Equator Processed More Than 500,000 Short Sales

December 29, 2010: Lenders initiated more than 500,000 short sales on Equator’s automated platform in one year of operation, the technology provider said Tuesday.

The company said it has seen “substantial growth” in its short sale operations, including a platform built specifically for the government’s Home Affordable Foreclosure Alternatives program, which launched in April to provide incentives to servicers for short sales and deeds-in-lieu of foreclosure.

Equator reported initiated short sales, meaning not all have closed. Short sales can be a long and tedious process as borrowers, servicers, lenders and investors must all agree on the terms of sale instead of foreclosing. Data from the Congressional Oversight Panel suggested lenders are moving most of their short sales out of the HAFA program and into their own programs. According to COP, the Treasury Department has spent only $4.3 million through the program, translating to roughly 661 closed transactions in eight months states Housing Wire.

Las Vegas Home Prices Continue Downward Trend

December 22, 2010: Home sales in the Las Vegas region continued to fall in November as investors and first-time homebuyers dominated the market.

A total of 3,693 new and resale houses and condos sold in the Las Vegas metropolitan area in November, down 6.8% from October and down 22.9% from a year ago, according to San Diego-based MDA DataQuick.

New home sales suffered the biggest drop in November, down 15.6% from October and 42.2% compared to November 2009. This is the slowest November DataQuick has recorded for new home sales since they started recording and distributing data in 1994.
Existing single-family home sales fell 7.3% from October and 20.9% from one year ago. Condos resales were down 14.4% from October and 14.1% from the same period in 2009.

DataQuick said current homeowners are on the sidelines because so many are upside down — they owe more on their homes than what they are worth and “therefore aren’t in a position to move.” A Campbell/Inside Mortgage Finance survey found this to be a nationwide trend.

The median home price in the Las Vegas metro area was $134,900 in November, up from $132,000 in October and almost equal with the price a year ago of $135,000. However, the current median home price is 59.1% below its peak in November 2006 at $312,000 states Housing Wire.

Most Underwater Homeowners Will Eventually Default to Get Rid of Debt

December 20, 2010: Bank of America Merrill Lynch analysts said the most likely way households will deleverage roughly $1 trillion in excess debt is through the default of more underwater mortgages.

Home prices in the Standard & Poor’s/Case-Shiller 20-city index have dropped 28.6% from the peak in the summer of 2006. This has led to more than 10.8 million homes, or 22.5% of the entire U.S. market in negative equity as of the third quarter, according to the analytics firm CoreLogic. And while that percentage is down from the 50 basis points from the previous quarter, negative equity remains the primary factor holding back a recovery in the housing market and the overall recovery.

Analysts said the collapse in home prices means the asset value supporting Americans’ debt is no longer there states Housing Wire.

Poverty looms for the long-term unemployed

December 16, 2010: Fifteen million Americans are now unemployed, according to the most recent jobs report. The unemployment rate for November inched up to 9.8%. The grimmest numbers, however, are for the long-term unemployed (see chart 1): 6.3m people, 42% of those unemployed, have been jobless for more than 26 weeks. That number does not include 2.5m people who want a job but who have not looked for a month or more, or the 9m who want full-time work but can only find part-time openings. For the full story see the Economist.

America, unlike some European countries, is not used to such high numbers. No recent recession has seen so many Americans out of a job for so long. Now, with millions fallen from the ranks of the employed, the federal government has deployed its imperfect safety net to catch them.

The first and most generous form of help is unemployment insurance. It is usually paid from a state trust fund and lasts only 26 weeks, as long as recipients meet criteria such as continuing to look for work. But Ohio is one of many states whose unemployment fund is empty. Since 2008 the federal government has paid for an extension of benefits, now to 99 weeks in battered states. Last year this helped keep 3.3m Americans out of poverty, according to the Centre on Budget and Policy Priorities, a think-tank. If Congress passes Barack Obama’s recent deal with Republicans, workers will go on being eligible for the 99-week maximum payment until the end of next year. But even so, 99 weeks is all anyone can get, and many workers have already reached that limit.

Foreclosures And Short Sales Still Pausing From the Robo-signing Scandal

Foreclosure filings dropped 21% in November from the previous month as lenders continued to review procedures for more signs of documentation problems, according to RealtyTrac.

There were 262,339 filings in the month, which was also down 14% from a year ago. For the first time since February 2009, filings slipped below 300,000. One in every 492 homes received either a default notice, scheduled auction or a bank repossession.

“While part of the decrease can be attributed to a seasonal drop of 7% to 10% that typically occurs in November, fallout from the foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork,” RealtyTrac CEO James Saccacio said in Housing Wire.

Some Homeowners Pay Second Mortgage But Not First Mortgage

NOW THAT’S WIERD
Borrowers who strategically default on their first mortgage often continue to pay on home equity lines of credit, according to a new white paper from two authors with the Philadelphia Federal Reserve.

The authors, Julapa Jagtiani and William W. Lang, said they wanted to take a closer look at the little-studied phenomenon of strategic default behavior as it relates to first- and second-lien mortgages. “Predicting mortgage losses has become more difficult with the increase in strategic default behavior and the increase in loan modifications,” the paper said.

“Focusing on mortgage defaults, our results indicate that the default rate for first mortgages far exceeded those of the second-lien mortgages during the financial crisis. This behavior was not observed in the pre-financial crisis period (i.e., the booming period of 2004-2006),” states Housing Wire.

About 20% of borrowers in the process of foreclosure due to defaults on the first mortgage kept their second-lien mortgage current. Among those who defaulted on their second-lien mortgages, about 80% also defaulted on their first-lien mortgage

Foreclosed Homes In Vegas Still Killing Neighborhood Property Values

Just how toxic are foreclosures to those homeowners who pay their mortgages?

Nasser Daneshvary, director of the Lied Institute for Real Estate Studies at UNLV, has done a study along with Assistant Director David Jones and economics professor Mike Clauretie.

They estimate homeowners who make their mortgage payments had their values cut by an average of $78,000 from July 2008 to July 2009 because of their neighbors. They urged lenders to do more short sales — the sale of homes for less than what the owner owes on the mortgage.

In October, the Greater Las Vegas Association of Realtors reported 28 percent of sales were short, down from a peak of 34 percent in June. But short sales averaged 7 percent to 8 percent of total existing-home closings in early 2009.
Their fear is that homeowner’s values will decrease more, and people will walk away from their homes. One research firm reports 80 percent of Las Vegas homeowners are underwater, according to the Las Vegas Sun.

Nevada’s Shrinking Population Will Exacerbate The Ongoing Housing Market

December 8, 2010:. Manufacturing cities, especially those producing machinery and transportation products, have posted surprising drops in unemployment rates in recent months. This includes devastated cities like Detroit and Elkhart, which continued to experience big job losses early in the year, but which have hit bottom and bounced back of late.

And then there is Nevada. After rising sharply to become the highest in the nation, Nevada’s unemployment rate sank in October. Las Vegas’ did as well. But there’s no good news here; employment was virtually unchanged for the month. Rather, the drop in the unemployment rate was driven by a huge decline in the labour force. Fully 25,000 Nevadans, including 19,000 residents of Las Vegas, left the labour force in October. The Las Vegas labour force has shrunk by 34,000 people in the past year. Migration is a healthy part of adjustment to downturns. The downside here is that shrinkage in Las Vegas’ population will exacerbate the ongoing housing market implosion, leaving households now 50% underwater in ever worse shape.