PBS Newshour – Is the foreclosure crisis over yet?

September 26th, 2015 by
Business and Economics Correspondent

Editor’s Note: This is the story of two housing markets — one that’s doing quite well and another that’s still treading water.

Economics correspondent Paul Solman spoke with Nick Retsinas, who teaches real estate at Harvard Business School, about the second, larger, lower-end market. Strolling around Cambridge, Massachusetts the two discussed how there can be bidding wars in one neighborhood and foreclosure signs in another. In the latter neighborhood, banks have refused to refinance mortgages despite the depreciated values of the homes.

Tune in to tonight’s Making Sen$e, which airs every Thursday on the PBS NewsHour, for more on the ongoing foreclosure crisis. The following conversation has been edited and condensed for clarity and length.

— Kristen Doerer, Making Sen$e Editor

Paul Solman: Are there really two housing markets now — one that’s doing well and another very large one that’s just not moving at all?

Nick Retsinas: Well, it’s a big country. So there are many markets. But generally speaking, it is a story of two markets. The higher-end market is doing very well, as a matter of fact, maybe too well. The lower-end market is kind of mired and stuck in the housing crisis.

Paul Solman:  So houses on this street in Cambridge, not far from Harvard Square, how much are they?

Nick Retsinas: They’re million dollar homes, easily. Sometimes more.

Paul Solman:  And I hear that there are now bidding wars!

Nick Retsinas: There are bidding wars, because so few come up for sale. A lot of these people have lived here a long time, so when they bought the house it might not have been a million dollars, but now they’re living in million dollar homes.

Paul Solman: They’re snapped up — people are bidding more than the asking price, right?

Nick Retsinas: We had a quarter last year in Cambridge where the majority of transactions were sold above the asking price. That’s unheard of to do that. The sellers know how high the market is, but even they can’t price it high enough to keep people out.

Paul Solman: And yet, I’ve been talking to people in the last few days who have told me that their houses lost 50 percent of their value and have barely come back at all.

Nick Retsinas:  It’s like the housing crisis keeps on giving to the lower end of the marketplace overall. Fifteen percent of all the houses under $200,000 owe more than the house is worth. They’re underwater, so to speak.

Paul Solman:  Fifteen percent?

Nick Retsinas: Fifteen percent. That’s one out of six, one out of seven houses owe more in their mortgage than the house is worth, which is why they can’t sell their house without paying money to get out of their mortgage.

Paul Solman: And how is the higher-end market doing?

Nick Retsinas:  At the higher end, it’s closer to five or six percent of the houses are still stuck — in some markets like Phoenix and Las Vegas and Los Angeles. But for the most part, the housing price increase has almost brought them back to where their peak was in 2007 and 2008.

Paul Solman: Why is it that banks will not accept an offer from a homeowner at the current market price, and then once the homeowner is out, the bank will sell it on the open market? The bank doesn’t get as much as it could’ve gotten from the very person who was living in the house.

Nick Retsinas: Some investors are very afraid of principal reductions. They’re afraid that there will be bad things happening between owners and related parties that would necessitate the bank taking up a reduction in what was the amount owed. They’re very nervous about doing that. I think they over-inflate that worry, but it’s one that does affect their behavior.

Paul Solman:  But it makes no sense. You’re the mortgage holder. I live in the house. The house has a $250,000 dollar mortgage, it’s now worth $140,000 or $130,000 or something. I say, “Hey! I will absolutely service that loan at $130,000, because it will cut my payments.” And you say, “No,” you kick me out and then you make the same deal with somebody else?

Nick Retsinas: I don’t disagree. But the counterargument they are hearing from their investors is: “If you start doing this, we will never buy mortgages from you again. If we get worried about whether or not we can get back our principal, we’re going to stop buying mortgages for you.” That’s what they’re afraid of.

It’s an investor saying that, because the banks aren’t necessarily holding these mortgages. They’re often bundling them, securitizing them and selling them to investors. Investors are very nervous about losing any of their principal. They feel that’s inviolate. And they’re afraid that if a bank starts to do that, they’re at risk of doing that for future investments, and they threaten not to buy other mortgages going forward.

Is that a real concern? Yes. Is it a real possibility? I’m not sure.

Paul Solman: So the bank is simply afraid of setting a ‘precedent’ that will hurt its business later on?

Nick Retsinas:  Yes, they are afraid it will be contagious to people. As a result, they haven’t done principal reduction, and you have these low values, particularly among low-end homes, continuing to stilt the marketplace.

Paul Solman: So are you sympathetic to the lenders for not giving the homeowner the same deal that is actually a price on the open market?

Nick Retsinas: No, I think the lenders have been shortsighted. And because they have been shortsighted, for the most part, this housing crisis has dragged on and on, and it explains why the recovery is so slow and so laborious.

Paul Solman: But what’s the logic?

Nick Retsinas: That contagion effect. The same logic. Absolutely the same logic.

So I own a house, and there is a mortgage of $300,000 dollars. The actual value of the house is $200,000 dollars. I might say to the bank, “Look at it! It’s only worth $200,000 dollars! So take the house for the $200,000 dollars. That’s all I got overall.”

The bank’s saying, “Oh, no, no. When you signed this agreement, you promised to pay the $300,000, not the $200,000 dollars.”

Paul Solman: But why doesn’t the bank accept the $200,000, since that’s the market price!?

Nick Retsinas: Because the bank thinks my neighbor is looking at me, saying, “Wait a minute, there’s something wrong with this. I’m paying my mortgage every month, even though I owe $300,000 dollars, and my house is only worth $200,000 dollars. Why don’t I stop paying my mortgage, so they’ll accept the lower valuation and save me that balance of $100,000 dollars that I owe them?” The banks are afraid this will be contagious to other people in similar situations with these underwater mortgages.

Often the lender has put this mortgage in a pool of mortgages and sold it to an investor. So while some banks are holding this in portfolio, many of them are in securities that are owned by investors. And investors are sending the signal: never, never forgive principal. Whatever you do, never forgive principal. They’re willing to sacrifice interest rate, but they’re not willing to sacrifice principal.

As a result, we’re mired in this, in the aftermath of foreclosure that never quite seems to go away.

Paul Solman: Inequality in the housing market as everywhere else in the economy has been happening now for 35 years or so. Why is there this sudden difference between the top end of the housing market and the significantly large bottom end?

Nick Retsinas: Well, there’s always a difference between high-end and low-end, of course, for many years over time. I think it’s exacerbated here because of the large numbers of foreclosures. The large number of foreclosures have made it impossible for people to go back in the market. They’re not allowed to go in the back in the marketplace for another five to seven years until they build good credit overall. And in the meantime, government and the government agencies, the Fannie Mae, the Freddie Mac and the FHA, are so spooked by what happened in the last crisis they’ve been tightening their credit boxes. So basically, you’re reducing demand at the low end.

One element of the housing recovery has been a spiraling rental market. Rents are going up consistently, almost all over the country. As a result, historically, young people rented and then used their savings to save for a down payment, but they don’t have any savings anymore. They can barely keep up with their rent. You couple this with stagnant wage growth, and you’re basically muting demand. Less demand means lower prices, and that’s why the prices don’t go up, that’s why the mortgages stay underwater.

Paul Solman:  So the foreclosure crisis is not over?

Nick Retsinas: It’s not over. It’s not at its peak where it was two or three years ago, but in many states, say, Florida and California, you still have a residue of foreclosures that are continuing to fill up that pipe and stuff the pipe so we can’t have the free flowing of markets.

Bad Bank Loans Still a Problem Seven Years After Financial Crisis

September 25th, 2015 by

Bad Loans Remain Well Above Pre Crisis Levels

SEP 23, 2015 3:07pm ET


The banking industry continues to sit on a mountain of problematic loans seven years after the onset of the financial crisis.

Credit quality, to be sure, is substantially better than it was during the peak of the crisis. But the amount of nonperforming assets on banks’ books is more than triple the levels reported in 2006.

Banks have been more reluctant to offload a number of credits in bulk sales, and loss-share agreements have also forced banks to keep sour loans on their books. Low interest rates, along with a lack of better reinvestment options, have also influenced executives’ decisions.

Still, the continued existence of troubled assets could prove problematic should the banking industry face another economic downturn, industry observers warn.

Lingering bad credits “has been puzzling,” said Jon Winick, chief executive at Clark Street Capital. “The banking system and the economy would have recovered faster if there had been more emphasis on disposing bad assets rather than managing them. It has distracted a lot of organizations.”

Noncurrent loans and other real estate owned totaled $162 billion at June 30, based on data from the Federal Deposit Insurance Corp. While the amount was a 63% decrease from mid-2010, it nearly tripled the $56 billion reported in mid-2006.

A market exists for buying distressed assets, though bankers can expect to bring in anywhere from 20% to 80% of a loan’s value through such sales. Pricing hinges on the type of asset and the location and condition of the underlying collateral, said Warren Friend, head of product strategy and strategic client relationships at Situs.

Clark Street Capital and Situs are among a group of companies that have long sought ways to get problem assets off the books of community banks.

Many bankers, however, have been loath to take such haircuts, industry experts said.

MidSouth Bancorp in Lafayette, La., has never felt forced to conduct a bulk asset sale, said Rusty Cloutier, the company’s president and chief executive. Rather, the $1.9 billion-asset MidSouth prefers to work with its borrowers to find solutions.

“Being more of a community bank, we try to work with customers in good times and in bad times,” Cloutier said. “It is a good tool to have in your arsenal.”

Troubled assets can still earn money for lenders, Friend said. Banks must weigh the required capital and existing returns of an asset against what the lender could get by selling the asset and redirecting the capital.

“Banks have had a hard time keeping assets on their books,” Warren said. “Their view is that it is better to have a bad asset that’s earning something and working through it then to have no assets at all and only have cash that is earning zero.”

Banks that scooped up failed institutions during the aftermath of the financial crisis could have more opportunities to sell sour loans once their loss-share agreements with the FDIC end, said Randy Dennis, president of DD&F Consulting. An increasing number of banks in recent months have successfully negotiated early termination of their arrangements with the FDIC.

Finally, prolonged low interest rates and low funding costs have made it easier for banks to hold onto problem assets in the hopes of rehabbing them. Rising interest rates could pressure banks with elevated problem assets, Dennis said.

“The rates have been so low, so it costs basically nothing to carry nonperforming assets,” Dennis said. “We are behind in working through these. We will find ourselves in trouble if we don’t have some progress before rates go up.”

Banks are continuing to incur costs associated with carrying bad assets, ranging from paying staff to manage them to various legal and regulatory expenses, Winick said. Reducing problematic assets could also help banks get out from under regulatory orders, he added.

Existing issues could be exacerbated if the economy hits another major snag. The industry could suffer new losses or more bank failures. Still, industry experts noted that banks, by and large, have higher capital levels then they did before the financial crisis, which should help tremendously in the case of another downturn.

“At this point, banks have some leeway to sit on this stuff and work it out,” said Jeff Davis, managing director of financial institutions at Mercer Capital. He said, however, that an unwillingness to address past issues could create bigger headaches should new problems arise.

Issues with the energy sector, driven by a prolonged slump in oil prices, could serve as a test case of sorts for an economic downturn scenario.

Davis said banks with stressed energy books might be inclined to go ahead and “blow out existing problem credits that have been on the books for several years.” A bank’s view on whether more oil and gas nonperforming assets are coming will probably influence their decision, he added.

Perspective and proactive management matter, bankers and industry observers said.

Comerica, a big energy lender in Dallas, reported in July that nonperforming assets at June 30 were $370 million, or 23% higher than what it had a year earlier. While much higher than the $174 million in nonperforming assets Comerica had in mid-2006, the amount, as a percentage of total assets, remains well below the industry norm.

“It is important to remember that we maintain a granular portfolio with about 200 customers in our energy line of business,” Ralph Babb, Comerica’s chairman and chief executive, said during a recent investor conference.

“We have prudently increased our reserves for energy loans for the past three quarters as a result of an increase in criticized loans and the impact of continued volatility and sustained low energy prices,” Babb said.

Financial Crisis Hollywood Style : “The Big Short” – Trailer

September 23rd, 2015 by

The Big Short – Trailer (2015) ‐ Paramount Pictures

The Big Short, directed Adam Mckay, is a take on the financial crisis based on the best-selling book by Michael Lewis, about four outsiders who see an inherent weakness of the business model that led to the global collapse of the economy.

Published on Sep 22, 2015
From the outrageous mind of director Adam Mckay comes THE BIG SHORT. Starring Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt, in theaters Christmas.

When four outsiders saw what the big banks, media and government refused to, the global collapse of the economy, they had an idea: The Big Short. Their bold investment leads them into the dark underbelly of modern banking where they must question everyone and everything. Based on the true story and best-selling book by Michael Lewis (The Blind Side, Moneyball), and directed by Adam Mckay (Anchorman, Step Brothers) The Big Short stars Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt.

Director: Adam McKay

Starring: Christian Bale, Steve Carell, Ryan Gosling, Brad Pitt, Melissa Leo, Hamish Linklater, John Magaro, Rafe Spall, Jeremy Strong, Marisa Tomei and Finn Wittrock

Connect with The Big Short:

Official Website:

NJ Foreclosure, Housing, Finance and Consumer News of the Day 9/22/15

September 22nd, 2015 by

News of the day relating to foreclosure, housing and finance impacting NJ homeowners and consumers as selected by the law firm of Denbeaux and Denbeaux. These is the top  story that is trending , and has caught people’s attention so far today.

Sinister visions of America in crisis: Hollywood finally gets foreclosures right in “99 Homes”

A little less dramatic but maybe more important to homeowners is the news that comes about loan modifications seemingly on the rise, as foreclosures diminish on a national average. However, there is still bleak news in New Jersey for homeowners, as foreclosures were on the rise as compared to a year ago for the same period in July.

Loan Modifications Outpaced Foreclosure Sales in July

Below is a list of stories from around the country that specifically mention foreclosure that we also may provide some further discussion on  later today.


Seattle Bubble (blog)

Foreclosures Back to Pre-Bust Levels Around Seattle

Seattle Bubble (blog)
It’s been a few months since we took a detailed look at foreclosure stats in King, Snohomish, and Pierce counties, so let’s update those numbers.
CBS News

Sinister visions of America in crisis: Hollywood finally gets foreclosures right in “99 Homes”

But in “99 Homes,” director Ramin Bahrani offers the most authentic portrait of theforeclosure crisis ever committed to film. Bahrani spent weeks in …
“99 Homes”: During the real estate downturn, sunny Florida turns downcast – The Real Deal South Florida (press release) (registration) (blog)
Wicked Local Rochester

STATEHOUSE ROUNDUP: Autumn signals busy season on the Hill

Wicked Local Rochester
The Senate on Thursday dove into the weeds of foreclosure law, passing legislation that would limit the window for former homeowners seeking to …
Highlands Today

Development stopped by real estate bust gains traction

Highlands Today
Shoop said the bank is pleased to have one of the properties it has held under foreclosurefor years to be active again. He said the amount of …

Darrell Turner of Turner Tree & Landscape files lawsuit against former Rep. Ronald Reagan

Bradenton Herald
In separate actions, Turner faces three foreclosure suits filed by 1st … Reagan was involved in a separateforeclosure lawsuit for a property he owned …
Black Star News

15 -Year Battle: Connecticut Homeowner Claims Bank Of New York Wants To “Steal” Home 

Black Star News
He says a Connecticut Superior Court Judge granted BNY strict foreclosure even after the IRS placed a federal tax lien on the property. The whole …

Group opposes Goldman purchase of GE deposits

… conduct,” the letter said, citing a 2013 foreclosure settlement, and concerns about whether it met certain obligations to pay for foreclosure prevention …

Positive results seen for August Norfolk County real estate market

Wicked Local Weymouth
Another positive result that occurred in August was the reduced number of foreclosure deeds filed and maybe more importantly, a significant reduction …


Foreclosures Help Real Estate Companies Profit with Rising Rents

September 21st, 2015 by

Two big real estate moguls will merge because they believe there will be greater profits from rentals, and that rising home prices will make homes difficult for prospective buyers.

As the story appears in the Wall Street Journal:

Big Landlords to Merge, Betting on Rising Rents

Article written by Ryan Dezember, appears in the Wall Street Journal, updated Sept 21, 2015

Two big owners of single-family rental homes said Monday they have agreed to merge, a bet that rents will keep rising and homes will remain difficult for many Americans to buy.

Starwood Waypoint Residential Trust, a publicly traded real-estate investment trust run by Barry Sternlicht, the longtime real-estate investor who is Starwood Capital Group’s chief executive, will combine with closely held Colony American Homes Inc. in a deal that values Colony at about $1.5 billion based on Starwood Waypoint’s closing share price Friday. The Wall Street Journal had reported the deal earlier Monday, citing people familiar with the talks.

Under the terms of the agreement, Colony shareholders will receive about 65 million shares of Starwood Waypoint. The deal has been approved by the boards of both companies and is expected to close in the first quarter of next year. Starwood Waypoint shares were inactive premarket.

“We believe this merger demonstrates the power of scale and consolidation and really crystallizes the long-term durability of the single-family rental industry,” said Thomas J. Barrack Jr., the executive chairman of Colony American Homes’ parent, Colony Capital. He will serve as nonexecutive co-chairman of the combined company alongside Mr. Sternlicht.

The two companies own a combined total of more than 30,000 homes valued at nearly $8 billion. Messrs. Sternlicht and Barrack were part of the rush by big investors to buy foreclosed homes in bulk, often sight unseen and at steep discounts, after the U.S. housing market collapsed.

Such investors concentrated their buying in some of the hardest-hit areas, including southern Florida, Phoenix, Atlanta and California, hoping to gain enough size in each market to make management of the properties more efficient.

Other major buyers of single-family rental homes include Blackstone Group LP, which has spent nearly $10 billion to acquire and spruce up about 50,000 foreclosed homes now rented through its Invitation Homes LP.

The proposed merger of Starwood Waypoint and Colony is a bet that the percentage of Americans who own homes will remain unusually low. While the foreclosure crisis has receded, toughened lending standards have pushed millions of Americans out of the homebuying market.

Higher interest rates would increase borrowing costs and make it harder for some renters to buy homes.

The Federal Reserve decided last week not to raise short-term interest rates from near zero, where they have held since 2008, but the central bank is expected to revisit the matter later this year.

The U.S. homeownership rate is at its lowest level in nearly 50 years, falling to 63.5% in the second quarter, according to the Commerce Department.

In contrast, single-family rentals now add up to 13% of overall housing stock, up from 9% in 2005, according to a report by Moody’s Analytics.

Rents have been climbing steadily, though some analysts and investors question how long it can last, especially in areas with weak wage growth. Many of the rental homes scooped up by big investors are in those parts of the U.S.

The single-family rental home business was long dominated by mom-and-pop operators. Big investors have used their access to capital and number-crunching skill to barrel into the market.Starwood Waypoint touts algorithms it has developed to guide decisions that include which neighborhoods to target.

The response from stock-market investors has been mostly tepid so far.

As of Friday, Starwood Waypoint shares were down about 20% since its spinoff from Starwood Property Trust last year. Shares ofAmerican Homes 4 Rent, which owned 37,491 homes in 22 states as of June 30, have risen 2.7% since their stock-market debut in August 2013.

Blackstone executives have said they plan to eventually list shares of Invitation Homes through an initial public offering.

Bond buyers have been more enthusiastic, snapping up the debt issued by some companies in the sector.

In the two years since Blackstone’s Invitation Homes sold the first bond backed by rents from a pool of houses, $13 billion of such bonds have been sold, according to Kroll Bond Rating Agency Inc.

Single-family rental companies must convince investors that the single-family rental model will remain viable if homeownership levels rebound. Some outsiders also question how much more firms like Blackstone, Colony and Starwood Waypoint can grow now that so many of the most deeply discounted foreclosed homes have been purchased.

Single-family rental companies also face questions about their ability to maintain tens of thousands of scattered properties. The chores include cutting lawns, fixing sinks, insurance and keeping track of rental rates and payments.

Big investors need to amass enough market share to keep their operating costs in check.

In June, Starwood Waypoint said the company and other institutional investors owned roughly 200,000 of the 15.3 million U.S. rental homes, suggesting significant room for expansion if other conditions are ripe.

The two companies believe that a merger would result in as much as $50 million in cost reductions.

If the deal goes through, Colony investors would own 59% of the combined company’s shares, while Starwood Waypoint shareholders would own 41%. Starwood Waypoint would issue new shares as part of the merger.

Write to Ryan Dezember at [email protected]

Why Subprime Borrowers Didn’t Cause the Foreclosure Crisis

September 21st, 2015 by

Wharton study details why the foreclosure crisis caused by the US housing market bust may have been “more of a prime, rather than a subprime, borrower issue.”

Published on 6/5/15 by Fernando Ferreira and Joseph Gyourk of the The Wharton School, University of Pennsylvania and NBER

A New Look At The U.S. Foreclosure Crisis: Panel Data Evidence Of Prime And Subprime Borrowers From 1997 To 2012

Fernando Ferreira and Joseph Gyourko

The Wharton School

University of Pennsylvania and NBER


Utilizing new panel micro data on the ownership sequences of all types of borrowers from 1997-2012 leads to a reinterpretation of the U.S. foreclosure crisis as more of a prime, rather than a subprime, borrower issue. Moreover, traditional mortgage default factors associated with the economic cycle, such as negative equity, completely account for the foreclosure propensity of prime borrowers relative to all-cash owners, and for three-quarters of the analogous subprime gap. Housing traits, race, initial income, and speculators did not play a meaningful role, and initial leverage only accounts for a small variation in outcomes of prime and subprime borrowers.

Most economic analysis of the recent American housing market bust and the subsequent default and foreclosure crises focuses on the role of the subprime mortgage sector.1 Roughly three-quarters of the papers on the crisis reviewed in the next section use data only from the subprime sector and typically include outcomes from no later than 2008. For example, Mian & Sufi (2009) use mortgage defaults aggregated at the zip code level from 2005 to 2007 to conclude that a “salient feature of the mortgage default crisis is that it is concentrated in subprime ZIP codes throughout the country.” However, subprime loans comprise a relatively small share of the complete housing market–about 15% in our data and never more than 21% in a given year. In addition, we document that most foreclosures in the United States occurred after 2008. These two issues raise questions about the representativeness of results based on selected subprime samples.

In this paper we provide new stylized facts about the foreclosure crisis and also empirically investigate different proposed explanations for why owners lost their homes during the last housing bust. We use micro data that track outcomes well past the beginning of the crisis and cover all types of house purchase financing – prime mortgages, Federal Housing Administration (FHA)/Veterans Administration (VA)-insured loans, loans from small or infrequent lenders, and all-cash buyers — not just the subprime sector. The data (described below in Section III)) contain information on over 33 million unique ownership sequences in just over 19 million distinct owner-occupied housing units in 96 metropolitan areas (MSAs) from 1997(1)-2012(3), resulting in almost 800 million quarterly observations. It also includes information on up to three loans taken out at the time of home purchase, and all subsequent refinancing activity. Thus, we are able to create owner-specific panels with financing information from purchase through sale or other transfer of the home.

These data show that the crisis was not solely, or even primarily, a subprime sector event. It started out that way, but quickly morphed into a much bigger and broader event dominated by prime borrowers losing their homes. Figure 1 reports the raw number of homes lost via foreclosure or short sale for the five different types of owners we track each year across all 96 metropolitan areas in our sample. There are only seven quarters, 2006(3)-2008(1) at the beginning of the housing market bust, in which there were more homes lost by subprime borrowers than by prime borrowers, although the gap is small as the figure illustrates. Over this time period, which is the focus of much of the previous literature in this area, 39,094 more subprime than prime borrowers lost their homes. This small difference was completely reversed by the beginning of 2009, as 40,630 more prime borrowers than subprime borrowers lost their homes just in the 2nd, 3rd, and 4th quarters of 2008. An additional 656,003 more prime than subprime borrowers lost their homes from 2009(1)-2012(3), so that twice as many prime borrowers lost their homes than did subprime borrowers over our full sample period.

One reason for this pattern is that the number of prime borrowers dwarfs that of subprime borrowers (and the other borrower/owner categories we consider). Table 1 lists the absolute number and share of all our borrower/owner categories over time. The prime borrower share varies around 60% over time and did not decline during the housing boom. Subprime borrower share nearly doubled during the boom, but only up to 21%. Subprime’s increasing share came at the expense of the FHA/VA-insured sector, not the prime sector.

NJ Foreclosure Bank Repossessions up 295%

September 17th, 2015 by

U.S. Foreclosure Activity Decreases 6 Percent in August Following Five Consecutive Months of Annual Increases

Bank Repossessions Up 40 Percent From Year Ago; Nevada, Maryland, New Jersey Post Top State Foreclosure Rates

September 17, 2015 00:01 ET IRVINE, CA–(Marketwired – September 17, 2015) – RealtyTrac® (, the nation’s leading source for comprehensive housing data, today released its August 2015 U.S. Foreclosure Market Report™, which shows a total of 109,561 U.S. properties with foreclosure filings — default notices, scheduled auctions and bank repossessions — in August, down 12 percent from the previous month and down 6 percent from a year ago. The 6 percent year-over-year decrease in August followed five consecutive months with year-over-year increases.

The report also shows one in every 1,205 U.S. housing units had a foreclosure filing in August.

“Foreclosure starts in August continued to search for a new floor below even pre-recession levels, indicating the housing recovery of the past three years is built on a solid financing foundation,” said Daren Blomquist, vice president at RealtyTrac. “But the continued rise in bank repossessions indicates more batches of bank-owned homes will be rippling through the housing market over the next three to 12 months as lenders list these properties for sale.

“This influx of bank-owned inventory may be good news for an inventory-challenged housing market, but buyers and investors interested in purchasing these bank-owned homes should understand they tend to be lower-value properties in areas where house values have not recovered as quickly and are more likely to have deferred maintenance issues that will need to be addressed,” Blomquist noted. “The average estimated market value of REO properties nationwide is now 33 percent below the average market value of non-distressed properties, and homes that were repossessed in the second quarter of this year on average had been languishing in the foreclosure process for 629 days.”

Foreclosure starts drop to lowest level since November 2005
A total of 45,072 U.S. properties started the foreclosure process for the first time in August, down 1 percent from previous month and down 19 percent from year ago to lowest level since November 2005. So far in 2015, foreclosure starts have averaged 49,362 per month, below the pre-crisis average of 52,279 per month in 2005 and 2006.

Foreclosure starts decreased from a year ago in 30 states, including California (down 29 percent from year ago), Florida (down 40 percent), New Jersey (down 38 percent), Texas (down 17 percent), and Maryland (down 26 percent).

Counter to the national trend, foreclosure starts increased from a year ago in 19 states, including New York (up 20 percent), Virginia (up 16 percent), Missouri (up 77 percent), and Massachusetts (up 61 percent) and Minnesota (up 20 percent).

Bank repossessions increase from a year ago in 36 states
There were a total of 36,792 U.S. properties repossessed by lenders through foreclosure (REO) in August, down 22 percent from previous month but still up 40 percent from a year ago, the sixth consecutive month with REOs increasing on a year-over-year basis. Bank repossessions in August were still well above their pre-crisis average of 23,119 per month in 2005 and 2006, but well below their peak of 102,134 in September 2010.

Bank repossessions increased from a year ago in 36 states, including Florida (up 23 percent), California (up 31 percent), Texas (up 168 percent), Ohio (up 35 percent), and New Jersey (up 295 percent).

“Foreclosure sales from the Trustee still require cash at the time of sale, so as a result lower-priced properties to mid-priced properties tend to sell for close to full value. Higher-priced foreclosures, while rare, can sometimes present an opportunity. With stricter lender requirements we are most likely a few years away from foreclosures truly having an impact on home values in the area,” said Greg Smith, owner/broker at RE/MAX Alliance, covering theDenver market in Colorado where foreclosure activity was down 45 percent from a year ago.

Counter to the national trend, bank repossessions decreased from a year ago in 13 states, including Georgia (down 55 percent), Illinois (down 22 percent), Wisconsin (down 7 percent), Connecticut (down 36 percent), and Kentucky (down 45 percent).

Scheduled foreclosure auctions drop to nine-year low
A total of 41,308 U.S. properties were scheduled for a future foreclosure auction in August, down 14 percent from the previous month and down 19 percent from a year ago to the lowest level since May 2006 — a more than nine-year low. Scheduled foreclosure auctions in August were about one-fourth of their peak of 158,105 in March 2010 but still above their pre-crisis average of 33,634 a month in 2005 and 2006.

Despite the national decrease, scheduled foreclosure auctions increased from a year ago in 23 states, including New Jersey (up 38 percent), Pennsylvania (up 18 percent), New York (up 64 percent), South Carolina (up 38 percent), and Massachusetts (up 21 percent).

Nevada, Maryland, New Jersey post highest state foreclosure rates
Nevada foreclosure activity increased 4 percent from a year ago in August — driven largely by a 233 percent jump in bank repossessions — and the state posted the nation’s highest foreclosure rate for the first time since September 2014. One in every 507 Nevada housing units had a foreclosure filing in August, more than twice the national average.

Maryland foreclosure activity was unchanged from a year ago despite a 429 spike in bank repossessions, and the state posted the nation’s second highest foreclosure rate for the third month in a row. One in every 534 Maryland housing units had a foreclosure filing in August.

New Jersey foreclosure activity increased 3 percent from a year ago — driven largely by a 295 percent year-over-year increase in bank repossessions and 38 percent year-over-year increase in scheduled foreclosure auctions — and the state posted the nation’s third highest state foreclosure rate for the third month in a row. One in every 539 New Jersey housing units had a foreclosure filing in August.

Florida’s foreclosure rate dropped out of the top three highest among the states for the first time since June 2012 thanks in part to a 33 percent year-over-year decrease in foreclosure activity in August to the lowest level since April 2007.

South Carolina foreclosure activity increased 11 percent from a year ago in August, boosting the state’s foreclosure rate to the fifth highest nationwide. One in every 863 South Carolina housing units had a foreclosure filing in August.

Other states with foreclosure rates ranking among the top 10 nationwide in August were Illinois at No. 6 (one in every 921 housing units with a foreclosure filing), North Carolina at No. 7 (one in every 970 housing units), New Mexico at No. 8 (one in every 1,005 housing units), Indiana at No. 8 (one in every 1,037 housing units), and Ohio at No. 10 (one in every 1,037 housing units).

10 of 20 largest U.S. metros post annual increase in foreclosure activity
Among the nation’s 20 largest metropolitan statistical areas by population, 10 posted year-over-year increases in overall foreclosure activity, led by St. Louis (up 140 percent), Boston (up 49 percent), Dallas-Fort Worth (up 26 percent), Minneapolis-St. Paul (up 26 percent), and New York (up 22 percent). Boston, Dallas-Fort Worth, and Minneapolis-St. Paul all continued to post foreclosure rates below the national average despite the increase in foreclosure activity.

Major markets with the biggest year-over-year decrease in foreclosure activity in August were led by Miami (down 37 percent), San Francisco (down 35 percent), Atlanta (down 28 percent), Tampa-St. Petersburg (down 23 percent), and San Diego (down 21 percent).

“Although the headline number appears to be worrisome, I believe that a majority of foreclosure activity is a function of banks finally starting to clear their backlogs,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market where foreclosure activity increased nearly 22 percent from a year ago. “This is intuitive as prices in the Seattle region continue to rise which will offset some of their potential losses. Any addition to the stock of homes for sale is a positive as inventory in the Seattle region remains at historic lows. I am sure that any bank owned properties that come to market will be snapped up quickly given the competitive market conditions in Seattle.”

Despite the decrease in foreclosure activity, Tampa-St. Petersburg posted the highest foreclosure rate among the nation’s 20 largest metro areas, with one in every 527 housing units with a foreclosure filing in August — more than twice the national average. Miami posted the second highest foreclosure rate among the 20 largest metro areas (one in every 568 housing units with a foreclosure filing), followed by Baltimore (one in every 586 housing units), Chicago (one in every 744 housing units), and Riverside-San Bernardino in Southern California (one in every 765 housing units).

“We saw a small increase in REOs into a strong market is positive. The market is easily absorbing them at higher prices and we are cleaning out the remnants from our ponderous judicial system. The continued decline in new filings indicates blue skies ahead,” said Mike Pappas, CEO and president of the Keyes Company covering the South Florida market.

New Jersey, Florida, Illinois, Nevada and North Carolina cities post top metro rates
Foreclosure activity decreased 5 percent from a year ago in August in Atlantic City, New Jersey, but the city still posted the nation’s highest foreclosure rate among metropolitan statistical areas with a population of 200,000 or more. One in every 307 Atlantic City housing units had a foreclosure filing in August, nearly four times the national average.

Another New Jersey city, Trenton, posted the second highest metro foreclosure rate — one in every 384 housing units with a foreclosure filing in August — followed by five Florida cities: Deltona-Daytona Beach-Ormond Beach at No. 3 (one in every 418 housing units with a foreclosure filing); Ocala at No. 4 (one in every 445 housing units); Jacksonville at No. 5 (one in every 462 housing units); Tampa-St. Petersburg at No. 6 (one in every 527 housing units); and Pensacola at No. 7 (one in every 541 housing units).

The three other cities with top 10 metro foreclosure rates in August were Rockford, Illinois at No. 8, Las Vegas at No. 9, and Fayetteville, North Carolina at No. 10 — all three with a foreclosure rate of one in every 565 housing units with a foreclosure filing.

Report methodology
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the month — broken out by type of filing. Some foreclosure filings entered into the database during the month may have been recorded in previous months. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default – Notice of Default (NOD) and Lis Pendens (LIS); Auction – Notice of Trustee’s Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). The report does not count a property again if it receives the same type of foreclosure filing multiple times within the estimated foreclosure timeframe for the state where the property is located.

Special methodology note on REOs
In the first quarter of 2015, RealtyTrac started receiving REO data from a new source that provides the data more quickly in some cases than other sources. This new source may be resulting in some REOs reported by RealtyTrac in the first six months of 2015 that would have been reported in subsequent months using other sources. As always, if RealtyTrac receives an REO filing (or any other foreclosure filing type) on the same property from multiple sources, or from the same source multiple times, that REO filing is only counted in the RealtyTrac U.S. Foreclosure Market Report the first time it is received.

Report License
The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information please contact our Data Licensing Department at 800.462.5193 or [email protected].

About RealtyTrac
RealtyTrac is a leading provider of comprehensive U.S. housing and property data, including nationwide parcel-level records for more than 130 million U.S. properties. Detailed data attributes include property characteristics, tax assessor data, sales and mortgage deed records, distressed data, including default, foreclosure and auctions status, and Automated Valuation Models (AVMs). Sourced from RealtyTrac subsidiary, the company’s proprietary national neighborhood-level database includes more than 50 key local and neighborhood level dynamics for residential properties, providing unrivaled pre-diligence capabilities and a parcel risk database for portfolio analysis. RealtyTrac’s data is widely viewed as the industry standard and, as such, is relied upon by real estate professionals and service providers, marketers and financial institutions, as well as the Federal Reserve, U.S. Treasury Department, HUD, state housing and banking departments, investment funds and tens of millions of consumers.

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NJ Bad Mortgages Comprise 10.2% of Total

September 17th, 2015 by

Even as Wall Street has doubts about the fed lifting interest rates, Main street mortgages are in trouble. According to an article in Forbes, bad mortgages comprise 10.2% of total mortgages in New Jersey which concluded that banks were giving NJ homeowners a chance to “catch up.”  

However, recent data from Realty Trac’s August 2015 U.S. Foreclosure Market Report™, says

New Jersey foreclosure activity increased 3 percent from a year ago — driven largely by a 295 percent year-over-year increase in bank repossessions and 38 percent year-over-year increase in scheduled foreclosure auctions — and the state posted the nation’s third highest state foreclosure rate for the third month in a row. One in every 539 New Jersey housing units had a foreclosure filing in August.

On Tuesday, September 15th an article appeared in Forbes , “Fewer and Fewer Distressed Property Sales,” [full article here ] in which Lawrence Yun wrote the following:

Distressed home sales reached their lowest point since the housing market crash nearly a decade ago, and look to all but disappear by this time next year. That is, sales of homes as the result of a foreclosure or in an underwater situation (where the mortgage debt amount was larger than the market price) comprised only 7% of the total in the latest data. That’s a marked improvement, considering the figure had been a third higher or more just a few years ago: 36% in 2009, 34 % in 2010, and 33% in 2011.

After discussing the issue of distressed property on the basis of a national average, he analyzes figures at the state level, and points out the situation in New Jersey:

When analyzing at the state level, there are few worthy differences. Arizona and California suffered greatly during the housing market downturn with an over 30% price plunge and an unending vista of foreclosures in some neighborhoods. Yet, these two states carry one of the lowest numbers of bad mortgages. Arizona’s seriously delinquent and foreclosure rate is now only 1.88% and California at 2.08%, both essentially at half the rate of the national average. At the other end, the bad mortgages comprise 10.2% of total in New Jersey and 7.7% in New York. Policy differences had an impact. Homes were quickly foreclosed on and sold to investors or to first-time buyers in Arizona and California, while homes  were not foreclosed on for months and years on end in New Jersey and New York – presumably to give homeowners a chance to catch up. One direct impact of this divergent policy is that home price growths in these Western states are solid while home price growths have been much more limited in the said Northeastern states. Despite these examples, the overall national trend is for falling distressed property sales in upcoming months and into next year.

On Thursday September 17, 2015

U.S. Foreclosure Activity Decreases 6 Percent in August Following Five Consecutive Months of Annual Increases

Bank Repossessions Up 40 Percent From Year Ago; Nevada, Maryland, New Jersey Post Top State Foreclosure Rates


New Jersey foreclosure activity increased 3 percent from a year ago — driven largely by a 295 percent year-over-year increase in bank repossessions and 38 percent year-over-year increase in scheduled foreclosure auctions — and the state posted the nation’s third highest state foreclosure rate for the third month in a row. One in every 539 New Jersey housing units had a foreclosure filing in August.

Foreclosure starts decreased from a year ago in New Jersey (down 38 percent) and 29 other states , including California (down 29 percent from year ago), Florida (down 40 percent),  Texas (down 17 percent), and Maryland (down 26 percent).

Bank repossessions increased from a year ago in New Jersey (up 295 percent) and 35 other states, including Florida (up 23 percent), California (up 31 percent), Texas (up 168 percent), and Ohio (up 35 percent).

Despite the national decrease, scheduled foreclosure auctions increased in New Jersey (up 38 percent), from a year ago in 22 other states, including Pennsylvania (up 18 percent), New York (up 64 percent), South Carolina (up 38 percent), and Massachusetts (up 21 percent).

Foreclosure activity decreased 5 percent from a year ago in August in Atlantic City, New Jersey, but the city still posted the nation’s highest foreclosure rate among metropolitan statistical areas with a population of 200,000 or more. One in every 307 Atlantic City housing units had a foreclosure filing in August, nearly four times the national average.

Another New Jersey city, Trenton, posted the second highest metro foreclosure rate — one in every 384 housing units with a foreclosure filing in August.

Tuesday September 15, 2015, Deadline for FEMA Hurricane Sandy Relief Claims Review

September 15th, 2015 by

Deadline to Enter Hurricane Sandy Claims Review Is One Day Away

Release Number:

Roy Wright, Deputy Associate Administrator for Insurance and Mitigation for the National Flood Insurance Program (NFIP), reminds policyholders that the deadline for requesting a review of their Hurricane Sandy claim is Sept. 15, 2015.

“If you feel your Sandy claim was underpaid, I encourage you to call us so we can take another look and we stand ready to take your calls,” Wright said. “FEMA has begun providing funds to policyholders who completed the review and were due additional payments on their claim,” Wright said.

More than 12,500 policyholders have entered the review process so far.

Getting started is as simple as making a telephone call. To be eligible for the review, policyholders must have experienced flood damage between Oct. 27, 2012 and Nov. 6, 2012 as a result of Hurricane Sandy and must have had an active NFIP flood policy at the time of the loss. Policyholders can call the NFIP’s Hurricane Sandy claims center at 866-337-4262 to request a review.  It is important to have your policy number and insurance company name when you call.

In advance of the approaching deadline, FEMA expanded its call center hours to make it easier for policyholders to request a review. The call center operates weekdays from 8 a.m. to 9 p.m. Eastern Daylight Time (EDT), Saturday and Sunday from 10 a.m. EDT to 6 p.m. EDT.

Policyholders can go online to to download a form requesting a review. The downloaded form can be filled out and emailed to [email protected] or faxed to 202-646-7970 to begin the review process. For individuals who are deaf, hard of hearing, or have a speech disability and use 711 or VRS, please call 866-337-4262.  For individuals using a TTY, please call 800-462-7585 to begin the review process.

When policyholders call, it is helpful if they have available as much information as possible, including the name(s) on the policy, the address of the damaged property and the ten-digit NFIP policy number that was in effect at the time of the loss. Policyholders will be asked a series of questions to determine whether they qualify for the review. If qualified, they will be called by an adjuster to begin the review. The timing of this call may be affected by the volume of requests. Most reviews can be concluded within 90 days.

Policyholders who have already requested a review of their claim do not have to call again. They are in the system and an adjuster will continue to work with them after the Sept. 15 deadline.

The Sandy Claims Review is intended to be simple for the policyholder and does not require paid legal assistance. Several nonprofit service providers are ready to offer free advice and answer questions policyholders may have. A list of these advocacy groups can be found on the claims review website at

FEMA’s mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain and improve our capability to prepare for, protect against, respond to, recover from and mitigate all hazards.

Follow FEMA online at and  Also, follow Administrator Craig Fugate’s activities at

The social media links provided are for reference only. FEMA does not endorse any non-government websites, companies or applications.

Ninth Circuit Court Sides with Mom in Dancing Baby Case Citing Fair Use Review

September 14th, 2015 by

What happens when you shoot video of your toddler learning how to walk and the Prince song “Let’s Go Crazy” is playing in the background?

What happens when you shoot video of your toddler learning how to walk and the Prince song “Let’s Go Crazy” is playing in the background?

In 2008, if you were Stephanie Lenz, a Pennsylvania mom, you would’ve received a “take down” letter from Universal exerting their rights under the Digital Millennium Copyright Act that establishes a potential copyright violation,and forces the material to be “taken down” unless the offender puts up a fight.

Stephanie Lenz put up a fight claiming that her video of her son learning to walk in the kitchen was a harmless fair use of a popular song. Today the 9th Circuit ruling established that the music industry to take a more considered approach to copyright evaluation before sending the take down letters.

Prince video case: California court makes it tougher for music, movie industries to take down Web postings

BREAKING: Fair Use Review Must Precede DMCA Takedowns, 9th Circ. Says

Law360, New York (September 14, 2015, 11:44 AM ET) — The Ninth Circuit ruled Monday in a closely watched suit known as the “dancing baby case,” finding copyright owners must consider the fair use doctrine before sending Digital Millennium Copyright Act takedown notices to online hosts like YouTube.

Siding with Stephanie Lenz and rights group Electronic Frontier Foundation, the appeals court said copyright owners like Universal Music Group can only send takedown notices if they’ve come a good faith conclusion that the targeted upload is not a protected fair use of the copyrighted work.