in much of California, where housing demand has driven prices in choice locations so high that a 10x income standard has become commonplace. (Even so, that seems insanely risky, imo.)
Anyhow, anyone who's lived through a prior housing bubble could spot this past one forming, and a whole lot of people observed, commented, and worried about it. Corrupt mortgage lenders and banks were willing to loan people insane amounts of money, but that didn't mean those people would ever be able to repay it -- and these finance people _knew_ that. But they collected their commissions on the loans, then swiftly sold the loans off, thus maximizing their profits and minimizing their exposure. Developers worked hand in hand with mortgage lenders and real estate agents to run house flipping schemes with straw buyers, in order to sell inventory they'd already built and collect enough money to start yet another development. The US built an entire generation's worth of housing stock in less than six years. In large parts of the country there is such an inventory surplus as a result, home prices will continue to be depressed for a good many years.
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bob haller wrote:

You mean shortage of real estate.

Yea, I question that comment as well.
If you take tornadoes, hurricanes, flooding out of the equation, your left with temperature extremes (winter vs summer) difference between the UK and US/Canada, and build quality (foundation, type of exterior siding, quality of windows/doors, roof type).
I have the impression that there are more people (higher percentage) living in appartments in the UK (vs detached homes) than in US/Canada.
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On 4/4/2012 6:42 PM, Home Guy wrote:

Forgot to ass this link from my clipboard...
The link that says Canada's housing market is more overvalued than the USA's was at it's peak....
http://www.huffingtonpost.ca/2011/11/25/canada-housing-market-bubble-overvalued-economist_n_1113031.html
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Should read pass, not ass :P
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Pass the link out of your ass? Work out same.
Christopher A. Young Learn more about Jesus www.lds.org .

Should read pass, not ass :P
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On 4/5/2012 7:23 AM, Stormin Mormon wrote:

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On 4/4/2012 8:40 PM, Duesenberg wrote:

http://www.huffingtonpost.ca/2011/11/25/canada-housing-market-bubble-overvalued-economist_n_1113031.html

Man we've been lucky. I bought a house in Austin TX right when the prices were at their highest nationwide and the prices here have only gone up. Not near as fast as they were but still climbing. My house has appreciated about 10% in 7 years.
Sorry to all that lost money. I can imagine how devastating it must be. I wouldn't wish that even on a Canadian. ;)
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Duesenberg wrote:

Studies like that always end up looking primarily at Vancouver - which is way overvalued but because we don't have stupid "no money down" mortgages you're going to almost always have affluent people buying those homes so there's not as much risk for the banks.
I bought my house in Q3 1999 for $182k (and paid off my $132k mortgage by 2004). If I were to sell it today (13 years later) I could get $300k for it within a week, and possibly $325k if I held out for 3 months.
The same house in Vancouver would probably sell for $1.5 million.
But still - there's no forclosure waves happening in Canada.
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On 4/4/2012 9:21 PM, Home Guy wrote:

Yup. Location, location, location.
But don't be surprised if it hits. I was lucky and played the real estate game. I could have easily lost a small fortune. I still may. Don't get too cocky. We should all use common sense from here on out. If it looks too good to be true it probably is.
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So what? The price of your house went up and now you can sell it for 1.8x.
Where are you going to live? In your RV? Any other house you might want to buy went up too.
If you have more than one house; one to live in, one to rent & then sell...... you'd have something.
If any property you own can be sold for more than 20x yearly rent..... it's probably over priced & you'd be wise to sell. Also eval it based on replacement cost per sq ft.
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DD_BobK wrote:

That wasn't my point. My point was to counter the argument made by Duesenberg that home prices in Canada are as inflated now as they were in the US a few years ago before the market collaped.
I countered the argument by pointing out that claims of over-valuation of Canadian homes are largely based on what's happening in one or two a-typical cities (Vancouver and a handful of neighborhoods in Toronto and Montreal) and that my home (with the price details I gave) is more typical of the residential house market in Canada.
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Glass Steagal to the changes in Fannie and Freddie were ALL done by Congress and ALL done by huge bipartisan votes (heck the final vote on G-S repeal in the Senate was by a voice vote). This was very much an entire government program with heavy support from both sides... at least until the shit hit the fan.

And yet they were in line with those in the Euro zone, Japan, and even Canada. So many countries in the low interest rate conspiracy?
--
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Clearly the FED should have paid attention to the bubble in housing prices. However housing prices were probably the only thing arguing for higher interest rates at the time. Inflation was low, the overall economy was growing at a reasonable rate, but not running like a freight train.
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Kurt Ullman wrote:

===========Bush seeks to increase minority homeownership http://www.usatoday.com/money/perfi/housing/2004-01-20-fha_x.htm
Home Ownership and President Bush
http://www.youtube.com/watch?v=kNqQx7sjoS8

See also:

http://www.youtube.com/watch?v=wASFRavojBY
=============

Japan was already at zero percent for more than a decade.

Everyone else had to lower their rates to prevent their currencies from rising in value (relative to the USD) so that their exports weren't killed.
It's been called a "race to the bottom" and a "currency war", and it was really started by Bush and the need to absolutely prevent interest payments caused by the ballooning debt from crushing the economy and needing to increase federal taxes.
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HG-
Making more friends in case you have a home repair question?
cheers Bob
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The first bone-head was: harry
And as usual for bone-heads posting through google-groups: Google removes "OT:" when it appears in the subject line (I put it back).
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harry wrote:

Google doesn't cut any "crap" (previously posted material). It just doesn't display excessive amounts of quoted material. But when you reply, it doesn't automatically remove the excessive amount of quoted material either.
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