California's foreclosure crisis passed another ominous milestone in April, when more than 1,000 foreclosed homes were auctioned off every weekday at courthouses across the state, the auction tracking firm innovative investments reported today.

The July -08 total of foreclosure sales at auction -- 22,838 for the state -- represents a jump of 44% over March totals and the highest level ever in California, innovative investments reports.

A separate estimate of foreclosures by Data Quick Information Systems had counted 47,171 foreclosures in the first quarter, a rate of more than 500 per day from January to March. The new statistics show every category of foreclosure statistics rose in April.

It appears the pipeline of potential foreclosures is jam packed, Innovative investments reported 44,101 new "Notices of Default" filings in April, and a new record for California. Notices of Default are the first step in the foreclosure process.

"We expected a significant increase in auction sales based on previous default patterns, Innovative investments reports.” Unfortunately, the continued increases in defaults tell us that the worst is still ahead."

As lenders grow more desperate to avoid taking possession of foreclosed homes, they are offering bigger discounts at courthouse auctions, with "discounts of 40% to 50% from prior sales price common in many parts of the state," innovative investments reports. Still, the auctions are usually uneventful, and usually do not attract serious bids. "The majority of these sales received no third-party bid and reverted back to the lender despite the largest across-the-board discounts ever offered at trustee sales auctions," innovative investments reported.

PHILADELPHIA (AP) - Just two months ago, Aaron Brokenbough had no clout and little say when lenders moved to foreclose on his home. His Philadelphia row house was scheduled for a sheriff's sale, the end of the road for most homeowners who are behind in mortgage payments.

That was before a Philadelphia court decided to step in with this unusual order: Sheriff's sales cannot go forward without a last-ditch effort by the lender and homeowner to work out a deal.

The court also gave Brokenbough some muscle, matching him with a volunteer attorney and housing counselor to take his side against his lender and their lawyers. Brokenbough feels a ray of hope.

"I'm overwhelmed," said the 36-year-old former mail processor, who fell behind on payments after he lost his job and his wife incurred medical bills from a surgery. "I'm hoping to save my home."

Philadelphia is just the latest in a growing number of cities - including Los Angeles, Baltimore, and Trenton, N.J. - that are taking matters into their own hands to help stop the nation's housing crisis within their borders.

With more than a half-million foreclosed homes on the market, and over 3 million borrowers behind on their mortgages, more cities are aggressively reaching out to residents and filing lawsuits against lenders.

While politicians debate in Washington, many cities are on the front lines of the foreclosure crisis: fielding calls from desperate homeowners, and fighting vagrancy and crime around vacated properties.

"We can't wait on the federal government," said Douglas Palmer, mayor of Trenton, N.J., and the president of the U.S. Conference of Mayors. "We're taking action."

Cities are under the gun to act: A report released by the U.S. Conference of Mayors last November projected economic losses of $166 billion this year for 361 metropolitan areas. These stem from lost tax revenue and jobs as well as slower consumer spending that come with home equity declines, and don't even include the financial toll of increased crime, fires and building code violations.

To try to recoup part of that money, some cities are suing lenders. But it's not easy to go after federally regulated companies.
In January, Cleveland took the public nuisance route and sued 21 major investment banks and lenders, charging that their subprime lending practices devastated neighborhoods and hurt property values and city tax collections. Baltimore sued Wells Fargo & Co., alleging a pattern of predatory lending practices in its poorest neighborhoods. Minneapolis and Buffalo, N.Y. are engaged in similar litigation.

"Why would these mortgage lenders continue to enter deals with these people who they knew could not afford their loans?" said Robert Triozzi, Cleveland's director of law. "To suggest (these financial institutions) didn't know the consequences just defies logic."

He blamed Wall Street greed and said the players relied on a scheme that could only work if home prices continued to rise.
"We're going to hold them accountable for actions they have done here," said Triozzi, who is seeking hundreds of millions of dollars in damages.

"The city seeks to use a single financial services company as a scapegoat for broad social problems that have plagued Baltimore for decades, including some caused by the city's own actions," Wells Fargo said in a statement. "The mortgage industry, however, says it is taking action to try to stop the rising tide of foreclosures."

Last fall, many lenders and servicers banded together to form a group called the Hope Now Alliance. The lenders try to work out repayment plans, and can modify the terms of the loan by lowering the interest rates or forgive part of the debt. Some cities are also trying to help homeowners catch up on their late payments.

This week in Jacksonville, Fla., - where the foreclosure rate is three times the national average - officials are launching a campaign to promote the city's interest-free loans. Distressed homeowners can get up to $5,000, which will be forgiven if they stay in their homes for at least five years, said Dayatra Coles, manager of housing services.

Louisville, Ky., also is giving out up to $5,000 in loans. The loans will be forgiven if the homeowner stays put for a decade. The city has teamed up with the United Way to offer access to housing help in addition to the charity's social services.

In order to battle a foreclosure rate that is 2.5 times the national average, according to First American CoreLogic, Trenton's mayor has asked pastors to preach at least one sermon in June on foreclosures and to distribute information about where to get help. Church volunteers became walking billboards, wearing "Save Trenton Homes!" T-shirts with hotline numbers on the back.

Last Sunday, Rev. Donald Sullivan Medley of the Cadwalader-Asbury United Methodist Church in Trenton preached that there's no shame in asking for help.
"Matthew chapter 7 talks about the wise and the foolish building their homes on the sand or on a rock," he told his congregation. The house on the rock withstood winds, rain and floods, not the house on the sand.

"We have to prepare," said Medley, whose trustees distributed foreclosure help information during service. Several people later came forward to get more information. Los Angeles, meanwhile, is adding foreclosure counselors in neighborhood centers for jobs and city services. The city also is tapping neighborhood councils to fight blight. L.A. is watching other cities' plans to buy up foreclosed properties and possibly use them for affordable housing, but in an area where homes can easily cost over $500,000, the cost of such a plan is a huge obstacle, said Gil Duran, spokesman for Mayor Antonio Villaraigosa.

Cities don't have the financial or regulatory strength to stem the crisis, and need firmer backing from the federal government, said John Taylor, president of the National Community Reinvestment Coalition in Washington.

The federal government has taken several steps to prop up the housing market, but critics say Bush administration-backed efforts to help borrowers avoid foreclosure are falling short.

The government has expanded the authority of the Federal Housing Administration to allow more borrowers to refinance their loans, and to help home buyers purchase a foreclosed property.

In May, House lawmakers passed a bill to send $15 billion to states to buy and fix up foreclosed property. Proponents say the measure, opposed by President Bush, will prevent blight in neighborhoods plagued by abandoned homes. Lawmakers are also considering housing tax credit of up to $7,500 for first-time home-buyers.

Still, calls are growing for more government intervention, in the form of a plan for the government to guarantee as much as $300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages.

But while the Congressional in-fighting drags on, cities have to deal with the housing "sinkhole" day in and day out, Taylor said. "They recognize the federal government really isn't moving that will make a difference fast enough." That's why officials in cities like Philadelphia aren't sitting still. Last week, hundreds of people mobbed a court room in city hall after they were told about the court intervention program. Common Pleas Court Judge Annette Rizzo, said, "It was bedlam."

AP Business Writer Alan Zibel in Washington contributed to this report.

CNNMoney.com Reports

Nation's foreclosure plague widens.... More tough times in the housing market: 8% monthly jump in foreclosures and 55% year-over-year. 'Bloated inventory' of homes owned by banks, expert says.

NEW YORK (CNNMoney.com) -- The foreclosure juggernaut lurched forward in July as banks took back 77,295 homes - up 8% in a month and 183% in a year, a report issued Thursday shows.
Total foreclosure filings - delinquency notices, auction sale notices and bank repossessions - were up 8% from June and 55% year-over-year, according to RealtyTrac, an online marketer of foreclosed homes.
One of every 464 U.S. households received at least one filing during July. And more than 680,000 homes have been repossessed by lenders since the beginning of August 2007, when the credit crunch hit.
"Bank repossessions, or REOs, continued to be the fastest growing segment of foreclosure activity," said RealtyTrac's chief executive officer, James Saccacio, in a statement. "The sharp rise in REOs, combined with slow sales, has resulted in a bloated inventory of bank-owned properties for sale."
The company says it has more than 750,000 active listings of repossessed homes for sale on its database. That represents about 17% of all the existing homes for sale in the United States as reported by the National Association of Realtors.

Leading states
Foreclosure activity in Nevada, surpassing all other states, touched one in every 106 households in July. Foreclosures in the state were up 15% for the month and were almost double the rate of last July.
Other hard-hit states included California (one of every 182 households), Florida (one of 186) and Arizona (one of 195). For sheer volume, California led the other states with a total of 72,285 filings.
An especially high percentage of the California filings were bank repossessions. There were 23,406 in all, up from just 4,444 in July 2007. The state accounted for more than a third of all such events in the nation. The number was also a big jump from June's total of 20,624 bank repossessions in the state.
"The properties there, once they enter foreclosure, are making a beeline back to the banks," said RealtyTrac's spokesman, Rick Sharga.
Many of the California homes were bought during the height of the frenzy of the mid-2000s at inflated prices. Now that home values have dropped, borrowers who bought at the top owe more than their homes are worth. These properties are almost impossible to refinance and are difficult to sell.
A couple of Midwestern states have also been consistently among the leading foreclosure hot spots and July was no exception. Ohio was fifth in the nation for foreclosures with one for every 375 households. That includes 4,057 bank repossessions, a 33% increase since July 2007. Michigan had 3,933 repossessed homes, or 17% fewer than last July, when it recorded 4,739.

City centers
The worst-hit metro area of the 230 regions that RealtyTrac covers was Cape Coral, Fla. About one of every 64 households in the Gulf Coast city received a filing during the month, more than seven times the national average.
Merced, Calif., with one filing per 73 households, had the second highest foreclosure rate, followed by the nearby Central Valley cities of Stockton and Modesto, which each had about one filing for every 82 households.
The report is bound to disappoint Washington policy makers and lending industry insiders who have stepped up their efforts to slow the massive default problem. June filings, which were down 3% from May, had been a cause for slight optimism.
But, according to Sharga, that decrease was helped along by rule changes in Massachusetts and Maryland that prevented lenders from issuing filings for up to an additional 90 days after borrowers first fall behind in their payments.
That significantly reduced the number of foreclosure filings in both states. In June, for example, Massachusetts recorded a 55% decrease in initial filings.
"Now, both states are creeping back up," he said. "The 90-day lull in Massachusetts is being followed by a whole run of properties [in delinquency]." 

U.S. foreclosure filings up 55 %Associated Press .... WASHINGTON --

The number of homeowners stung by the dramatic decline in the U.S. housing market jumped last month as foreclosure filings grew by more than 50 percent compared with the same month a year ago, according to data released Thursday.
Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June, RealtyTrac Inc. said. That means one in every 464 U.S. households received a foreclosure filing last month.
Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 77,000 properties were repossessed by lenders nationwide in July, the company said.
Nevada, California, Florida, Arizona, Ohio, Georgia and Michigan had the highest foreclosure rates. Foreclosure filings increased from a year earlier in all but eight states.
The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan.
As foreclosures soar, banks and mortgage investors are also facing a pileup of foreclosed properties on their books and are cutting prices dramatically.
RealtyTrac noted that it had more than 750,000 foreclosed homes in its database of properties for sale, equal to about 17 percent of the 4.5 million U.S. homes that were up for sale in June.
To speed up the disposition of the 54,000 foreclosed properties it owns, Fannie Mae is opening offices in California and Florida and is considering selling those properties in bulk to investors. "I do not think this is a time to be holding onto (foreclosed properties) hoping for a better day," CEO Daniel Mudd said last week.
It remains to be seen how much the government's intervention will stem the housing crisis. President Bush last month signed sweeping housing legislation that aims to prevent foreclosures by allowing homeowners to swap their mortgages for more affordable loans, but only if their lender agrees to take a loss on the initial loan.
The bill is projected to help about 400,000 households.
The number of foreclosures "could start to stabilize as early as the first quarter of next year if the government program gains any traction," said Rick Sharga, RealtyTrac's vice president for marketing. "That's really the unknowable right now."
Even with government help, nearly 2.8 million U.S. households will either face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value by the end of next year, predicts Moody's Economy.com.
In the RealtyTrac report, the Cape Coral-Fort Myers area in Florida was the metro area with the highest rate of foreclosure, followed by three California cities: Merced, Stockton, and Modesto. Las Vegas ranked fifth.

Tens of thousands of Californians lost their homes during the first three months of the year as foreclosures soared more than 300 percent across the Bay Area and the state. Many experts expect those numbers to climb higher this year and beyond.

"The problem isn't going away anytime soon," said Andrew LePage, an analyst with DataQuick Information Systems. "We're still looking for some sign of a peak in foreclosure activity."
Lenders took back 6,579 homes in the nine-county Bay Area during the first quarter, up from 1,493 a year ago and 4,573 in the fourth quarter, according to a report released by DataQuick on Tuesday. Throughout California, 47,171 homes were foreclosed on, up from 11,032 a year ago. The regional and state figures are now at their highest level in more than 15 years.
It's just the newest benchmark in a housing crisis that has set one after another. The national real estate downturn reached critical levels last summer as resetting subprime loans and falling home values precipitated growing numbers of defaults and eventually an international liquidity crisis. The big jump in foreclosures will place additional pressure on home prices, which could lead to further foreclosures, economists say.
Each case can have a devastating impact on a family or individual.
Raul Gonzalez and his wife, Margarita Narvaez, were thrilled after buying a San Jose home two years ago. The feeling faded quickly.
Gonzalez, who immigrated from Mexico in 2000, said he unwittingly used a negative-amortization loan, in which the monthly payment covered only a portion of the interest. The balance grew each month, and after the teaser rate expired, the monthly payment rose well beyond what the 33-year-old painter could afford.
The main lender foreclosed on the three-bedroom home in late January and the family traded their keys for cash, moving into an apartment later that month.

Suit alleges fraud

The couple filed a lawsuit against the mortgage broker, Realtor and one of the lenders, asserting they were defrauded, among other claims. But the strain of the situation led to health problems, Gonzalez said, and the hit to his credit rating means they have little hope of buying another home anytime soon.
"The reality is, I can't do anything," Gonzalez said in Spanish through a translator, his attorney. "Perhaps it's better to leave these problems and only rent, because I have to take care of myself."
Declining home values and resetting adjustable rate mortgages are combining to drive up the rate of foreclosures, said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange. Many borrowers agreed to loans with initial teaser rates because they believed they could refinance when their payments increased, he said. Instead, declining home values erased the equity necessary to do so.
The median price for resale homes in the Bay Area slid 20.4 percent year over year to $549,000 in March, with sales off 40.6 percent, DataQuick reported last week.

Contra Costa has most

Areas hardest hit by foreclosures experienced the biggest price declines. Contra Costa County recorded the highest number of foreclosures in the first quarter, 2,228. Bank-seized homes represented nearly half of all sales in March and prices dropped by about a third to $409,000.
The largest increases were in Sonoma County, a 472.3 percent jump to 538, and Santa Clara County, a 471.6 percent increase to 926. Marin County saw the least number of foreclosures, 76, followed by Napa with 112 and San Francisco at 124.
Neighborhoods defined by ZIP codes in Antioch, Richmond, Vallejo, Oakley and Suisun City continued to experience some of the highest levels of foreclosures. But some neighborhoods that previously had few, including San Francisco's Hunters Point and several in Santa Rosa and San Jose, saw an escalation in foreclosure rates.
There's little reason to believe the worst is past, Adibi said.
Surveys by financial services company Credit Suisse and others show the number of resetting adjustable rate mortgages will rise this spring and summer. That will bump up payments for many borrowers and may lead to missed payments and default notices in the months ahead.

Threat of recession

Also, many economists believe the nation has already fallen into a recession, which could lead to job losses that would further undercut owners' ability to pay their mortgages.
"There's going to be added pressure," Adibi said.
In another indication that foreclosures are likely to climb, mortgage defaults jumped nearly 150 percent in the region and state from January to March. Lending institutions sent Bay Area homeowners 16,398 default notices, up from 6,730 a year ago and 12,704 in the preceding quarter, DataQuick said. These notices are considered the first step in the foreclosure process.
Statewide, lenders issued 113,676 default notices, up from 46,760 a year ago and 81,550 in the fourth quarter.
The soaring foreclosure and default rates come in spite of calls by banking regulators and government officials for lenders to modify the loans of distressed borrowers, a request many lenders claim they've heeded.

Modifications in dispute

But several surveys by the California Reinvestment Coalition have found these so-called workouts are the exception, foreclosures the rule. Loan servicers often don't return calls from borrowers, renege on promised changes just before foreclosing or offer modifications that leave owners with higher monthly payments, said Kevin Stein, associate director of the San Francisco consumer advocacy organization.
"Things are getting worse," he said.
Dustin Hobbs, spokesman for the California Mortgage Bankers Association, a Sacramento trade group for home lenders, disputed the characterization. He said the Hope Now Alliance, a coalition of lenders, has worked out more than a million loans since last summer.
"This industry is making, has made and is continuing to make an unprecedented effort to reach out to distressed buyers," he said.
In a prepared statement, U.S. Sen. Dianne Feinstein, D-Calif., said Congress must do more to help borrowers.
"We need to clean up the industry to protect future home buyers, and to help ensure this never happens again," she said. "We must take action to restore confidence in the American Dream of home ownership."

Home |  About us |  Our Team | Mohawk | Services |  Free Coaching |  Resources | Foreclosure News| The process | Catalog | VIP Membership | Contact Us

Innovative Investments, LLC © 2008