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Short
sales damage house prices just like REO - (www.ochousingnews.com) Many market pundits claim
lenders should focus on short sales rather than foreclosures. They contend
short sales offer better capital recovery than foreclosures and they are less
harmful to market pricing. This is not an accurate assessment. First, not all
foreclosures become REO. About a third of all foreclosures are purchased by
third parties who either flip them or hold them as cashflow investments.
Flippers generally improve the property and sell for full market value, so
their activities don’t push prices lower. And obviously, cashflow investors
don’t push prices lower because they don’t sell their properties. Both short
sales and REO resales require discounts to sell. REOs require a discount
because lenders are loathe to spend any money fixing them up. Short sales
require a discount because buyers won’t put up with the arduous process unless
there is a reward for their patience.
Euro Zone Crisis Boils as Leaders Fail to Signal New Steps -
(www.nytimes.com) With Greece’s
membership in the euro zone teetering, fears of bank insolvency rising and
Europe’s leaders bickering about what to do, the euro crisis is once again
intensifying and threatening to undermine fragile growth globally. At a summit
meeting in Brussels on Wednesday, regional leaders failed to signal any
significant new steps to stimulate the sputtering regional economy or resolve
the competing agendas of President François
Hollande of France, who favors stronger action to spur growth,
and his German counterpart, Chancellor Angela
Merkel, who has opposed aggressive moves to ease the pressure on
Europe’s weakest economies. Yet, the urgency for a solution to the region’s debt crisis, now in its third year, may never
have been greater.
Underwater
homeowners owe $1.2 trillion more than homes' worth - (www.centralvalleybusinesstimes.com)
The deep end of the pool is
the Central Valley when it comes to homes that are underwater, according to a
new national report from the real estate information company Zillow Inc. Breaking
down the mortgage crisis by ZIP code, Zillow (NASDAQ: Z) lists portions of the
Valley as in the worst 1 percent in the nation. This includes the 95206 ZIP
code on the south side of Stockton; 95205 on the city’s east side, both of
which have 70 percent or more of the homes with mortgages more than the homes
are worth; 93307 on the southeast side of Bakersfield; 95833, 95834; 95835, all
on the north side of Sacramento; 95742 in Rancho Cordova; 95824 on Sacramento’s
south side; and 95961 in Olivehurst. To make it into Zillow’s Worst 1 Percent,
homes have to be at least 70 percent underwater.
Firm
Targets Calif. Homeowners With Foreclosed 2nd Mortgages - (www.10news.com) Adding new uncertainty in the state's ongoing
mortgage crisis, a Texas company is aggressively pursuing hundreds of
Californians to collect second-mortgage debt -- on homes they've already lost
through foreclosure. Many of these former homeowners believed their mortgage
debt had been erased after their houses were taken by banks and lending
companies. But the Texas company, Heritage Pacific Financial, has
aggressively pursued collections and filed lawsuits claiming those debts still
linger. For Ahmed Abdelfattah of San Jose, debt collectors started calling in
2009, saying he owed Heritage Pacific $135,000. He said he'd never heard of the
company before. "It's been a nightmare," Abdelfattah said. "It's
cost me money and time, and they ruined my credit until now." Oscar Trejo
said his first encounter came a few days before he expected to exit bankruptcy
and get a fresh financial start. That was in November 2010, he said. Heritage
Pacific sent Trejo, who also lives in San Jose, a letter saying it had asked a
bankruptcy judge not to discharge, or erase, its $88,800 claim against him.
California
bank repossessions continue to plummet, squatters rejoice - (www.ochousingnews.com) Like any business, banks adjust their business
plans quarterly based on both internal and external forces. Internally, banks
respond their need for additional capital to fund operations. Externally, they
cope with a declining housing market, recent regulatory changes, and new
conditions imposed by the bank settlement. When banks adjust their business
plans, it may have sudden and dramatic effect on their policies. In the first
quarter of 2012, the major banks which control most California REO dramatically
reduced the number of properties they purchased at auction. The precipitous
declines in REO were not due to improving borrower delinquency. Far too many
people are not paying their mortgages, and banks haven’t made significant
progress in reducing shadow inventory. In short, they didn’t stop foreclosing
because they ran out of people to foreclose on. So why did they?
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