Judicial Foreclosure Auctions Up 31% from Year Ago

Judicial Foreclosure Auctions Up 31% from Year AgoTotal foreclosure activity in April was at the lowest level since February 2007, a 74-month low, but bank auctions in states where courts oversee the process increased 22 percent from the previous month and is up 31 percent from a year ago, reports RealtyTrac.
Foreclosure auctions authorized by a judge are now at the highest level since October 2010 — a 30-month high.
Scheduled foreclosure auctions increased from a year ago in 15 of the 26 judicial or quasi-judicial foreclosure states, including Maryland (199 percent increase), New Jersey (91 percent increase), Ohio (73 percent increase), Oklahoma (57 percent increase), and Florida (55 percent).
Scheduled foreclosure auctions reached a 68-month high in Ohio, a 31-month high in Maryland, a 27-month high in New Jersey, and an 18-month high in Oklahoma.
A judicial foreclosure is a court proceeding that begins when the lender files a complaint and records a notice announcing a claim on the property to potential buyers, creditors and other interested parties.
Subsequently, the court will authorize a sheriff’s sale. The sale is an auction of the property open to anyone, and must be held in a public place.
“Foreclosure starts have been increasing for several months in many of the judicial states, and now that increased volume is showing up in the second stage of the process: the public foreclosure auction,” said Daren Blomquist, vice president at RealtyTrac.
The jump in scheduled foreclosure auctions in judicial states is an indication that lenders are serious about moving forward with completing the foreclosure process — “either through repossession or sale to a third party investor at public auction,” Blomquist said.
Despite the nationwide decline in foreclosure filings, 22 states reported increasing foreclosure starts from the previous month, including New Jersey (138 percent increase), Connecticut (46 percent increase), Texas (37 percent increase), Georgia (35 percent increase), Oregon (16 percent increase), and California (13 percent increase).
Foreclosure starts reached a 36-month high in Connecticut, a 27-month high in New Jersey, and were up on a monthly basis for the third consecutive month in California after hitting a 90-month low in January, when new legislation affecting the foreclosure process took effect.
Total foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 144,790 U.S. properties in April, a decrease of 5 percent from the previous month and down 23 percent from April 2012.
Lenders repossessed 34,997 U.S. properties in April, down 20 percent from March and down 32 percent from April 2012 to the lowest level since July 2007 — a 69-month low.
Twenty two states use judicial procedures as the primary way to foreclose. These include: Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana,Maine, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania,South Carolina, South Dakota, Vermont and Wisconsin.
In all other states, foreclosure is usually handled by attorneys who follow a state-provided process.
Judicial Foreclosure Auctions Up 31% from Year Ago

One thought on “Judicial Foreclosure Auctions Up 31% from Year Ago

  • May 11, 2013 at 8:42 am

    Are your mortgage modification terms worth continuing!!!
    Financially strapped homeowners who are close to foreclosure may want to face the music now rather than continuing to struggle with their monthly payments. There’s a high probability of losing the house anyway, even with the government’s help.
    According to a new report, people who take advantage of a key federal program to modify their mortgages in an effort to save their homes are defaulting “at an alarming rate.”
    The report from the special inspector general for the Treasury Department’s Troubled Asset Relief Program doesn’t say why an inordinately high percentage of owners who take part in the Home Affordable Modification Program, or HAMP, are unable to maintain their loan modifications. The report says only that the longer owners remain in the program, the more likely they are to default again.
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    Even with permanently reduced loan payments, the number of owners who are “redefaulting” is rising, the inspector general says.
    At the end of the first quarter of 2013, the report found, nearly half the oldest of the HAMP modifications, from the third and fourth quarters of 2009, were going back into default.
    Specifically, 46% of the HAMP mods made in the third quarter of 2009 redefaulted and 39% from the fourth quarter flunked out. Even mods from 2010 had failure rates as high as nearly 38%, the report says.
    As of March 31, of the 1.28 million owners whose loans were modified under HAMP, more than 312,000 have gone into default again. And when that happens, the consequences are severe.
    Owners who cannot sustain their reworked loans and fall out of HAMP are left with the terms of the original mortgage. And as such, they are responsible for making up the difference between the original loan payment and the lower HAMP loan payment.
    Not only can the back payment be substantial, the inspector general advises, but already distressed owners can be hit with late fees on both the principal and interest that weren’t paid during the modification period.
    In some instances, the report cautions, redefaulting borrowers can end up owing more than they did before their loans were modified.
    The Obama administration’s signature housing support program, HAMP was created in 2009 to help owners avoid preventable foreclosure by encouraging the companies that administer their mortgages — so-called loan servicers — to find ways to lower their payments.
    Under the program, which was recently extended until Jan. 1, 2016, borrowers with loans made before 2009 whose monthly payments for principal, interest, taxes and insurance are more than 31% of their gross income are eligible. Generally, servicers reduce the borrower’s interest rate or extend the loan term to bring the payment down to an affordable and sustainable level.
    As a last resort, but only with the agreement of the investor that owns the loan and is the ultimate recipient of the principal and interest you pay every month, servicers may also forgive some of the amount still owed on the mortgage.
    But HAMP doesn’t subsidize troubled borrowers. Rather, it provides financial incentives to mortgage servicers that work with borrowers. More than $4 billion of the $7.3 billion in federal funds spent on housing support programs during the housing crisis was spent under HAMP alone.
    That raises the question of whether some servicers may be modifying loans they know will eventually fail just to earn fees from Uncle Sam. No one seems to have addressed that issue. But previous research yielded some interesting findings.
    For example, a study a few years back from the Federal Reserve Bank of New York found
    that the greater the payment reduction, the less the rate of recidivism. But many loan mods don’t lower the payment. Rather, many result in higher payments and higher balances because the payments owed plus any penalties and fees are added to the outstanding balance without changing other terms of the loan.
    On the other hand, the study found that the lowest redefault rates occurred when the payment reduction was paired with principal reduction. In other words, the servicer agreed to forgive some of what was owed. When their principal is reduced, the study found, problematic borrowers are four times less likely to default again.
    Other studies from the University of North Carolina and the Boston and Atlanta Federal Reserve Banks had similar findings: There’s a high correlation between redefaulting and loan mods in which the payments are stretched out and the debt is deferred — but not reduced.
    So the message for underwater borrowers considering a loan modification is this: Unless your servicer offers to rework your loan in such a way that you no longer owe more than the house is worth, think hard about what you are doing.
    Is there a real chance you can save your house? Or are you merely putting off the inevitable?
    http://www.latimes.com/business/realest … 9633.story

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