Feldman Law Center – News by Feldman Law Center – California’s recently passed anti-foreclosure bill exempted most lenders in the state from its regulations with loopholes big enough to drive a truck through. Trumpeted by legislators as another layer of protection for homeowners, the bill exempted the largest lenders in the state including Wells Fargo, Bank of America, and JP Morgan Chase because they already had loan modification programs in place. Even for the rare lender that might have been out of compliance with the law, and then subject its regulations, adding a loan modification program would exempt it from the mandated 90 day postponement of foreclosure proceedings on delinquent homeowners.
It was with amazement then that industry watchers marveled at the June foreclosure statistics which showed that foreclosures actually declined even as the state’s default filings increased. Many of the comments made it sound like lenders in California might actually be giving homeowners a break. ForeclosureRadar Chief Executive Sean O’Toole said, “A number of lenders appear to have self-imposed California’s latest foreclosure moratorium on themselves, despite having received an exemption from it.”
The numbers definitely bear out that there could have been more foreclosures and more properties put up for auction in the month of June. An example of lenders’ restraint is Bank of America, which cut their notice of trustee sale filings by 48% from May to June. Seemingly puzzled by the decrease, Mr. O’Toole commented, “… (it’s) an outcome we are struggling to find an explanation for.” One thing for certain is that the ultimate explanation won’t have anything to do with lenders cutting homeowners a break because they feel sorry for them.
It’s much more likely that what is being called a self imposed moratorium is based on the lenders choosing the lesser of two evils and the law of supply and demand. A look at a couple of statistics from the California auctions illustrates what the lenders are dealing with and why there aren’t more properties going to auction:
* Of 22,291 foreclosures taken to auction only 2,687, representing 12% of the total, were sold.
* Opening bids as set by lenders averaged 39.3% lower than the mortgage balance.
* Almost half of the properties sold at auction were discounted by 50% or more.
* Despite the steep discounts and the relatively limited supply, lenders were forced to take back 87% of the properties submitted for auction.
Those are pretty grim stats given that the 22,000 properties that actually went to auction represents less than 20% of the amount that could have been submitted. Putting salt in the wound, the 2,600 properties that did sell were done at steep discounts and represent about 2% of the total of homes that could have been sold. A lender looking at those numbers would have no motivation at all to foreclose save for special situations where there is perceived value or a buyer waiting on the other side.
Under normal circumstances, foreclosures typically run in an orderly three part process starting with the filing of a notice of default (NOD). The property then goes to auction at a trustee sale where it is either sold or taken back by the lender. The current bottleneck is occurring at part three of that process because homes aren’t selling and lenders are already flooded with properties in their REO departments. Continuing to foreclose at a brisk pace only adds to the existing backlog, building a supply that isn’t even close to being met by demand. In that situation the lesser evil is to leave the property in limbo and hope that borrowers can fix their mortgage problem or modify the existing loan.
Leaving properties in limbo also benefits lenders by allowing them to carry properties on their books at a value of their choosing due to Congress’ relaxing of mark to market rules in the spring. A foreclosure sale forces the adjustment of valuation on properties sold at auction so even if properties were selling, it’s unlikely that lenders would be willing to accept massive write-downs at current valuations. In an environment where just about any action a lender can take results in a loss of some sort, moving as slowly as possible might be the only way to minimize damage on a daily basis. It could be that a write-down pace on 2% of the REO portfolio each month is a number that lenders can live with at the moment. Whatever the reason, the break that homeowners are getting right now is subject to change at a moment’s notice.
For more information about loan modification (mortgage loan modification) visit Feldman Law Center at www.feldmanlawcenter.com
About Feldman Law Center:
The Feldman Law Center was founded for the purpose of negotiating loan modifications on behalf of their clients. These negotiations have two major goals; to reduce monthly mortgage payments to a level of affordability for the homeowner and to either stop or avoid foreclosure proceedings. The mission at The Feldman Law Center is to provide the highest level of professional service while delivering the best possible result on each loan modification we negotiate on the behalf of the families we represent.
Having negotiated over 500 attorney driven mortgage loan modifications, we realize that each homeowner’s situation is unique and that each modification may require a different approach than the one before it. To that end, we can always call on our 25 years of negotiating, knowledge, and real estate experience to provide the most optimal solutions for each family’s situation. While we are negotiating your loan modification with your lenders our friendly and compassionate team will keep you updated all the way on how the process is advancing.
The people at The Feldman Law Center completely understand the stress of being behind in your monthly payments and the sleepless nights that can be brought on by an impending foreclosure. Rest assured that we will stand with you all the way through the loan modification process and that we are driven to get the best outcome possible for you and your family. If you are struggling with your monthly payments and worried about the threat of foreclosure, we can help. Call The Feldman Law Center today at 800-588-0425.
Resources:
Feldman Law Center: Profile – Business Exchange
Press Release – The Feldman Law Center’s Code of Ethics and Practices
Loan Modification – Feldman Law Center
Feldman Law Center, Mission Viejo CA 92691
Feldman Law Center – The Cream Rises in Loan Modifications
Feldman Law Center – Ten Tips for a Successful Home Loan Modification
Feldman Law Center – Saving Thousands with a Loan Modification – Debt Settlement Combination
Feldman Law Center – Mission Viejo, CA, 92891 – Citysearch
Feldman Law Center – The New York Times gets it About Half Right
Feldmanlawcenter.com – Feldman Law Center Company News
Feldman Law Center
Feldman Law Center Trulia Profile
It was with amazement then that industry watchers marveled at the June foreclosure statistics which showed that foreclosures actually declined even as the state’s default filings increased. Many of the comments made it sound like lenders in California might actually be giving homeowners a break. ForeclosureRadar Chief Executive Sean O’Toole said, “A number of lenders appear to have self-imposed California’s latest foreclosure moratorium on themselves, despite having received an exemption from it.”
The numbers definitely bear out that there could have been more foreclosures and more properties put up for auction in the month of June. An example of lenders’ restraint is Bank of America, which cut their notice of trustee sale filings by 48% from May to June. Seemingly puzzled by the decrease, Mr. O’Toole commented, “… (it’s) an outcome we are struggling to find an explanation for.” One thing for certain is that the ultimate explanation won’t have anything to do with lenders cutting homeowners a break because they feel sorry for them.
It’s much more likely that what is being called a self imposed moratorium is based on the lenders choosing the lesser of two evils and the law of supply and demand. A look at a couple of statistics from the California auctions illustrates what the lenders are dealing with and why there aren’t more properties going to auction:
* Of 22,291 foreclosures taken to auction only 2,687, representing 12% of the total, were sold.
* Opening bids as set by lenders averaged 39.3% lower than the mortgage balance.
* Almost half of the properties sold at auction were discounted by 50% or more.
* Despite the steep discounts and the relatively limited supply, lenders were forced to take back 87% of the properties submitted for auction.
Those are pretty grim stats given that the 22,000 properties that actually went to auction represents less than 20% of the amount that could have been submitted. Putting salt in the wound, the 2,600 properties that did sell were done at steep discounts and represent about 2% of the total of homes that could have been sold. A lender looking at those numbers would have no motivation at all to foreclose save for special situations where there is perceived value or a buyer waiting on the other side.
Under normal circumstances, foreclosures typically run in an orderly three part process starting with the filing of a notice of default (NOD). The property then goes to auction at a trustee sale where it is either sold or taken back by the lender. The current bottleneck is occurring at part three of that process because homes aren’t selling and lenders are already flooded with properties in their REO departments. Continuing to foreclose at a brisk pace only adds to the existing backlog, building a supply that isn’t even close to being met by demand. In that situation the lesser evil is to leave the property in limbo and hope that borrowers can fix their mortgage problem or modify the existing loan.
Leaving properties in limbo also benefits lenders by allowing them to carry properties on their books at a value of their choosing due to Congress’ relaxing of mark to market rules in the spring. A foreclosure sale forces the adjustment of valuation on properties sold at auction so even if properties were selling, it’s unlikely that lenders would be willing to accept massive write-downs at current valuations. In an environment where just about any action a lender can take results in a loss of some sort, moving as slowly as possible might be the only way to minimize damage on a daily basis. It could be that a write-down pace on 2% of the REO portfolio each month is a number that lenders can live with at the moment. Whatever the reason, the break that homeowners are getting right now is subject to change at a moment’s notice.
For more information about loan modification (mortgage loan modification) visit Feldman Law Center at www.feldmanlawcenter.com
About Feldman Law Center:
The Feldman Law Center was founded for the purpose of negotiating loan modifications on behalf of their clients. These negotiations have two major goals; to reduce monthly mortgage payments to a level of affordability for the homeowner and to either stop or avoid foreclosure proceedings. The mission at The Feldman Law Center is to provide the highest level of professional service while delivering the best possible result on each loan modification we negotiate on the behalf of the families we represent.
Having negotiated over 500 attorney driven mortgage loan modifications, we realize that each homeowner’s situation is unique and that each modification may require a different approach than the one before it. To that end, we can always call on our 25 years of negotiating, knowledge, and real estate experience to provide the most optimal solutions for each family’s situation. While we are negotiating your loan modification with your lenders our friendly and compassionate team will keep you updated all the way on how the process is advancing.
The people at The Feldman Law Center completely understand the stress of being behind in your monthly payments and the sleepless nights that can be brought on by an impending foreclosure. Rest assured that we will stand with you all the way through the loan modification process and that we are driven to get the best outcome possible for you and your family. If you are struggling with your monthly payments and worried about the threat of foreclosure, we can help. Call The Feldman Law Center today at 800-588-0425.
Resources:
Feldman Law Center: Profile – Business Exchange
Press Release – The Feldman Law Center’s Code of Ethics and Practices
Loan Modification – Feldman Law Center
Feldman Law Center, Mission Viejo CA 92691
Feldman Law Center – The Cream Rises in Loan Modifications
Feldman Law Center – Ten Tips for a Successful Home Loan Modification
Feldman Law Center – Saving Thousands with a Loan Modification – Debt Settlement Combination
Feldman Law Center – Mission Viejo, CA, 92891 – Citysearch
Feldman Law Center – The New York Times gets it About Half Right
Feldmanlawcenter.com – Feldman Law Center Company News
Feldman Law Center
Feldman Law Center Trulia Profile
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