Foreclosure Inventory Still More Than Double ‘Normal’ Level

foreclosure-notice-twoDespite substantial declines over the last three to four years, especially in the last year, the rate of foreclosure inventory—that is, the percentage of residential properties that were in some state of foreclosure—remains about two and a half times its “normal” or pre-recession level, according to Black Knight Financial Services’ September 2015 Mortgage Monitor released Monday.

According to Black Knight, about 737,000 residential properties remained in pre-foreclosure inventory as of the end of September, which is about 214,000 fewer than in September 2014—a decline of about 22.6 percent. Those 737,000 properties in foreclosure represent about 1.46 percent of all residential mortgages nationwide.

With all the market buzz in the last year about dwindling foreclosure and REO inventory, the number of homes in pre-sale foreclosure inventory nationwide is still two and a half times the pre-recession rate, according to Black Knight. September was a good month for Florida, however; the Sunshine State experienced a year-over-year decline in foreclosure that was nearly double the national rate for the month (43 percent). This decline dropped Florida’s foreclosure inventory total from more than 160,000 in September 2014 down to below 100,000 in September 2015 and ended the state’s eight-year reign as the top-ranked state in foreclosure inventory. New York, which saw foreclosure inventory drop year-over-year by 19 percent in September, now is the top state in that category with slightly fewer than 100,000 properties.

Florida still had the highest volume of residential mortgages that were 90 or more days past due in September, though that rate declined by 32 percent year-over-year, according to Black Knight.

“As of the end of September, Florida has ended its 8-year reign as the foreclosure capital of the U.S,” Black Knight Data & Analytics SVP Ben Graboske said.  “Over the past 12 months, the state has reduced its inventory of loans in active foreclosure by 43 percent. That’s nearly twice the national average of 22.5 percent. Of course, Florida’s not out of the woods just yet—it still has the largest number of properties 90 or more days past due but not yet in foreclosure. New York—which has seen only a 19 percent reduction in its foreclosure inventory over the past year—has now taken Florida’s place as the state with the most loans in active foreclosure.”

What is going on with homebuilders?

NEW YORK – Nov. 25, 2015 – Lackluster homebuilding is hurting home buyers, writes National Association of Realtors® (NAR) Chief Economist Lawrence Yun in his latest column for Forbes. In October, housing starts totaled 1.06 million on a seasonally adjusted annualized rate – the lowest in seven months and below the level from a year ago.

“What is going on with homebuilders?” Yun writes. “Housing starts refuse to rise in any meaningful way, despite the ongoing shortage in the number of homes on the market and falling rental vacancy rates. What is being built is getting quickly sold.”

A big negative consequence of sluggish homebuilding activity is that renters “are suffering and are having a hard time converting into ownership,” Yun writes.

In the past year, the share of first-time home buyers dropped to the lowest point since 1987 with only 32 percent of recent home buyers being first-time home owners. The historical average is around 40 percent.

As such, the homeownership rate has dipped to the lowest point in 50 years – 63.5 percent.

“The key reason for the falling homeownership rate is that homebuilders are not building enough,” Yun notes.

He says “massive” housing shortages have resulted in markets across the country. For example, in the San Francisco-Oakland region, 234,000 net new jobs have been created over the past three years but only 30,000 new housing units have been constructed – and most of that even have been apartments.

“Too little housing in relation to job creation has pushed up home prices too high too fast.” Yun writes. Home prices in San Francisco have climbed 52 percent over the past three years while incomes have not.

Nationwide, the slow pace of new home construction over the past three years has caused home prices to rise from anywhere by 20 percent to 25 percent, while the median national household income has grown by only 7 to 8 percent.

What’s more, rents have risen at the fastest pace in seven years and some places have seen double-digit rate increases due to housing shortages.

“The solution to the housing shortage is simply to build more homes,” Yun writes. “If homebuilders do not make headway, expect pitiful performance as more renters get shut out of what most Americans would view as the American Dream of middle-class life.

Source: “Lackluster Home Building Hurts First-Time Buyers,” Forbes (Nov. 18, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Real estate Q&A: Renter duped in foreclosure scam

FORT LAUDERDALE, Fla. – Nov. 25, 2015 – Question: Three months ago, we rented a house that was listed by a real estate agent. We were told the owner lived abroad. After negotiations between our agent and the listing agent, we filled out a detailed application, paid first and last month’s rent (plus a security deposit) and moved in and are still current on the rent. Yesterday we received a letter from an “asset preservation” company telling us that our rental home is a bank-owned foreclosure and that we have to move. What is going on? — LeighAnn

Answer: Unfortunately, you fell victim to an all-too-common scam. The scammer finds a vacant home owned by an out-of-towner and pretends to be the owner in order to rent or even sell the property. All it takes is a new door lock and information easily available on the Internet. The listing agent probably had no idea the scammer was not the real owner.

It’s imperative that renters and buyers find out who owns a property and whether it’s in foreclosure. Check the property appraiser’s website for current ownership information and the county clerk’s website for foreclosures. No real estate agent should just rely on a listing without independently confirming these details.

Check this information even if you meet the person you think is the owner. Ask to see his or her driver’s license and talk to a few of the potential neighbors.

In this case, be sure that the “asset preservation” company is the real deal. The firm should be able to tell you the specifics of the foreclosure lawsuit so you can check the court records and call the bank to confirm.

You most likely will have to move out. Coordinate with the bank for a reasonable exit date. The lender should be cooperative because it’s cheaper and faster than having to evict you from the house.

About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program.

The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

Copyright © 2015 Sun Sentinel, Gary M. Singer. Distributed by Tribune Content Agency, LLC.

Buyers should understand the negotiation process

NEW YORK – Nov. 16, 2015 – Low for-sale inventories and interest rates have increased competition among homebuyers for a limited number of for-sale property listings. In some markets, sellers may receive a dozen or more offers on the same day their home hits the market.

As a result, most of those bidders will be disappointed – sometimes more than once. And if they don’t understand the contract and negotiation process upfront, it can make matters worse.

Realtors would be wise to counsel buyers upfront. They should make sure buyers’ expectations about the process are realistic and dispel some of the myths about negotiations.

Buyers’ agents should let clients know before placing the first bid, for example:

  • Listing agents and sellers are not legally required to disclose that there are other offers
  • Sellers are not obligated to negotiate with the first buyer who makes a bid
  • Sellers don’t have to accept full-price or cash offers
  • Counteroffers can be made over the phone, but only written agreements are binding
  • Sellers can legally tell a buyer what a competing bidder offered because neither they, nor their agent, owe a duty of confidentiality to the buyer
  • Buyers should realize they don’t have the right to change their mind once a seller accepts their offer in writing
  • If buyers reject a seller’s counteroffer, the counteroffer is no longer open for acceptance

Source: Alliance Review (11/06/2015) Lorenz, Joe

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Aside from Completed Foreclosures, the News in Florida is All Good

FloridaFlorida still leads the nation in 12-month sum of completed foreclosures by more than double the total of the next closest state, according to CoreLogic’s September 2015 National Foreclosure Report released this week. But aside from that, the news in Florida as far as foreclosures are concerned is all good.

The Sunshine State has fallen to third in foreclosure inventory rate (2.6 percent) behind New Jersey (4.6 percent) and New York (3.7 percent) and is getting closer to the national average, which was 1.2 percent during September. Florida had the highest decline of any state in foreclosure inventory year-over-year in September—a 42.3 percent drop, from 4.4 percent in September 2014.

In addition, Florida’s serious delinquency rate (5.8 percent) in September was third, behind New Jersey (8.0 percent) and New York (6.5 percent), according to CoreLogic. In September 2014, Florida’s serious delinquency rate was 8.6 percent, or 2.8 percentage points higher than September 2015.

“The largest improvements in the foreclosure inventory continue to be in judicial states on the East Coast such as Florida and New Jersey,” said Sam Khater, deputy chief economist for CoreLogic. “While the overwhelming majority of states are experiencing declines in their foreclosure rates, four states experienced small increases compared with a year ago.”

11-12 CoreLogic GraphThose four states were Massachusetts, Rhode Island, Wyoming, and New Mexico. Washington, D.C. also saw an increase in foreclosure activity. Those states, plus D.C., are typically near the bottom of the foreclosure metric list. Washington, D.C. had a lower total of completed foreclosures in the 12-month period ending September 30, 2015 (only 69) than any state. The state with the lowest total was North Dakota with 310.

Florida’s 12-month sum of completed foreclosures (91,000) for September was below 100,000 again, good news for a state where 12-month completed foreclosure sums have been well above 100,000 since the crisis. In fact, the Tampa metro area, which has routinely been near the top of CoreLogic’s lists for metro areas with the most completed foreclosures over a 12-month period, was not even listed in the top 10 for September—nor was any Florida metro. The top metro area for 12-month sum of completed foreclosures in September was Atlanta, with 14,240. Despite this, Atlanta’s foreclosure inventory rate (0.7 percent) and serious delinquency rate (3.3 percent) were still below national averages in September of 1.2 percent and 3.4 percent.

Click here to see the complete report.

Housing Pulse Surveys

OCTOBER 14, 2015
Americans Think Buying a Home Is a Good Financial Decision, 2015 Survey Says

NAR’s eleventh Housing Pulse Survey shows a vast majority of Americans believe that buying a home is a solid financial decision, and most believe they could sell their home for at least its initial purchase price.

The survey, which measures consumers’ attitudes and concerns about housing issues, found that building equity; wanting a stable and safe environment; and having the freedom to choose their neighborhood remain the top three reasons to own a home. The number of renters who are now thinking about purchasing a home has increased since the last survey in 2013, up from 36 percent to 39 percent.

The telephone survey of 1,000 adults nationwide in the 50 most populous metropolitan statistical areas was conducted for NAR by American Strategies and Myers Research & Strategic Services for NAR”s Housing Opportunity Program. An additional 250 interviews were conducted with millennial adults (born after 1981) from the same geography.

Some key findings from the year’s survey include:

More than eight in 10 Americans believe that purchasing a home is a good financial decision, and 68 percent believe that now is a good time to buy a home.
Sixty-one percent of renters now say that eventually owning a home is one of their highest personal priorities, up 11 points from 2013.
Respondents expect to see continued improvement, as 89 percent expect real estate sales to increase or remain the same.
Source National Association of Realtors

All Contracts updated TRID rules changed Oct 3 2015.

ORLANDO, Fla. – Sept. 28, 2015 – The rules change for buyers who need a mortgage if they apply this Saturday, Oct. 3, or later.

To prepare for that change, Florida Realtors forms have been updated, with the new version effective today. This pre-Oct. 3 release provides time for Realtors to begin using the new contracts and forms for buyers who won’t apply for a loan until Saturday or later.

“By now, most of you have read materials and attended presentations regarding the upcoming changes to the financing and closing process,” says Margy Grant, Florida Realtors vice president and general counsel. “As the implementation date of the new “Truth-in-Lending RESPA Integrated Disclosure” Rule (“TRID”) approaches, here are some reminders for real estate practitioners.”

TRID regulation

Effective Date: Oct. 3

The new rules affect transactions in which applications for loans are made on or after Oct. 3. (The new rules don’t apply to cash transactions.) The new rules do not affect contracts pending as of Oct. 3 or that close after Oct. 3, unless the loan application by the borrower is made Oct. 3 or later.

Lender and closing form changes

The old forms (GFE, TILA forms, HUD-1) will still be used if the new TRID rules don’t apply. The new forms – the Loan Estimate and the Closing Disclosure – apply to transactions in which a loan application will be made after Oct. 3.

Licensees won’t typically be provided copies of the Loan Estimate and Closing Disclosure unless given a copy by your buyer or seller. However, it’s likely that you’ll receive a different document for review: a supplemental form – a closing and disbursement statement – created by the closing agent on a form created by the American Land Title Association.

Loans covered

The new rules apply to loans where the property is primarily for personal, family or household purposes (i.e., applies to residential and could apply to other types of properties, depending on the purpose of the loan, as determined by the lender.)


Loan estimate

If TRID rules apply: Once a lender receives specific information defined by the TRID rules, that lender has a maximum amount of time to provide the buyer with a Loan Estimate. The Loan Estimate summarizes the loan, including costs, so the buyer can use it as a comparison tool as he shops other lenders for a loan. If a buyer has a question about the Loan Estimate, he should speak directly to the lender.

Buyer expenses for loan application

When buyers apply for loans, they need to inform lenders of all known expenses relating to the transaction in order for lenders to prepare the Loan Estimate. The expenses should include a transaction fee, if any, as well as the cost of inspections.

Buyer information needed to process loan

Under TRID , the lender cannot ask for necessary documentation from a buyer who has only made a loan application and not proceeded further. If the buyer wants a lender to start evaluating an application immediately, he should gather all the lender’s required documentation and submit it early in the process.

Status of loan

Lenders are unable to start charging buyers fees for processing loans (except for a credit report fee), until the buyer has advised the lender of buyer’s intent to proceed. Therefore, it’s advisable to monitor whether a buyer has given a lender an intent to proceed with a loan, so you will know when the lender has begun to process the loan.


Revised Florida Realtors sale and purchase contracts

Both the CRSP and FloridaRealtors/FloridaBar purchase and sales contracts have been updated with revisions regarding new TRID rules. The new forms replaced the former forms on September 28. The redlines reflecting the changes on the forms and the summaries are available online at

What information should the parties be given about TRID?

All parties in a real transaction must adapt to these changes. As soon as practical, the fact that the loan process will take more time and probably be more cumbersome, at least at first, should be communicated to the parties.

The Mortgage Banker’s Association has created a document, Changes to the Mortgage Disclosures and Closing Process, that’s designed for buyers and can be provided by you to help familiarize them with the “new normal” loan process.

Additionally, buyers should be advised that requested changes or underwriting decisions made late in the transaction could delay the closing.

Negotiate longer periods of time for transactions

Experts are advising real estate licensees to build more time into the contract for buyers to obtain loan approval and longer periods of time to close the transaction when TRID applies. The lenders must follow a lot of new rules, and new loan processing could take more time than it did in the past, at least at first.

Negotiate shorter periods of time for contract details

Because closing agents need information earlier than they did before in order for lenders to prepare and deliver the Closing Disclosure, consider requiring inspections, repairs, evidence of title and surveys to be completed and delivered earlier in the process.

Communicate earlier in the process

Talk with the closing agent as early as possible about costs, expenses, credits, etc., needed to prepare the Closing Disclosure. The closing agent must provide the closing numbers to the lenders at least two weeks before closing in order for the lenders to prepare the buyer’s Closing Disclosure on time. This also holds true for any contract amendments. Get them to the lender as soon as they’re fully executed.

Using an older version of the contract where loan application is made Oct 3 or later?

If you have an existing contract on the older purchase and sale contact form that is contingent on financing, and the buyer doesn’t apply for a mortgage loan until Oct. 3 or later, it may be advisable to amend the existing contract. If preparing a contract downloaded before Sept. 28, consider the following options:

1. Insert in the blanks for loan commitment date and closing, a date that’s farther out than usual.

2. Require that evidence of title be delivered and repairs and survey completed at least two weeks prior to closing.

3. Provide for an extension of the closing date for an agreed amount of time, in the event the closing is delayed due to a failure to timely deliver the Closing Disclosure.

4. Note that if you do extend the closing date and are using Florida Realtors/Florida Bar contract, it could affect other existing contract terms, notably Paragraph 8(b)(ii). Extending the closing date will extend parties’ right to cancel the contract if the buyer has not secured a loan commitment.

Earlier walk-throughs

Many people have suggested that the parties would benefit from providing an earlier walk-through of the property to confirm needed repairs have been made. This could theoretically avoid last-minute repairs or contract amendments, credits, etc.

However, a later walk-through wasn’t included in the current contract revision as it presented the likelihood of requiring two walk-throughs, with the second one still occurring the day before closing to confirm the condition of the property. Licensees may want to discuss this with their buyer and add this to a contract, depending upon the particulars in the transaction.

Avoid simultaneous closings, at least initially

The concern: This will involve multiplying by two the anticipated complexities TRID will likely cause, and the second transaction may fail if the first closing does not occur.


Preparation and delivery of buyer’s Closing Disclosure

When a buyer is using a lender, the lender prepares the buyer’s side of the new Closing Disclosure. The buyer must receive this document three business days before the scheduled consummation of the transaction (before the buyer becomes obligated on the loan).

For purposes of providing the Closing Disclosure, a business day is any day except Sundays and federal holidays. Where the lender is either emailing or mailing the Closing Disclosure to the buyer, it must be done 7 days in advance of the closing to meet TRID’s delivery requirements.

Last minute changes that require a new 3-day waiting period

Under TRID, if the loan product changes, a prepayment penalty is added or the APR changes (as defined by TRID) after a Closing Disclosure has been delivered to a buyer, then the Closing Disclosure must be corrected and a second (new) three day re-disclosure period must pass prior to the buyer becoming obligated to the loan.

Last-minute changes that should not require a new waiting period

Other changes, such as last minute contributions by the licensees to cover an unexpected repair, can be made to the Closing Disclosure without creating a new three-day waiting period if the lender is willing to fund the loan

Seller’s Closing Disclosure

The closing agent prepares the seller’s Closing Disclosure, submits it to the lender for review, and the lender ultimately gives it to the seller.

Reminder: It’s more likely you’ll review a closing statement (probably not the Closing Disclosure) the closing agent prepares for the parties to sign at closing, and from which the closing agent actually disburses. You are encouraged to speak to the closing agents you work with in your markets to confirm their plan on using a closing statement – and their intent to share them with you.

The closing agent needs your license number

Make sure all sales associate, broker and brokerage licenses are current. Verify this by checking the DPBR website now and again after Sept 30 (C.E. renewal cycle ends Sept. 30) to ensure all licenses are active.

This is important because agents’ and brokers’ license numbers involved in each transaction will be included on the new Closing Disclosure. Closing agents may ask licensees for this information, or they may check that licenses are listed as active themselves.

© 2015 Florida Realtors®