By Robert Freedman, senior editor, REALTOR® Magazine
A government-mandated foreclosure moratorium would take about 20 percent of homes available for sale off the market, and that’s something that would hurt the home sale market today and hinder the recovery that’s so badly needed tomorrow, NAR Chief Economist Lawrence Yun said in his monthly existing-home sales press conference yesterday. (See video)
Yun said the banks are right to look at their foreclosure processing to identify their paperwork mistakes. Those mistakes need to be fixed, because buyers are rightly concerned about buying foreclosures if there’s any uncertainty about the validity of the title. But right now that should be as far as the response goes in addressing improperly processed foreclosures, he said.
Just the threat of a moratorium is impacting sales. NAR surveyed about 2,000 of its members and found about a quarter of them have had a buyer pull out of the market out of concern over a moratorium.
Yun didn’t say this, but the statistics suggest buyers are concerned the rug will get pulled out from under them if they try to buy a foreclosed property.
By Brian Summerfield, Online Editor, REALTOR® Magazine
Source: Wikipedia Creative Commons
If you’ve ever wondered what the entirety of online communities would look like in cartographic form — and really, who hasn’t? — then you should give this map from blogger XKCD a look. In this analogical atlas, social media platforms are represented by landmasses, and topical trends are represented by topographical features or bodies of water (e.g., “Bieber Bay”).
This is probably more amusing than anything else, and you can definitely find yourself wasting several minutes scanning the map for little “Easter eggs.” But real estate pros who don’t know much about social media can discern a few key concepts just by looking at this thing for a few seconds. Here are some of the main take-aways:
Facebook is huge: The network dominates the social media map the way Russia dominates the map of the physical earth. The other networks tucked in to the left, er, West (and located perilously close to the “Charred Wasteland of Abandoned Social Networks”) of Facebook are together just a fraction of its size. While some of the networks are filling certain niches (such as MySpace for music or LinkedIn for business), none of them come close to the overall activity of Facebook. If you’ve only got time for one social network, this map makes clear which one you should be on. Continue reading »
By Robert Freedman, senior editor, REALTOR® Magazine
Bank of America and GMAC Mortgage, two of the big banks that are looking into their foreclosure procedures after irregularities were found, say they’ve resumed foreclosures, either all or in part. But, based on the reaction their announcements received, the foreclosure issue seems far from over.
The 50 state attorneys general are moving forward with their sweeping investigation of the foreclosure procedures of the big banks, some members of Congress continue to press for a nationwide foreclosure moratorium (and will be holding a hearing in mid-November), and some interest groups remain vocal about halting foreclosures until banks’ procedural issues have been ironed out.
For you, as real estate professionals, the big issue remains the impact all of this is having on sales. Buyers are understandably nervous about proceeding with offers on foreclosed homes if they feel the rug can get pulled out from under them at any time.
But there are other impacts on you as well. What do you do if you’re listing an REO and you’re told by the bank that it’s reviewing the foreclosure paperwork on that property? Do you pull the property off the MLS, or do you continue to market it if it hasn’t yet attracted an offer? And what do you tell the buyer if it has attracted an offer?
What if the property is owned by a third party that bought the house as an REO from the bank, and now the bank is saying it’s reviewing the foreclosure paperwork on it? Do you automatically pull it out of the MLS? What if the third-party owner wants to keep it listed and wants you to continue marketing it?
What about the availability of title insurance? If a lender or a buyer (in the case of buyer’s title insurance) can’t get title insurance because the foreclosure was deemed invalid, can the sale proceed? What if it’s not yet clear whether the foreclosure is valid or not? Can a buyer get a commitment from a title insurer that title insurance can be issued on the property? If no title insurer will make that commitment, should the buyer proceed with the offer? And, even if an insurer provides a commitment, is that as good as a guarantee that the property will get title insurance, or is such a commitment no more solid than a routine bank pre-qualification letter?
These are some of the questions we hope to answer in a webinar we’re hosting next week, on Thursday, Oct. 28, on the foreclosure issue. NAR Associate General Counsel Ralph Holmen and American Land Title Association (ALTA) attorney Steve Gottheim will explore these kinds of questions. We’ll get an update on what’s happening with the calls for a moratorium, too.
The webinar is free and lasts one hour. Learn more about it and register.
By Robert Freedman, senior editor, REALTOR® Magazine
[Editor's Note: The announcement that Bank of America and GMAC would resume some foreclosures changes the situation somewhat, but there is still a great deal of uncertainty surrounding the remaining foreclosure freezes. Also, political pressure to halt foreclosures remains significant.]
Given the daily headlines on the foreclosure freeze it’s easy to lose sight of that fact that most lenders are not putting a halt to their foreclosure processing. Earlier this week I sat down with my colleagues Jeff LIscher, NAR’s managing director of regulatory policy, and Paul Bishop, NAR’s vice president of research, to get their take on what’s happening with the foreclosure freeze. (See the video.)
Jeff’s first point was that there are thousands of lenders and only a handful are freezing their foreclosures while they review whether their past foreclosures were handled correctly.
So far, only a few major banks are implementing a moratorium while they conduct their reviews. Bank of America is the biggest. It’s halting foreclosures in all 50 states. J.P. Morgan Chase is halting foreclosures in about half the states. Same thing with GMAC Mortgage. But Wells Fargo, another big lender, isn’t implementing a freeze.
This isn’t to say the problem isn’t big. It appears to be very big. But it’s not all-encompassing, and I think that was Jeff’s point.
Paul reinforced this point by making clear the bulk of foreclosures are concentrated in just a handful of states, with just two, California and Florida, accounting for a third of all foreclosures. And California isn’t a pure judicial foreclosure state. It’s a hybrid in its legal processes for foreclosures. Continue reading »
By Melissa Dittmann Tracey, contributing editor, REALTOR® Magazine
Do you ever tell others that you are “showing a foreclosure?” If so, you’re not using the word “foreclosure” correctly.
Some real estate professionals use the term to refer to all distressed properties, Kathy Mehringer, director of risk management with Coldwell Banker Residential Brokerage, Southern California companies, told attendees at a session last week during the California Association of REALTORS® Expo.
Here are the definitions Mehringer provided to set the record straight:
Foreclosure is a legal process by which a defaulting borrower is deprived of their interest in the property.
Real estate owned (or REO), on the other hand, is a real estate asset owned by the lender that is taken back during the foreclosure process.
By Robert Freedman, Senior Editor, REALTOR® Magazine
About half a dozen articles and editorials have come out in the last two days cautioning against the federal government imposing a national moratorium on foreclosures while banks review their processes. They’re summarized here for informational purposes only.
The Politics of Foreclosure, Wall Street Journal, Oct. 10, 2010. The foreclosure problem isn’t about whether some home owners had their homes wrongly foreclosed upon (there’s been no evidence of that to date) but to what extent banks were taking short cuts on foreclosure procedures in states requiring judicial foreclosures. Banks need to conduct their reviews and correct their processing mistakes, but talk in Congress about imposing a national foreclosure moratorium would unnecessarily disrupt the housing market at a time when it needs to find its bottom and move on.
SIFMA: U.S.-Wide Foreclosure Moratorium Would Be a ‘Catastrophe’, Dow Jones Newswires, Oct. 10, 2010. The Securities Industry and Financial Markets Association (SIFMA) says cases of incorrect foreclosure processing must be identified and addressed on a case-by-case basis but imposing a national moratorium while banks sort things out could be “catastrophic” for the housing market and the economy.
Senior White House Official: Not Sure About a National Foreclosure Moratorium, Washington Post, Oct. 10, 2010. White House Senior Advisor David Axelrod says there are valid foreclosures that would get caught up in a national moratorium, throwing the housing market into turmoil. Meanwhile, congressional leaders are ramping up talk about imposing a national moratorium.
Obama Administration Does Not Support U.S. Moratorium on Foreclosures, Washington Post, Oct. 11, 2010. FHA Commissioner David Steven says it’s crucial to protect households from being foreclosed upon in error but the government must be careful not to overreach and apply a remedy that will make the problem of foreclosures worse, which is what a national moratorium could do.
Foreclosure Freeze Could Undermine Housing Market, Associated Press, Oct. 11, 2010. Widely watched housing economists Karl Case of Wellesey and Mark Zandi of Moody’s Analytics were starting to become relatively upbeat about the housing market before the foreclosure processing problems came to light. Now both of them are concerned that the problem, and the effort to fix it, could set back the recovery. “Anything that slows the foreclosure process is a bad thing,” says Case. Banks say the issue isn’t whether the mortgages should have been foreclosed upon but about the procedures they used, because most people who were foreclosed upon were behind on their payments.
Recent Comments