Making sense of the foreclosure numbers

Posted on March 2, 2010 by grim

From the NY Times:

In New Jersey, No Consensus on Foreclosure Problem

IN gauging the severity of the foreclosure problem in New Jersey, the experts could hardly be farther apart. Some see the state as relatively unscathed at this point, with the situation about to improve; others see worsening conditions that may turn downright severe.

But then again these same experts are the first to admit that they are handicapped by extremely unreliable information. Real estate market analysts, lawyers, academics, public officials: there are clusters of them on either side of the debate.

“Precise numbers on foreclosures are very elusive,” said James W. Hughes, the dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. But he said he was hearing reports from researchers in the field that foreclosure filings in some county courts were increasing. That trend may pick up steam as federal home-buyer stimulus programs expire, and high-paying jobs continue migrating out of state.

Jeffrey G. Otteau, whose Otteau Valuation Group provides real estate market analysis to the industry, sounded a similar note on the quality of available statistics. “The numbers from the various sources do not square,” was how he put it. Mr. Otteau quoted data from RealtyTrac, a company based in Irvine, Calif., that monitors court filings around the country, in characterizing New Jersey’s current foreclosure rate as very low — just .04 percent of households. He also predicted that foreclosure actions would decline as the overall economy improved. RealtyTrac, a subscriber service, is a primary source of information about distressed properties for investors.
…
Cross-checking RealtyTrac numbers with other statistics often amounts to an “apples and oranges” problem, according to Mr. Otteau and Mr. Hughes. For instance, a report last month by the New Jersey court system estimated the number of foreclosure filings rose 29 percent from 2008. But the number is a raw count, not a calculation of rate.

Still, Mr. Otteau said, it does not jibe with RealtyTrac’s report as best he can tell. Goldie Sommer, a real estate lawyer who specializes in short sales for the firm Sommer & Engelhart in Fairfield, said she had ended up relying on the anecdotal reports of brokers who list properties available for short sale — and on the fact that she is extremely busy — to infer that the number of homeowners facing foreclosure was “bouncing up again.”
…
For instance Michael Hawley, of the United Association of Realtors, said that 35 to 40 percent of Essex County homes currently listed in the $300,000-to-$350,000 price range were short sales. At $700,000 and above, he added, 10 to 15 percent of listings are short sales.

An office manager for Weichert in Caldwell estimated that 15 percent of all listings right now were delinquent-mortgage properties; at Unicasa United Realty in Newark, a manager estimated that more than 60 percent of the agency’s listings were for properties whose owners were “underwater,” or owed more than the home was worth.

Posted in Economics, Foreclosures, New Jersey Real Estate | 485 Comments

Snowmageddon Open Discussion

Posted on February 26, 2010 by grim

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

Posted in General | 772 Comments

What Recovery? New Home Sales Dive.

Posted on February 25, 2010 by grim

From the Wall Street Journal:

New Home Sales Plunge to ’63 Levels

Sales of new single-family homes plunged last month, underscoring the fragility in the housing market.

Sales dropped 11.2% in January from a month earlier to a seasonally adjusted annual rate of 309,000, the Commerce Department said Wednesday. The decline brought sales to their lowest level since the government began tracking the numbers in 1963. Sales were 6.1% lower than in January 2009.

This gauge of new-home sales is particularly volatile because it is based on a very small sample size and carries a wide margin of error. Still, the sharp decline is an indication that the housing market remains feeble, despite improvements in the past year fueled by low mortgage rates, reduced home prices and a government tax credit for home buyers.

The tax credit, which was expanded and extended, is set to expire April 30. It could lead to an upturn in sales in the next couple of months as buyers rush to take advantage of it, analysts say.
…
The drop in sales in January triggered an increase in the backlog of unsold new homes on the market, pushing it up to the equivalent of what would normally be sold in 9.1 months versus eight months in December. And the abundance of homes on the market continued to bring prices down. The median sales price for new homes fell 2.4% to $203,500 in January, compared with a year ago.

Faltering demand in the housing market also led to a drop in mortgage applications for both new and existing homes. The Mortgage Bankers Association’s seasonally adjusted purchase index fell 7.3% for the week ended Feb. 19 from the prior week, the advocacy group that represents the real-estate finance industry said Wednesday. It is the index’s lowest level since 1997.

Posted in National Real Estate, New Development | 431 Comments

NY metro home prices fell 6.3% in December

Posted on February 24, 2010 by grim

From the Star Ledger:

Home prices still fall in the N.Y. region

Housing prices in the New York metropolitan area dropped for the fourth consecutive month in December, according to data released today.

Nationwide, prices in the 20 cities that are tracked by Standard & Poor’s/Case-Shiller housing index dropped 3.1 percent in December from the previous year.

“The housing market is definitely in better shape than it was this time last year,” said David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, in a statement.

In the New York-area, which includes 14 New Jersey counties, the index dropped 6.3 percent from the same period last year.

From the WSJ:

Case-Shiller Adds to Confusion on Housing Market

Tuesday’s latest home-price reading shows that momentum slowed at the end of 2009 for the housing market, adding to the confusion about where prices are headed from here.

The S&P/Case-Shiller 20-city composite index in December fell 0.2% from November, but after adjusting for seasonal factors, home prices were up 0.3%. That was the same change that the index showed in November.

Fifteen of 20 markets tracked by the index showed monthly declines, though the battered Southwest fared well. Las Vegas had its first monthly gain in more than three years (and today’s story helps to explain why conditions there have improved), while Los Angeles led the nation with a 1% monthly increase.
…
Robert Shiller, the Yale University economist who co-founded the index that bears his name, called the home-price rebound during the second half of the year “the most dramatic turnaround” since he began charting home prices in 1987. Home prices fell by 11% for six months ending in April 2009, before rising by around 5% over the following six months. The last time home prices swung so sharply was in April 1991, when a more modest 5% decline over six months was followed by a 2% rally.

What followed? “Nothing,” says Mr. Shiller. “The home market was absolutely dead for the better part of a decade after that.” But he says today’s volatility in prices and the massive amount of federal stimulus has made the home-price outlook far more uncertain. “The market has shown a lot of momentum,” he said. “What trend are we seeing now? It’s very ambiguous.”
…
“What worries me right now is the default rate on mortgages,” says Mr. Shiller. “It might go up because of a change in our sense of responsibility to pay mortgages. People are angry and upset.”

Posted in Economics, National Real Estate, New Jersey Real Estate | 461 Comments

Shore rentals in demand for the Summer of ’10

Posted on February 23, 2010 by grim

From the NY Daily News:

Want to roll in Snooki’s sheets? ‘Jersey Shore’s’ Seaside Heights, N.J., house is $1,800 a night

How about a roll in Snooki’s sheets?

For $1,800 a night, you can grace the ground zero of Guido – and that includes the bed where the grand Guidette laid her head.

The Seaside Heights, N.J., house where Snooki and the rest of the cast of MTV’s sleeper hit “Jersey Shore” partied the nights (and days) away is up for rent – and the Daily News decided to go take a look.

Lucky housemates can sit at the very table where Vinny and The Situation cooked up a lobster dinner or chat on the same duck phone that was the source of many a hookup for Mike and Pauly D.

“Oh, God, this place is sick,” said Kristen Steinhardt, 15, who drove more than 100 miles from Garden City, L.I., for a look at the summer-share Shangri-la.

“Snooki. The Situation. This house just blows my mind,” Kristen said as she walked around the rental – which comes complete with a New Jersey State/Italian flag-themed garage.
…
Loundy said he has received “hundreds” of calls to rent out the seaside party house – owned by brothers Paul and Daniel Merk – since first putting it on the market about a month ago.
…
“The demand to stay in the ‘Jersey Shore’ house is amazing. It’s booking up fast,” Loundy said. He even recently rented it out for a Guido-themed sweet 16 party and claims he has had some celebrities save a date or two.
Finding your inner Guido doesn’t have to break the bank. A group of 12 can rent the hair-gel palace for $150 a night per person, Loundy said.

Renters must stay a minimum of three nights, and the price goes up as the summer heats up. Popular dates, such as the Fourth of July, can run as high as $15,000 a night.

Posted in Humor | 507 Comments

Suck it up, sellers.

Posted on February 22, 2010 by grim

From the NY Times:

Dry Your Eyes and Lower the Price

NEVER in all his 17 years selling real estate has Mark Seiden gone through as many boxes of tissues as he has in the past 12 months.

It’s not he who is crying, but some of his customers — as they come to grips with the reality that their houses are worth far less in today’s market than what they had hoped, said Mr. Seiden, who owns Mark J. Seiden Real Estate in Briarcliff Manor.

But the sooner a seller faces reality on prices, he said, the sooner a sale can occur. As evidence, he cited Susan and Robert Whiting of Ossining, whose six-bedroom three-bath 1950s Cape had languished six months at $499,000 before they hired him. “At that price, nothing happened,” said Mrs. Whiting, a day care provider. “We didn’t even have one reasonable offer.”

The first thing Mr. Seiden did was brandish the tissues and recommend a listing price of $60,000 less. “At first I was in shock,” Mrs. Whiting said. “But then I decided if we wanted to sell, this is what we better do.” A bidding war ensued, and some weeks later the house went into contract at $10,000 over the list price.
…
In the Ossining/Briarcliff market in 2009, homeowners received about 94 percent of their asking prices, according to Mr. Seiden. But he said the actual percentage was probably even lower, as the official one was calculated using the most recent listing price — very likely reduced from the original.
…
Mr. Nadler cited another Larchmont example: a three-bedroom two-bath prewar condo listed at $1.2 million whose owners “needed to be convinced” to drop the price. After generating only weak interest and unacceptable offers, they finally agreed to lower the price to $999,000 and then to $985,000. At that point, Mr. Nadler said, “the floodgates opened.” It sold for close to the final asking price, he said.
…
The first impression also still counts, which is why Richard and Marilyn Wishnie of Briarcliff Manor employed a home stager to help market their four-bedroom two-and-a-half-bath 1960s colonial.

“The stager said to us, ‘Come with me to the front door and look at your house the way a buyer might,’ ” recalled Mr. Wishnie, a former county legislator. They did, and subsequently spent $2,500 to remove old wallpaper in the kitchen, replace carpeting in one bedroom and retile the floor in the front entrance.
…
But it was pricing that may ultimately have turned the tide in their favor. They listed the house at about $619,000 — far less than they had originally hoped — but it sold quickly, for $10,000 over asking. “We knew this was the worst possible time to try and sell a house, but it all worked out,” Mr. Wishnie said.
…
That a well-priced property will sell more quickly is not a new concept. “That’s true in boom years, too,” Mr. Mercurio said, “although that applies more than ever now.”

Posted in Economics, National Real Estate | 1,368 Comments

Weekend Open Discussion

Posted on February 20, 2010 by grim

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

Posted in General | 504 Comments

“I’m not going to spend this state further into debt and I’m not going to tell you a happy story…”

Posted on February 19, 2010 by grim

From the Star Ledger:

Gov. Chris Christie warns N.J. districts school aid could be cut 15 percent in next budget

With school districts still reeling from the midyear budget cuts he announced last week, Gov. Chris Christie said today he has asked districts to prepare for a 15 percent reduction in state aid in the budget he will propose next month. If enacted, it would be the largest-ever cut in state aid to schools, officials said. Frank Belluscio, spokesman for the New Jersey School Boards Association, said it would be the first reduction in aid to schools of any kind in at least 30 years.

Christie and Acting Education Commissioner Bret Schundler said at a meeting with school officials in Union County that their goal is to keep K-12 education aid flat in the upcoming budget, which Christie will propose March 16 and must be signed into law by July 1. But they said, with an $11 billion deficit looming, they wanted to give advance warning so school officials would not be caught off guard if steep cuts are necessary.

“This is about us telling the truth,” the Republican governor said. “I’m not going to spend this state further into debt and I’m not going to tell you a happy story on July 1st, only to come to you in February and say, ‘Well, more bad news.’ I think that’s much more unfair to school districts.”

Total formula aid to schools is currently about $7.5 billion, according to a spokeswoman for the state Department of Education. A cut of 15 percent of that would be about $1.1 billion.

“I don’t know how we would survive it,” said Perth Amboy Superintendent John Rodecker. “There would be massive layoffs. It would in turn mean that everything we’ve built up to this point, to make us what I consider to be an outstanding school district, would be lost.”

Posted in New Jersey Real Estate, Politics, Property Taxes | 619 Comments

Four year recovery?

Posted on February 18, 2010 by grim

From the Star Ledger:

Rutgers report: job loss recovery will take at least 4 years

With the recession in the rearview mirror, this decade will be known as the Great Reckoning as the economy tries to recover from massive job losses, according to a Rutgers report released today.

It could take at least four years for the nation to recover more than 8.5 million private-sector jobs that were lost since 2007, according to the Edward J. Bloustein School of Planning and Public Policy. The jobless rate is at a 33-year high in New Jersey – 10.1 percent – and nationwide the previous decade saw three of the worst private-sector job loss years ever in 2009, 2008 and 2001.

“We had to digest a lot of bad news,” said James Hughes, dean of the Bloustein School, in a telephone interview. “Some of the worst has passed us, and again the two question marks are: Can housing stand on its own in 2010, and what types of problems are really going to emerge with commercial real estate?”

The Federal Reserve will stop buying bad mortgages at the end of March — creating fears that mortgage rates, which have been at historic lows, could rise, he said.

A record number of commercial real estate loans made during the boom years are coming due that must be refinanced in the next decade, according to the report.

This year “is going to be the start of maybe a three- or four-year period where a number of buildings are going to face a lot of problems,” Hughes said of the commercial real estate market. “They are OK right now, but what happens when they have to be refinanced and they are underwater?”

Posted in Economics, New Jersey Real Estate | 520 Comments

A closer look inside short sales

Posted on February 17, 2010 by grim

From the Star Ledger:

The long and short of short-selling homes

But Goldie Sommer, a real estate attorney and agent, said there is no reason why anyone can’t navigate a short sale.

Sommer, a principal at Fairfield-based Sommer and Engelhart, has overseen more than 250 short-sale deals over the past two years.

Your Business took a closer look at short sales with Sommer:
…
Q. Can anyone apply for a short sale?

A. Yes, you can even do a short sale on government-backed (HUD loans) and FHA loans. Many of my short sales are on government-backed loans.

The restrictions for short sales of a government-backed loan pertain to the purchase of a subsequent home with government backed funds (FHA funds), not the short sale of one.

Q: How does a short sale affect your credit score?

A. I can’t give you exact numbers. But I’ve heard it’s about 50 points off your FICO (score) versus 200 on a foreclosure. And it doesn’t say foreclosure on your credit report. It will say “mortgage paid not full amount.” So, everybody knows. But my clients are so upset. They are devastated, because they always had good credit. I tell them, you don’t stick out as an unusual case because everyone is going to have this on their credit score.
…
Q. What’s the sticking point for people in New Jersey?

A. In our state, lienholders are allowed to pursue homeowners for any deficiency under a short sale. We have found that we encounter more problems negotiating the short sale with the second mortgage holder than with the first, especially if the second loan is high.

I do not believe this problem is addressed under the new rules and will continue to be an issue for our homeowners if they have second mortgages.

Q. How long does the process take?

A. If you are lucky, you can get a short sale approved in as little as two or three months. But we’ve seen them take as long as a year.

That doesn’t mean that the bank won’t go forward with a foreclosure. They will, and they usually do. Normally, however, the house will get approved for short sale well before a house goes up for a sheriff sale.

When an approval is received on a short sale, the typical letter states that we have 30 days from approval to close title. The buyer must scramble to obtain financing, order title work, survey, etc. in a short amount of time. The new rules will give homeowners a minimum of 90 days to close. This is a big plus.

Posted in Economics, Foreclosures, New Jersey Real Estate | 453 Comments

Tuesday Open Discussion

Posted on February 16, 2010 by grim

Open discussion, flying down to Nashville this morning.

You know the drill, keep it clean.

Posted in General | 450 Comments

Paying homeowners to stay homeowners

Posted on February 15, 2010 by grim

From Default Servicing News:

Company Proposes Paying Homeowners Not to Walk Away

With tumbling property values leaving nearly a quarter of borrowers owing more on their mortgage than the home is worth, some may find it tempting to walk away even if they are financially able to keep making payments – either to get out from under the debt completely or to force the servicer’s hand for a modification. This idea of “strategic default” has become a universal concern within the industry, but one New Jersey company says it has a plan to counter such calculated flights of exodus.

According to the Loan Value Group LLC (LVG), it’s time to pay current borrowers to stay that way. The company introduced a new program this week that helps lenders and servicers identify borrowers at risk of walking away and implement an incentive program in which the homeowner receives a monetary “reward” if they remain current on their payments without changing the terms of the original mortgage note or reducing principal.

The Responsible Homeowner Reward (RH Reward) program was developed on a foundation of behavioral economics and employs patent-pending technology developed by LVG. The firm evaluates each individual borrower’s propensity to strategically default (as distinct from the risk of affordability default) based on a dozen criteria, including negative equity, income, and geography, and then determines the optimal size of each “reward.”

Posted in Economics, National Real Estate | 417 Comments

Property tax rebate fraud? I’m shocked!

Posted on February 13, 2010 by grim

From the AP:

Audit exposes NJ property tax program flaws

Lax oversight, confusing rules and potential fraud have combined to cost New Jersey millions each year in rebates and tax deductions given to homeowners who may not qualify for them, according to a recently released state audit.
…
For years the state has offered rebate programs and tax breaks to seniors and disabled homeowners in the form of checks that are usually mailed out in the fall — just in time for November elections.

But a new report by the State Auditor found that the Division of Taxation, which oversees the programs, and municipalities failed to cross-check records or demand proof from homeowners to make sure they qualify for the programs.

In 2007, the year examined by the auditor, the two programs paid out more than a quarter billion dollars.

“We’re kind of taking people at their word,” said Acting State Auditor Stephen Eells, “and there are improper payments going out.”
…
In 2007, the average “freeze” rebate checks averaged $958, according to the Treasury Department. That year, 154,600 senior and disabled homeowners received “senior freeze” rebates totaling $165 million.

A random sample found that 6,000 homeowners who received the rebates were younger than 65, according to federal records. Of those, 405 receiving $318,000 in rebates weren’t receiving social security benefits, indicating that they weren’t as old as they claimed.

The audit also found sloppy accounting; some homeowners who claimed disabilities were listed instead as over 65. And it found that many — nearly 1,250 homeowners who received a total of $1.3 million in rebates — claimed they made less than $60,000 a year while a cross-check against federal tax forms showed they made too much to qualify.
…
A look at everyone — 362,000 homeowners — who received the $250 credit in 2007 found 9,162 cases where, according to tax records, homeowners made more than the threshold. That cost the state $2.3 million in lost revenue.
…
Former Bogota mayor Steve Lonegan, who ran against Christie in the GOP gubernatorial primary, has long been opposed to the rebate program, calling it a form of “income redistribution.”

He wasn’t surprised to hear that unqualified homeowners were cashing in on it.

“What they really need to do is eliminate the program and cut everyone’s taxes across the board,” he said. “It’s too complex, too costly to administer, too subject to political manipulation. It’s a failed program.”

Posted in New Jersey Real Estate, Property Taxes | 735 Comments

New Jersey Q4 Home Sales Up, Prices Down

Posted on February 12, 2010 by grim

From the Record:

North Jersey home prices down 5.5% in fourth quarter 2009, to median $434,000

The housing market’s steep price slide appears to be slowing, according to data released Thursday by the National Association of Realtors.

The median price of an existing single-family home in North Jersey and the New York metropolitan area was $434,000 in the fourth quarter of 2009, down 5.5 percent from a year earlier, the NAR said. Nationally, prices declined 4.1 percent in that period, to a median $172,900.

Prices in North Jersey and the metro area are more than $100,000 below the peaks of around $540,000 reached in 2006 and 2007.
…
Sales of condos, co-ops and single-family homes in New Jersey rose 34 percent in the quarter from a year earlier, to 135,600 units. That’s still below the levels of the housing boom, when yearly sales topped 180,000 in 2004 and 2005.

Real estate broker Vikki CQ Healey CQ of Vikki Healey Properties in Maywood said she thought prices in the area were down a little more than the NAR data suggests — maybe 7 or 8 percent.

“We have such a preponderance of short sales and foreclosures in the market; those prices are really bring down the averages quite a bit,” she said.

But she agreed that the volume of sales was way up over late 2008, in part because of the depressed market activity after the collapse of Lehman Brothers in September 2008.

“Nothing was selling; it didn’t matter what the price was, what the interest rate was,” she said. “That was when the financial crisis hit, and we were paralyzed.”

From the Star Ledger:

NJ existing home sales rise on lower prices, rates

Declining regional prices and record low interest rates boosted existing home sales last year.

The National Association of Realtors said today that resales in New Jersey stabilized at the end of 2009 — rising 2.7 percent to about 115,400. Meanwhile, the expanded and extended first-time home buyers tax credit had little effect here because of the relatively high cost of homes.
…
“Most consumers are sitting down and taking a look at what it would cost them to get the same home three years ago,” said Tom Kunz, chief executive of Parsippany-based Century 21, of New Jersey buyers. “And on top of that be able to finance it.”

Posted in Economics, New Jersey Real Estate | 434 Comments

Citi offers cash for keys

Posted on February 11, 2010 by grim

From the WSJ:

Citi Pushes Foreclosure Alternative

Mortgage lenders are trying to arrange smoother departures for distressed homeowners who can’t be saved by loan modifications–and discourage them from trashing the homes on their way out.

CitiMortgage, a unit of Citigroup Inc. (C), announced Wednesday a pilot project that will let some delinquent borrowers remain in their homes without making mortgage payments for six months if they voluntarily transfer ownership to the bank.

Over the past two years, millions of foreclosures have been delayed by state and federal programs requiring lenders to try to keep borrowers in their homes by easing their monthly payments. But the moment of truth is approaching for hundreds of thousands of households that sought help under the Obama administration’s Home Affordable Modification Program, or HAMP, launched a year ago, as well as borrowers who have sought help through other programs.

“We are concerned that if there is a foreclosure glut at some point in the cycle it would have to have a negative impact on house prices,” and Citi’s pilot program should help prevent a build-up in foreclosed homes, said Sanjiv Das, the chief executive of CitiMortgage in an interview.
…
The CitiMortgage pilot program provides incentives for more borrowers to use a procedure known as a “deed in lieu of foreclosure,” in which the borrower voluntarily transfers ownership of the home to the lender, which then cancels the mortgage debt. Aside from letting such people stay in the homes for six months, CitiMortgage says it will give them at least $1,000 to cover relocation costs, an incentive sometimes dubbed “cash for keys.”

Mr. Das said, “Something formally needs to be done in addition to the modifications. We are in a different stage of the housing cycle. Restructuring mortgage payments was part one of the cycle, making sure that foreclosure glut doesn’t hit the industry is part two of the cycle. Citi is trying to stay ahead of it.”

The pilot program is available for certain people whose mortgages are owned by CitiMortgage in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. The bank should benefit by avoiding legal costs and reducing the time homes are left vacant and exposed to vandalism. Participants will be required to “maintain the property in its current condition,” the bank said. It plans to expand the program if the pilot is successful.

From the Washington Post:

Mortgage officials try exits softer than foreclosures

Seeking alternatives to the nation’s struggling foreclosure prevention efforts, federal and mortgage industry officials increasingly are looking for ways to get distressed borrowers to leave their homes voluntarily, without going through the expensive foreclosure process or a messy eviction.

Citigroup, for instance, plans to announce a pilot program on Thursday that would allow delinquent borrowers who don’t qualify for or decline mortgage relief the opportunity to stay in their homes without making payments for up to six months before turning over the keys, in return for keeping the property in good condition. The bank estimates that up to 20,000 borrowers in Texas, Florida, Illinois, Michigan, New Jersey and Ohio could be eligible.
…
Moody’s Economy.com has forecast that the number of short sales and transactions in which borrowers surrender their deed in lieu of foreclosure will increase more than 50 percent, to about 490,000, this year. That is just a fraction of the 1.9 million homeowners Moody’s has forecast will lose their homes to foreclosure this year, up from 1.7 million last year.

From the Star Ledger:

CitiMortgage offers option for N.J. homeowners in default

The fourth-largest mortgage servicer in the country is offering homeowners in New Jersey who are 90-days late on their payments a chance to walk away with cash.

CitiMortgage, a unit of Citigroup, will announce today a trial program that lets borrowers remain in their homes for six months after signing a deed-in-lieu of foreclosure contract — so called because owners agree to hand over their homes to the lender.

These borrowers also will receive at least $1,000 in relocation expenses.

“Basically, the lenders are giving defaulted owners cash for their keys,” said James Bednar, who writes a real estate blog at njrereport.com.

He said some participants could eventually end up saving as much as $20,000 after relocation expenses and mortgage payments.
…
Real estate agents also said the program could have an adverse effect on New Jersey’s already troubled housing market by driving down prices.

“They’re going to have to be at a lower price than everyone else,” said Sal Poliandro, a Saddle River-based real estate agent, of the homes that will eventually go up for sale. “Not only are they going to have these houses on the market, they are going to be encouraged to sell them quickly.”

Posted in Housing Bubble, National Real Estate | 680 Comments