Archive for the 'Foreclosures' Category

FHA foreclosure homes have been rising in number largely due to the delinquencies by high-risk borrowers who took out loans in 2007 and 2008.

These borrowers had credit scores lower than 600, but the FHA still insured their loans or refinanced their loans to respond to calls from policy makers to guarantee loans as private lenders started to reject loan applications during the last months of 2007 and first months of 2008.

According to the FHA, it started tightening its credit standards after many of the mortgages it had guaranteed in 2007 and 2008 have defaulted.

Brian Montgomery, who worked as commissioner of the FHA until July, said that legislators called on the FHA to refinance problem loans to save homeowners from foreclosures. The FHA has predicted that 24 percent of all home loans insured by the FHA in 2007 will default and that 20 percent of all loans guaranteed in 2008 will also default.

Because of these high levels of expected FHA foreclosure homes, analysts said that the agency may need to be rescued by the federal government soon. According to an FHA annual audit, the projected reserves of the FHA have fallen below the level set by the federal government and may need infusion of federal money. FHA officials however insisted that the FHA has adequate capital and that it can withstand projected losses from foreclosures.

The expected drop in FHA reserve levels has sparked debates about the policy of lending with low down payments just to stimulate the housing market. In many of the country’s struggling housing markets, the FHA has been guaranteeing 50 percent of all home loans being made.

Loan refinancing has also been battering FHA over the past 3 years. Based on a report from First American CoreLogic, defaults on refinanced mortgages have increased faster than defaults on house purchase loans.

In 2007, the percentage of loan applicants with credit scores lower than 600 had increased from 30 percent during the previous year to 37 percent, according to analysts at LPS Applied Analytics.

Now, according to FHA, it has been accepting better home loans as lenders implemented their own stricter lending standards since last year. With average credit scores for FHA borrowers climbing up to about 690, officials hope to reduce the pace of FHA defaults.

Additionally, the Justice Department has also filed a mortgage fraud lawsuit against Lend America, which it charged with causing a large number of FHA foreclosure homes.

In the second quarter this year, the profits of banks in Kansas dropped sharply as foreclosure houses forced the banks to write off an increased percentage of home loans during the quarter.

The net profits of commercial banks in Kansas dropped to a low $16.3 million in the quarter ended June 30 from the $127.5 million gained during the same quarter last year.

Savings and loans association meanwhile earned only $10.5 million, a substantial 37 percent drop from their total earnings of $16.7 million in the second quarter last year.

Due to continued foreclosures in the residential market, Kansas banks made a 1.25 percent write-off on loans, an increase from the 0.41 percent during the same quarter last year. They also increased their reserves for bad loan losses to $185.3 million, much more than double the $75 million posted last year. The percentage of bad loans increased to 2.9 percent.

Savings and loans also increased their write-offs, writing off 0.49 percent during the quarter, marking an increase from the 0.12 percent during the same quarter last year.

They made $9.3 million in total reserves for bad loans, an increase from the $7.1 million they set aside last year. The reserves however marked a decrease from the $15.8 million they allocated for bad loans in the first quarter.

In the second quarter last year, there were 335 commercial banks in Kansas. This year’s second quarter reports showed only 327 banks.

Nearly 19 percent of commercial banks in Kansas were unprofitable in the second quarter, more than double the 7.2 percent during the same quarter last year.

The percentage of banks posting an increase in profits decreased to 31 percent from 54 percent one year ago and from 38 percent in the first quarter.

Among Kansas savings and loans associations, 25 percent posted losses in the second quarter, an increase from the 17 percent during the same quarter in 2008. The percentage of thrifts posting an increase in profits dropped to 38 percent from the 59 percent one year ago. The percentage was unchanged from the first quarter.

Total bank deposits decreased, with deposits in commercial banks dropping from $40.5 billion one year ago to $39.7 billion in the second quarter. Deposits in thrifts however increased by 4 percent to $7.1 billion.

Nationwide, banks posted a total loss of $3.7 billion in the second quarter. It was an overwhelming contrast to the $4.7 billion they earned during the same quarter in 2008.

Homeowners in Florida are experiencing contrasting residential property tax effects from the decline of home values across Florida due to repo house sales.

Last week, homeowners who purchased their homes during the boom and who were paying higher taxes got significant reductions in their tax bills for 2009 while homeowners who have been paying lower taxes because of Florida’s Save Our Homes tax increase cap got increases in their tax bills for 2009.

Taxpayer Jim Flateau, one of around 290,000 homeowners in the Tampa Bay area who received reduced tax bills, said he is happy about the tax reductions since his home is now worth around 20 percent less than its original value. For this year, his property tax was reduced by around $500.

According to Tim Wilmath, head of valuation at the Hillsborough County Property Appraiser’s Office, the taxpayers who will benefit from the lower home valuations are the ones who suffered most from the housing downturn. He said that these types of homeowners comprise about one-third to one-half of all homeowners in a county.

On the other hand, longtime homeowners who have been paying lower residential property taxes for many years due to the Save Our Homes program received increases in their tax bills for 2009.

The state Save Our Homes program limits annual increases in the taxable values of homesteaded properties at 3 percent. After several years, the difference between the assessed value of a house and its market value becomes bigger.

This year, despite the decline in home values, tax assessments for certain homesteaded properties were still increased up to their limits, according to tax officials. They argued that the properties enjoyed years of savings.

Now, it is the newer homeowners who will benefit most from the Save Our Homes program. In the future, the program will prevent their tax valuations from soaring to high levels.

Taxpayer Flateau paid $312,800 for his home in Pasco County when he bought it in 2005. This year, the tax valuation fell by over $52,000 to $194,490, giving him tax savings of around $500.

Nonetheless, according to tax official Mike Well, over 65,000 out of Pasco County’s 127,000 homesteaded properties will not experience higher taxes this year because of their substantial declines in value.

Meanwhile, in Pinellas County, one-third of the 245,000 owners of homesteaded properties will pay reduced taxes while two-thirds will pay increased taxes.

House flipping business is proving to be a popular way to earn quick profits and at the same time, help communities fight the blight brought about by foreclosure properties. In New York, several nonprofit organizations get into the business of purchasing foreclosed homes, rehabilitating and selling them.
Nonprofit organizations, with the help of the government in [...]

Communities across the U.S. have been implementing creative ways to contain foreclosed properties in their areas, according to a report from the PolicyLink Center for Infrastructure Equity.

More Neighborhood Stabilization Program grants were awarded by the U.S. Housing and Urban Development (HUD) to counties in Georgia to help officials create affordable houses by building, purchasing or rehabilitating repo home or to provide rental assistance.

Three out of nine parcels of the Dragon City Casino development in Las Vegas, Nevada are scheduled for bank REO properties sale on June 26. The foreclosure auction will be conducted by the Community Bank of Nevada.

The number of mortgage applications declined last week, as mortgage rates and inventories of repo homes increased, based on data released by the Mortgage Bankers Association on Wednesday.

Home prices in South Carolina’s tri-county area of Chester, York and Lancaster increased in April by 7 percent, based on a report released by the Piedmont Regional Association of Realtors. The increase is one positive sign affirming hopes of housing market recovery in the area from the effects of bargain-priced repo properties.

2008 was a very volatile year for the real estate market and the economy affecting local, state and national levels. Record levels of foreclosures plagued every state as more than 2.2 million US families lost their homes. With more people losing jobs, and fluctuating prices of gasoline compounding these woes, the nation will continue to face this grind in the coming months.