Foreclosures Shape Banking Trends - Housing Tracker

Quote of the Day

"At this point in the crisis, those of us who are practitioners would take what we can get. I wouldn't turn down less! Because we need a re-performing program, which is what in effect the Frank bill is." – Lewis Ranieri, CEO of Ranieri & Co., credited with creating the market for securitized mortgages. Ranieri backs a bill by U.S. Representative Barney Frank that would make lenders accept losses on home loans in exchange for government guarantees. Ranieri said keeping homeowners in homes would help lenders and said his main concern is that the bill should help lower and middle-income families rather than investors. (Reuters, Apr. 28th)

Foreclosure Trends

Midwest HFAs Focus on Foreclosures. “Midwest housing finance agencies [HFAs] are allocating more resources to [foreclosures,] even as the price of low-income housing tax credits [LIHTCs] continues to fall. The Ohio Housing Finance Agency is hoping to spur more developers to rehab foreclosed and vacant properties as rental housing [by easing] site control requirements for those seeking tax credits to rehab vacant properties... [Also,] OHFA added the rehabbing of vacant properties to its “maximizing outcomes” pool, the final pool of credits awarded each year… Ohio is also allocating $4.5 million from its housing trust fund to finance the redevelopment of 150 vacant single-family homes in Cleveland.” (Housing Finance, May 2008)

S&P Downgrades $41 Billion Mostly Alt-A Deals. "S&P: Due to current market conditions, we are assuming that it will take approximately 15 months to liquidate loans in foreclosure and approximately eight months to liquidate loans categorized as real estate-owned [REO]." So homes going into foreclosure today - in S&P's view and on average - will be liquidated 15 months from now, or in the summer of '09. So much for the '09 spring selling season - it will be dominated by REOs from the record foreclosure activity today.” (Calculated Risk, Apr. 29th)

B Of A Unveils Plan To Help Fight Off Foreclosures. “Bank of America (BAC) initiatives to help troubled homeowners stave off foreclosure: Modify at least $40 billion in problem mortgage loans from at least 265,000 customers in the next two years. Permit tenants to live in troubled properties for 60 days after the completion of foreclosure proceedings. If the tenant leaves voluntarily within 30 days of the completed foreclosure, they will get a $2,000 cash-for-keys payment to help defray moving costs. Set a 2009 goal to lend and invest $1.5 trillion in community development over 10 years… BofA [says it] will not assess new late charges for customers in foreclosure… and in some cases will waive prepayment penalties.” (Desert Sun, Apr. 29th)

Foreclosure Activity Up 112 Percent Over 2007. Pennsylvania: “James J. Saccacio, CEO of RealtyTrac. “In some areas there are also some unusual, non-market factors impacting the foreclosure numbers. For example, the city of Philadelphia in late March issued a temporary moratorium on all foreclosure auctions for April, and the city has since adopted a program that will delay foreclosure proceedings on owner-occupied properties until the owners have met face-to-face with lenders to attempt a loan workout plan that would prevent foreclosure.” (Roanoke.com, Apr. 29th)

Sometimes Banks Forgive. “Maryland: As more of their assets are becoming the deeds to foreclosure properties that are expensive to maintain and hard to sell… Increasingly, lenders are downsizing their mortgage departments and opening what are being given names such as Loss Mitigation Department or Home Retention Team. In effect, they are partial-loan forgiveness departments. Lenders are being very careful in judging who qualifies, looking at such factors as personal hardship in view of a debtor’s ability to pay and whether or not the home’s resale value is far below the amount of the mortgage. The deals are basically of two types – loan modifications and short sales.” (Herald Mail, Apr. 27th)

Dear Readers: Read anything you liked on this subject and didn't see it here? Why not post a link or a quote from the article in our comments section. Share the wealth! - Ed.

Get Seeking Alpha's housing market coverage by email -- it's free and takes only seconds to sign up.