Archive for November, 2011
At the rate homes are going on the foreclosure block in Maryland these days, it would take 21 years — yes, years — before the current "pipeline" of homes in danger of foreclosure are all sold.
That's according to industry consultant LPS Applied Analytics, which shows a dramatic drop in the number of Maryland foreclosure sales (repossessions or other involuntary transfers) after the robo-signing revelations last fall. That's pushed the state's time-to-sell figure skyward to the fourth-highest nationwide.
It’s a rare area of agreement between Republicans and the Obama administration: The government should reduce its outsize role in making sure that people can buy homes.
And yet, in the past three months, these officials and others in Washington have taken steps that expand the government’s support of the housing market.
The reason is that the economy and the housing market, in particular, remain weak. Officials are worried that withdrawing government support for housing could make it more difficult for people to buy homes, reducing demand and sending housing prices even lower.
Housing starts, sales and prices have been flat for months, suggesting housing has hit its bottom, John Burns Real Estate Consulting said Monday.
Yet, a full recovery remains elusive even as the industry and government push for more loan modifications. To date, 72% of delinquent borrowers do not quality for HAMP, according to John Burns.
The Irvine, Calif.-based consulting firm foresees a slow recovery ahead. One that is weighed down by a lack of consumer savings, debt-to-income challenges and low move-up activity among borrowers who have high loan-to-value ratios on existing mortgages.
The study says three elements are holding home prices down: tighter underwriting guidelines on mortgage loans, distressed home sales and 2.4 million vacant residential properties that will take three to four years to occupy.
The consulting company concluded that loan modifications "are a waste of time" since borrowers are carrying too much debt. Based on Treasury Department reports, John Burns found that debt-to-income ratios before loan modifications are hovering around 45.2%. After going through a modification, the debt-to-income ratios remain in the 31% range.
The recovery may be slow going, but the John Burns report sees several silver linings on the horizon.
For starters, there are 2.4 million excess vacant homes and that number is expected to continue its downward trajectory. The excess housing vacancy level peaked at 3.2 million units in 2009 and has continued its steady decline since then.
The high inventory levels follow a decade of significant growth, where the nation's housing stock grew by 15.8 million units even though households only grew by 11.2 million, John Burns Real Estate Consulting said.
The good news is the nation currently has pent-up demand, and that is expected to boil over into the market in the next few years.
By 2015, John Burns Real Estate Consulting predicts 1.43 million in household growth and 1.2 million in new construction, creating a healthier balance, where household growth outpaces homebuilding.
In addition, 5.9 million Americans aged 25 to 34 are currently living with their parents, compared to 4.6 million in 2006. When that age group is ready to enter the market, they will boost demand for new and resale homes, as well as rentals.
Write to Kerri Panchuk.
The new reality of working in mortgage finance is the ephemeral nature of employment can now surprise to the downside.
Let me explain: people used to want to hire in this space.
We are getting word of another law firm shutting down. In this case, the Steven J. Baum law firm stood accused of callousness toward the plight of distressed homeowners.
In many cases, loss of income (no job) can lead a borrower down this road. While it can be argued that, in many default cases, the mortgage product didn't fit the homeowner, there is still no reason to think we aren't in a new reality.
This is a wake-up call to everyone: it can happen to you.
I take no pleasure in someone going out of business. I do believe the employees of the Baum law firm, who reenacted a skid row scene for Halloween (photo found here), followed a pattern of downward spiral.
The law firm clearly knew, even if they didn't approve, that employees dressed up as the down-and-out. The new reality is that there is no irony that they are now unemployed.
The point is this. If Baum wanted to slow, or even turnaround, the quality of his business (and that's a big if), he should've fired workers such as this long ago.
Write to Jacob Gaffney.
Follow him on Twitter @jacobgaffney.
Tags: Baum, default law
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