March foreclosure stats are out, and with the moratoriums all lifted, foreclosures are up. Catch me on CBS Nightly News with Katie Couric tonight as I discuss my housing and foreclosure outlook for 2009. If you miss the interview, we will have the video clip up on our site tomorrow here.
Lenders End Moratoria, Opening Flood of Foreclosures; Re-defaults and Job Losses Also Take Their Toll
Completed foreclosures hit another monthly record in March as 175,199 homes were lost to foreclosure, up 44 percent from February’s record high, according to the latest U.S. Foreclosure Index released today by ForeclosureS.com, a leading real estate information provider.
The number of foreclosed properties was up dramatically from 121,756 in February. Nearly 370,000 properties have been repossessed by lenders so far this year – 18.3 of every 1,000 households – up more than 38 percent from 266,986 in the fourth quarter of 2008, the U.S. Foreclosure Index shows, and up 76 percent from 210,280 in the first quarter of 2008.
The first-quarter 2009 total is the highest quarterly total of completed foreclosures since the foreclosure crisis began. Pre-foreclosure filings – filings that could lead up to a completed foreclosure – also reached their highest quarterly level, topping 600,000 for the first time since the foreclosure crisis began.
While February and March headlines boasted of government efforts to stop foreclosures, in fact March was the first month when major government-backed lenders – including Fannie Mae and Freddie Mac – lifted moratoria on many properties in the first week of March. Only properties eligible for modification under the Obama administration’s plan were covered by continuing foreclosure moratoria, according to statements by the two agencies.
“The floodgates of foreclosure opened with the expiration of these foreclosure freezes,” says Alexis McGee, foreclosure expert, educator, and author. “With rising unemployment, a backlog of delayed foreclosures and increasing abandonment of properties, foreclosures soared in March to levels we have not seen in this crisis.”
“Hopefully, this is a short-term surge caused by months of delayed foreclosures. This is a very troubling turn after seeing some bright spots earlier this year. However, with Obama’s new Making Homes Affordable Plan now in effect we are hoping that in the near future we will see a reduction in new pre-foreclosure filings, which will help stabilize the housing markets” McGee said.
“March’s high numbers may also be caused by defaults on previously modified loans. Earlier this month the Office of the Comptroller of the Currency and the Office of Thrift Supervision reported higher and rising re-default rates on modified mortgages as part of their fourth-quarter 2008 report,” McGee added. “The report points to the fact that not all previously modified loans result in lower monthly payments, and when combined with today’s economics, the result can be catastrophic for already strapped homeowners.”
The Obama administration’s Making Home Affordable Plan is intended to help promote loan modifications by bringing debt-to-gross income ratios down to 31 percent. In short, that would allow homeowners to only spend 31 percent of their income on the mortgage, including taxes. With such low payment levels – compared to 50 percent payments as the recent norm of banks – people who get their loans modified under the new plan will be far more likely to remain in their home.
Regionally, the U.S. Foreclosure Index of Completed Foreclosures (Real Estate Owned) shows double-digit increases in March over February’s already record high monthly numbers: Full Report Here.
What you will hear in my CBS interview tonight is the Fed is continuing to work on restoring growth and each day will continue to get brighter. Housing is already recovering in the hardest hit areas of California, Nevada, Florida and Arizona. (Read more here: Existing Home Sales Up BIG: Housing Turnaround Underway :Housing Bidding Wars in California?; Reno/Sparks Investors: Housing Turnaround Underway; Housing Bidding Wars Hit Arizona)
Yes, the foreclosure moratoriums are up and so will be the number of foreclosures for the first half of this year. Do a search here to see what's available in your area. You'll be surprised at all the great deals right around your corner. But I expect the foreclosure numbers will slow down in the second half of the year as new loan modifications and refinancing affects take hold.
Remember, just because it's a foreclosure, does not make it a good deal. You must "Do the Math Right" before you write your offers and lock in your 15% minimum profit when you buy. I will show you how next Tuesday in my Mastering Mini-Lab Live Webinar and Conference Call. You must register in advance. More here.
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