Housing’s new worry: Repeat foreclosures return

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After the worst national housing crash in history, the picture of distress continues to improve, but now with one worrisome aberration. For the first time in more than two years, the number of repeat foreclosures took a U-turn and was higher in January compared to a year ago.

Repeat foreclosures are when a home has been in the foreclosure process once, was somehow saved by either a loan modification or payment program, but then goes back into foreclosure. This can happen when the borrower either can’t or won’t keep up with the new payments. New repeat foreclosures rose 11 percent in January from December and accounted for more than half of all new foreclosures, according to Black Knight Financial Services.

The problem is worst in states where a judge is required in the foreclosure process. These so-called “judicial” states have a far longer time horizon for processing foreclosures and therefore have huge backlogs of troubled loans in limbo.

Analysts at Black Knight say they are unsure what’s driving the numbers. They point to some seasonal factors and do not believe the problem is due to the government’s mortgage bailout program (the Home Affordable Modification Program), which has a five-year term. Some of those first modifications from 2009 are turning into pumpkins. As such, they do report a slight uptick in resets under the program but say those would not materialize into new foreclosures until May at the earliest. The problem may in fact be far more basic.

“It’s not surprising because so much tinkering was done with defaulted borrowers over the last five or six years. It’s not surprising they’re running into problems again,” said Guy Cecala, CEO and publisher of Inside Mortgage Finance.

 

 

During the worst of the crisis, banks were put under increased pressure to modify loans even outside the government bailout program. They lowered interest rates, but in the end, many of their borrowers simply didn’t have the basic cash flow to pay, whatever the rate. Re-default rates were expected to be high, with some calling even 40 percent conservative.

In the meantime, completed foreclosures have been decreasing more rapidly than the backlog of seriously delinquent loans. The hope had been for the opposite and a quick return to a more normal level of distress. There are still more than twice as many troubled loans than normal, despite rising home values and an improving economy. In other words, the mortgage mess isn’t all cleaned up just yet.

SATURDAY March 14 Events!

SATURDAY, MARCH 14, 2015
Ongoing Tours at Leilani Farm Sanctuary in Haiku
12:00 AM Nature Conservancy of Hawaii
7:00 AM Maui Filipino Chamber of Commerce’s Annual Scholarship Golf Tournament
07:00 AM – 01:00 PM Maui Girlz Shave Ice to Donate 100% of Sales to Aloha Backpack Buddies Program 
07:00 AM – 01:00 PM Maui Swap Meet 
07:00 AM – 12:00 PM Upcountry Farmer’s Market 
 08:00 AM – 01:30 PM  Bocce Ball Tournament
08:00 AM – 02:00 PM Fundraising Garage Sale for Feline Foundation of Maui
08:00 AM – 05:00 PM Maui Nui Farm Farmers Market in Kula every Thurs, Fri, Sat, Sunday from 8am to 5pm
08:00 AM – 01:00 PM Maui Puerto Rican Association Food Drive to Benefit Maui Food Bank
08:00 AM – 02:00 PM Trail of the Whale
09:00 AM – 04:00 PM 2-night service trip in Haleakala Crater
09:00 AM – 01:00 PM Community Exchange Event
09:00 AM – 02:30 PM Malama Honokowai – Maui Cultural Lands, Inc.
10:00 AM – 02:00 PM 24th Annual Lu’au of Keawala’i Congregational Church
10:00 AM – 03:00 PM Easter Mini Photography Session
10:00 AM – 05:00 PM Exhibit: Schaefer Portrait Challenge 2015
10:00 AM – 11:00 AM Leilani Farm Sanctuary Tour
01:30 PM – 10:00 PM GO FOR THE GREEN 1st Annual St. Patrick’s Day Shindig
02:00 PM – 08:00 PM Lomi Lomi Nui • Kahuna Bodywork Training Retreat
04:15 PM – 06:30 PM #KaiCapische-A Taste of Sardinia Sunset Cruise
05:30 PM – 09:00 PM 3rd Annual Book Trust Extravaganza: Casino Royale
05:30 PM – 09:00 PM 3rd ANNUAL BOOK TRUST HAWAII FUNDRAISER 2015 BOOK TRUST EXTRAVAGANZA: CASINO ROYALE
06:00 PM – 08:00 PM Maui Miracle Prophetic Service 

MARKET UPDATE JANUARY 2015

January 2015 Statistics
IN A NUT SHELL……

Monthly Residential and Condo Unit Sales numbers bounce up and down the last few months
somewhat, with Residential and Condo Inventory increasing during the Winter Vacation
(High Sales) season.

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There is a noticeable bifurcation of the Market Place right around the $1,000,000 mark.
Properties listed just under $1,000,000 sell quicker, those that are $20-60,000 over are slower
to sell, even with similar condition and on the same street. Obviously more people can afford a
less expensive home; however there seems to be a buyer resistance to crossing that 7 digit
threshold (sellers take note).
2014 Year-to-Date Median and Average prices were rising across the Residential, Condo and
Vacant Land markets despite lower number of unit sales (YTD). January 2015 took a break
from that trend, stay tuned..
Increased showings and sales, multiple offers on “well priced” listings, hesitant buyers become
onlookers…… Window of opportunity is quickly closing for first-time homebuyers (see
below).

“CASH is King!” when making an offer. For several months approximately 42% of all sales
were CASH.
Well priced properties are attracting multiple offers making for a quick sale. Inventories in
Residential and Condo classes grow somewhat as Sale Prices increase. REO (Foreclosures) and
Short Sales are dwindling, with any “hidden inventory” (or overhang) backlog slowly trickling onto the market.

Mortgage Interest Rates are inching up slightly which may help motivate would-be
Buyers to go ahead and buy IF they can qualify. Savvy Investors are buying with Cash, giving
them a strong negotiating position, no financing/appraisal hassles and a quick closing. While
general U.S. economic news looks cautiously hopeful, current World and US events will have ripple effects on cost of living, consumer confidence, Financial and Real Estate Markets.
Rising Sales prices cause some “Owners” to become “Sellers,” putting their homes on the
market.

FOR SELLERS: Sharpen your pencil, talk to your CPA and your Realtor® to explore the hidden benefits or consequences. Make no assumptions that will sting later.
To be successful, Sellers need to beat competing properties with better property condition,
REALISTIC pricing, good marketing, and flexible, creative terms. Days on Market figures show
that properties priced right will sell in a reasonable timeframe, often with multiple offers. “Priced Right” is still the determining factor.

BEST Deals are selling, while significantly over-priced listings remain un-sold.

Pro-Active Sellers are getting their properties appraised, inspected and surveyed in advance to
encourage realistic offers from knowledgeable Buyers. This can prevent unanticipated escrow
fallout or Buyers whittling your price down during the transaction when previously unknown facts
come to light.

FOR BUYERS: Low interest rates prevail; however have started to nudge up and are predicted to rise in 2015. Buyers should get Pre-Approved so they can shop in confidence (fewer last minute disappointments due to non-funding loans).

“Short-sales” and foreclosures are still in the marketplace, yet they can be less of a bargain than they seem, requiring more hurdles to leap and more time (often 4-6-12 months) to close, if at all.
Be prepared, but BE REALISTIC. Lenders are more stringent on requirements now for loan
approval, compared to 2004-2008.

First-Time Home Buyers – Many programs are available…..
The low point in the market has passed, so check it out carefully NOW, don’t delay. The
opportunity is fading quickly. If you can’t buy now, start saving your down payment for the next
market cycle.

Disclaimer: Zooming in on the figures of a specific geographic area or property type may lead to
different conclusions that looking at the overall view.
Maui’s market place is much smaller than Oahu’s, and a few high or low sales have a greater effect on the statistical numbers without necessarily indicating a big market swing one way or another.