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Nationwide, new foreclosure cases and repossessions have dropped by a third since last fall as banks, as greater scrutiny over banks’ foreclosure procedures and more home owners fighting back in court has slowed the pace. Banks, already facing huge backlogs of foreclosures they’ve already repossessed, also may be reluctant to add on more to their inventory, experts say.

States where courts must review each foreclosure tend to have the longest delays. But in the 27 states without that requirement, foreclosures are much quicker. For example, as comparison, in California, the foreclosure backlog is three years, and in Nevada and Colorado, it’s two years.

“If you were in foreclosure four years ago, you were biting your nails, asking yourself, ‘When is the sheriff going to show up and put me on the street?’” Herb Blecher, an LPS senior vice president, told The New York Times. “Now you’re probably not losing any sleep.”

Full article at source: “Backlog of Foreclosures Giving Some a Reprieve,” The New York Times (June 19, 2011)

 Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Federal regulators are accusing Bank of America Corp. of being slow to provide documents and other information in an investigation into the banking giant’s foreclosure practices, according to a court filing.

BofA “significantly hindered” the review, said departmental auditor William Nixon in a document that was filed in a lawsuit by the State of Arizona against the bank.

“When interviews were permitted, the presence or involvement of the bank’s attorneys limited the effectiveness of those interviews,” Nixon said in the court filing.

Federal regulators and state attorneys have been investigating banks’ procedures for foreclosures after reports surfaced last year of banks using “robo-signers” to sign hundreds of unread foreclosure documents daily without proper reviews.

Full article at source: “Bank of America Hindered Foreclosure Review-Filing,” Reuters News (June 13, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Foreclosure can mean more than just a blemish to borrowers’ credit record–it can jeopardize their job too. Federal contractors and employees are finding a foreclosure can cost them their federal security clearance and ultimately their job. It can take years to restore a security clearance so they can work again too.

Many employees who have security clearances are required to report mortgage defaults and other financial issues to their company’s or agency’s security officer.

About 70 security clearance appeals involving foreclosures and other distress sales were reported from January 2006 through January 2010 by the U.S. Defense Department’s Office of Hearings and Appeals. Of those 70 cases, 62 clearances were revoked or denied, according to reports.

“Losing your security clearance is like losing your most marketable aspect for employment,” Travis John, a real estate broker, told the Orlando Sentinel.

David P. Price, a lawyer who specializes in security clearance cases, says he’s seen financial related security clearance problems double in recent years.

For borrowers at risk of foreclosure, they usually have more success at keeping their security clearance if they can prove that their mortgage was a sensible loan that did not overextend them at the time and also show they’ve tried to find a work-out solution, such as a short sale. However, Price says that even a short sale doesn’t put borrowers in the clear since it can take a long time to complete such transactions and increase the chance of a foreclosure.

Source: “Foreclosures Put Workers’ Security Clearances at Risk,” Orlando Sentinel (June 7, 2011)

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Fannie Mae announced this week new rules that will require mortgage servicers to act more quickly and consistently in helping troubled home owners avoid foreclosure.

Fannie told servicers they must strive to build a “strong customer service relationship,” better understand why the borrower is missing payments, and educate them on ways to prevent foreclosure.

“We want home owners to be able to understand their options when facing foreclosure, and we want servicers to reach home owners early in the process, communicate frequently and clearly, and help home owners avoid foreclosure,” says Jeff Hayward, senior vice president of Fannie Mae’s national servicing organization.

Also among the revamped guidelines, Fannie told servicers they will be required to contact home owners verbally and in writing within 120 days after a loan first becomes delinquent. They will need to try to complete a loan modification or other option that keeps the borrower in their home or helps the borrower avoid the foreclosure process.

If foreclosure is unavoidable, servicers will need to follow a clear timeline and must begin the foreclosure process once a loan has been delinquent for more than 120 days. Servicers also must make it clear when a property in the foreclosure process will be sold.

Source: “Fannie Mae Updates Rules on Delinquent Loans,” Associated Press (6/0 6/11) 

“Little customer service relationships” with the banks problem loans in the Placerville, California regions, continue to slow economic recovery. Let’s hope this really represents a change for the better!  Other related articles at: www.sierraproperties.com

In negotiation talks with state and federal officials, the nation’s largest banks said they are willing to pay $5 billion to settle an ongoing probe into claims of faulty foreclosure practices.

Bank of America Corp., JPMorgan Chase & Co., CitiGroup Inc., Wells Fargo & Co., and Ally Financial Inc. made the offer during negotiation talks this week with state attorneys general and federal officials. The five bank giants service more than half of mortgages in the country.

The ongoing settlement talks stem from an investigation into banks’ foreclosure practices, which revealed last fall a “robo-signing” scandal in which thousands of foreclosures were approved without proper reviews.

Since then, state attorneys general, along with other government agencies, have worked to change banks’ foreclosure procedures and penalize banks for shoddy practices.

The $5 billion offer from banks comes at time when state attorneys general are pressing banks to agree to a special fund that would cover principal write-downs for struggling home owners, a proposal that banks have strongly opposed. The banks argue that any plan that would reduce borrowers’ loan balances would just encourage more home owners to default.

Source: “Banks Said to Offer $5 Billion to Resolve Probe of Foreclosures,” Bloomberg (May 11, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Eighty-two percent of independent landlords say they would rent to someone who had lost a home in foreclosure, if the applicant had otherwise good credit, according to a new survey by The National Association of Independent Landlords.

“Landlords typically won’t rent to applicants with poor credit–and a foreclosure will absolutely slam someone’s scores,” says Tracey Benson, president of The National Association of Independent Landlords. “The exception is when they see people who have paid their bills their whole life, but lost their job, can’t meet their mortgage and must hand their keys back to the bank.”

Benson says that applicants with a foreclosure aren’t necessarily bad credit risks. “Often, they lost their jobs and homes through no fault of their own,” she says.

As such, “because of this abundance of defaults, there is a greater need for rental property, so landlords should carefully vet applicants,” Benson says, adding that landlords should do a thorough background check to determine whether defaulting applicants were a victim to financial woes or following a lifelong trend of not paying bills.

Source: “Most Landlords Say They Would Rent to People Who Lost Homes to Foreclosure, The National Association of Independent Landlords Finds,” PRNewswire (April 20, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Mortgage delinquencies on single-family homes continued to inch down in March, as did first-quarter home-owner vacancies, two government agencies report this week.

For the fourth straight month, mortgage delinquencies dropped in March as delinquencies on single-family homes fell to 3.63 percent last month compared to 3.78 percent in February, Freddie Mac reports.

Meanwhile, the percentage of empty homes dropped in the first three months of the year, although overall vacancies remain high.

The first-quarter home-owner vacancy rate fell to 2.6 percent from 2.7 percent in the fourth quarter of 2010, according to the Commerce Department.

The residential rental vacancy rate increased to 9.7 percent in the first quarter, compared to 9.4 percent in the prior quarter.

Details at:  “Freddie Mac: Mortgage Delinquencies Decline Again in March,” Dow Jones Business News (April 26, 2011) and “First Quarter Home Owner Vacancy Rate Falls to 2.6 pct,” Reuters News (April 27, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

RealtyTrac, a foreclosure data resource, and SmartZip, an investment analytics company, are teaming up to offer HomeScore ratings for foreclosure properties.

The HomeScores allow buyers a different to size up bank-owned properties by providing information on the foreclosed home’s potential for above average price appreciation and below average costs. For example, properties that receive scores of 35 or above are considered good-to-excellent investments.

“This enables shoppers to get an independent assessment of the long-term value of foreclosures,” says Avi Gupta, SmartZip’s vice president of research and marketing. “Shoppers can also easily compare properties against each other, since HomeScore is a relative rating on a scale of 1 to 100.”

The scores will appear in the listing search results at RealtyTrac, and site visitors will also have the option of even sorting foreclosed property results based on HomeScore ranges.

Source: “RealtyTrac Teams Up With SmartZip,” Inman News (April 25, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Banks who spend the extra cash to rehab a foreclosed or REO property stand to sell the property much faster than a non-rehabbed REO, according to a new study by Field Asset Services Inc., a property preservation and REO asset management company.

For the last two years, the company has analyzed the number of days on market for remodeled foreclosure or REO properties versus those that are not remodeled.

In reviewing 17,252 properties across 13 states, researchers found that the average days on the market for REO properties that were not rehabbed was 222.8 days. On the other hand, properties that were rehabbed sold, on average, in 69.8 days.

“When a home looks better, it sells faster,” Javier Zuluaga, director of sales and marketing for Home Repairs and Remodeling (HR&R) LLC in Tempe, Ariz., told Inman News.  

Full article at: “Rehabbed REOs Spend Less Time on Market,” Inman News (April 22, 2011) 

Our comment: Lenders might consider this in the Sacramento and Placerville, California regions. This is what may cash buyers are doing.   

Banks continue to receive backlash for their handling of a flood of foreclosures across the country. A new report released this week by federal regulators finds that banks failed to do a good job in handling foreclosures and sometimes evicted home owners when they clearly should not have.

The problems were “significant and pervasive” and added up to “a pattern of misconduct and negligence,” according to the Federal Reserve. The Fed says it soon plans to announce monetary penalties against mortgage servicers.

The report revealed several cases “in which foreclosures should not have proceeded due to an intervening event or condition,” such as families in bankruptcy or home owners who were eligible for a loan modification or even in the process of doing a loan modification.

Source: “Report Criticizes Banks for Handling of Mortgages,” The New York Times (April 14, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at:  www.sierraproperties.com