More than 40 states to sign foreclosure settlement

More than 40 states will sign a settlement with the top-five mortgage servicers over alleged foreclosure abuses that arose more than one year ago, Iowa Attorney General Tom Miller said in a statement Monday night.

Last week, Miller extended the deadline to Monday for states wanting to sign the deal with Bank of America ($7.97 0.13%), Wells Fargo ($30.20 -0.43%), Citigroup ($33.30 -0.24%), JPMorgan Chase ($38.14 -0.14%) and Ally Financial ($22.95 0.03%).

“The sign-on deadline for the proposed joint state-federal mortgage servicing settlement passed Monday with more than 40 states signing on,” Miller said “This enables us to move forward into the very final stages of remaining work.Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement.”

Throughout the day, those representing states hardest hit by the foreclosure crisis signaled they are still working on the details of the settlement.

“We’re closer,” a spokesperson for California AG Kamala Harris said.

“My office is continuing to review the intricate draft settlement terms and advocating for improvements to address Nevada’s needs,” said Nevada AG Catherine Cortez Masto in a statement. “Receipt of important state specific information is necessary to make our determination and my office is still in discussions regarding that information.”

Florida AG Pam Bondi said she “remains involved in the settlement discussions in order to reach the best resolution for Floridians and all Americans.” She signed a joint letter with other republican AGs in 2010, saying a settlement that would involve principal reduction creates a moral hazard and lead to more strategic defaults.
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An official in one AG office said an announcement is expected at the end of this week at the earliest.

From Bloomberg:

California, N.Y. Are Among Fewer Than 10 Mortgage Deal Holdouts

California and New York’s attorneys general haven’t signed on to a proposed settlement with five banks over foreclosure practices that has won the support of more than 40 states.

California’s Kamala Harris and New York’s Eric Schneiderman, who have been some of the most outspoken in pushing for changes to the deal, are among those who hadn’t joined the agreement as of yesterday’s deadline for states to decide. More than 40 states signed on to the accord, according to Iowa Attorney General Tom Miller, who is helping to lead talks with the banks.

“Adding more numbers probably improves the political dimension of the settlement from the standpoint of the attorneys general,” said Ken Scott, a Stanford University law professor. “If you can say there were only a handful of diehards that didn’t sign on, that gives you some political protection.”
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Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. made a last-minute demand that New York drop claims filed against them Feb. 3 as a condition of the settlement, a person familiar with the matter said.

The push by the three banks raised a new obstacle in getting Schneiderman’s support for the deal, said the person. New York, along with California, Nevada and Delaware said late yesterday they hadn’t signed on to the settlement.

New York sued Bank of America, JPMorgan and Wells Fargo in state court in Brooklyn, saying their use of a mortgage database known as MERS led to improper foreclosures. Schneiderman said the banks’ use of the Mortgage Electronic Registration Systems database misled homeowners, undermined foreclosure proceedings and created uncertainty about ownership interests in properties.

Foreclosure Deal Deadline Arrives as States Must Choose Whether to Sign On

States that balked at bank liability releases in a proposed $25 billion nationwide settlement over foreclosure practices must decide by today whether its mortgage relief and reforms are worth the legal claims they’ll give up.

While some states have already announced their intention to sign the deal, others including California Attorney General Kamala Harris have yet to publicly commit in part due to terms that protect the banks from future litigation. Without Harris, the deal’s value will drop by several billion dollars, according to a person familiar with the matter.

The agreement is “beyond fixing,” said George Goehl, executive director of National People’s Action, a network of community organizations which advocates for fair lending and affordable housing.

“People are very disappointed in what this is going to be both in terms of dollars and release of claims,” Goehl said in a telephone interview. “We’re giving away the store.”

Most states don’t have the resources to go it alone and fight the banks in court, said James Tierney, director of Columbia Law School’s National State Attorneys General Program. States such as California that may reject the agreement must decide whether the time and money needed to fight for a better deal is worth it, given that the settlement provides immediate relief for homeowners, he said.

“How long does it take and how much better?” Tierney said of a state pursuing its own deal. “Is it so much better that it warrants the cost and delay?”
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Today’s deadline, extended by the parties from Feb. 3, comes almost 16 months after all 50 states announced they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes.

One in 12 N.J. home sales was a foreclosure in third quarter

About one in every 12 New Jersey home sales in the third quarter of 2011 involved foreclosed properties — a steep drop from the previous year, according to RealtyTrac, a California company that follows the foreclosure market.

Nationally, foreclosure sales made up 20 percent of sales in the third quarter, down from 30 percent in the same period a year earlier.

Lenders have sharply pulled back on foreclosure activity since fall 2010, when reports arose that lenders’ representatives were “robo-signing” affidavits and other documents — signing them so quickly they couldn’t be verified. Lenders are now trying to show courts in New Jersey and other states that they are not cutting corners in foreclosures. And state attorneys general are close to a settlement with lenders over their foreclosure practices.

“Even with the hurdles to selling foreclosures, foreclosure sales continue to represent a historically high percentage of all sales,” said Brandon Moore, chief executive officer of RealtyTrac. “In 2005 and 2006, foreclosure sales consistently accounted for less than 5 percent of all sales nationwide.”
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Foreclosed properties typically sell at a steep discount, which tends to pull down the prices of competing properties. In New Jersey, foreclosed properties sold for an average of $208,801 in the third quarter, a 38 percent discount to regular properties. Nationally, foreclosed properties sold for an average $165,322, a 34 percent discount, RealtyTrac said.

“The sooner the market gets more clarity about accepted foreclosure procedures, primarily through the long-promised settlement between multiple states attorneys general and major lenders, the sooner the market can more efficiently dispose of these distressed properties,” Moore said.

Bank Foreclosure Deal Reviewed by States as Delaware Drops Out

State attorneys general reviewed a proposed settlement with banks over foreclosure and mortgage- servicing practices that negotiators are pressing to complete as Delaware said it would reject a deal said to total $25 billion.

Representatives of Democratic attorney general offices met at a Chicago hotel yesterday to discuss the negotiated terms and ask questions, said Iowa Attorney General Tom Miller. Miller, who is helping to lead talks, said an agreement with the banks is getting closer.

“There are still issues to be worked out,” Miller said in an interview. “This is one step along the way, and it was a very productive day.”

State and federal officials have been negotiating a settlement with the five largest mortgage servicers — Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc (ALLY). Talks were triggered by disclosures that the companies were using faulty documents in seizing homes.

The $25 billion deal would fund loan principal writedowns for homeowners and provide refinancings, a person familiar with the matter said before yesterday’s meeting. The proposal also sets requirements for how the banks conduct home foreclosures. The settlement would drop to $19 billion if California Attorney General Kamala Harris decides not to sign on, the person said.
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Delaware Attorney General Beau Biden won’t sign on to the proposed agreement as drafted, Delaware Deputy Attorney General Ian McConnel said in a phone interview. He declined to comment on the reason for Biden’s decision.

Biden has been among a group of attorneys general, including New York’s Eric Schneiderman and Harris in California, who have said any settlement shouldn’t protect banks from claims that haven’t been fully investigated, such as claims stemming from the packaging of mortgages into securities sold to investors.

From the NYT:

Political Push Moves a Deal on Mortgages Inches Closer

About one million homeowners facing foreclosure could have their mortgage burden cut by about $20,000 each as part of a long-awaited deal taking shape among state attorneys general, federal officials and the nation’s largest mortgage servicers.

But a final agreement remained out of reach Monday despite political pressure from the White House, which had been trying to have a deal in hand that President Obama could highlight in his State of the Union address Tuesday night.
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The agreement could be worth about $25 billion, state and federal officials with knowledge of the negotiations said, with up to $17 billion of that used to reduce principal for homeowners facing foreclosure. Another portion would be set aside for homeowners who have been the victim of improper foreclosure practices, with about 750,000 families receiving about $1,800 each. But bank officials said Monday that the total amount of principal reduction and reimbursement would depend on how many states eventually sign on.

Economists See Ways to Aid Housing Market

he underpinnings of a housing recovery are hiding in plain sight: sharp price declines, low mortgage rates and rising rents have made owning more affordable than renting in a growing number of markets.

Yet housing largely remains in a funk. The prospect of continued price declines—led by the oversupply of foreclosed homes—has deterred some potential buyers, while others can’t qualify for loans.

Many economists, including some at the Federal Reserve, are urging President Barack Obama to do more, and the president will be “aggressive on housing” in his State of the Union address on Tuesday, his housing secretary said last week. The administration is already rebooting a refinancing initiative and putting finishing touches on programs to convert some foreclosed properties into rentals.

What more can be done? Economists cite three broad ideas that could advance a housing recovery.

First, local investors could play a greater role in spurring a recovery in their own communities. Some mom-and-pop investors have begun to buy up excess housing stock and rent it out.
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Second, policy makers could restore clarity to lending by finalizing a clutch of pending regulations. The government’s extraordinary steps to rescue Fannie and Freddie helped prevent a cataclysmic shock but it has made no real movement to overhaul the companies and the nation’s broader housing-finance machinery.
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Third, a growing number of economists are warning that the overhang of debt in some of the most distressed housing markets will linger for years, particularly if more borrowers default. They say mortgage investors and banks should consider reducing debt for more troubled homeowners.
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Mustering the political will to take any of these three steps wouldn’t be easy. Given the state of the market, “there isn’t a solution which will make everyone love you and cost no money,” Mr. Ranieri says.

Indeed, no single idea will fix all of housing’s problems. Many involve taking on more risk or rewarding bad behavior.

Home prices decline 4.3% in November: CoreLogic

Home prices nationwide fell 4.3% year-over-year in the month of November, according to analytics firm CoreLogic in its November Home Price Index.

Santa Ana, Calif.-based CoreLogic said home prices declined 1.4% from October to November, making it the fourth consecutive monthly decline.

When excluding distressed home sales, prices year-over-year fell only 0.6%, compared to 1.6% in October. Distressed sales include all short sales and REO deals.

“With one month of data left to report, it appears that the healthy, non-distressed market will be very modestly down in 2011,” said Mark Fleming, CoreLogic’s chief economist. “Distressed sales continue to put downward pressure on prices, and is a factor that must be addressed in 2012 for a housing recovery to become a reality.”

Capital Economics expects prices to stop falling this year, although the recent acceleration in the rate of declines “will provide more support to those Fed officials who recently have championed more action to revive the housing market.”

“The current balance between demand and supply, as measured by how long it would take to clear all the homes on the market at recent rates of sale, is consistent with prices stabilizing in six months’ time,” according to the Toronto-based firm.

Bernanke calls for nationwide REO rental program

The government should consider helping the nation’s vacant, unsold stock of foreclosed properties by supporting initiatives to occupy.

Federal Reserve Chairman Ben Bernanke believes that one aspect should be a government support program that allows renters to move into those houses.

In a letter Wednesday to ranking members on the House Committee of Financial Services, Reps. Spencer Bachus, R-Ala., and Barney Frank, D-Mass., Bernanke said that inefficiencies in the foreclosure and mortgage origination processes are dragging on the economic recovery.

However, solutions are available, he added.

“Preliminary estimates suggest that about two-fifths of Fannie Mae’s REO inventory would have a cap rate above 8% — sufficiently high to indicate renting the property might deliver a better loss recovery than selling the property,” Bernanke’s staff writes in a supporting white paper.

“Estimated cap rates on the Federal Housing Administration’s REO inventory are a bit higher — about half of the current inventory has a cap rate above 8% — because FHA properties tend to have somewhat lower values relative to area rents,” they said.
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In a scenario of declining house prices such as this, homeownership should be promoted, according to the white paper. Indeed, they argue that in many cases REO-to-rentals may be inappropriate. Yet unless mortgage origination requirements, with tighter underwriting standards, are loosened in the immediate future, borrowers may have little choice but to rent.

Furthermore, support for such a program will cost mortgage servicers, bond investors and even taxpayers. But it may be a sacrifice for the greater good.

New Jersey foreclosures wait in the wings as court deliberates key case

Hundreds of New Jersey foreclosure cases are waiting in the wings for the state’s Supreme Court to issue what will be a landmark decision in the Garden State.

Legal scholars suggest lenders are waiting to see what the court will do with the U.S. Bank National Association v. Guillaume case before moving forward with thousands of pending foreclosures.

The issue in the case causing lenders to pause is the question of whether a foreclosure notice is made invalid because the lender filed a notice of intent to foreclose with the servicer listed on the notice instead of the lender.

In the original complaint, the Guillaume’s argue the lender, U.S. Bank NA, violated the Fair Foreclosure Act by not including the lender’s information in a spot that ended up containing contact information for the servicer.

Linda Fisher, a professor at Seton Hall Law School who has been following the case, said the foreclosure process is “kicked off by filing the notice of intent to foreclose.” Fisher filed an friend-of-the-court brief with the New Jersey Supreme Court in support of the Gillaumes’ claim.

Fisher says the intent to foreclose form has 24 data points, including the name of the lender and contact information for the lender.

The Guillaumes, who challenged the foreclosure on several fronts, initially claimed the lender “violated the FFA because although the notice of intent to foreclose listed plaintiff as the holder of the note, it did not list plaintiff’s address, but rather, listed the address and telephone number” of the servicer.

An appellate court ruled for the lender and against the plaintiffs saying “directing the Guillaumes to contact ASC (or the servicer) fulfilled the purpose of the notice provision under the FFA — making the debtor aware of the situation, and how and who to contact to either cure the default or raise potential disputes.”

But the case now awaits the New Jersey Supreme Court decision, causing some lenders to pause before launching foreclosures.

Fisher said the initial notice of intent to foreclose claimed the servicer was the lender and the holder of the obligation. Later in the case, the issue became the fact that the lender’s name was listed but with the servicer’s address.

“The banks are contending it is OK to enter only the name of the servicer,” Fisher said. “The Guillaumes are saying the servicer is not a substitute for the lender because the statute is quite clear, and it specifically mentions inclusion of the name of the lender.”

NYC foreclosures drop 32%

New York City foreclosure filings dropped 32% in the third quarter over last year.

Lenders filed 3,168 foreclosures on single-family and multifamily properties during the quarter, according to a study from New York University Furman Center for Real Estate and Urban Policy. The notices, the first stage in the foreclosure process, also dropped 5.4% from the previous three months and were down more than 46% from the peak in 2009.

Roughly 73% of all filings occurred in either Brooklyn or Queens. Over the last two quarters, notices have been more evenly split between homeowners and landlords.

“Given persistent unemployment and delinquency rates nationally, it remains unclear whether the past four quarters of reductions in foreclosure notices is the result of the slow pace of foreclosure proceedings, or a promising sign that more homeowners are now able to meet their mortgage obligations,” said Vicki Been, faculty director of the Furman Center.

Court rule changes and a massive backlog pushed the average completion time to beyond 900 days, the longest in the nation, according to RealtyTrac, which monitors filings across the country.
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Meanwhile, the 5,615 property sales in third quarter dropped 3.6% from last year. Home values declined in every borough but Manhattan.

“Sales volume continued to lag in the third quarter of 2011, showing little change since last quarter and remaining well below the sales volumes we’ve seen in the city in the past decade,” said Ingrid Gould Ellen, faculty co-director of the Furman Center.

In New York City, values are down more than 20% from the peak, which crested sporadically across all major boroughs just before the financial crisis struck in 2007.

Housing Prices Won’t Recover Until 2013: Economists

U.S. home prices will stagnate through next year and only start recovering in 2013, according to economists polled by Reuters who also felt the stimulus options being floated will not do much to reinvigorate the market.

The housing market, considered by many as critical to any meaningful economic recovery, is still struggling to find its footing after collapsing by a third over the past several years, leaving many owing more than their homes are worth.

The poll of 27 analysts taken Nov. 17-22 was more downbeat than a survey taken two months ago, which predicted small home prices rises next year of less than 1 percent on average.

With an excess of unsold homes holding prices down and more foreclosures expected, lawmakers and experts have floated various options for propping up the market until the economy improves and Americans start buying homes again.

But most of the economists polled were sharply critical of two of the main proposals: more purchases of mortgage-backed securities (MBS) by the U.S. Federal Reserve and a reduction in loan principal for struggling homeowners.
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As well, 19 out of 26 who replied said prices could eventually recover without a major program to write down principal payments.

Opponents of such a scheme argue it would come with a hefty price tag, and such a measure would likely be politically sensitive heading into an election year.

Advocates say it’s the only way to head off another wave of foreclosures by keeping underwater borrowers in their homes and will speed up the recovery. Seven economists said house prices would not recover without a writedown plan.
“We see little prospect that any policy action will meaningfully impact the housing outlook over the next year,” said Sam Bullard, senior economist at Wells Fargo.

“Unfortunately, a sustained improvement in housing will not likely get underway until the mountain of foreclosures is cleared and the price discovery process plays out.”
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Home prices as measured by the S&P/Case-Shiller home price index are expected to finish out this year down 3.3 percent compared with the 3.8 percent decline forecast in the September’s poll.

But prices are seen slipping 0.3 percent next year compared to September’s forecast for a 0.8 percent gain. Prices are expected to rise a meagre 1.5 percent in 2013.

Eighteen economists said they see prices bottoming in 2012, with 12 of those expecting it will happen in the first half of the year. Just one economist each said a bottom won’t be found until 2013 and 2014, while 7 said it has already happened.

Foreclosure Filings in U.S. Rise 7% as Bank ‘Rain Delay’ Eases

U.S. foreclosure filings rose 7 percent in October to a seven-month high as lenders started to speed up action against delinquent borrowers after a yearlong review into documentation, according to RealtyTrac Inc.

A total of 230,678 properties received notices of default, auction or repossession, compared with 214,855 in September, the Irvine, California-based data seller said today in a report. One in every 563 U.S. households got a filing.

Notices plunged almost 31 percent from October 2010, when banks and loan servicers began slowing the process after complaints over the way they handled documents for defaults and home seizures. The monthly gain in filings signal that a “rain delay” in foreclosures may be easing, according to RealtyTrac Chief Executive Officer James J. Saccacio. The backlog has been partly to blame for a stalled U.S. housing recovery, he said.

“Sloppy paperwork, government intervention, a slow economy and lack of confidence is a giant concoction lengthening the process,” Saccacio said in a telephone interview.

He estimated that the U.S. housing market needs as long as 40 months to clear a glut of distressed homes that includes properties with negative equity. Almost 29 percent of Americans with a mortgage owe more than their property is worth, Zillow Inc. said this week.
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Default notices increased 10 percent in October from September and rose to an 11-month high in so-called judicial states, where most bank delays had been occurring because the courts oversee foreclosures. Default filings jumped 28 percent in Florida, 50 percent in Pennsylvania and 61 percent in Indiana from September, according to RealtyTrac.

Total default notices were down 23 percent on a year-over- year basis.

U.S. auction notices climbed 8 percent from September, including a 22 percent increase in judicial states. They rose 57 percent in Florida, 43 percent in Minnesota and 38 percent in Illinois. Total scheduled auctions were down 38 percent from October 2010.

Home seizures jumped 4 percent from the previous month, while falling 27 percent from a year earlier. They climbed sequentially by 40 percent in Michigan, 45 percent in Oregon, 48 percent in New Jersey and 73 percent in Indiana, according to RealtyTrac.

Legal issues slow foreclosures

In a small Bergen County courtroom one recent Friday, a sheriff’s officer auctioned off two foreclosed properties in a matter of minutes, as a handful of investors kept their eyes open for bargains.

It was a far cry from the typical sheriff’s auction of mid-2010, when 15 or more properties were auctioned weekly and up to 100 investors crowded the courthouse’s large jury room.

Sheriff’s auctions are among the most visible symbols of the housing crisis, which left many homeowners saddled with mortgages they couldn’t afford. But foreclosure auctions have slowed dramatically since questions arose more than a year ago about “robo-signing” — that is, sloppy paperwork by mortgage lenders and servicers.

Though lenders were given the go-ahead in August to start foreclosing again in New Jersey after showing a judge they were following the rules, they have been slow to resume activity.

The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state’s Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn’t properly identify itself in a notice sent to the troubled homeowners.

Under new state court rules, lawyers working for foreclosing plaintiffs have to personally certify that they have checked the facts behind a foreclosure filing with an employee of the lender or the lender’s servicer. Many have indicated to Wolfe that they are reluctant to sign such a certification, because they’re concerned that the lender’s paperwork may not meet the requirements set out in the Laks decision.

E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, said he believed there was no “real question about the validity of the loans being put through the foreclosure process.”

“The money is still owed; it’s just a matter of making sure you meet the procedural requirements, and we agree the requirements should be met,” Levy said.

Advocates for distressed homeowners say it’s only reasonable to ask lenders to get the paperwork right when it involves a matter as serious as taking someone’s home.

“Any delay that there is in New Jersey is occurring only because lenders haven’t followed the law,” said Margaret Lambe Jurow, a lawyer with Legal Services of New Jersey, who has represented homeowners in foreclosure cases. “Had they filed these things properly, they’d be in and out.”

The implications go beyond the losses suffered by homeowners and lenders. Housing analysts say the troubled real estate market can’t recover until the large number of distressed properties are finally sold. The properties make up a so-called “shadow inventory” — not on the market yet, and likely to ultimately sell at a large discount to other properties, pulling down housing values. Foreclosed homes typically sell at a discount of 20 percent or more, according to research.

Many Foreclosures, Few Listings

PRICES are down across the board so far this year in urban, suburban, rural and shore areas, in both northern and southern New Jersey — everywhere except areas close to Manhattan commuter train service, and in all price categories except, surprisingly, the uppermost.

What is perhaps scarier, market analysts say, is that mass foreclosure actions, which could further hurt home values, have yet to make their presence felt.

“The floodgates have been opened” on foreclosures, said Bill Flagg, a foreclosure specialist with ERA Queen City Realty in Scotch Plains. “Still, we are seeing just a trickle of listings.”

In August, after an investigation into lending practices at five big banks, a state Supreme Court judge removed what had been a de facto moratorium on judicial approvals of foreclosures.

In some other states, banks are still in the process of “recertifying” their lending practices, after evidence of “robo-signing” and careless processing of loans came to light. In New Jersey, however, that is officially done and over. “We don’t know for sure why the banks continue to hold back” on foreclosure listings, Mr. Flagg said.

New Jersey has almost 30,000 homes stuck at different points in the foreclosure “pipeline,” according to court records. Their owners are months to years delinquent on mortgage payments, and lenders have gone to court, at least to begin proceedings to seize their properties, as is required in this state.

On average, the process was taking 708 days, or nearly two years, while the moratorium was in effect in New Jersey. After it lifted in August, new foreclosure filings did increase: there were 1,190, up from 859 in July. But that was a small rise when seen in context, said Jeffrey G. Otteau, the president of the Otteau Valuation Group in New Brunswick.

As of the end of August, there had been 68 percent fewer foreclosure filings than in the same period of 2010, with just 0.05 percent of homeowner households receiving a first-time notice of default. That equates to five foreclosure filing notices for every 1,000 homeowners.

So when will the foreclosure wave finally show up? “This situation,” Mr. Otteau wrote in an e-mail, “reminds me of the recent BP Gulf oil spill, where we were all waiting for the oil to hit the beaches,” and the quantities that did arrive were smaller than expected. “I’m still wondering where it went — probably sitting on the ocean floor in enormous pools of coagulation, much like the shadow inventory in the foreclosure markets.”

Eventually those failed loans will have to “rise to the surface,” Mr. Otteau said. He predicts that when foreclosures do start coming fast and furious, the impact will be highly uneven around the state — just as the pain is unevenly dispersed now.

Foreclosures continue to plague housing market

Foreclosures continued to plague the U.S. housing market last quarter, while a a growing backlog has caused the length of the foreclosure process to drag on and on.

Nationwide, foreclosure filings totaled 610,337 in the third quarter, an increase of less than 1% from the previous quarter, said RealtyTrac, an online marketplace for foreclosed properties.

Even though the increase was small, it is significant since it broke the trend of three consecutive quarterly decreases, said RealtyTrac Chief Executive James Saccacio.

“This marginal increase in overall foreclosure activity was fueled by a 14% jump in new default notices, indicating that lenders are cautiously throwing more wood into the foreclosure fireplace after spending months spent trying to clear the chimney of sloppily filed foreclosures,” he said.

Month-over-month, there were fewer foreclosures. Nationwide filings totaled 214,855 in September, a decrease of 6% from August and a 38% decrease from September, 2010.

“While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up,” said Saccacio.

From the Record:

Foreclosures in N.J. take an average 974 days

Foreclosures in New Jersey take an average of 974 days, or more than 2 1/2 years, RealtyTrac Inc. reported Wednesday. That’s the second-longest process in the nation, just behind New York at 986 days.

RealtyTrac also reported that foreclosure activity remained low in the state in the third quarter, down 78 percent from the third quarter of last year, as lenders dealt with accusations of sloppy documentation and legal improprieties in the foreclosure process.

Nationally, foreclosure activity was down 34 percent in the third quarter, compared with the same period in 2010.

“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork,” said James Saccacio, chief executive officer of Irvine, Calif.-based RealtyTrac, which tracks the foreclosure market nationwide.
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One sign the process may be ramping up in New Jersey was a 29 percent increase in the number of default notices from the third quarter of 2010 to the third quarter of 2011. Default notices are the first step in the process.

Nationally, homes foreclosed in the third quarter took an average of 336 days to go through the system. New Jersey’s process is slower than some states’ because its foreclosures must go through the courts, which is not the case in about half the states.

The process was also slowed dramatically this year after state Chief Justice Stuart Rabner ordered six large lenders to show that they were following the rules and not filing unverified documents in foreclosures. The six lenders — GMAC Mortgage, Bank of America, Citibank, JPMorgan Chase Bank, OneWest and Wells Fargo — were cleared to begin foreclosure activity again in August and September.

In New Jersey, one in every 969 households received a foreclosure filing during the third quarter, compared with one in every 213 nationwide. Foreclosure activity in the third quarter remained highest in Nevada, California and Arizona, states that were hit hardest by the housing bust.

Bill allows tax-free use of retirement funds for mortgage payments

A bill introduced in Congress would allow struggling homeowners to withdraw funds from their retirement accounts tax free to pay their mortgage.

Sen. Johnny Isakson (R-Ga.) and Rep. Tom Graves (R-Ga.) submitted the Home Act Wednesday. Isakson also co-sponsored the Sen. Barbara Boxer (D-Calif.) bill that would eliminate fees and loan-to-value caps for Fannie Mae and Freddie Mac borrowers looking to refinance.

Borrowers could pull as much as $50,000 from their retirement account or one-half of the current value of their account, whichever is smaller, and avoid the typical 10% tax penalty. The cap is a lifetime cap, and does not expire on a particular date. Borrowers are eligible to make multiple withdrawals until they reach the cap.

The money must be put directly toward the mortgage within 120 days of withdrawal.

“This bill will help Americans who risk foreclosure use their own resources to make their mortgage payment on time without being penalized by the federal government,” Isakson said. “I firmly believe that economic recovery in this country will not occur until the housing market bounces back.”
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“This legislation will simply place taxpayers who have saved responsibly on the same level as those who have not, all the while reducing foreclosures, eliminating red tape and accomplishing a goal that all members of Congress can support — keeping Americans in their homes,” Graves said.