New Jersey Real Estate Report

From the Financial Times:

Tighter rules dash hopes of end to squeeze

Banks expect to tighten lending standards for US households and businesses through to the end of the year and into 2009, damping any hopes of a quick end to the credit squeeze, according to a report by the ­Federal Reserve.

The Fed survey of senior loan officers is conducted every three months. Monday’s report was based on responses from 52 US banks and 21 US branches of internationally based banks in mid-July.

It highlighted that domestic banks had tightened standards in “all major loan categories” since the last survey in April, with consumer loans in particular becoming tougher to secure.

“Coming at a time when the cash flow from the rebates has dried up and the growth in labour income is slowing to a crawl, the restriction in lending to households underscores the challenges facing the consumer in the second half of the year,” said Michael Feroli, a US economist at JPMorgan.

The survey also pointed to a bleak outlook, with “large net fractions” of foreign and US banks expecting lending standards to tighten further in the remaining part of this year and “smaller, though substantial, net fractions” expected the stricter terms to continue next year.

“These days, you practically need the Jaws of Life [a hydraulic rescue tool] to pry open a banker’s wallet,” said Mike Larson, an interest rate and property analyst at Weiss Research.

“Overall, the longer the crunch ­lingers, the longer the economic slump could drag on.”

From Reuters:

Fed says banks broadly tighten U.S. loan standards

Banks in the United States further tightened lending standards in all major categories, especially for consumer loans, in the past three months amid a weakening economic outlook, according to a Federal Reserve survey released on Monday.
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The survey added to evidence that a year-long credit crunch sparked initially by subprime mortgage defaults is far from easing as banks hoard capital and make it harder to borrow.

The tightness in credit is now being driven by broader weakness in the U.S. economy and is defying efforts by the Fed to boost liquidity in the banking system and keep interest rates low.

“It clearly is going to be difficult to get a loan. The Fed cutting rates doesn’t help a lot when you can’t get a lender to make a loan,” said Gary Thayer, senior economist at Wachovia Securities in St. Louis.

He said the tighter lending standards was typical in a weakening economy, and creates headwinds that will help delay recovery, along with a worsening housing slump and still-high fuel prices.

The tightening of credit was particularly pronounced in the consumer sector, where banks increased minimum credit scores required on credit cards and reduced card balance limits.
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he housing sector got no relief in the past three months, as lenders further tightened standards all mortgage categories. The Fed said about 75 percent of U.S. banks tightened lending standards on prime mortgages — those given to customers with better credit histories — versus about 60 percent who said they tightened in the April.
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However, 50 percent of the respondents said there was a lack of demand for such loans and 40 percent said there was a limited number of mortgage applicants at their bank who meet the Fannie Mae and Freddie Mac underwriting criteria for conforming jumbo loans, which require better credit scores and higher down payments.

From the WSJ:

Housing Bill Relies on Banks To Take Loan Losses
Lawmakers Pressure Lenders to Pitch In To Curb Foreclosures
By DAMIAN PALETTA
July 28, 2008; Page A3

WASHINGTON — The housing rescue bill passed by the Senate Saturday hasn’t been signed into law, but top Democrats already are putting pressure on regulators and bankers to make sure a major program to prevent foreclosures doesn’t fall flat.

For struggling U.S. homeowners, the success or failure of the program — which would let roughly 400,000 owners refinance into affordable, government-backed loans — depends largely on bankers’ willingness to take a partial loss on the loans and to reduce the amount of money borrowers owe.

Bankers say they will do it, but it isn’t clear how many loans they might be willing to restructure.

“I absolutely do believe that there will be more principal reductions,” Michael Gross, Bank of America Corp.’s managing director for loss mitigation, mortgage, home-equity and insurance services, told a congressional panel Friday.
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Experts say the program’s eventual participation could rise dramatically if home prices continue to drop — which could put more pressure on lenders to offer borrowers more assistance. Lawmakers are already pressing regulators and lenders to prepare now so the program can begin without delay when it goes into effect Oct. 1.
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Taking a loss on a loan by writing down the principal owed is one of the least desirable options for loan servicers. They typically prefer to either lower the interest rate or extend the life of the loan — from 30 years, for example, to 40 years.

“The real problem is going to be, just like with every program out there, are the banks going to take this seriously?” said Rebecca Case-Grammatico, a staff attorney at the Empire Justice Center in Rochester, N.Y., who advises clients facing foreclosure. “And if they don’t, we’re in the same position we’ve been in all along.”
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The program will be run by the Federal Housing Administration, a division of HUD, and will insure up to $300 billion in refinanced 30-year, fixed-rate loans. The mortgages can’t be for more than 90% of a home’s newly appraised value. For mortgages that exceed the value of the home, the lender would have to voluntarily write down the principal to the qualifying level. If the home goes up in value, the borrower must share newly created equity with the FHA.

The program will begin Oct. 1 and end Sept. 30, 2011. Borrowers won’t be able to qualify if they have intentionally defaulted on their loans or if they had a debt-to-income ratio of less than 31% as of March 1.

From the WSJ:

FDIC Faces Mortgage Mess After Running Failed Bank
Subprime Lender Made Problem Loans On Regulators’ Watch
By MARK MAREMONT
July 21, 2008; Page A1

Federal officials heap much of the blame for the subprime mortgage mess on lenders, claiming they recklessly made too many high-cost home loans to borrowers who couldn’t afford them.

It turns out that the U.S. government itself was one of the lenders giving out high-interest, subprime mortgages, some of them predatory, according to government documents filed in federal court.

The unusual situation, which is still bedeviling bank regulators, stems from the 2001 seizure by federal officials of Superior Bank FSB, then a national subprime lender based in Hinsdale, Ill. Rather than immediately shuttering or selling Superior, as it normally does with failed banks, the Federal Deposit Insurance Corp. continued to run the bank’s subprime-mortgage business for months as it looked for a buyer. With FDIC people supervising day-to-day operations, Superior funded more than 6,700 new subprime loans worth more than $550 million, according to federal mortgage data.

The FDIC then sold a big chunk of the loans to another bank. That loan pool was afflicted by the same problems for which regulators have faulted the industry: lending to unqualified borrowers, inflated appraisals and poor verification of borrowers’ incomes, according to a written report from a government-hired expert. The report said that many of the loans never should have been made in the first place.
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At the time the FDIC was running Superior, subprime lending hadn’t yet emerged as the national disaster it since has become. But some lending experts already were faulting industry practices and warning about rising delinquencies. The FDIC’s problems with Superior could fuel criticism that bank regulators were slow to heed warning signs.
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In a recent court filing, the FDIC estimated that about 1,500 of the 5,315 loans it sold to Beal either have defaulted or are nonperforming. The FDIC already has bought back another 247 of the mortgages, most of them for violations of federal anti-predatory-lending laws intended to protect borrowers from unreasonably high fees or deceptive practices. Beal Bank has said in court filings that 73 of the repurchased loans were originated while the FDIC was running Superior.
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The FDIC says that was a draft report. Last month, the agency filed a final version in court, which estimated that about 19% of the loans sold to Beal contained “material” breaches of the warranties — meaning there were significant problems with close to 1,000 mortgages. This version of the report blames Beal Bank for some of the portfolio’s lost value, saying it serviced the loans in an “inferior” manner.

From the Wall Street Journal:

The Biggest Housing Losers
May 12, 2008

You may not know it, dear reader, but Congress is playing you for a sap. During the housing mania, you didn’t lend money at teaser rates to borrowers who couldn’t pay, or buy a bigger house than you could afford. You paid your bills on time. As a reward for that good judgment and restraint, Barney Frank is now going to let you bail out the least responsible bankers and borrowers.

The Massachusetts Democrat’s housing bill passed the House Thursday, and it makes us wish we had splurged like so many others. In the name of helping strapped home buyers, Mr. Frank is giving lenders a chance to pass their worst paper onto Uncle Sugar. If both borrower and lender agree to participate, lenders can accept 85% of the current appraised mortgage value and in return get to dump up to $300 billion of those loans on the Federal Housing Administration (FHA). Guess which loans they are likely to dump?

Looking at the details in Mr. Frank’s 45-page first draft of this bill, FIS Applied Analytics estimated that taxpayer losses could reach as high as $27 billion, more than four times Mr. Frank’s estimate. The next draft, clocking in at 72 pages when it passed Mr. Frank’s committee, was miraculously scored by the Congressional Budget Office at “only” a $2.7 billion cost to taxpayers.

CBO lowballed it in part because it assumed that most people eligible for this assistance will not apply for it. It is true that some lenders may be wary of taking a 15% haircut off the top, but watch out if bankers and borrowers do take the taxpayers up on Mr. Frank’s offer. This is especially likely because at the same time that Mr. Frank touts the lowball estimate, he is also making mortgage servicers an offer they can’t refuse.
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The plan seems to get more generous by the week, at least if you’re an ally of Mr. Frank. The monster he brought to the floor Thursday runs to hundreds of pages. State governments receive authority to issue $10 billion in tax-exempt bonds to subsidize home purchases and to help subprime borrowers refinance.

In a sop to builders, Mr. Frank also expands the low-income housing tax credit, and he creates a new refundable credit for certain home buyers. To help defray the cost to the Treasury, Mr. Frank raises taxes on multinational companies by delaying a scheduled reform. A law set to take effect this year would expand firms’ ability to claim foreign tax credits and thereby avoid double taxation. Mr. Frank would put it off for another year.
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We can only imagine what else is buried in this tome, which deserves a Presidential veto. But the worst problem remains its invitation for bankers to dump their biggest losers on taxpayers. The Frank plan appears to take care of everyone in the housing market, except the renters and homeowners who lived within their means.

From the WSJ:

Keeping Families Above Water
May 8, 2008; Page A2

The latest flash point in the debate over the nation’s bursting housing bubble is this: Since so many American houses are worth less than their mortgages, should the government do more to get lenders to settle for less than the full debt, even if it may cost taxpayers some money?

The White House and Treasury say “No!” House Financial Services Committee Chairman Barney Frank and other House Democrats, with the quiet backing of Federal Reserve Chairman Ben Bernanke, say “Yes!”

Of the 80 million houses in the U.S., about 55 million have mortgages. Of those, four million are behind on payments. Foreclosure proceedings were begun on about 1.5 million homes last year, up more than 50% from 2006. This year will be worse. The Treasury, according to presentations its officials have made recently, predicts house prices could fall another 10% to 15% before touching bottom.

Moody’s Economy.com estimates that one in roughly 12 American families with mortgages — four million in all — already owe more than the current value of their homes. They are said to be “underwater.” The firm predicts that by early 2009 nearly one in four, or 12 million, homeowners will be underwater. Most will continue to pay mortgages on time. Many won’t, and are at risk of losing their homes.
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In ordinary times, a lender shouldn’t need prodding from the government to do what’s in its self-interest. But these aren’t ordinary times. The drop in home prices is pervasive, mortgage markets messy and complexities caused by turning mortgages into securities many. No one in Washington wants to help the “speculators” who bought homes they don’t live in or those who lent to them. And there’s broad agreement that those who bought more house than they’ll ever be able to afford are going to lose out. The debate revolves around the “preventable foreclosures.”
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The White House condemns this as a “bailout” and says it won’t work. As the Treasury argued in a recent PowerPoint presentation: “Homeowners who can afford their mortgage but walk away because they are underwater are merely speculators.” (It’s a bit jarring to hear the Treasury vilifying people who are acting in their economic self-interest.) But if not for the widespread decline in house prices — “a relatively novel phenomenon,” Mr. Bernanke labels it — and the proliferation of no-money-down mortgages made with the acquiescence of regulators, these homeowners wouldn’t be underwater.

From Bloomberg:

Bernanke Urges Action to Slow Jump in U.S. Home Foreclosures

Federal Reserve Chairman Ben S. Bernanke, seeking to end the worst housing slump in a quarter century, urged the government and mortgage lenders to intensify their efforts to avoid home foreclosures.

Bernanke, in a speech in New York yesterday, also reiterated his call for lenders to forgive portions of mortgages for some struggling homeowners. He said proposals should be “tightly targeted” at borrowers at greatest risk of losing their properties, and avoid providing an incentive for defaults.

The Fed chief also backed the idea of having the Federal Housing Administration refinance troubled mortgages, a concept included in Democratic legislation in Congress, without explicitly endorsing the bill. His remarks indicate a gap with the Bush administration, which has preferred to rely on industry-led efforts.

“Realistic public- and private-sector policies must take into account the fact that traditional foreclosure-avoidance strategies may not always work well in the current environment,” Bernanke said in remarks to a Columbia Business School dinner.
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As the housing recession deepened, officials in Washington have offered a number of different proposals. Foreclosure filings rose 57 percent in March from a year earlier, according to Irvine, California-based RealtyTrac Inc.

“Conditions in mortgage markets remain quite difficult, and mortgage delinquencies have climbed steeply,” Bernanke said.
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Bernanke did note that accelerating foreclosures may push home prices down further, hurting the broader economy and threatening the financial system. He anticipated the foreclosure rate will increase this year after such proceedings began on 1.5 million properties last year.

A quarterly Fed survey yesterday showed the share of banks making it tougher for companies and consumers to borrow approached a record last month in the aftermath of the subprime mortgage collapse. The Senior Loan Officers’ Survey found a net 70 percent of banks increased their loan rates over their cost of funds.
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Bernanke warned that “to be effective, such programs must be tightly targeted to borrowers at the highest risk of foreclosure.” Qualification guidelines could be set, such as identifying an amount of debt compared with income, or the extent to which the home value is below the mortgage amount, he indicated.

“Finding the right balance — particularly the need to avoid programs that give borrowers who can make their payments an incentive to default — is difficult,” the Fed chairman said.

From the Wall Street Journal:

Banks Toughen Terms on Loans
Both Consumers And Businesses Feel the Impact
By SUDEEP REDDY
May 6, 2008; Page A3

In a blow to an already wobbly U.S. economy, banks are imposing tougher lending terms for consumers and businesses across the board.

The Federal Reserve’s survey of banks’ senior loan officers, one of the most closely watched gauges of lending practices, found that the credit crunch is widening. The proportion of domestic banks tightening their standards was at or near historical highs for almost all loan categories, including credit cards and student loans.

The survey, conducted in April, showed that demand for loans weakened in most categories, though not as much as in the previous three months.

The lending pullback comes as the economy slows to a crawl. The banks’ hesitancy to lend could restrain consumer spending as well as investment by businesses that depend on borrowing.

About a third of the 56 domestic banks surveyed in April reported raising their standards for credit-card loans over the past three months, up from just 10% in January. Banks are being tougher on credit-score requirements and are reducing credit limits on card loans. In addition, 44% of banks, up from 30% in January, tightened standards for other consumer loans.
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Banks continue to get more restrictive in their real-estate lending as the housing bust adds to their losses. About 70% of banks said they tightened standards for new home-equity lines of credit over the prior three months. Roughly half of the banks said they tightened terms on existing home-equity lines of credit over the past six months because of home prices falling below their appraised values. Most lenders also cited loan defaults and a change in borrowers’ financial circumstances for tightening terms.

More than 60% of banks tightened standards on prime mortgages, up from just over half in January and 15% a year ago. At least three out of four said they tightened standards for nontraditional and subprime mortgages in the past three months. For commercial-real-estate loans, about 80% of banks tightened their lending standards.

From the NJ Judiciary:

Testimony by Judge Philip S. Carchman
Acting Administrative Director of the Courts
Senate Budget and Appropriations Committee
Fiscal Year 2009
Wednesday, April 30, 2008

Economic indicators tell us that by the end of this court year, case filings will reach historic highs. For example, foreclosure filings in New Jersey for the first quarter of 2008 exceeded 4,000 per month, a staggering 44 percent increase over the same period last year. This year we are on track to receive an anticipated 49,000 foreclosure filings. This is double the number we received in 2006, just two years ago. And our best estimate is that we may double this number yet again next year.

Increased foreclosure filings are a harbinger of increases elsewhere. Our special civil part filings are about to hit record highs. Families in financial trouble, when forced to decide between paying a credit card bill or the mortgage, pay the mortgage. Left unpaid, their credit card debts will reach our special civil part courts, where filings are for amounts under $15,000. We are analyzing the numbers on a monthly basis and have grave concerns. We project receiving more than 621,000 Special Civil Part cases this year, 100,000 more than last year.

We know from experience that we must be watchful of similar growth in other case types as well. Another by-product of hard economic times is displacement in people’s lives. Financial struggles tear families apart, possibly resulting in divorce, domestic violence, abuse or neglect of children or missed support payments. We may see the effects of increased financial strain in the criminal courts as well. Our court system’s challenge is great: to adequately manage and resolve cases that we project will increase overall by almost 9 percent by the end of June while at the same time reducing staff by 300 to meet our budget reduction of $27 million.

From Bloomberg:

U.S. Foreclosure Filings Double in First Quarter

U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages and falling home prices left property owners unable to sell or refinance without losing money.

Almost 650,000 properties were in some stage of foreclosure during the quarter, or 1 in every 194 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of foreclosure data, said today in a statement. The number was 112 percent above a year ago. Nevada, California and Arizona had the highest rates.
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“This country needs a cleansing,” billionaire real estate investor Sam Zell, chairman of Equity Group Investments LLC, said yesterday at the Milken Institute Global Conference in Los Angeles. “We need to clean out all those people who never should have bought in the first place, and not give them sympathy.”
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Government attempts to slow the flood of defaults “could be simply deferring another flood of foreclosures,” Saccacio said in the statement. “That could extend the length of time it takes the market to recover from this downward cycle.”
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“That whole process has to be liquidated,” Zell said.
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California had the most filings at 169,831, and the second- highest rate at one for every 78 households. Arizona had the third-highest rate, one in every 95 households. Florida was fourth at one in 97.

The foreclosure rate was one in 110 in Colorado, one in 166 in Massachusetts, one in 202 in Maryland, one in 265 in New Jersey, and one in 550 in New York, according to the report.

From the AP:

Homes facing foreclosure more than doubled in 1Q from 2007

The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the nation with a foreclosure rate that was 6.6 times the national average, Irvine, Calif.-based RealtyTrac Inc. said.

Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year, RealtyTrac said.

The latest tally also represents an increase of 23 percent from the fourth quarter of last year.

From the Bridgeton News:

Mortgage payments in trouble

Housing foreclosure rates are rising quickly throughout Cumberland County, with rates in Bridgeton, Millville and Vineland already surpassing the national average, according to representatives at the Tri-County Community Action Agency and Affordable Homes of Millville Ecumenical (AHOME).

The two groups, centered in Bridgeton and Millville, respectively, have joined together with 10 other housing counseling agencies across the state to help residents avoid foreclosure.

AHOME Executive Director Donna Turner said her office has received an “incredible” increase in the number of new clients over the past month.

“We averaged one client every two weeks or so, but now we’re getting new people coming to us by twos and threes every week,” said Turner. “They’re mostly 60 days or more behind in their payments and in default.

“It’s just incredible, this increase. We’re going to need to hire staff.”

According to Turner, more than 168 Millville homes are currently in pre-foreclosure — in which the residents have missed at least one payment. Sixty-six have already been taken by banks and 14 have gone up for auction.

In Bridgeton, 114 homes are in pre-foreclosure, with 71 taken by banks and 10 sold in auctions.

And more than 230 homes in Vineland are in pre-foreclosure, with already 84 picked up by banks and 20 sold in auctions.

“We expect these numbers to only increase,” added Turner.

RealtyTrac, one of the largest online providers of foreclosure listings in the country, places the foreclosure rate in Bridgeton at more than one in every 1,200 homes, using United States Census numbers. The national average is about one in every 5,000 homes.

In Millville, between one in 300 to one in 600 homes have fallen to foreclosure. It is the same story in many parts of Vineland, especially center city, its most affected area. East Vineland does slightly better than the rest of the city, roughly mimicking Bridgeton’s numbers.

From CNN/Money:

The trillion-dollar mortgage time bomb

Among the nightmares lurking around the corner for the already battered housing and credit markets would be a meltdown at mortgage financing giants Fannie Mae and Freddie Mac.

Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor’s recently placed an estimated price tag on this worst case scenario — $420 billion to $1.1 trillion of taxpayer’s money.

This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980’s and early 1990’s. That cost taxpayers about $250 billion in today’s dollars.

S&P added that saving Fannie and Freddie might cost so much that the federal government’s AAA credit rating, the top possible rating, might even be at risk. If that was lost, then all federal government borrowing would become more expensive.
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Wagner pointed out that at the end of January, 82% of all mortgages in the U.S. were backed by one of the firms, up from only 46% in the second quarter of 2007.
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And Fannie and Freddie’s role in the mortgage and real estate markets is likely to grow, as Congress recently allowed them to back larger mortgages, up to $729,750, up from the previous limit of $417,000.
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“I don’t think the message is a bailout is necessary or imminent,” Wagner said. “But they’re facing this increased role at a time that their own credit performance is suffering from the rifts in the housing and mortgage markets. They’re both projecting much higher losses than we’ve seen in some time.”
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“The real fundamental problem is real estate prices have been falling and they might fall substantially more,” said Robert Shiller, a Yale University economist who argued for years that a bubble was forming in real estate prices. “OFHEO and Fannie and Freddie never considered the possibility of a massive real estate correction.”
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“I would say there’s at least a 50-50 chance of some sort of bailout. I’m not saying it will necessarily cost $1 trillion, but they’ll need some kind of help, and it very well could happen this year,” said Dean Baker, co-director of the Center for Economic and Policy Research.

From the WSJ:

RATING GAME
As Housing Boomed, Moody’s Opened Up
By AARON LUCCHETTI
April 11, 2008; Page A1

Bond-rating agency Moody’s Investors Service used to be an ivory tower of finance. Analysts were discouraged from having a drink with a client. Phone calls from bankers went unanswered if they rang during intense, almost academic debates about credit ratings.

A decade ago, as the housing market was just beginning to take off, Moody’s was a small player in analyzing complex securities based on home mortgages. Then, Moody’s joined Wall Street and many investors in partaking of the punch bowl.

A firm once known for a bookish culture began to focus on the market share that affected its own revenue and profit. The rating firm became willing, on occasion, to switch analysts if clients complained. An executive overseeing mortgage ratings went skydiving with a client. By the height of the mortgage-securities frenzy in 2006, Moody’s had pulled even with its largest competitor, rating nine out of every 10 dollars raised in these instruments. It gave many of the bonds its coveted triple-A rating.

Profits at the 99-year-old firm, which John Moody started to rate railroad bonds, rose 375% in six years. The share price quintupled.

Now, Moody’s and the other two major rating firms, the Standard & Poor’s unit of McGraw-Hill Cos. and the Fitch Ratings unit of Fimalac SA, are under fire for putting top ratings on securities that ultimately collapsed in value. Investors, many of whom relied on ratings to signal which securities were safe to buy, have lost more than $100 billion in market value. The credibility of the ratings system is in tatters as new downgrades of mortgage securities come almost weekly. Investigators from Congress, the Securities and Exchange Commission and several state attorneys general are examining the rating firms’ practices.

Moody’s acknowledges it sometimes got things wrong in judging mortgage bonds, but says these were honest mistakes and not the result of efforts to garner market share. It says it has maintained its rigor and objectivity in a rating process that is still adversarial toward big investment banks.

From Reuters:

Mid-Atlantic banks face more loan losses-report

Big Mid-Atlantic banks face more losses from the real estate slump, according to a report on Monday from a regional Federal Reserve that suggests the worst has not passed for the beleaguered banking sector.

Prospects of an ever-growing stockpile of bad loans on homes, office buildings and shopping malls will likely force banks to seek additional capital and/or to put aside more money to cover further losses, the Philadelphia Federal Reserve said.

While the latest study focused on banks the regional Fed oversees in three Mid-Atlantic states — Pennsylvania, New Jersey and Delaware, many of them do business across the country.

Financial conditions at these large Mid-Atlantic banks worsened across the board in the last quarter of 2007, deteriorating to their weakest levels in 15 years by some measures, the Philadelphia Fed said.

“Large banks may need to increase their provisioning for loan losses in future quarters, reducing income,” it said in its quarterly “Banking Brief.”

From the Philadelphia Fed:

Banking Brief - Fourth Quarter 2007 (PDF)

From CNN/Money:

Foreclosures up 60% in February

Foreclosure filings nationwide jumped 60% in February compared with the same month last year, but they decreased slightly versus January, according to a report released Thursday.

RealtyTrac, an online marketer of foreclosure properties, said 223,651 homes got hit with foreclosure filings last month, which include default notices, auction sale notices and bank repossessions. 46,508 of those were lost to bank repossessions, which more than doubled over last year.

The report also indicated that foreclosure filings in February fell 4% compared with January, similar to a 6% decrease that occurred during the same time-span in 2007.

The monthly decrease is a “seasonal occurrence,” according to Rick Sharga, a RealtyTrac spokesman. Foreclosure rates spike in January when homeowners are saddled with extra debt from the holidays, then settle in February, he said.

The report suggests that efforts from government and consumer groups to combat the rising number of foreclosures have not had a significant impact, according to Jared Bernstein, a senior economist at the Economic Policy Institute.

“I don’t see evidence that any of the interventions we’ve been implementing are having any effect,” he said. The report “doesn’t show that measures have failed but it’s pretty clear that nothing we’ve undertaken is slowing foreclosures.”

Sharga pointed out that the most recent action by the Federal Reserve to inject liquidity into the credit markets could help the mortgage market, though he agreed with Bernstein that “the previously announced government initiatives haven’t had any effect.”

From the AP:

New Jersey lawmakers target mortgage woes

New Jersey lawmakers are moving to cut mortgage foreclosures by imposing a six-month moratorium on subprime loan defaults, creating a new loan fund to help people stay in their homes and allowing some who lose homes to stay in them for a time.

The legislation unveiled Tuesday is meant to help homeowners combat problems with subprime loans typically given to those with imperfect credit histories and low incomes.

For many with subprime loans, low-interest rates have adjusted higher, creating problems with paying mortgages.

Sen. Ronald Rice estimates as many as 16,500 New Jersey homeowners with subprime loans will face foreclosure this year.
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The plan calls for:

_ A six-month moratorium on subprime loan defaults to give borrowers time to find a solution.

_ A new fund to provide loans and counseling to help people with subprime loans stay in their homes. The fund would be generated by a $2,000 fee charged to lenders for each subprime foreclosure and $1 million from the New Jersey Housing & Mortgage Finance Agency.

_ Allowing those who lose their homes to subprime foreclosure to stay in them as rent-paying tenants until the property is acquired by someone who plans to occupy it.

From the Star Ledger:

Bill aims to deter foreclosures and prevent high-cost loans

With a garbage-strewn front lawn, a roof charcoaled black by fire and gaping holes where the windows and doors used to be, the house at 95 Ellis Ave. in Irvington has one of those unfortunate urban histories.

It started down the path to foreclosure in 2005, went vacant and, according to neighbors, was quickly broken into by drug-ad dicted squatters who set it ablaze.

And now it stands (barely), awaiting a wrecking ball and re minding anyone who walks by exactly what neglect looks like.

“It’s an eyesore,” said Melvin Torres, 28, who lives just down the street in a well-kept duplex owned by his grandfather. “It brings down the whole neighborhood.”
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The bill would establish a $2,000 fee, paid by lenders or loan servicers when they initiate foreclosure proceedings on high-cost loans, which include most subprime loans.

The resulting fund, which the bill’s crafters expect to be in the neighborhood of $30 million with roughly 15,000 loans expected to go into foreclosure this year, would provide counseling and education for those in foreclosure, emergency foreclosure prevention assistance and also support nonprofit groups looking to buy foreclosed properties and put them to productive use.

The bill’s advocates hope the fee will also deter lenders from making bad loans to begin with. Data from the Federal Reserve Bank of New York, the arm of the Federal Reserve that serves New Jersey, indicate that nearly 30 percent of subprime adjustable rate mort gages in New Jersey are either in foreclosure or heading in that direction.

“It’s impossible to buy a toaster that has a one in five chance of catching fire and burning your house down,” said Phyllis Salowe- Kaye, executive director of New Jersey Citizen Action. “But it is possible to get a mortgage that has a one in five chance of putting your family out in the street.”