ELYAC Realty- Filings Increased a Record 81 Percent in 2008

Filings Increased a Record 81 Percent in 2008

Foreclosure filings continued to soar through the end of the year – and there’s no relief in sight for 2009.

NEW YORK (CNNMoney.com) — U.S. foreclosure filings spiked by more than 81% in 2008, a record, according to a report released Thursday, and they’re up 225% compared with 2006.

A total of 861,664 families lost their homes to last year, according to RealtyTrac, which released its year-end report Thursday. There were more than 3.1 million foreclosure filings issued during 2008, which means that one of every 54 households received a notice last year.

“Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami,” said James Saccacio, CEO of RealtyTrac in a statement.

And despite those efforts on the part of both the government and the banking industry to quell the housing crisis, defaults continued to climb as 2008 came to an end. Foreclosure filings were up 17% in December over November, and rose 41% compared with December of 2007.

“The big jump in December foreclosure activity was somewhat surprising given the moratoria enacted by both Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500), along with programs from some of the major lenders and loan servicers aimed at delaying foreclosure actions against distressed homeowners,” said Saccacio.

Both of the government-sponsored mortgage giants suspended foreclosures starting November 26, 2008 through January 31, 2009.

The devastating numbers are unlikely to improve soon.

“I don’t see how we can avoid three million foreclosures again in 2009,” said Rick Sharga, a RealtyTrac spokesman. His company now has nearly a million sales listings for bank-owned homes.

Huge foreclosure inventory

And what’s worse, Sharga thinks that as many as 70% of the bank-owned homes listed on RealtyTrac’s site have not yet been posted on multiple listings services (MLS), the industry databases of homes for sale. Those homes are less likely to be sold because most real estate agents won’t know they’re available.

“Either banks are overwhelmed and can’t get the houses on the MLS quickly, or they’re deliberately slowing down so they don’t have to take markdowns to actual home values on their books,” Sharga said. Either way, it has the effect of underestimating the foreclosure inventory problem.

Banks also seem to be slowing the foreclosure process, according to Sharga. They are not sending out foreclosure filings as quickly when homeowners fall behind on payments.

Part of that is because some new state regulations require banks to notify delinquent borrowers of their intent to file notices of default, and to offer help to borrowers who want to get their finances back on track. Banks simply lack the manpower to track down so many delinquent homeowners with the required notifications. This creates a delay between the time that borrowers first miss payments and when they go into foreclosure.

After one such rule took effect in California this past summer, notices of default fell by half, to 21,665 from 44,278. But they jumped back to more than 44,000 again in December, probably because banks caught up on many of the postponed notices.

“The recent California law, much like its predecessors in Massachusetts and Maryland, appears to have done little more than delay the inevitable foreclosure proceedings for thousands of homeowners,” said Saccacio.

Falling home prices

Foreclosures are closely tied to home prices – they tend to rise as prices fall. And nationally, home prices have fallen more than 21% from their peak, according to the S&P/Case-Shiller Home Price index. In many areas, the decline has been much worse.

In Los Angeles, San Francisco and Miami prices are down 30% or more. They’ve fallen more than 40% in Phoenix and nearly that much in Las Vegas.

Declining prices put many homeowners “underwater” on their mortgages, owing more than their homes are worth, which makes them more likely to default.

And adding a flood of bank-owned homes to already slow markets further outstrips demand and dampens prices, creating a spiral of lower prices and higher foreclosures.

As a result, more homeowners who fall behind on their mortgage payments end up losing their homes, according to Jay Brinkman, the chief economist for the Mortgage Bankers Association.

In California and Florida 80% of the homeowners who miss a payment end up in foreclosure, according to the MBA. That’s a much, higher percentage than in the past.

“The number of mortgages 30 days past due are still below what they were during the 2001 recession,” said Brinkman. But the proportion of those loans that went into foreclosure was much lower, he added – about 10%.

“Delinquency itself has become a much clearer predictor of foreclosure,” said Sharga.

If home prices keep plunging, the foreclosure scourge will likely continue.

And S&P’s chief economist, David Wyss, expects home prices to continue to decline, bottoming in early 2010 roughly 33% below their 2006 peak.

Worst hit areas

The three states hit hardest by foreclosure in 2008 were Nevada, Florida and Arizona. In Nevada, 7% of homes received a foreclosure filing – such as a notice of default, auction sale notice or foreclosure sale – during the year, up 126% from 2007.

Florida filings soared 133%, hitting more than 4.5% of all households, while Arizona filings jumped 203%, also to about 4.5%. California had the highest total number of filings for any state, 523,624, more than double 2007 levels.

Stockton, Calif. had the highest rate of foreclosures of any metropolitan area, at 9.5%. Las Vegas was second with 8.9% and Riverside/San Bernardino Calif. was third with 8%.

Of the top 20 cities for foreclosures, most are in the Sun Belt, with the exception of Detroit at number 10, Memphis, which ranked 18th and Denver which was 19th.

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Brought to you by:

ELYAC Realty Los Angeles Realtors Specializing in Foreclosure Homes for Sale, Home Loans, and Mortgage Brokers

310.562.0572

www.elyacrealty.com

Job losses hit 2.6 million as layoff pain deepens

Job losses hit 2.6 million; unemployment surges to 7.2 percent, heads for 10 percent or higher

• Jeannine Aversa, AP Economics Writer
• Friday January 9, 2009, 6:43 pm EST

WASHINGTON (AP) — A staggering 2.6 million jobs disappeared in 2008, the most since World War II, and the pain is only getting worse with 11 million Americans out of work and searching. Unemployment hit a 16-year high of 7.2 percent in December and could be headed for 10 percent or even higher by year’s end.

Friday’s government figures were “a stark reminder,” said President-elect Barack Obama, that bold and immediate government action is needed to revive a national economy that’s deep in recession and still sinking.

More than a half million jobs melted away as winter took hold in December — 524,000 in all, the government estimated — and the true carnage will almost certainly turn out to be even worse when the figures are nailed down more clearly a month from now.

“Behind the statistics that we see flashing on the screens are real lives, real suffering, real fears,” said Obama, already moving full-speed with Congress to put together an emergency revival plan a week and a half before taking office.

It’s real, indeed, for 38-year-old Rachel Davis of St. Louis.

“If you get laid off right now, God help your soul,” she said. “You better hope you’ve got savings or someone backing you.” In fact, she was laid off three months ago after working as a dental technician for 20 years. While Congress and the new president struggle to find answers, she says, “I have no faith in this system” and plans to move out of the country in hopes of finding better luck.

The severe recession, which just entered its second year, is already the longest in a quarter-century and is likely to stretch well into this year. The fact that the country is battling a housing collapse, a lockup in lending and the worst financial crisis since the 1930s makes the downturn especially dangerous.

All the problems have forced consumers and companies alike to retrench, feeding into a vicious cycle that Washington policymakers are finding difficult to break.

Investors, too. The Dow Jones industrial average fell 143 points Friday to end the week down nearly 5 percent, the worst week since November.

The Labor Department’s unemployment report showed widespread damage across U.S. industries and workers — hitting blue-collar and white-collar workers, people without high school diplomas and those with college degrees.

“One word comes to mind — dreadful,” said Stuart Hoffman, chief economist at PNC Financial Services Group.

And, there’s no relief in sight. The new year got off to a rough start with a flurry of big corporate layoffs, and there were more on Friday. Airplane maker Boeing Co. said it plans to cut about 4,500 jobs this year, and uniform maker G&K Services Inc. is eliminating 460 jobs.

Employers also are cutting workers’ hours and forcing some to go part-time. The average work week in December fell to 33.3 hours, the lowest in records dating to 1964 — and a sign of more job reductions in the months ahead since businesses tend to cut hours before eliminating positions entirely.

“There is no indication that the job situation would stabilize anytime soon,” said Sung Won Sohn, economist at the Martin Smith School of Business at California State University. “This could turn out to be one of the worst economic setbacks since the Great Depression.”

Economists predict a net total of 1.5 million to 2 million or more jobs will vanish in 2009, and the unemployment rate could hit 9 or 10 percent, underscoring the challenges Obama will face and the tough road ahead for job seekers.

All told, 11.1 million people were unemployed in December. An additional 8 million people were working part time — a category that includes those who would like to work full time but whose hours were cut back or those who were unable to find full-time work. That was up sharply from 7.3 million in November.

If those part-time employees, discouraged workers and others are factored in, the unemployment rate would have been much higher — 13.5 percent in December. That was the highest for that broader category in records going back to 1994.

Worried about the sinking economy and their own financial fortunes, companies are trimming payrolls as a way to cut costs. Government revisions showed losses in both October and November to be much deeper than previously reported.

“Clearly, the situation is dire, it is deteriorating, and it demands urgent action,” Obama said Friday. “For the sake of our economy and our people, this is the moment to act, and to act without delay.”

Obama, who takes over Jan. 20, is promoting a huge package of tax cuts and government spending that could total nearly $800 trillion over two years. With add-ons by lawmakers, the package could swell to $850 billion or higher.

The unemployment rate zoomed from 6.8 percent in November, to 7.2 percent last month, the highest since January 1993.

The rate for blacks climbed to 11.9 percent, the highest since the spring of 1994. The rate for Hispanics rose to 9.2 percent, the highest since May 1996. The rate for teenagers rose to 20.8 percent, the highest since September 1992.

Last year was the first that payrolls had fallen for a full year since 2002, and the loss was the most since 1945, when nearly 2.8 million jobs disappeared. Though the number of payroll jobs in the U.S. has more than tripled since then, losses of this magnitude are still brutal.

The nation’s jobless rate averaged 5.8 percent for the year — up sharply from 4.6 percent in 2007 and the highest since 2003.

During President George W. Bush’s nearly eight years in office, a net total of 3 million jobs were created. In President Clinton’s two terms, roughly 21 million jobs were generated.

Employment last month shrank in virtually every part of the economy — construction companies, factories, mortgage brokers, banks, real-estate firms, accountants and bookkeepers, computer designers, architects and engineers, retailers, food services, temporary help firms, transportation, publishing and waste management. The few fields spared included education, health care and government.

The lost-job total for December probably understated the reality since some companies probably held off on layoffs around the holidays, economists said. Moreover, the government collects the payroll information around mid-month. So the full extent of the layoffs probably wasn’t captured, making it even more likely there will be big reductions in January and that December’s cuts will be revised upward.

Workers with jobs saw modest wage gains. Average hourly earnings rose to $18.36 in December, a 3.7 percent increase over the year. But high prices for energy and food through much of 2008 made people feel that their paychecks weren’t stretching that far.

Corporate layoffs continue to pile up. Earlier this week, drugstore operator Walgreen Co., managed care provider Cigna Corp., aluminum producer Alcoa Inc., data-storage company EMC Corp., Intermec Inc., which makes electronic devices for tracking inventory, and computer products maker Logitech International announced major layoffs to cope with the recession.

AP Business Writer Christopher Leonard in St. Louis contributed to this report.

Copyright © 2008 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.

ELYAC Realty- Mortgage rates tumble to record low

Mortgage rates tumble to record low

Average rates on 30-year fixed mortgages drops to 5.1 percent

The Associated Press

updated 10:10 a.m. PT, Wed., Dec. 31, 2008

Rates on 30-year mortgages fell to a record low for the third straight week and borrowers took advantage of the drop, sending new applications soaring.

With the Federal Reserve on the verge of pouring hundreds of billions of dollars into the devastated U.S. housing market, mortgage rates have plunged to the lowest level since Freddie Mac started tracking the data in April 1971.

Low rates are a great opportunity for borrowers with solid credit and plenty of equity in their homes. But those in danger of foreclosure are still sidelined, and defaults are expected to keep rising in the coming months.

Freddie Mac reported Wednesday that average rates on 30-year fixed mortgages dropped to 5.1 percent this week, down from the previous record of 5.14 percent set last week. It was the ninth straight weekly drop. The survey was released a day early due to the New Year’s holiday.

Mortgage rates have plunged by about 1.3 percentage points since late October, Freddie Mac said. For a borrower taking out a $200,000 loan, that means a savings of more than $170 in monthly payments, according to Frank Nothaft, the mortgage finance company’s chief economist.

Meanwhile, mortgage applications last week remained at the highest level in more than five years, the Mortgage Bankers Association said.

The trade group’s weekly application index was essentially unchanged for the week ending Dec. 26. Applications surged earlier this month to the highest level since July 2003, when refinancing activity boomed at the peak of the housing market.

More than 80 percent of applications came from borrowers looking to refinance at more affordable rates, the trade group said.

Interest rates have plunged since the Federal Reserve pledged last month to buy up mortgage-backed securities in an effort to bolster the long-suffering housing market. The Fed, starting early next month, will buy up to $500 billion in securities guaranteed by the government-controlled home loan giants Fannie Mae, Freddie Mac and Ginnie Mae, a federal agency.

“It’s a huge number,” said Derek Chen, an analyst at Barclays Capital, who noted that mortgage rates are still high when compared with yields on long-term Treasury debt.

With the Fed and Treasury Department buying up a significant portion of the new mortgage securities issued by Fannie and Freddie next year, that gap, or spread, could narrow.

If that happens, mortgage rates could fall further, possibly as low as 4.5 percent, Chen said.

The average rate on a 15-year fixed-rate mortgage dropped to 4.83 percent, the lowest point since March 2004. That rate was 4.91 percent last week, Freddie Mac said.

Rates on five-year, adjustable-rate mortgages rose to 5.57 percent, compared with 5.49 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.85 percent, from 4.95 percent last week.

The rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year mortgages and five-year adjustable rate mortgages averaged 0.7 point last week, compared with 0.5 point for one-year adjustable-rate mortgages.

Meanwhile, home prices dropped by the sharpest annual rate on record in October and there are no signs the housing pain is over.

The Standard & Poor’s/Case-Shiller 20-city housing index, released Tuesday, fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history. Prices are at levels not seen since March 2004.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/7148582/

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Brought to you by:

ELYAC Realty Los Angeles Realtors Specializing in Foreclosure Homes for Sale, Home Loans, and Mortgage Brokers

310.562.0572

www.elyacrealty.com

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