The Arizona Real Estate Foreclosure market is seeing an increase in foreclosure notices according to Manny Caballero of Encompass Realty ®. Today in single family detached homes that are about 6,710 properties that are REO, or bank owned and about 44,613 single family detached homes on the market making REO representing about 15% of the Arizona real estate resale market and that percentage is growing.

In speaking today with Anthony with AZCO Properties says that a good percentage vacant REO vacant properties are getting broken into and what is getting stolen are taking cooper plumbing, AC units and more.
Manny Caballero of Encompass Realty ® stated he just got off the phone with Ocwen they stated Ocwen is not doing short sales? What is Ocwen Financial Corporation up to? Manny is also stating Indy Mac is charging to process a real estate Short Sale.

take example of a short sale with Encompass Realty ® who is currently negotiating with a bank:
Property Purchased in March 2005 with a $ 143,000 purchase price. The first mortgage is foreclosing with a sale date May 21st, 2008. There was a second mortgage taken out by the owners to remodel their house. The second mortgage is with Washington Mutual, aka WaMu.

In a real estate foreclosure situation when the first mortgage reaches the foreclosure auction date and nobody bids to purchase the property, it goes back to the bank as a REO, which is a good chance in today’s real estate market. What happens to the second mortgage? The second mortgage loses their investment.
So with the foreclosure sale date approaching, Encompass Realty ® has been trying since early April 2008 to obtain a short sale approval on the second. The second mortgage investor would get back 25% of the loan amount which is unheard of in a real estate short sale. Normally a second would only be allowed to bet only $ 1,000 to $3,000. Washington Mutual doesn’t return phone calls. Stay Tuned.
Realtors may want to rethink making offers on real estate short sales. Unless you can wait months, Manny states he rather make offers on REO and real estate resale’s.

Real estate short sales in the Arizona seems to be increasing and through out the nation. Encompass Realty ® in Arizona states that they are processing over 60 real estate short sales at any given month and is rejecting about 75 customers per month.

What is a real estate short sale? A: Simply, the real estate home owner owes more than fair market value.

Why would a bank accept a real estate short sale?
A: Most real estate markets it would cost the bank more money to complete a foreclosure, pay attorney costs, pay to maintain the property for sale, pay to make repairs, pay pay pay. It costs a bank about 20% to 45% of the existing mortgage to sell the property as a REO due to declining.

What makes short sales so hard?

1. A BPO (Broker Property Opinion) agent that wants to remain anonymous, states in order to get many BPOs from Clear Capital (http://www.clearcapital.com/) the real estate agent was told to increase their opinion of value because Clear Capital had to “maintain good relationship with the banks so they can make money” The banks uses a BPO to determine if a offer for a short sale is a good offer, but are they getting incorrect information? According to the anonymous agent, Clear Capital pays these agents about $50.00 to $ 85.00 to do the job a licenced Apprasier or a Real Estate Broker. I wonder what the percentage of real estate property goes back to the bank? In most states, Clear Capital is in violation of Real Estate Law, where most states require its the Real Estate Broker that can pay a real estate agent not Clear Capital.

2. Banks or Servicing agent for the bank are not staff to handle real estate short sales. Encompass Realty ® states in April 2008 some banks are taking up to 4 months to approve a short sale, most real estate buyers can’t wait that long and canel the transaction leaving the real estate company 30 days to find another buyer.

3. Banks or Servicing agents for the banks finally get ready to approve a real estate short sale, like Countrywide, in April 2008, told the listing broker to reduce his and the selling agent commision in order to get an approval. Companies like Countrywide and others are “Interference with an existing contractual relation occurs when an outside party interferes with an existing contractual agreement between two other parties. ” Because Country wide and companies like them are infact open to a lawsuit because they are interferring with a existing contract between the listing brokerage and the seller and the listing brokerage and the selling brokerage. Its a time bomb that could have a class action law suit just waiting to happen.

4. BPO’s, banks not paying for a apprasial from a licenced apprasier, or getting a Broker Property Opinion from a Broker who has many years of experience rather an typical agent with less than 1 year experience is most likely getting the wrong information such as the BPO’s from Clear Capital.

Encompass Realty ® states the #1 reason people are in a real estate foreclosure is ” job loss”.

#2 reason people are losing their homes to foreclosures? Bank are not willing to lower their interest rate or convert the arm mortgage to a fixed rate. Thats right, Federal Goverment has a program call “FHA Secure Program”, Encompass Mortgage LLC reports they had referred 50 people that qualify for the “FHA Secure Program” but the bank with the licence to do FHA insured loans added more conditions outside the lending guidlines of HUD and rejected the 50 people for any refiancing. If we know of 50 people who could not get a loan per the FHA guildines from a Bank that has a FHA licence should the bank have a FHA licence.

#3 reason people are in foreclosures is really they were put in bad loans and they really can’t affored the property or the bad loan. In most cases banks could lower their payment or those qualified for the FHA Secure Program refiance them to a lower payment would reduce the “wave of real estate foreclosures”

Companies like “Walkaway Program LLC” are starting left and right. We recommend Walkaway Program but there is so many companies that don’t help anyone. Buyer Beware..

In California and Arizona people are putting their house keys in the mail, mailing their keys back to the lender, ” Jingle Mail”
People facing foreclosure are feed up waiting for the bank to approve payment arrangements to get out of foreclosures and lack of communication or their property values are declining so bad, that “Jingle Mail” is increasing.

Banks and their servicing agents better pay attendtion, as of today in the Arizona MLS, there are 45,559 residential houses for sale and of that 6,533 for sale are owned by the bank, thats 14% of the homes for sale today are owned by the bank. Encompass Realty ® believes that number is really 30% because the time it takes to get a foreclosed property ready to sale is taking time due to the sheer number of foreclosures.

What is the future for Banks? Class Action Suits from Real Estate Brokerages and sellers? More Foreclosures because banks can handle the sheer number of calls for help on payment and short sales?

Its about April 19th, 2008 we check with Encompass Realty ®, arizona real estate company, Encompass Realty states in the Arizona Multiple Listing Serivce there is about 52,621 residential houses for sale, and out of that 6,421 are Bank Owned property that have been forelcosed on. On this apple for apple results the banks have
12% of the house for sale.
Encompass Realty is reporting the number one reason people are in forclosure, “job loss”. The second reason people are in foreclosure is probably bad loans but more inportant, banks are just not willing to provide foreclosure help.

Workout efforts have been too little and too late to stem the surge of foreclosures that continues to roil housing and financial markets.

The number of homes entering some stage of foreclosure jumped almost 100% in the third quarter from the same time a year ago and 30% from last quarter, according to RealtyTrac, of Irvine, Calif., with a sizable jump in the number of homes completing the foreclosure process and being taken back by the bank (referred to as real-estate owned, or REO).

“We saw a fairly big spike in REO activity” in September, says Rick Sharga, vice president of marketing for RealtyTrac. “We’re not done with this mess yet.”
Indeed, despite all the hype about hot lines and special loan-modification programs, analysts say little has been done to help a significant number of borrowers stave off foreclosure.

“There’s a lot of movement in the right direction,” says Amy Schur, national campaign director for the Association of Community Organizations for Reform Now (ACORN), which has campaigned against predatory lending. “But that doesn’t mean we’re seeing it yet on the front lines with borrowers.”

Significant risk to economy

A recent survey from Moody’s Investors Service of the top 16 subprime loan servicers – which handle $950 billion in loans, or 80% of the market – found that they had modified only 1% of their loans that had reset to higher interest rates during January, April and July 2007.

Getting some traction on these troubled loans will be critical, analysts say, because the foreclosure crisis is likely to get a lot messier. A huge wave of subprime loans made in 2005 and 2006 – many under looser lending criteria with a greater risk of default – will reset between now and next summer. Rates on 2 million mortgages will rise by the end of 2008, and one-fourth of those affected homes will face foreclosure, estimates the U.S. Department of Housing and Urban Development.

This surge in foreclosures and the resulting drain on the economy is “the most significant current risk” to the economy, according to Treasury Secretary Henry Paulson, who in a recent speech warned of the “immediate need” for lenders to modify and refinance more loans.

Lenders changing their tune

Until recently, however, some investment groups and lenders had refused to do any loan modifications, Schur says. But, with such a large number of loans going into default, many are now changing their tune.

Countrywide Financial, one of the nation’s largest lenders, recently announced that it will refinance or modify up to $16 billion of adjustable-rate mortgages through the end of 2008, to help as many as 82,000 borrowers stay in their homes. Countrywide also says the same loan-modification approvals and paperwork that used to take more than a month can now be accomplished for delinquent borrowers in five to 10 days. “Any kind of foreclosure action will get delayed or stopped while we are working on the paperwork,” says Countrywide Senior Managing Director Steve Bailey.

Why more lenders weren’t willing to offer these fast-track solutions earlier is puzzling to many, even those inside the industry.

Lenders and investors have real incentive to work with borrowers, because the foreclosure process causes them to lose an average of 50% of their investment, says Ron Morgan, a managing director at ISGN Technology’s third-party servicing company, MortgageHub. “The best thing investors can do is to try and keep them in their homes until the housing turnaround.”

Quick action is critical

Countrywide and other lenders have come under fire for making loans that borrowers could not afford and, in today’s market, cannot refinance. Of the $468.2 billion in loans that Countrywide made in 2006, $40.6 billion were nonprime.

Lenders say they are taking steps to contact troubled borrowers and work with them. But often, by the time they get approval for a loan modification, it’s too late and borrowers have already lost their home.

At least two of the top five loan servicers have been telling borrowers that it will take two to three months to find out if their loan even qualifies for a workout, says Morgan.

Quantum Servicing, Countrywide and others say they are starting to call borrowers months in advance of loan resets, warning them that their payments will go up and advising them of their options. At that point, the borrowers are in good standing and their loans are easier to refinance.

“We are trying to coach homeowners,” says Countrywide’s Bailey, “so they can get quicker answers and solutions.”

But some of the top U.S. loan servicers “do not have the staff or the technology to meet the demands of borrowers meeting resets on adjustable-rate mortgages,” Morgan says.

Thousands of new jobs have opened up at financial companies to deal with this influx of delinquent borrowers, but with so many positions open, Morgan says, employers have struggled with a revolving door.

Some borrowers avoid lenders’ calls

Lenders also complain about the trouble they have had getting borrowers on the phone.

Sue Byrd, loss-mitigation team leader at Quantum Servicing, says they put out about eight to 10 calls on average to each delinquent borrower, and as many as 50 calls if they are having trouble reaching a borrower.

To get more of their calls returned, the company recently began offering Starbucks Coffee gift cards and prepaid cell phones with 30 days of service, as lures to speak with one of its representatives.

Many of those who answer the phone will hang up, or say the borrower is busy or not at home, Byrd says. Borrowers, she says, are afraid of speaking to debt collectors for fear they will lose their home. “A lot of times, they are substantially behind and they think they have to come up with all of it to rectify the situation,” she says. “They hear the word foreclosure and they just shut the door.”

But, in most cases, she says, borrowers can work out something to prevent foreclosure. Most who show that they can make at least three months of payments at the lower tier (before rates bumped up) can qualify for a modification or refinance. That excludes the unemployed, however, such as the large number of autoworkers who have lost their jobs in Michigan, Ohio and Indiana. Many of these borrowers aren’t eligible for refinancing or other modifications.

States step in to help

But to date, analysts say, even the lenders who have gotten borrowers on the line haven’t offered much relief, despite all the hot lines and hype. Indeed, some are just pushing back the reset on loans or forgiving one or two payments, says Brian Hudson, executive director of the Pennsylvania Housing Finance Agency. “I don’t think that’s sufficient,” he says. “For us, (a loan modification) means truly restructuring the loan so (borrowers) are in the best place for the long term, rather than the short term.”

Many state housing groups have stepped in to bail out troubled homeowners, before the problem does significant damage to their communities.

Hudson’s agency, which launched its program last week, is negotiating with lenders to reduce the payoff on some loans that are over market value. It also plans to sell state bonds to help underwrite the cost of making new 30-year fixed-rate loans to 500 to 1,000 distressed homeowners in the next 18 months.

At least a dozen other states have launched assistance programs. Some simply offer counseling hot lines, but a handful in Ohio, Delaware, Maryland, New York and Massachusetts help borrowers to refinance, and one in Michigan helps borrowers with mortgage payments when they become involuntarily unemployed. However, many of these programs – including Pennsylvania’s – are only just now taking applications or refinancing their first loans.

Meanwhile, lenders are forming partnerships with third-party debt counselors and other groups to try to get distressed homeowners talking about their options. “Many times a borrower would rather talk to a counselor first than go directly to their lender,” says John Mechem, a spokesman for the Mortgage Bankers Association.

That’s understandable, Schur says, given the horrible predicament many borrowers have been put in by these financial institutions. “Many were ripped off from the get-go by brokers and lenders who got them into a really bad loan. It’s hard for them to know who to trust.Melinda Fulmer

Encompass Realty®, www.encompassrealty.com, arizona real estate

Real estate buyers that have solid credit and some money for a down payment are in a better position than a couple of months ago. According to MyConsultant.com loan officers the 30 year fixed rate has dropped again to a three-month low. The real estate home prices in may areas of Arizona have dropped also.

In the non-conforming loans such as Jumbo Loans (loans $ 417 k and up) the rates have risen. So if you want to move up or by a bigger house, and you have the credit with the qualifications to do it, Manny Caballero of Encompass Realty® states this is the time to buy.

The falling home prices Nationwide has the median home prices fell 1.5% in the second quarter according to the National Association of REALTORS.
Given the real state buyers with the good credit that is a lot of bargaining power with new home building and sellers. For example a house in Phoenix listed for $ 350,000 actually sold for $ 288,000 but on the other hand real estate in Tempe, which is land lock, are getting pretty much full price and in some cases, multiple offers.

So if you are in the market and don’t know a good loan officer, you could try MyConsultant.com where the minimum experience for each real estate loan officer is at least 3 years and verified they are licensed in the states they offer real estate mortgages.

Encompass Realty®, registered mark, www.encompassrealty.com

he outlook for homeowners who are having trouble keeping up with their mortgage payments took a turn for the worse last month.

U.S. home foreclosures continued to rise in July — up 9 percent from June and up 93 percent from a year ago, according to the latest monthly numbers released Tuesday by RealtyTrac, an a Web site that tracks foreclosed properties.

Nearly 180,000 fillings — including default notices, auction sale notices and bank repossessions — were reported during the month. That means that one in every 693 U.S. households was hit with foreclosure in July.

The new foreclosure data, along with ongoing turmoil in the financial markets, renewed debate in Washington Tuesday over whether the government has responded adequately to the meltdown of the mortgage market. Caught in the middle are borrowers who may qualify for better terms, but remain at risk of losing their homes because they can’t refinance their existing mortgages.

Lawmakers on Capitol Hill are considering various measures to restore a mortgage market now in disarray. Some are suggesting that lenders and borrowers involved in the risky loans that are now going bad should simply suffer the consequences. But supporters of more aggressive measures argue that the government may need to step in before the current mortgage mayhem threatens the wider economy.

Sen Banking Committee chairman Chris Dodd (D-Conn.) urged the administration Tuesday to raise limits on the portfolios of mortgages held by federally-backed agencies, Freddie Mac and Fannie Mae.

“The power exists today with regulators to lift those caps,” Dodd told a press conference following the meeting following a meeting with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Brenanke. “That does not require statutory language or new laws.”

But Dodd, a Democratic presidential candidate, said Paulson indicated the Treasury was “not likely to move in that direction.”

“I’m still concerned Treasury does not appreciate the importance of this issue,” said Dodd.

Earlier, Paulson told CNBC that the Treasury is “talking to a wide variety of participants in that market, including Fannie Mae and Freddie Mac, and we’re thinking through options to reduce the strain in the mortgage market.”

Paulson said that the turmoil in the credit markets would take time to unravel, but stressed that the underlying U.S. economy remains in good shape.

“This will play out over time and liquidity will return to normal when the market has a better understanding, when investors have a better understanding, of the risk return trade-off,” Paulson said.

But while investors cope with the turmoil in the finanical markets, millions of homeowners remain a risk of losing their homes. Like everything else involving real estate, the impact of the mortgage mess and the ongoing wave of foreclosures has been felt unevenly across the country. Much of the damage has occurred in the states like California and Florida where the housing boom — combined with rampant speculation and easy-money lending — grew the fastest.

Other hard hit states such as Michigan were already battered by weak economic conditions before the recent credit storm hit. Detroit posted a 70 percent month-over-month increase in foreclosures in July, pushing the city’s foreclosure rate to one filing for every 97 households — more than seven times the national average.

Though 43 states have seen higher year-over-year foreclosure rates, more than half of the total has been concentrated in just five states — California, Florida, Michigan, Ohio and Georgia.

Nevada topped the list with highest state foreclosure rate with one filing for every 199 households — more than three times the national average. Georgia, with one foreclosure for every 299 households, ranked second. Michigan’s foreclosure rate of one filing for every 320 households ranked third. Other states with foreclosure rates in the top 10 included Colorado, Ohio, Arizona, Massachusetts and Indiana.

As foreclosures were rising, the flow of new money into the mortgage market has slowed sharply. Hardest hit were buyers applying for so-called “jumbo” loans (more than $ $417,000 for a single-family home) which have become much harder to come by — and more expensive when available — in just the past few weeks. Some borrowers with good credit looking for so-called “conforming” loans below that limit are also having a hard time getting mortgages approved.

The worry is that a slowdown in the availability of new mortgages could deal yet another blow to a housing industry already suffering its worst downturn in more than a decade.

“The reduction in credit availability to the broader mortgage market in recent days represents a new and potentially more damaging phase to the housing correction,” Credit Suisse’s chief economist Neal Soss wrote in a research note Friday. “We have sharply lowered our residential investment forecast accordingly.”

oss figures that home sales “could register huge declines over the next several months” which could, in turn, set off a new round of construction cutbacks. Credit Suisse now forecasts a 33 percent drop in residential real estate investment from the last year’s peak. That would be bigger than the 24 percent decline in the late ’80s and early ’90s, but not as big as the 45 percent drop in the early ’80s, according to Soss.

Both of those housing pullbacks sent the U.S. economy into recession. But Soss, among others, believe that the current strength in the U.S. job market, strong consumer spending, and a rapidly expanding global economy could limit the impact of the current mortgage mayhem on the broader economy.

“Whether or not the current financial episode devolves into a more significant storm for the business expansion remains to be seen, but history suggests that financial crises on Wall Street are often treated as a spectator sport by Main Street, with little impact on the real economy,” he wrote.

Despite last week’s efforts by the Federal Reserve to put out the fire, some lawmakers on Capitol Hill are working on broader measures to try to stem the ongoing wave of foreclosures and calm the mortgage markets.

“We’ve got a serious problem, with a lot of potential foreclosures out there. How can we keep people in their homes?” Sen. Dodd told CNBC Monday. “That’s an ongoing problem here in addition to trying to change the regulatory environment that allowed this to happen in the first place.”

A key issue under discussion in Congress is whether government-backed mortgage finance companies, like Fannie Mae and Freddie Mac, should be given more leeway to expand their reach in the mortgage market.

As the housing market boomed earlier in the decade and subprime lending took off, these federally-backed mortgage agencies lost market share to more lenient lenders with easier terms like no-money down or little or no documentation. (Along the way, they also lost friends in Congress following disclosure of a series of accounting problems.)

Now, backers of these government-backed mortgage agencies are pushing a series of reforms to help them gain back mortgage market share. Because they are federally insured, these loans typically charge lower interest rates because the risk to investors who buy them is lower. The hope is that homeowners now at risk of foreclosure — because of pricier terms offered by subprime lenders — could avoid default by converting to cheaper, government-backed loans.

“(Fannie Mae) checked on subprime mortgage issuance out there, and they say roughly up to half of the holders of subprime mortgages would qualify on a credit basis for a Fannie Mae conventional conforming loan,” said Sam Lieber, president of the Alpine Mutual Fund Group.

In April, Sen. Charles Schumer, D-N.Y., proposed spending hundreds of millions of dollars of government funds to help troubled borrowers avoid losing their homes. In May, the House passed a bill that would raise current limits on the size of mortgages that can be insured by the Federal Housing Administration.

But the bill would also allow FHA to insure loans with no money down and charge higher premiums to riskier borrowers. Critics of those moves, including Sen. Richard Shelby, R-Ala., and other Senate Republicans, say the changes that eased lending standards could expose the FHA — and taxpayers — to the kinds of risks that got subprime borrowers and lenders into trouble to begin with.

“We have to be very careful going down this road,” said Michael Darda, chief economist at MKM Partners. “Longer term, we’re going to have a problem with risks being mis-priced. That is how we got into this situation in the first place. So I think we need to be very wary about federal government actions.”

Though the details of any reform package have yet to be worked out, the recent turmoil in the mortgage markets has provided momentum to legislation that has been stalled for months. Last week, President Bush indicated general support for giving federal housing agencies enough “flexibility” to help try to avert more foreclosures.

It remains to be seen how far Congress and the White House will go to use taxpayer dollars to help bail out homeowners facing foreclosure. But some see a significant shift in the political wind in the past few weeks.

“I do smell a federal bailout,” said Darda. “We have a Democratically controlled Congress and a Republican president with a disastrous international situation and a plummeting approval rating. So this could be irresistible.” John W. Schoen

Encompass Realty®, ‘Registered Mark‘, Encompass Realty REO Department increases its staff to handle the needs of National and Local Lenders.