The Invisible Recession

The Invisible Recession

“An in depth look into what really happened after the economic collapse”

Joshua Anderson. Lexington Realty Correspondent.

We have all seen the apparent signs of the big recession. First there was the mortgage crisis, the failed banks, the Wall Street scandals and of course the unemployment rate. All of this began when the housing market began to collapse and continued on a downward spiral. The more homes that were foreclosed, the less equity became available. Small businesses began to take a dive and within a matter of months the entire financial infrastructure of the United States was faltering at a record rate. As the smoke began to clear, massive layoffs ensued and corporate giants began to buckle.

One of the highlights in this crisis was the big Wall Street bailout. Stronger banks acquired the weaker banks and we all believed that we, the American people, were somehow going to benefit from this. The outcome, we didn’t, not at all in fact. The only noticeable signs we saw of this bailout was that Wamu’s became Chase and Merrill Lynch became Bank of America. Aside form the obvious acquisitions in the news; we were left waiting for a savior. Homeowners who were delinquent were expecting modifications that never came to fruition, and the unemployed waiting to be hired again. In the midst of this fiasco, several large banks were compensating there executives with skyrocketing incomes & bonuses.

While the rest of the economy was struggling to keep up, Bank of America CEO Thomas Montag received a total compensation of $29,930.431. This was considered only slightly larger that that of Wells Fargo CEO John Stumpf who made just over $21,000,000.  These numbers are astronomical and completely unfair to the American people who are barely able to stay in their homes. The most terrifying factor is that for those who are facing foreclosure thought they had a fighting chance. However, the Obama administration made it clear that stepping up foreclosures is the only way to stabilize the doomed housing market.

At this point in time, there are not many options available to those who are struggling. There is however some long term tips to keep in mind. Continuing education may be the best way to secure a great career and of course smart savings and investments. There may be a recession but as you can see there is a dramatic difference between those who are feeling the effects, and those who aren’t.

Obama Advocates Foreclosure

Obama Advocates Foreclosures

By Joshua C Anderson, Lexington Realty Correspondent November 14, 2010 3:39 PM PT

Los Angeles—The housing market has been jolted by several failed attempts to recover and the only solution at this point, seems to destroy and rebuild.

In the midst of the month long foreclosure moratorium, harsh decisions had to be made. Obama administration officials stated that all lending and servicing institutions needed to review there foreclosure policies and procedures, this however did not result in a mass of homeowners getting out of trouble. The officials made it clear that they did not support the moratorium for several reasons. One main point being that the housing market wouldn’t return to normal without foreclosures.

A stable market in the future does not come without consequences. The continuation of foreclosures will not only hurt the housing market, but it will also have an adverse affect on the overall economy. The Mortgage modification program was supposed to lower homeowner’s monthly payments by 31%. The program was a complete failure and many homeowners have been misinformed.  Laurie Goodman of Amherst Securities said in a statement, “What they have now realized is there are a lot of borrowers who can’t be saved and have to be moved through the foreclosure process.”

This will be a hard fact to address to the American people. There will be a lot of animosity and many will feel left out. There are however, alternative options to foreclosure. The most popular and less damaging is the short sale.

Southern California based Housing Assist of America has made quite an impact on the short sale market. They are among the nation’s best negotiators and have over a 90% percent success rate. Typically in a short sale the lender will accept less than what you owe on the property and in most cases forgive the left over balance. The consequences are significantly less detrimental to the homeowner’s credit and financial situation than that in a foreclosure. Housing Assist of America has recently made an alliance with tax powerhouse H&R Block. Together, they educate at risk homeowners on short sales and tax ramifications. There scheduled to host a free seminar next week in Culver City, a hard hit  suburb of Los Angeles. As the foreclosures in the nation increase so do the opportunities for scammers. When the loan modification wave hit, several fly by night firms starting collection retainer fees from homeowners, only to yield no results. Other signs to watch out for include companies that promise results and charge an upfront fee. Banks do not charge there clients to modify or short sale there homes.

In this vulnerable time it’s important to be vigilant to what your options are. The government has made it clear that foreclosures will continue and everyone who falls into that category will inevitably fall into it, one way or the other. From a homeowner’s perspective, the best option is to accept the demise and seek out the best exit strategy. For those who are still holding on to hope or speculation, this message from the top should clearly define the future housing forecast.

“As we near the end of 2010, the housing market remains fragile, and has recently come under renewed pressure from slowing economic growth, weaker employment and foreclosure uncertainties, We believe that it will be a considerable time until the housing market has a sustained recovery.” A chilling statement from Freddie (FMCC) Mac CEO, Charles Haldeman.

Foreclosures Crippling the Economic Recovery

Home prices & sales are up but foreclosures are still crippling the economic recovery.

By Joshua C Anderson, Lexington Realty correspondent. October 26, 2010

Los Angeles-It’s been more than a few weeks since the major lenders have enacted the foreclosure moratorium. “We are looking intensively at the firms’ policies, procedures, and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures,” said Fed Chairman Ben S. Bernanke. Many homeowners are still clinging on to the idea that they will not be foreclosed as a result of this investigation. The reality of the situation is that only ten percent of at risk homeowners will get out the situation there in.

Several key factors that are adding to the demise of the housing market include the fact that the housing recession is nowhere near over. Most of the nation’s communities have not yet bottomed out and optimistic speculation is merely opinion driven. Once the market does officially bottom out, prices will not rebound automatically. It will take quite some time for the rest of the economy to get up to speed, and even then it will be a long recovery. Another common misconception is that the worst is in the past. Rick Sharga from Realty Trac, an online foreclosure company, says he does not envision foreclosure activity stabilizing until late 2011. There are still those who will continue to believe that there loans will be modified, even though several reports from the top news and government agencies confirmed that it was a huge failure.  One of the realistic solutions in this market is to mitigate as much as loss as possible. Many of the homeowners who are facing foreclosure do have an opportunity to salvage what’s left of there credit and financial future by attempting a short sale.

Knowing that are very few positive solutions to this crises, it would behoove homeowners to seek out reputable companies, attorneys and accountants. By doing adequate research, the average homeowner can avoid fraud and even foreclosure. According to the California department of real estate, companies that are conducting modifications, loans, short sale and forensic loan audits, arte required to be registered and certified with the department. It is up to the homeowner to seek out this information and make the right decision based on there situation.

Bank of America Resumes Foreclosures

Bank of America Resumes Foreclosures

On Monday, Bank of America stated that, after having reviewed 102,000 foreclosures in 23 states where courts must sign off on proceedings, they are now resuming the process on said cases.

B of A stated that the first of the new affidavits are scheduled to be submitted by October 25, 2010, and will continue reviewing in 27 other states soon after. According to a B of A spokeswoman, no errors were found during their review, and less than 30,000 foreclosure sales across all 50 states will be delayed as result of the investigation. The announcement came one day before the banks third quarter earnings report, the news sending B of A’s shares up 36 cents to $12.34 or 3.01%. B of A stated that the review process, “has been an important step to give customers confidence they are being treated fairly.”State Attorneys General have stepped up pressure on banks recently after it was revealed that some bank employees had signed foreclosure affidavits without verifying that the documents were accurate, also known as “Robo-signing”.

October 1^st was the initial launch of review for B of A, and October 18^th is said to be the day the bank will expand its document probe to all 50 states. The bank says that their initial assessments in the remaining 27 states show that the basis for their foreclosure decisions were indeed accurate.

So far at least five other major mortgage servicers have announced their own document review process. 1.8 million Loans are in foreclosure in the 23 judicial states, while 1.3 million are pending in other parts of the country, according to a Morgan Stanley analyst report.

Home Ownership Hits 11 Year Low

Home Ownership Hits an 11 Year Low

Americans who own their own homes has dropped to an all time low since 1999.  The home ownership rate fell to 66.9% in the second quarter of 2010.  The number of vacant homes  fell in the second quarter, to 2.5%. Meanwhile, the vacancy rate in rental homes stayed steady at 10.6%.  What are your thoughts?

2011 Home Prices to Drop Below 2009 Values

What will 2011 home prices be?

This is the news that many homeowners have been dreading, yet it has seemed like it was inevitable.   Altos Research states, “home prices will continue to decline through the rest of 2010 and start 2011 slightly lower than 2009.

The primary reason that we will be seeing a drop is due to shadow inventory, these are due to the homes that will be in default in the coming months.   Because we can’t estimate the number of homes that are in shadow inventory, it is difficult to say when the housing market will begin to recover.   Let’s hope to see some growth soon!

Real Esate Recovery Stalled

When will real estate fully recover?

In real estate there is a term called “shadow inventory”.  This is applied to real estate that will be on the market, but we don’t know about yet. This includes all types of homes:

- homes that are several months in arrears on their mortgage and soon to hit foreclosure

- homes that are 90-plus days late and soon to be in foreclosure

- bank owned REO’s that have not put put on the market yet

Due to the low value of these homes, this will keep the housing market in a dismal state for some time to come.

Shadow inventory is scary, but not insurmountable.

Banks Foreclose On Homes

We are seeing that the banks are taking more homes, even as the number of people who fall behind on their mortgage has declined.  In May, banks had taken back nearly 93,777 properties, which was up 1% from the previous months record and 44% from the same period a year earlier.

One in every 400 homes received a foreclosure notice last month.

Throughout this mortgage meltdown, lenders have been lenient in repossessing homes as they are attempting to deal with the borrower defaults.  As we are seeing the housing market stabilize, they are putting their attention back on the repossession of homes.

Fannie Mae gets tougher with interest only loan requirements

Fannie Mae is set to tighten its mortgage requirements, effective August 30, 2010. To qualify for a Fannie Mae-backed interest-only loan, a homebuyer is now required to put 30% of the purchase price down as a down-payment.

ARM’s – Fannie Mae will only buy those in the cases where the borrower can afford to make payments even if their interest rates reset to 2% higher than the loans original interest rate or the industry cap rate.

“These policy changes reflect our intention to continue providing liquidity to different market segments by ensuring that support for ARM products remains in appropriate circumstances,” said Marianne Sullivan, Senior Vice President of Single Family Credit Policy and Risk Management at Fannie Mae.

Fannie Mae a fortune 500 company is mandating that borrowers of these interest only loans have credit scores of 720, and strong reserves of cash. Fannie Mae has also stated that they will stop funding balloon mortgages.

Many borrowers saw those balloons swell to unmanageable proportions and lost their homes when they couldn’t afford or refinance the balloon payment.

Once again these guidelines are supposed to be effective August 30, 2010.

Government Pushes Lenders for Short Sales

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