Posts Tagged ‘California’

Foreclosures Decline, But Expect a Spike Thanks to Banks Settlement

Monday, March 26th, 2012

Foreclosure filings declined eight percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, according to RealtyTrac Inc. A total of 206,900 homes received notices of default, auction or repossession last month, down two percent from January, according to the data firm, which noted that one in every 637 households received a filing.  Those numbers could rise sharply in coming months.

Banks slowed foreclosures for more than a year as attorneys general in every state investigated charges of shoddy and incomplete paperwork.  A $25 billion settlement with the five largest lenders removed some roadblocks to property seizures and gave the go-ahead for future actions, Brandon Moore, RealtyTrac’s chief executive officer, said.  “February’s numbers point to a gradually rising foreclosure tide.  That should result in more states posting annual increases in the coming months.”

“The pig is starting to move through the python,” said Daren Blomquist, RealtyTrac’s director of marketing.  The banks “have already adjusted their foreclosure practices to fit the terms of the settlement.  We expect that to continue as (the settlement) gets finalized,” Blomquist said.

The settlement clarifies the way in which foreclosures must be handled.  That is expected to let banks speed up their processing, putting many delinquent homeowners into the foreclosure process.  Cases could move forward after being on hold for months — even years — with their delinquent owners still living illegally in the properties.

“The foreclosure and mortgage settlement filed in court earlier this week will help pave the way to a properly functioning foreclosure process by providing a clear roadmap for necessary foreclosures,” Moore continued.  “That should result in more states posting annual increases in the coming months.  Not surprisingly, many of the biggest annual increases in February were in states with the more bureaucratic judicial foreclosure process, which resulted in a larger backlog of foreclosures built up over the last 18 months in those states.”

Cities with the highest foreclosure rates were Riverside-San Bernardino in California (one in 166 housing units); Atlanta (one in 244); Phoenix (one in 259); Miami (one in 264); and Chicago (one in 302).

The Department of Housing and Urban Development’s (HUD) Office of the Inspector General’s report found that several banks violated servicing standards and foreclosure procedures and engaged in extensive robo signing.  The banks agreed to follow new servicing standards and offer relief to borrowers by providing $10 billion in principal reductions, $3 billion in refinancing loans and $7 billion in alternatives to foreclosure.  Foreclosures in the 26 states with a judicial foreclosure process rose 24 percent over last year, while activity in the 24 states that follow a non-judicial foreclosure process fell by 23 percent

Default notices, the initial step in the foreclosure process increased more than 20 percent in 12 states, including Hawaii, Maryland, Connecticut, South Carolina, Indiana, Pennsylvania and Florida.  State attorneys general have filed lawsuits against major lenders in New York, California and Nevada in recent months, further slowing the pace of foreclosures in those states.

August Foreclosures Rise 33 Percent Over July

Tuesday, October 11th, 2011

Default notices sent to delinquent U.S. homeowners soared 33 percent in August when compared with July, evidence that lenders are accelerating the foreclosure process after almost one year of delays, according to RealtyTrac, Inc.  First-time default notices were filed on 78,880 homes, the highest number in nine months.  Total foreclosure filings, which also include auction and home-seizure notices, rose seven percent from a four-year low in July to 228,098.  One in 570 homes received a notice during August.  “The industry appears to be hitting the reset button and the logjam may finally be breaking up,” Rick Sharga, RealtyTrac senior vice president, said.  Foreclosure filings in 2011 have been “artificially low.”

“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” Sharga said. “It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.”  Foreclosure activity started declining last year after problems surfaced with the way many lenders were handling foreclosure paperwork, such as shoddy mortgage paperwork comprising several shortcuts known as robo-signing.

Additional factors have also stalled the pace of new foreclosures.  In some cases, the process has been held delayed by courts in states where judges are involved in the foreclosure process, a possible settlement of government investigations into mortgage-lending practices, and lenders’ reluctance to take back properties because of slowing home sales.  A rise in foreclosures also means a potentially faster turnaround for the U.S. housing market.  Experts say that revival won’t occur as long as the glut of potential foreclosures remains on the market. 

Foreclosures depress home values and create uncertainty among potential homebuyers who worry that prices may further decline as more foreclosures hit the market.  There are approximately 3.7 million more homes in some phase of foreclosure at present than there would be in a normal housing market, according to Citi analyst Josh Levin.  “This bloated foreclosure pipeline now presents the greatest obstacle to a housing market recovery,” he said.

Although negotiations between some banks and state attorneys general regarding foreclosure practices are still unresolved, several restarted foreclosure actions after an April settlement with federal regulators.  JPMorgan Chase & Co., as of the end of June, had resumed foreclosure actions in nearly all of the 43 states where it had suspended its efforts.  So-called “shadow inventory,” or the looming foreclosures that are still expected to hit the market, is a major threat for a housing sector that already has a glut of unsold homes.  In spite of everything, default notices had fallen 18 percent when compared with August of 2010 and down 44 percent from the peak reached in April 2009 during the tail end of the recession.

Writing for The Consumerist website, Chris Morran says that “Last year, several of the country’s largest mortgage servicers — Bank of America, GMAC/Ally, JPMorgan Chase, among others — were forced to hit the pause button on foreclosure procedures after it was revealed that many foreclosure documents were being rubber stamped by untrained, ill-informed ‘robo-signers.’  This delay caused a bottleneck of foreclosure-worthy properties waiting to be reviewed.  But now it looks like those homes are starting to trickle out into what could be a flood in early 2012.  According to Bank of America, “We are on an ongoing path to return foreclosures to normal levels. Strong gains like that from July to August demonstrate our progress – primarily in judicial states — clearing more volume to advance to foreclosure once we pass the numerous quality controls we have in place and exhaust all options with homeowners.  Our progress each month builds upon foreclosure levels lower than the market realities would dictate.”

A more optimistic view of the dismal report was offered by Gregory Tsujimoto, who performs market research for John Burns Real Estate Consulting in Irvine, CA, and views the data as reflecting more of a stall in an improving market than a new downtrend.  Despite the sharp increase in monthly figures, Tsujimoto attaches more weight to an 18 percent decline in default notices on a yearly basis.  Tsujimoto believes that the uptick in default notices is “a leading indicator for future foreclosures, which is not coming at a great time when measures of consumer confidence have declined.”  But, he says that we must address the backlog of distressed inventory and “vacant homes in the marketplace before we get true improvement.”  The other key, he says, is “creating jobs to spur demand.”

Among the states with the highest foreclosure rates, California led in new foreclosures with an increase of 55 percent over July, according to RealtyTrac.  Cities in inland California posted big jumps, with Riverside and San Bernardino counties soaring 68 percent, Bakersfield 44 percent and Modesto 57 percent.  “Scratch beneath the surface and there’s not a lot to cheer about this month.  Home sales were up from a year earlier but remained far below average,” DataQuick President John Walsh said.  “Many would-be buyers can’t find financing, and others who want to make a move now are stuck because they owe more than their homes are worth.”

The decision to move ahead is an important one since RealtyTrac has long maintained that property values won’t rise until a large number of distressed properties are purchased.  “We don’t know yet if this is a beginning of a trend, but there is a good chance we might see a return to more realistic foreclosure numbers,” Sharga concluded.

Foreclosures Appear to Be Stabilizing

Monday, August 29th, 2011

Foreclosure filings fell a dramatic 35 percent in July to the lowest level in nearly four years as lenders and state and federal agencies ramped up their efforts to keep delinquent borrowers in their homes, according to RealtyTrac Inc.  A total of 212,764 properties received default, auction or repossession notices, the lowest number in 44 months.  Filings declined on a year- over-year basis for the 10th consecutive month, and were down four percent when compared with June.  One in every 611 households across the country received a notice.  “The downward trend in foreclosure activity has now taken on a life of its own,” RealtyTrac Chief Executive Officer James J. Saccacio said.  “Unfortunately, the fall-off in foreclosures is not based on a robust recovery in the housing market but on short-term interventions and delays that will extend the current housing market woes into 2012 and beyond.  It appears that processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts, may be allowing more distressed homeowners to stave off foreclosure.” 

Nevada leads the nation with the highest foreclosure rate of any state, one filing for every 115 homes.  California, with one foreclosure for every 239 homes came in second, while Arizona, with one in every 273 homes, was third.  Las Vegas continued to record the nation’s highest foreclosure rate, with one in every 99 homes getting a foreclosure filing in July. 

Foreclosure auctions, the final step in the agonizing foreclosure process were also scheduled on five percent fewer properties in July.  The month’s auction total hit a three-year low and was nearly half (46 percent) below the March, 2010, peak.  An estimated four million vacant homes not yet accounted for by lenders constitute an immense inventory of residential properties, approximately 2.2-million of which are in default and have not yet been formally foreclosed known as the “shadow inventory” weigh down the marketplace. 

The Obama administration is proactively seeking ways to dispose of foreclosed homes that are under government control.  The goal is to “bring stability and liquidity” to the housing market, Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA), said.  The FHFA regulates Fannie Mae and Freddie Mac, which guarantee approximately 90 percent of American mortgages.  President Obama has proposed a program to encourage the rental of foreclosed homes owned by the Federal Housing Administration, Fannie Mae, and Freddie Mac.  Banks could adopt similar programs and offer homes at steep discounts to get residential real estate off their books.  Financial institutions typically get lucrative write-offs from these and so might prefer to rent some properties.  Other federal attempts to prop up the housing market have not been successful to date.  The Making Home Affordable Program operation was launched in March of 2009 with the main component the Home Affordable Modification Program.  This was created to cut mortgage payments for families who couldn’t afford them, but wanted to keep their houses.  A Congressional Oversight Panel report said the programs had failed and fell far short of its goal to modify mortgages for three million to four million homes.  The new Obama plan to rent foreclosed homes has the potential to positively impact home prices.

Writing on MSNBC, John W. Schoen says that “A sharp slowdown in the pace of home foreclosures may help ease the financial burden on bankers by helping them unload a glut of repossessed homes more slowly and delay booking losses from the sale of distressed properties.  But it will do little to help millions of Americans families at risk of being tossed from their homes in the next few years.  The slowdown follows a wave of legal challenges by homeowners that has all but shut down the machinery of bank repossession in some states.  Some homeowners are disputing the widespread practice of ‘robo-signing’, in which lenders process batches of foreclosure fillings with little or no formal review.  Other homeowners have successfully halted repossessions by questioning shoddy paperwork or broken paper trails that don’t establish clear title to a property.  The slowdown has left millions of American households in legal limbo, prolonged the housing market’s four-year recession and delayed hopes for a broader economic recovery.” 

“The process has more or less ground to a halt in a lot of states that do foreclosures through the court system,” said Rick Sharga, a senior vice president at RealtyTrac.

North Dakota’s Booming Economy Grew 7.1 percent in 2010

Wednesday, July 13th, 2011

Guess which state’s economy grew at a significantly faster pace than the nation’s measly 2.9 percent?  According to a report from the Department of Commerce, it’s North Dakota, whose economy expanded a robust 7.1 percent in 2010.The key driver behind both North Dakota’s success is drilling for oil.  Historically, North Dakota’s mining sector — which includes oil — was quite small compared to its overall economy.  That has undergone change in recent years due to new technology that makes it possible to tap billions of barrels of oil in a remote area of North Dakota known as Bakken. American oil demand was relatively flat last year — but that made no difference in North Dakota.  Mining surged 59 percent, primarily because businesses were working to build the infrastructure to support this young industry in the Bakken region.  “North Dakota has a lot of untapped shale oil, and developing that field may have attracted a lot of investment and a lot of employment into the state,” said Luke Popovich, a spokesman for the National Mining Association.

By 2015, the new fields could yield as much as two million barrels of oil a day — more than the entire Gulf of Mexico produces now.  This new drilling is expected to raise American production by a minimum of 20 percent over the next five years.  Within 10 years, it could reduce oil imports by more than half.  “That’s a significant contribution to energy security,” said Ed Morse, head of commodities research at Credit Suisse.

Among the other states, one of the prevailing themes impacting growth is the ongoing housing slump – which was most evident in Nevada and Arizona.  Several states — including Indiana, Massachusetts and Oregon — saw a manufacturing comeback for autos, high-tech equipment and machinery.

The states seeing the greatest growth in 2010 after North Dakota include New York at 5.1 percent; Indiana at 4.6 percent; Massachusetts at 4.2 percent; and West Virginia at 4.0 percent.

Wyoming was the loser with its $34 million GDP falling 0.3 percent in 2010. It’s because the majority of Wyoming’s coal is used to generate electricity — and when demand for energy declined. last year, it was a setback for Wyoming’s mining industry.  With the energy sector rebounding and coal prices soaring, Wyoming is likely to fare better in 2011. Wyoming performed very differently from North Dakota in 2010.  Mining is a well established segment of the economy, accounting for approximately one third of the entire state’s GDP.  When energy demand fell and oil prices barely picked up in 2010, Wyoming’s GDP was badly hurt.  “When the economy is just flat or just limping along, you can expect a state like Wyoming to really take it hard,” Popovich said.

After Wyoming, the slowest growing states are Nevada at -0.2 percent; Arizona at 0.7 percent; Oklahoma at 0.7 percent; and Montana at 1.1 percent.  States like Delaware, which rely heavily on manufacturing of soft goods such as plastic, struggled due to weak consumer demand and competition from producers overseas.

“It’s only been fleshed out over the last 12 months just how consequential this can be,” said Mark Papa, chief executive of EOG Resources, the first company to use horizontal drilling to tap shale oil.  “And there will be several additional plays that will come about in the next 12 to 18 months. We’re not done yet.”

Foreclosed Homes Total a Three-Year Supply

Tuesday, June 14th, 2011

The current national inventory of foreclosed homes represents a three-year supply, according to RealtyTrac.  Not surprisingly, that is depressing home prices.  “This is very bad for the economy,” said Rick Sharga, a RealtyTrac spokesman.

In Las Vegas, the foreclosure situation is so dire that more than half of all homes sold in Nevada are foreclosures.  In California and Arizona, 45 percent of sales are foreclosures; that totals 28 percent of all existing home sales during the 1st quarter of 2011.

Additionally, the nation’s stock of foreclosed homes are selling at deep discounts, particularly REOS, which are bank-owned homes.  The typical REO sold for about 35 percent less than comparable properties, according to RealtyTrac.  In some areas, the discounts were ever steeper: In New York, the discount for REOs was 53 percent during the 1st quarter and almost 50 percent in Illinois, Ohio, and Wisconsin.

“Short sales,” homes where the selling price is less than what is owed by the borrowers, are also dragging down the market.  These sell for an average nine percent discount.  When you consider both REOs and short sales, Ohio had the biggest discount of any state, at 41 percent.

During the 1st quarter, there were 158,000 sales involving distressed properties nationally, less than half the nearly 350,000 during the same period of 2009.  With the slower pace of sales, it will take three years to sell off the inventory of 1.9 million distressed properties, according to Sharga.  “Even if you look at REOs alone, it will take 24 months to clear them and that’s without any new foreclosures at all coming into the system,” he said.

RealtyTrac found that the average sales price of properties in some stage of foreclosure, scheduled for auction or bank-owned — was $168,321, down 1.89 percent from the 4th quarter of 2010.

A total of 158,434 bank-owned homes and those in some stage of foreclosure were purchased during the 1st quarter, a 16 percent decline from the 4th quarter of last year and down 36 percent from the 1st quarter 2010 total.  Bank-owned properties that sold in the 1st quarter had been repossessed an average of 176 days before the sale, while properties that sold in earlier stages of foreclosure in the 1st quarter were in foreclosure an average of 228 days before they were sold.  According to James J. Saccacio, chief executive officer of RealtyTrac, “While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery.  At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure.”

Foreclosures are particularly attractive to all-cash buyers who demand discounts,  pushing down the value of all properties.  More than 75 percent of American cities experienced price declines in the 1st quarter.  Bank-owned homes totaled 107,143 sales in the 1st quarter, down 11 percent from the 4th quarter and almost 30 percent from 2010.  Sales of homes in default or scheduled for auction totaled 51,291, a 26 percent decline, according to RealtyTrac.  That was less than half the peak of 348,629 distressed deals in the 1st quarter of 2009.

Writing on the website 24/7wallstreet.com,  Douglas A. McIntyer offers an interesting perspective.  “Any economist will say that when some homes are sold at 27 percent below the normal market, all home prices will be pulled lower.  That may be the key to the home market recovery.  Foreclosure inventory will continue to rise as banks put more backlogged homes onto the market.  The glut will probably push down the average of all homes by several percent. This may be a reason home prices are predicted to fall another 10 percent this year.  Buyers will not come back to the housing market until they believe that prices are too good to resist.  That may mean homes that sold for $500,000 in 2005 will have to sell for $300,000 next year.  Prices will not be driven down quickly without the reduction in inventory of foreclosed homes.  There has to be a bottom to prices.  The sooner it is found the better.  The housing market is more than half dead.  The only tonic is a belief by buyers that prices are so remarkably low that new buyers will make money on a house and not lose it.  If the housing market is to continue to drop, the drop needs to be swift.  Mortgage rates are near all-time lows.  Inflation and concerns about the value of Treasuries due to the U.S. national deficit could change that.  Home prices that are viewed as affordable need to be married with low mortgage rates for the market to catch fire.”

“The Terminator” Wants to Create Green Solutions

Tuesday, March 15th, 2011

Former California Governor Arnold Schwarzenegger recently called for the end of false debate over climate science, saying that we should not assume that China will create green technologies that Americans can adopt and to admit that global warming will impact the globe in coming years. In a speech at the APRA-E Energy Innovation Summit in Washington, D.C.,  Schwarzenegger said that changing to a green economy, fixing the environment and ending the political stalemate over carbon legislation are well within the power of today’s technology.

“We want a new era of energy independence, a new era of green technology and green jobs, a new era of better health from a cleaner environment, and a new era of American inventiveness,” Schwarzenegger said.

Schwarzenegger connected the green economy of the future to the current unrest in the Mideast. He said that the overthrow of foreign dictators seemed impossible a month ago but now seems inevitable.  At the same time, he believes that defeatism about the ability of a green revolution to transform America will soon look incongruous.  The former California governor also pointed to the recent volatility in oil prices resulting from upheaval in the Middle Eastern as a clear example of why the United States needs to wean itself off foreign oil.  “Why should a dried-up desert country with a crazy dictator like Libya play havoc with America’s energy future?” Schwarzenegger asked.

Schwarzenegger pointed out that California offers a model for tech companies that can help vitalize the economy and cut greenhouse gases, while helping the country reduce its imports of oil. As governor, he signed a global-warming law that mandates reductions in greenhouse gases; California also has a renewable-energy mandate that has resulted in almost 20 percent of electricity coming from renewable sources.

He lamented the national discussion on clean energy, saying too much of it is stuck in the debate over the science of global warming.  Instead, people should focus on immediate benefits from investing in green technologies, including improved health, economic growth, consumer savings from efficiency, and reduced dependence on foreign oil.

“Think about what it means that in the Central Valley of California, one in six children has to walk around with an inhaler.  I know we can change the debate and win the debate,” he said.  “We can’t talk about global warming, because people can’t relate to that.”  Instead of creating “forward-looking policies” for energy use, elected officials are debating the science of global warming.  “There is a disconnect between what is happening and what is being debated,” Schwarzenegger concluded.

Yahoo! Planning a New Corporate Home

Thursday, June 10th, 2010

 Yahoo wins approval for a new corporate campus in Santa Clara, CA.  Advance planning has put the heavily trafficked Internet destination and online media company Yahoo! in a sound position to develop a planned 3,000,000 SF campus in a high-profile location in Santa Clara, CA.  Yahoo! purchased the 48-acre site in 2006 – well before the financial crisis and increased competition from Google and Facebook.  Although no construction start date has been announced, Yahoo!’s plans have won the approval of the Santa Clara City Council, which certified the environmental impact report and the development agreement.

Currently based in Sunnyvale, CA, Yahoo! plans to develop 13 six-story office and R&D buildings; three two-story common buildings; and two levels of underground parking at the site.  When completed, the campus will accommodate as many as 12,000 employees.  According to Yahoo!, the development would consolidate its employees and facilities in a Silicon Valley region with “high corporate visibility”.  The development agreement gives Yahoo! the authority to build at the site for as long as 20 years.

Inland Empire Poised for Industrial Comeback

Wednesday, July 22nd, 2009

Over the past decade, California’s Inland Empire has been transformed from a little-known region with affordable housing and lots of inexpensive land into an industrial hub – thanks to its proximity to the busy Ports of Los Angeles and Long Beach.  With the City of Ontario embarking on The Ontario Plan, sciearmalogo2city fathers are laying the groundwork for increased investment over the next 30 to 40 years.  The plan’s goal is to create an all-inclusive community where people and businesses will want to be.

According to Mary Jane Olhasso, economic development director for the City of Ontario, “Although firms are pulling back, they still realize that the region has competitive advantages over our coastal neighbors.  In Ontario, both industrial and office lease rates are lower than Los Angeles and Orange County.”

The Inland Empire’s industrial market is in a prime position to recover when the economy improves because the region is notable for its relatively low-cost housing, large workforce and vital location relative to international shipping.  With 40 percent of all containerized cargo entering the United States through Southern California ports, the Inland Empire is the logical location for gigantic distribution centers to handle the freight prior to shipping it throughout the United States.

Larry Armstrong: Architecture During a Recession

Monday, June 29th, 2009

The best way to survive a recession is to have a strategic plan firmly in place when the inevitable downturn happens.  That’s the opinion of Larry Armstrong, President of Ware Malcomb, an Irvine, CA-based international architectural firm with ongoing projects in the United States, Latin America, Asia and Europe.

architect_istock5775134In a recent interview for the Alter NOW Podcasts, Armstrong says “There is no question that we learned everything about saving a business and building a business during the 1990s downturn.”  In fact, Armstrong’s firm wrote a recession plan several years ago and determined exactly how they would react.  “You have to look at what revenue can support what level of staff and all the additional expenses and costs which, over time, become discretionary.  You have to look at those and decide what is necessary and what isn’t,” according to Armstrong.

The current environment does not support ego-driven, icon architecture.  Rather, there is a move towards thrift, because corporate users want to be seen as economical and functional — not as extravagant.  The recession also has impacted Corporate America’s attitude towards green design and LEED-certified buildings.  According to Armstrong, “We’re seeing a bit of a retreat – not major – and a vast majority of our projects are still LEED certified”.  Still, if the project is industrial, Armstrong is not hearing a desire for LEED certification anymore.

To listen to Larry Armstrong’s full interview on architecture during a recession, click here for the podcast.

 
icon for podpress  Larry Armstrong on Architecture in a Recession: Play Now | Play in Popup | Download

No Port in the Global Fiscal Storm

Wednesday, April 22nd, 2009

Shipping activity has plunged as much as one-third at U.S. ports most heavily invested in the once red-hot but now declining Asia trade. 

Freight rates from South China to Europe have slid as much as 42 percent from some ports since November, leading shipping industry authority Drewry Container Freight Rate Insight Report to speculate that this once-robust market is in freefall.titanic-sinking-7790481

As freight rates fall to record lows shipping companies are playing hardball to remain competitive, even though relatively little product is being shipped these days.  According to Drewry, container lines could see a $68 billion plunge in global revenues this year, compared with 2008 revenues of $220 billion.  Drewry notes that global all-in freight rates fell to $1,681 per 40-foot box, down from $2,098 in November.  That’s a steep $400 drop per feu (forty-foot equivalent unit) or 20 percent in just two months.

The ports of Los Angeles and Long Beach are slashing cargo rates to retain old customers and attract whatever new business they can.  Spanning 10,000 acres, these vast ports typically handle $357 billion in goods every year.  The ripple effect of this year’s overall 18.1 percent downturn is evident in California’s vital Inland Empire logistics market, where higher vacancy rates – now approaching nine percent — are translating to cheaper rents.

Conditions are slightly better at the East Coast ports of New York and New Jersey, because their diverse mix of trading partners include Asia, Europe, Latin America and South America.