U.S. Foreclosure Activity Drops to 10-year low in 2016

Jan. 12, 2017 – ATTOM Data Solutions' Year-End 2016 U.S. Foreclosure Market Report found that foreclosure filings were reported on 933,045 U.S. properties in 2016, down 14 percent from 2015 to the lowest level since 2006, when there were 717,522 U.S. properties with foreclosure filings. Foreclosure filings include default notices, scheduled auctions and bank repossessions.

The report also shows that 0.70 percent of all U.S. housing units had at least one foreclosure filing in 2016, the lowest annual foreclosure rate nationwide since 2006, when 0.58 percent of housing units had at least one foreclosure filing.

ATTOM's year-end foreclosure report is a count of unique properties with a foreclosure filing during the year based on publicly recorded and published foreclosure filings collected in more than 2,500 counties nationwide, with address-level data on more than 23 million foreclosure filings historically also available for license or customized reporting.

The report also includes new data for December, when there were 85,919 U.S. properties with foreclosure filings, down 1 percent from the previous month and down 17 percent from a year ago – the 15th consecutive month with a year-over-year decrease in foreclosure activity.

"The national foreclosure rate stayed within an historically normal range for the third consecutive year in 2016, even as banks continued to clear out legacy foreclosures from the last housing bubble, particularly in the final quarter of the year," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "Foreclosures completed in the fourth quarter had been in the foreclosure process 803 days on average, a substantial jump from the third quarter and indicating that banks pushed through significant numbers of legacy foreclosures during the quarter.

"Despite that push, we still show that more than half of all active foreclosures nationwide are on loans originated between 2004 and 2008, with a much higher share of legacy foreclosures in some markets."

Biggest backlogs of legacy foreclosures in New Jersey, New York, Florida
Nationwide, 55 percent of all loans actively in foreclosure as of the end of 2016 were originated between 2004 and 2008. The District of Columbia had the highest share of legacy foreclosures with 76 percent, followed by Hawaii (66 percent), New Jersey (64 percent), Nevada (63 percent), Delaware (61 percent), and Massachusetts (61 percent).

In terms of total number of legacy foreclosures, New Jersey led the way with 32,279, followed by New York (31,838), Florida (29,411), California (17,208), and Illinois (12,244).

Among counties, those with the highest total number of legacy foreclosures were Nassau County (Long Island), New York (8,632 representing 74 percent of all loans actively in foreclosure); Cook County (Chicago), Illinois (7,357 representing 53 percent); Kings County (Brooklyn), New York (6,207 representing 68 percent); Miami-Dade County, Florida (5,262 representing 64 percent); and Los Angeles County, California (4,956 representing 64 percent).

Foreclosure starts at new record low nationwide, but increase in 15 states
A total of 478,857 U.S. properties started the foreclosure process in 2016, down 16 percent from 2015 and down 78 percent from the peak of 2,139,005 foreclosure starts in 2009 to the lowest level since ATTOM began tracking foreclosure starts in 2006.

Counter to the national trend, 15 states and the District of Columbia posted a year-over-year increase in foreclosure starts in 2016, including Delaware (up 37 percent); Connecticut (up 35 percent); Maine (up 30 percent); Rhode Island (up 26 percent); Arizona (up 15 percent); and Massachusetts (up 12 percent).

Bank repossessions drop to 10-year low, but increase in 21 states
A total of 379,437 U.S. properties were repossessed by lenders (REO) in 2016, down 16 percent from 2015 and down 64 percent from the peak of 1,050,500 REOs in 2010 to the lowest level since 2006.

Counter to the national trend, 21 states and the District of Columbia posted a year-over-year increase in REOs in 2016, including Massachusetts (up 61 percent); Alabama (up 32 percent); New York (up 21 percent); Virginia (up 9 percent); and New Jersey (up 4 percent).

New Jersey, Delaware, Maryland post top state foreclosure rates in 2016
States with the highest foreclosure rates in 2016 were New Jersey (1.86 percent of housing units with a foreclosure filing); Delaware (1.51 percent); Maryland (1.37 percent); Florida (1.18 percent); and Illinois (1.10 percent).

Other states posting foreclosure rates in the top 10 highest in 2016 were Nevada (1.09 percent); South Carolina (0.92 percent); Connecticut (0.91 percent); Ohio (0.89 percent); and New Mexico (0.78 percent).

Atlantic City, Trenton, Rockford post top metro foreclosure rates in 2016
Among 216 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rate in 2016 were Atlantic City, New Jersey (3.39 percent of housing units with a foreclosure filing); Trenton, New Jersey (2.16 percent); Rockford, Illinois (1.54 percent); Philadelphia (1.53 percent); and Lakeland-Winter Haven, Florida (1.46 percent).

Other metro areas with foreclosure rates ranking among the top 10 highest nationwide in 2016 were Baltimore, Maryland (1.45 percent of housing units with a foreclosure filing); Tampa-St. Petersburg, Florida (1.38 percent); Chicago (1.35 percent); Columbia, South Carolina (1.32 percent); and Miami (1.30 percent).

Average time to foreclose jumps to new record high
U.S. properties foreclosed in the fourth quarter of 2016 had been in the foreclosure process an average of 803 days, a 29 percent jump from the previous quarter and a 27 percent increase from a year ago to the longest since ATTOM began tracking average foreclosure timelines in Q1 2007.

There were eight states where the average time to foreclose in the fourth quarter was more than 1,000 days: Utah (1,403); New Jersey (1,383); New York (1,283); Hawaii (1,220); Florida (1,186); Indiana (1,033); Illinois (1,024); and Pennsylvania (1,010).

States with the shortest average time to foreclose for properties foreclosed in the fourth quarter of 2016 were Virginia (223 days); Michigan (355 days); Oregon (362 days); Alabama (363 days); and Colorado (381 days).

ATTOM's year-end foreclosure report is a count of unique properties with a foreclosure filing during the year based on publicly recorded and published foreclosure filings collected in more than 2,500 counties nationwide, with address-level data on more than 23 million foreclosure filings historically also available for license or customized reporting.

© 2017 Florida Realtors®

Owners may qualify for mortgage principal reduction


MIAMI– The Federal Housing Finance Agency (FHFA) says lenders will be contacting more than 1,400 South Florida homeowners at risk of foreclosure with offers to reduce their unpaid mortgage balances.

The one-time modification would lower their monthly payments in addition to the total amount owed on the mortgages, FHFA said.

To qualify, owners must have a mortgage backed by Fannie Mae or Freddie Mac; live in the home; be 90 days or more delinquent as of March 1; have an outstanding unpaid mortgage balance of $250,000 or less as of March 1; and owe more than 115 percent of what the house is worth.

Statewide, 6,260 homeowners are potentially eligible for the principal reduction program, according to FHFA. Nationwide, 30,761 could qualify, the agency said.

During the worst of the housing crisis, mortgage principal reduction was considered a last resort among lenders because so many people across the country owed more than their homes were worth, said Guy Cecala, publisher of the Inside Mortgage Finance newsletter in Bethesda, Md.

What's more, there was concern that homeowners would intentionally default on mortgages to qualify for a principal reduction, and lenders did not want to reward those people, Cecala said.

Now that the housing crisis is over, reducing mortgage balances for struggling homeowners won't result in big dollar losses for the government, according to Cecala.

"The numbers are quite small," he said. "The inventory of distressed properties has shrunk dramatically. Dealing with it now is much more manageable."

To accept the offer, homeowners have to make three on-time payments and sign an acceptance letter, according to FHFA.

The agency encourages homeowners who think they qualify but have not received an offer in the mail to contact their individual lenders directly.

Even if homeowners aren't eligible for principal reduction, they may qualify for another program, FHFA said.

"The sooner you let them know you're having difficulty, the greater the number of options your servicer will have at their disposal to help," the agency said in a blog post.

FHA Lowers Borrowers’ Mortgage Insurance Premiums

WASHINGTON – Jan. 9, 2017 – Lower costs are coming for homebuyers seeking a Federal Housing Administration-insured (FHA) mortgage.

FHA announced that it's cutting annual premiums for mortgage insurance from 0.85 percent to 0.60 percent, a move the National Association of Realtors® (NAR) says breathes new life into the program. With FHA loans, buyers pay mortgage insurance to protect FHA's funding in exchange for downpayments as low as 3 percent.

"FHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders," says NAR President William E. Brown. "The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time- and lower-income borrowers. Now, we have a real opportunity to get back on track."

Following the Great Recession, FHA increased its monthly mortgage insurance premium from 55 basis points to 90 basis points; then, in April 2013, it increased them again due to post-recession concerns over credit risk and the need to strengthen FHA's Mutual Mortgage Insurance Fund (MMIF). At the time, however, NAR research found that the overall 80 basis point increase nixed 1.45 million to 1.65 million renters out of the market.

Since then, the MMIF has shown continued good health, including achieving a much-watched capital reserve ratio over 2 percent for two years in a row. In light of that strength, NAR applauded FHA's move in January 2015 to reduce premiums to 85 basis points, and since then has advocated for a further reduction.

FHA mortgages are important for low- and moderate-income buyers in particular because a lower downpayment is required than with many conventional mortgage options. Buyers with lower credit scores may find more favorable treatment with an FHA loan than a conventional product as well.

"This is a question of simple math," Brown says. "Every time we cut the cost of mortgage insurance, it means more borrowers meet the debt-to-income ratio required to purchase a home. It follows that dropping mortgage insurance premiums today will mean a whole lot more responsible borrowers are suddenly eligible to purchase a home through FHA. That puts more money in the fund to protect taxpayers – and it puts more families in homes so they can live out the American dream."

While Brown thanked the FHA and Department of Housing and Urban Development (HUD) for the premium cut, he suggested one other change to "better achieve FHA's mission" of serving creditworthy families: Eliminate FHA's "life of loan" mortgage insurance requirement, which forces borrowers to maintain mortgage insurance on an FHA-insured property regardless of their equity position. Borrowers with traditional mortgage insurance can typically extinguish their mortgage insurance once they reach 20 percent equity in the property.

"HUD and FHA leaders are to be commended for recognizing the need we have before us," Brown said. "Our work continues, but we're encouraged by today's announcement."

© 2017 Florida Realtors  

How to Get Your Down Payment and Closing Costs Paid For You

Buyers can finance their Down Payment and Closing Costs with Community Second Mortgages - Community second mortgages allow eligible homebuyers to finance their down payments, closing costs and even home improvements.

This type of assistance may be offered by states, counties, local housing agencies, nonprofit organizations or Employer Assisted Mortgage (EAM) programs.

Subject to qualification, Fannie Mae and Freddie Mac allow buyers to finance over 100 percent of your home's purchase price.  They do this by combining the first mortgages with a second mortgage (this loan arrangement will work with HomeReady and Home Possible programs).

The Fannie Mae program is called Community Seconds, and the Freddie Mac option is called Affordable Seconds.

Down Payment Assistance and Closing Costs

Community second mortgages allow eligible homebuyers to buy houses with no out-of-pocket down payment or closing costs.

Repayment may be structured in several ways:

  • they may make monthly fixed monthly payments until the loan is repaid.
  • they may be allowed to defer (put off) repayment for some period. Then, you make fixed monthly payments until the loan is repaid.
  • they may not have to make payments at all. The loan is only repaid if you sell the property.
  • they may not have to repay the loan if you remain in your home for a specified number of years.

If repayment is deferred for five years or more, the second mortgage payment is not counted when the lender calculates the debt-to-income ratio (DTI).

Who Is Eligible For Community Second Mortgages?

Community second mortgages are offered by many sources.

According to the OCC (United States Office of the Comptroller of the Currency), most EAM programs have some income-eligibility requirements. With regard to income, generally, no more than 120 percent of the Area Median Income (AMI).  As it concerns credit scores, no lower than a 640.  Further, buyers must qualify in the usual manner as it relates to job stability, income sources etc.

The assistance may be limited to first-time buyers, and require some form of homebuyer education or counseling.

Every loan has its own requirements, so once the down payment and closing cost programs have been located in the buyers’ area, attention must be paid to the specific guidelines.

Finding Your Program

These second mortgage programs requirements can vary from county to county of state to state.

An online search for "community second mortgage by city, county or state will bring up programs offered by local housing departments.

HUD’s State pages may also have some resources.  Select State, then "Homeownership Assistance," and a list of links and contact information for many programs will be generated.

Mortgage rates for home loans with Community Seconds or Affordable Seconds are still very low. Combining the two mortgages can get a buyer into a home they can afford with little or nothing out-of-pocket.  These programs take time, so preparation and an early start is the key.  ** Funds are subject to availability.

This year, let’s be creative and continue to help our buyers get the best of what’s available to them.


How to Manage HOA Disputes

Homeowners associations are common in many areas and various types of development. The homeowners association, or “HOA,” is the governing body of the subdivision or complex. However, there are times when individual or multiple homeowners have a legal dispute with the HOA. Several options may be available to help resolve such disputes.

Obligations of the Parties

When a person buys real property in an area governed by the association, he or she automatically becomes a member of the association. He or she is usually responsible for paying dues. These funds typically cover common areas to the community, including swimming pools, golf courses rec centers, sidewalks and walking paths. Each homeowner must abide by the covenants, conditions and restrictions, which may include provisions regarding acceptable exterior paint colors, pet rules, exterior aesthetic rules and other such provisions regarding the homeowner and the property.

Many homeowners associations are comprised of a governing board. Some associations work more like a democracy in which each person has an equal vote when an issue arises. The HOA is responsible for managing the dues that are paid in. It may also help resolve disputes between neighbors so that they do not actually have to interact with each other. Homeowners associations may also make it possible for homeowners to enjoy more luxurious amenities. Another advantage of an HOA is that it can help stabilize property value because one homeowner may not see his or her property decline in value due to the appearance of an unsightly neighboring home.

Types of Disputes

There are a variety of disputes that may arise in this context. An individual homeowner may be given a citation for violating the HOA rules and be fined. He or she may disagree with the imposition of the fine or the interpretation of the rule that he or she is alleged to have broken. This situation can arise if the homeowner paints his or her home a different color than that permitted in the HOA rules if the homeowner is found to have included tasteless yard decorations in his or her yard, if a homeowner is included signs regarding political agendas or for other violations of HOA rules.

Another dispute may arise when the HOA attempts to impose a rule that is not actually included in the HOA covenants. If the homeowner believes that the HOA is overstepping its bounds, such a dispute may arise. Similarly, issues may arise when the HOA rules are only imposed on some residents but not others, giving rise to claims of favoritism.

Since the HOA collects dues, another type of dispute that may arise is if the members of the association believe that the funds are not being properly managed. If a need arises and the members have already paid dues but then are required to pay to fix this new need, the members may collectively have a dispute against the HOA.

Sometimes the dispute is between two neighbors who are both part of the association. The HOA may handle disputes between neighbors and be able to successfully resolve it.

Dispute Resolution

In the covenants, the homeowners association may require that homeowners participate in mediation in good faith in order to resolve any legal disputes that arise. Others may simply encourage arbitration. What is unique about these types of disputes is that they usually involve parties that must continue some sort of relationship after the dispute is resolved.

In some situations, the aggrieved property owner may sue the HOA, which is usually a separate legal entity. The court may order the HOA to specific performance, usually to obey the rules that it already laid out. In other instances, it may impose an injunction in which the HOA is instructed not to participate in certain activities.

Individuals who are involved in HOA disputes may wish to discuss the legal issues with a real estate lawyer in order to determine what their options are.

About Stefan McHardy: Stefan is a Florida licensed attorney, real estate agent and a foreclosure auction investment specialist.  He practices in the areas of real estate, foreclosure, business litigation, and contract law from his Pembroke Pines and Miami Beach offices.  He frequently consults on general real estate and investing matters.  You can find out more about Stefan at DSALegalGroup.com/stefan or by visiting StefanMcHardy.com

10 Things You Need to Have in a Rental Lease Agreement

If you are new to leasing investment property to tenants, you need to be sure that your rental lease agreement covers all the bases so you can protect your investment properly.  Here are 10 terms you will definitely need to include in your rental lease agreement:

1.Names of all adult tenants and parties to the agreement.  If there is more than one adult tenant occupying the property, be sure to include the names of all adult tenants in the agreement. This will ensure that all adults who will be living on your property are responsible for living up to the terms of the agreement, including the payment of rent. It also provides you with the right to terminate the agreement if any of the tenants violates the lease terms.2. Tenancy and termination terms.  Specify the length of the agreement — whether it is month-to-month or for a fixed term. Typically, lease terms are for one year with options to renew. Specify the termination options for all parties as well.

3. Rent amount.  Detail the amount of the rent, when the rent is due and the forms of payment you will accept.

4. Subleasing and occupancy limits.  Make it clear that only those who have signed the lease, along with their minor children, may occupy the property.  Also include whether or not you will allow tenants to sublease — and if you do, be sure to include that subleasing is only allowed with your prior approval.

5. Security deposits.  Probably one of the single largest sources of disagreements between landlords and tenants has to do with security deposits. To protect yourself, be sure you detail exactly how the property must be left at the end of the lease in order for the tenant to receive his or her security deposit back. Florida law on security deposits specifies that these must be returned within 15-60 days after the tenant has left and returned the keys to you. If there are deductions, you must notify your former tenant in advance and provide details on those deductions. Florida has other laws regarding security deposits, so it is wise to check with a Florida real estate attorney for the proper notice in your rental lease agreement.

6. Repairs/maintenance.  The terms of your agreement should specify the maintenance obligations for you and your tenant, and require that your tenant notifies you immediately of any repairs that need to be made to the property.

7. Entry rights.  Your agreement should detail the conditions under which you are permitted to enter the property and what kind of notice is required before you do. Florida law allows landlords to enter a rental lease property in the case of an emergency, to make needed repairs or inspections, to show the property to prospective new tenants or contractors, if there is reasonable cause to believe a tenant has abandoned the property, and pursuant to a court order. Unless it’s an emergency, you must give your tenant 12 hours’ notice of your intent to enter and do so at a reasonable time, which has been defined as between 7:30 a.m. and 8 p.m.

8. Prohibited behavior.  You obviously don’t want someone dealing drugs out of your rental lease property and you probably don’t want noisy tenants either. Whatever your criteria for prohibited behavior, spell it out in your lease agreement.

9. Pets.  You should state whether or not you allow pets and any restrictions as to the size or number of pets allowed or if you charge a pet deposit or fee.

10. Damages/alterations.  Your agreement should specify who is responsible for damages to the property as well as what types of alterations — if any — a tenant may make to the property and whether your permission or approval is necessary to make those alterations.

About Stefan McHardy: Stefan is a Florida licensed attorney, real estate agent and a foreclosure auction investment specialist.  He practices in the areas of real estate, foreclosure, business litigation, and contract law from his Pembroke Pines and Miami Beach offices.  He frequently consults on general real estate and investing matters.  You can find out more about Stefan at DSALegalGroup.com/stefan or by visiting StefanMcHardy.com

Why Not Paying Your Debts May Land You In Jail

Anyone who has ever fallen behind on their bills knows just how troubling that experience can be. Harassing phone calls, letters, and emails are the usual tricks of the trade, or for secured debts, repossession or foreclosure. But, America abolished debtors prisons. So, debt collectors are not supposed to be able to put you in jail because you owe money. However, a few have discovered a way to do just that.

Virtually every jurisdiction allows for “bodily attachment” when one violates a court order. Bodily attachment really just means that you will be arrested for something, and a “writ of bodily attachment” is often issued in contempt proceedings to get one to come into compliance or spend time in jail. These are usually reserved for instances when one misses a court date or starts to simply ignore order after order by the courts.
Enter the new model for underhanded debt collection. Fail to pay your debt, and the creditor goes to court to get a judgment against you. Many debtors fail to attend these proceedings, preferring to just sit back and wait for the inevitable judgment rather than spend the time and money to appear and be humiliated before a judge over a debt they know is owed. Once the creditor receives a judgment against you, it initiates post-judgment proceedings involving discovery and/or court hearings. Start missing those and the creditor can ask for sanctions against you, including – you guessed it – contempt of court and a resulting writ of bodily attachment. Get picked up on a writ of bodily attachment, and the amount you have to pay to get out of jail is often set as the amount of the judgment. To the court it makes sense to kill two birds with one stone, but to you, the debtor, it can mean spending time in jail for doing nothing worse than managing your finances poorly.
Through this method, the creditor is often able to blackmail debtors into payment of not only the original debt, but also attorney fees and costs, interest, late fees, and sometimes other expenses. This can cause a relatively small debt to skyrocket to astronomical amounts. So, for example, a $1,000 debt could easily have $20,000 in attorney fees and costs attached to it, particularly if you make it exceptionally difficult for the debt collector to advance the case through the court or get paid after judgment. And, there is plenty of case law out there saying that it is legal for attorney fees to exceed the amount of the original debt owed, so do not assume that the court will find such a markup unreasonable.
What can you take away from this? Obviously, if you are already in debt and facing collections, there is often little to be done about getting caught up, other than trying to reduce expenses and make what payments you can. If the debt collector takes you to court, pay very close attention to every notice and other paper you receive, and follow your case online by paying attention to the court's electronic docket. You will want to make sure you receive everything that is filed in the case, and attend every hearing (embarrassing and time consuming though they may be). If you are attempting to comply in good faith at every turn, there will be no grounds for contempt and no basis for issuance of any bodily attachment. Moreover, you may wish to speak with an attorney in your area that specializes in violations of debt collection laws. They may be willing to take your case on a contingency fee (meaning you will not have to pay out-of-pocket) and might even be able to turn the table on unscrupulous debt collectors who abuse and violate the law. At the very least, they may be able to negotiate a reduction of the debt you owe and/or obtain a term over which you can pay, making it easier to get caught up and out of debt.

About Stefan McHardy: Stefan is a Florida licensed attorney, real estate agent and a foreclosure auction investment specialist.  He practices in the areas of real estate, foreclosure, business litigation, and contract law from his Pembroke Pines and Miami Beach offices.  He frequently consults on general real estate and investing matters.  You can find out more about Stefan at DSALegalGroup.com/stefan or by visiting StefanMcHardy.com