Option ARMs and the Next Wave of Foreclosures - Housing Tracker

Quote of the Day

“We’re not out here to destroy people’s lives. It may seem so at times, but we’re not. It’s just a job.” – Houston, Texas Precinct 5 Constable Capt. Dennis Kuthe, whose responsibilities include removing people from their homes when they’re foreclosed upon. (KHOU, Apr. 16th)

Foreclosure Data

Foreclosure Aid Hinges on Eligibility, How Many Are Helped. “The White House opposes an ambitious Democratic plan to defuse the nation's housing crisis by sharply relaxing eligibility standards for federal mortgage insurance. Under the proposal, lenders would be encouraged to wipe out a portion of the debt on troubled loans in exchange for a promise that the government would pay off the mortgage if the borrower can't. Democrats and some mortgage analysts predict the plan would save more than 1.5 million families from foreclosure... But federal housing officials and other analysts… say so many of the nation's approximately 3 million subprime borrowers are in such deep financial trouble… that only a few hundred thousand are likely to qualify even under relaxed standards.” (Washington Post, Apr. 16th)

Mortgage Resets: Subprime May Be Ending, Option ARMS Have Just Begun. “Paul Jaber, a portfolio manager at the Perpetual Value Fund: The option ARM loan was very popular through Q1'07 - so take 40 months from that date, plus 3 months for them to go 90 days late and then and only will you see foreclosures start to level off… The reason why Countrywide Financial (CFC), Washington Mutual (WM), Wachovia Bank (WB), Downey Financial (DSL) and First Fed Financial (FED) are all imploding is because the 2003-2004 pay option ARM loans are all recasting and then going 90 days late… Pay option ARM loans have a teaser payment that will last until the loan goes 110%-125% of original value and then the loan RECASTS to a fully amortizing loan. That is how a payment skyrockets.” (Herb Greenberg in Seeking Alpha, Apr. 17th)

Foreclosures Force Homeowners Associations To Skimp. “With large numbers of homeowners unable to pay their monthly fees, condominium and homeowners associations are being forced to skimp on maintenance and security - and increase dues. Fully half of 487 Florida associations surveyed recently by Hollywood law firm Becker & Poliakoff say they're facing financial shortfalls because of the foreclosure crisis… And about one-fifth say they'll increase fees or impose special assessments to make up for the shortfall… That means homeowners who are still paying their bills are being hit with higher fees to cover landscaping, repairs and maintenance.” (Palm Beach Post, Apr. 16th)

Foreclosures Leave Warehouses Of Goods In Their Wake. Texas: “Foreclosures in Harris County are up 16% this year… In dozens of cases a month, deputy constables have to evict people who’ve refused to give up their homes… Just east of downtown, a warehouse is filling up with their washers, mattresses, sofas and fans, even kids little bicycles and teddy bears. Precinct 5 Constable Capt. Dennis Kuthe said his office used to do about 10 foreclosure evictions a month, and now they’re doing 40… The owners have 30 days to claim [their belongings] by paying the moving and storage expenses. If they don’t, the items are sold at auction.” (KHOU, Apr. 16th)

Foreclosure Forecasts Predict $65B Tax Loss For NY. “Pew Charitable Trusts report: Three percent of New York homeowners -- or one in 32 -- could face foreclosure in the next two years or so because of a subprime loan, leading to an estimated $65-billion loss to state and local tax coffers. With estimates of national tax losses at $365B, that means New York would carry almost 18% of all tax losses. Fifty-two percent of all New York homeowners are expected to lose an average of $18,334 on property values, Pew said, while nationally, it's 43.5% of homeowners affected losing an average $8,771.” (NY Newsday, Apr. 16th)

Bargain-Hunters Swarm Market. California: “Foreclosed houses and bargain-hunting buyers have flooded Southwest County's real estate market since year-end, a turn that has slammed prices but also hinted at a possible "bottom" to the yearlong downturn... Escrows closed on 522 homes in March, the largest number since August 2006, according to monthly MLS totals... The number rose by double digits from year-ago levels in January, and again in February and in March. DataQuick Information Systems: Foreclosures accounted for 56 percent of the homes sold in Riverside County last month… Foreclosureradar.com: Lenders owned about 2,500 properties in Southwest County last month, and about 5,000 more were in earlier stages of foreclosure.” (North County Times, Apr. 16th)

Number Of Foreclosure Filings Jump In Utah. “RealtyTrac: Utah foreclosure filings jumped more than 93% in March from a year earlier, substantially higher than the U.S. average increase of 57%. Even with the large increase, Utah still compares favorably with other states… In Utah, 1,230 homes are in some stage of foreclosure, or one in every 733 households. Nevada, which weighed in at one foreclosure for every 139 households, California (one in 204 households) and Florida (one in 282 households) had the three highest rates. Utah was ranked No. 17.” (Salt Lake Tribune, Apr. 15th)

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Comments

[vrspace]

And these headlines from the market that Bob Toll says offers a "Glimmer of hope" in an otherwise weak selling season:

Naples foreclosure rate climbing the charts

www.naplesnews.com/new.../


Home sales fall in March by 12% in Naples area

www.naplesnews.com/new.../

[the finalhorseman]

and we pay for a bunch of greedy idiots who couldnt read the fine print. fix the usa...fire congress.

[The Old Salt]

Heavy Seas never stopped an Old Salt, but this land mess could!!

[pcat]

It easy to head off trouble at sea by being prepared for conditions,maintaining all systems and keeping a weather eye out.You can see pirates approaching from miles away but not on land.They have many disquises and come not with firearms and cutlasses but contracts and promises of riches.

[User 169490]

Does this girl write a blog, or is this just spam ?

Seems a little more like the latter to me.

[brokerbila]

The author...She's legit.

The sea has no sympathy for the unprepared and little respect for certificates.

Batten down mates... the storm is still brewing.

[RobertTrudeau]

Thanks for the stats. It is folly to believe that the US government can prop up the housing market, it is simply too big, and there are implications to flooding the economy with dollars. The Fed has blown nearly half its wad, and the real estate market has about another 20% to fall before we reach rational valuations. The government doesn't actually fund mortgages, investors do, and bond investors hate inflation, which will run out of control if the government has to make good on trillions of dollars in mortgages. You are right that only a limited number of people will actually be helped, but it sure does a lot to calm people when they see headlines in the newspaper.

[vrspace]

Sorry for the excessive focus on Naples, FL and area– the following two articles are an interesting commentary and perhaps bellwether for the quasi-residential / commercial market, notwithstanding Blackstone’s investment versus the divestement of (an other “old salt”) Jack Antaramian.

www.naplesnews.com/new.../

www.naplesnews.com/new.../

[Kunst]

User 169490: This is a digest, not spam, not a blog. I think it's interesting and valuable, because I rarely have already seen these articles before she gathers them together.

Would you make the same snide comment to a "boy"?