Walking Away

A Third of Public Says It’s Sometimes OK for Homeowners to Stop Making Mortgage Payments

A majority of Americans say it is "unacceptable" for homeowners to stop making their mortgage payments and abandon their homes, according to a Pew Research Center survey. But more than a third (36%) say the practice of "walking away" from a home mortgage is acceptable, at least under certain circumstances.

Nearly six-in-ten (59%) believe it is wrong for homeowners to deliberately stop paying their mortgages and surrender their homes to the mortgage lender, according to the survey of 2,967 adults conducted May 11-31.

But two-in-ten (19%) say it's acceptable and an additional 17% volunteer that it depends on the circumstances.¹

As the housing market continues to flounder in many parts of the country, more than one-in-five homeowners (21%) say they owe more on their mortgages than their home is worth, the survey finds.

Some homeowners in this situation stop making their mortgage payments and let the bank foreclose on their homes.

In July alone, lending institutions foreclosed on an estimated 93,000 properties, according to data compiled by RealtyTrac Inc.; this was the second-highest monthly total since the firm began tracking foreclosures in April 2005.

Not surprisingly, how people fared financially during the Great Recession is linked to their views on walking away from a mortgage.

Nearly half (48%) of all homeowners say the value of their home declined during the recession, and as a group they are more likely than those whose home did not lose value to say it's acceptable to renege on a mortgage (20% vs. 14%).

Renters are even more likely to say it's okay to stop making house payments: Fully a quarter (25%) say it is acceptable to walk away.

Those who have had financial problems during the recession are more likely than others to say that walking away from a mortgage is acceptable.

Nearly one-in-four adults (24%) who say their families are just able to pay their monthly bills or can't meet expenses say it's okay to stop paying a mortgage, compared with 14% of those who say they "live comfortably."

But homeowners who say their homes are worth less than what they owe are not more tolerant of the practice than those who would break even or make money on a sale (18% vs.17%).

While some demographic groups are more likely than others to say it's okay to walk away -- among them, Hispanics, adults younger than age 65 and those living in the West -- these differences are mostly modest.

For example, nearly a quarter (24%) of all Hispanics say it's acceptable to abandon a mortgage, compared with 17% of whites and 21% of blacks. However, roughly similar majorities of Hispanics (58%), blacks (56%) and whites (61%) say it's wrong to do so.

There are sharp differences by partisanship. Democrats are about twice as likely as Republicans to say it is acceptable to walk away (23% vs. 11%).

Under Water and Upside Down

As the housing market collapsed and the Great Recession took hold, sinking home values have left many homeowners owing more on their mortgages than they could collect if they sold their property. In real estate argot, their mortgages are "under water" and their home loans "upside down."

According to the survey, about one-in-five mortgage-holders (21%) are currently "under water." Black homeowners are more likely than whites to be in this circumstance (35% vs. 18%); lower-income homeowners are more likely than upper-income homeowners to face this problem (33% for those with family incomes of less than $30,000 vs. 15% for those earning $75,000 or more). Middle-aged homeowners are more likely than either younger or older homeowners to be in this situation.

Caught between big mortgages, sinking home values and the financial strains associated with periods of high unemployment, many homeowners have stopped making mortgage payments and opted to "walk away" from their loans and their homes. The practice has grown so common that the mortgage finance giant Fannie Mae, reeling from mounting losses, is now suing so-called "strategic defaulters" -- those who can afford a mortgage but bail anyway.

Read the Full Report

by Rich Morin, Senior Editor, Pew Research Center
September 15, 2010

HOUSE OF THE WEEK

Huntsman Sr.’s Utah Ski Mansion

 

50000 Royal St., Park City UT

For sale: $49,500,000

Source: Forbes

When you have nine children and 56 grandchildren, your winter vacation getaway probably leans more toward mansion than cabin.
Jon Huntsman, Sr.’s Park City home has 20,000 square feet of living space and 12 bedrooms — two of which are bunk bedrooms with 20 mattresses — enough room for his children and grandchildren, as well as any guests.

The father of former Republican presidential nominee Jon Huntsman, Jr., Huntsman Sr. began his business career in an egg-producing company in Los Angeles. He rose through the ranks, culminating with his contributions in the invention of the plastic egg carton. That success led him to form the Huntsman Container Corporation, which manufactured the “clamshell” container for McDonald’s Big Mac and as well as plastic plates, bowls and containers for other fast-food companies. He then founded Huntsman Chemical, transitioning it to the Huntsman Corporation, which went public in 2005.
The Huntsman patriarch designed the home for his family in 1989 out of reclaimed logs from the forests surrounding Yellowstone Park, said listing agent Paul Benson of Summit Sotheby’s International Realty.
“The whole home, even the guest rooms, are filled with timber ceilings and walls,” explained Benson.
The home contains several living areas with cathedral ceilings, stone fireplaces and picture windows, as well as a dining room that seats 20, a paneled library, fitness center and children’s playrooms and massive indoor pool.
Many of the furnishings in the home are available for purchase as well. Benson notes that the estate holds one of the largest collections of American Indian art in the U.S.
Situated in Utah’s ski haven of Upper Deer Valley on 60 acres, the property is private, yet accessible. The seclusion of the home is perfect for the Huntsman family to entertain high-profile guests. Huntsman Sr. previously served as the Republican Party of Utah national committeeman,  as well as the Special Assistant and Staff Secretary to President Nixon. Before running as a Republican party presidential nominee this past year, Huntsman Jr. was formerly Utah governor and an ambassador to China under President Obama.
Huntsman Sr. first listed his home on the Park City real estate market in September 2009 for $55 million. The house was removed in April 2010 and later re-listed with its current lower price. According Benson, Huntsman is letting go of the property to focus on his new development: Huntsman Springs, a golf course and high-end community in Driggs, Idaho
According to Zillow’s mortgage payment calculator, a monthly payment on Huntsman’s estate would be $182,093, assuming a 20 percent down payment on a 30-year-fixed rate mortgage.

Source: 

Home Value Declines Pick Up in Fourth Quarter

Rising foreclosures and soft economic data were the main culprits behind accelerated declines in home values during the fourth quarter. According to the Q4 Zillow Real Estate Market Reports, released today, national home values fell 1.1 percent from the third to the fourth quarter, representing an annual decline of 4.7 percent. Overall, national home values have fallen 24.2 percent since their peak in May 2007. The newly released Zillow Home Value Forecast, however, points to brighter days in the future for many markets.

According to the Zillow Home Value Forecast, national home values will decline less in 2012 than in 2011, ending the year down 3.7 percent. While the Forecast does not show a bottom in home values nationally this year, home values in some individual markets are likely to reach a bottom. In the Washington and Los Angeles metropolitan statistical areas (MSAs), the Forecast shows home values increasing by 1.3 and 1.2 percent, respectively, by the end of the year.

Additionally, markets like Riverside, Calif., Phoenix and Baltimore MSAs will likely reach a bottom in home values in 2012.

“As previously stated, we believe 2012 will be a transitional year for real estate. Positive developments will include markets showing organic growth, and home sales increasing as the year proceeds. However, we maintain our forecast that home values will continue to fall in 2012, ” said Zillow Chief Economist Dr. Stan Humphries on the Zillow Research page. “Negative equity will continue to cast a long shadow over the real estate market, keeping foreclosure rates elevated, and keeping a firm lid on significant home value growth even once values have bottomed in 2013.”

New to this quarter’s report, the Zillow Home Value Forecast uses data from past home value trends and current market conditions, including leading indicators like home sales, months of housing inventory supply and unemployment, to predict home values over the next 12 months for the nation and the 25 largest markets tracked by Zillow.

States Negotiate $26 Billion Deal for Homeowners

After months of painstaking talks, government authorities and five of the nation’s biggest banks have agreed to a $26 billion settlement that could provide relief to nearly two million current and former American homeowners harmed by the bursting of the housing bubble, state and federal officials said. It is part of a broad national settlement aimed at halting the housing market’s downward slide and holding the banks accountable for foreclosure abuses.

Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected

Still, the agreement is the broadest effort yet to help borrowers owing more
than their houses are worth, with roughly one million expected to have their mortgage debt reduced by lenders or able to refinance their homes at lower rates. Another 750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 will receive checks for about $2,000. The aid is to be distributed over three years.

The final details of the pact were still being negotiated Wednesday night, including how many states would participate and when the formal announcement would be made in Washington. The two biggest holdouts, California and New York, now plan to sign on, according to the officials with knowledge of the matter who did not want to be identified because the negotiations were not completed.

The deal grew out of an investigation into mortgage servicing by all 50 state attorneys general that was introduced in the fall of 2010 amid an uproar over revelations that banks evicted people with false or incomplete documentation. In the 14 months since then, the scope of the accord has broadened from an examination of foreclosure abuses to a broad effort to lift the housing market out of its biggest slump since the Great Depression. Four million Americans have been foreclosed upon since the beginning of 2007, and the huge overhang of abandoned homes has swamped many regions, like California, Florida and Arizona.

In New York State, more than 46,000 borrowers will receive some form of benefit, with an estimated 21,000 expected to see what they owe reduced through a principal reduction, according to estimates by the Department of Housing and Urban Development.

The five mortgage servicers in the settlement — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — have largely set aside reserves for the expected cost of the accord and investors are likely to cheer its announcement because it removes one more legal worry for the industry, analysts said.

Banks Involved in the Settlement

“I wouldn’t say it’s a panacea for the housing industry but it is good for the banks to get this behind them,” said Jason Goldberg, an analyst with Barclays.

As more and more states signed on this week, the negotiations with the banks became especially intense, said one participant, who wasn’t authorized to speak publicly. Two bank officials, Frank Bisignano of JPMorgan Chase and Mike Heid of Wells Fargo, played a critical role in the talks with Shaun Donovan, the secretary of Housing and Urban Development, and Thomas J. Perrelli, the associate attorney general at the Justice Department. Bank of America, which will make the largest payout as the nation’s biggest mortgage servicer, moved more cautiously, the participant said.

The settlement money will be doled out under a complicated formula that gives banks varying degrees of credit for different kinds of help. As a result, banks are incentivized to help harder-hit borrowers with homes worth far less than what they owe.
 

While the $26 billion figure is the one being cited in the negotiations, federal officials said they hope the eventual value for homeowners reaches up to $39 billion. However, mortgages owned by the government’s housing finance agencies, Fannie Mae and Freddie Mac, will not be covered under the deal, excluding about half the nation’s mortgages.

About one in five Americans with mortgages are underwater, which means they owe more than their home is worth. Collectively, their negative equity is almost $700 billion. On average, these homeowners are underwater by $50,000 each.

A recent estimate from the settlement negotiations put the average aid for homeowners at $20,000.

“I just don’t think it’s going to be a life-changing event for borrowers,” said Gus Altuzarra, whose company, the Vertical Capital Markets Group, buys loans from banks at a discount.

Several billion dollars would cover the direct cash payments to foreclosure victims and provide money for states’ attorneys general to services like mortgage counseling and future investigations into mortgage fraud.

Though many economists identify the moribund housing market as the greatest drag on the recovery, it is not clear how much the settlement will help.

Christopher J. Mayer, a housing expert at Columbia Business School, said the accord could give banks more certainty that they can clear their large backloads of seized homes, restoring the flow of those homes into the market.

“It may be good for individual homeowners, but if you don’t do something to help the foreclosure process, it’s not going to help the housing market,” he said.

Mark Zandi, the chief economist for Moodys Analytics, said that while the settlement looked small compared with the scope of the problem, it was not necessary to erase all, or even most, of the nation’s negative equity to turn the market around.

About a third of houses on the market now are distressed, or have been through foreclosure, he said, and reducing that percentage by just a small amount could be enough to put a floor under housing prices.

More than the dollar figures, the settlement had been held up amid concern by New York’s attorney general, Eric T. Schneiderman, that it provided too broad of a release for banks for past misdeeds, making future investigations much more difficult.

Mr. Schneiderman was able to win significant concessions from the banks in recent days.

In the agreement’s expected final form, the releases are mostly limited to the foreclosure process, like the eviction of homeowners after only a cursory examination of documents, a practice known as robo-signing.

The prosecutors and regulators still have the right to investigate other elements that contributed to the housing bubble, like the assembly of risky mortgages into securities that were sold to investors and later soured, as well as insurance and tax fraud.

Officials will also be able to pursue any allegations of criminal wrongdoing. In addition, a lawsuit Mr. Schneiderman filed Friday against MERS, an electronic mortgage registry responsible for much of the robo-signing that has marred the foreclosure process nationwide, and three banks, Bank of America, JPMorgan Chase and Wells Fargo, will also go forward.

Along with how broad the releases would be, California’s attorney general, Kamala Harris, also pushed for her state to be able to use the state’s False Claims Act. That would enable state officials and huge pension funds like Calpers to collect sizable monetary damages from the banks if officials could prove mortgages were improperly packaged into securities that later dropped in value.

By: Nelson D. Schwartz and Shaila Dewan

This story originally appeared in The New York Times

BREAKING NEWS: Details Released On Principal Forgiveness Plan

Breaking News: The Robo-Signers Mortgage Fraud Fiasco may be coming to a conclusion…

This may appear to be good news on the surface. After all, there appears to be some sort of justice happening on behalf of owners.

However, what this settlement will also trigger is millions of foreclosures. All the owners who are in default (6,000,000) will see their foreclosures happening faster. We have already seen a dramatic increase in NODs. The banks were clearly holding back the foreclosure process until this issue was ‘resolved’.

Remember:

4,000,000 -  have already lost their homes to foreclosure.

6,000,000  - are in default NOW.

11,000,000  - are underwater on their mortgages.

Officials from more than 40 states have signed onto a record $25 billion settlement with the five biggest banks related to foreclosure abuses including “robo-signing” of documents.

The settlement would require banks to provide billions of dollars in aid to homeowners who have lost their homes to foreclosure or who are still at risk.The deal would set aside up to $17 billion specifically to pay for principal reductions and other relief for up to one million borrowers who are behind on their payments but owe more than their houses are currently worth. The deal would also provide checks for about $2,000 to roughly 750,000 who lost homes to foreclosure.

The banks — led by the five biggest mortgage servicers, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — want to settle an investigation into abuses set off in 2010 by evidence that they foreclosed on borrowers with only a cursory examination of the relevant documents, a practice known as robo-signing. Four million families have lost their homes to foreclosure since the beginning of 2007.

The deal with Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, andAlly Financial will reportedly total $25 billion. Some $17 billion of that would go toward writing down mortgage principal for an estimated 850,000 troubled borrowers, $3 billion could go toward restitution payments of $1,500-2,000 each to borrowers who lost their homes to foreclosure, and the rest could go to state funds for foreclosure relief

The biggest remaining holdout, California, has returned to the negotiating table after a four-month absence, a change of heart that could increase the pot for mortgage relief nationwide to $25 billion from $19 billion.

If banks fall short of the multibillion-dollar benchmarks set out for principal reduction and other benefits for homeowners, they will have to pay the difference plus a penalty of up to 40 percent directly to the federal government, according to Mr. Madigan.

The depressed housing market continues to pose a drag on the halting economic recovery.  Some 11 million families owe more on their houses than they are worth.

The settlement, if all states participate, will also include $3 billion to lower the rates of mortgage holders who are current. Banks will get more credit for reducing principal owed and helping families keep their homes, and less for short sales or taking losses on loans that were likely to go bad, like those that were severely delinquent.

Other Links:

This Articile - Real Estate Insider News 

Robo signing Indictment Hits Top Executives

Robo Signing Indictment

Missouri Grand Jury Hands Up Major Indictment 

Three Tips for Emotionally Detaching from Your Home

Making Decision Based on Reason...Not Emotion

Like many people, you probably have a deep emotional connection to your home. Your kids grew up in your house; you can still see the pencil marks you made on the door frame marking their growth. You’ve spent many happy hours on the backyard patio. The dining room has been the setting for many great dinner parties. Maybe you even grew up in the house yourself, and it’s been in your family for over fifty years.

You’re fortunate to have had so many good memories. But beware: When it comes time to sell, a “love affair” with your home can work against you. Too often, people make decisions about selling their home based on emotion instead of reason.

What is the worst housing market for foreclosures in the US?

Florida.

Florida makes up of 25% of ALL foreclosures in the US. It takes on average 806 DAYS to foreclosure on a home in Florida. In Florida homes have depreciated 50% from the boom.