Real Estate Market Statistics For Snohomish and King County

King County REO Bank Sales By Price Range 2011

2012-01-10T17:44:00.000-08:00

(click on graph to enlarge)

In King County last year 33% of all the property sales were distress sales. Of that total 22% were REO Bank Sales (foreclosed properties).

In this chart (blue=2010, green-2011) we can see that sales of bank owned properties were very strong for 2011.

But the chart tells us even a bigger picture - a majority of the bank owned properties that sold were in the $100K - $200K range.

Another thing this chart tells us, is there are very few foreclosures above $399,000. Above that the the monthly sales numbers are mostly in the single digits.

What you might find interesting is the average home prices for different sales types for residential properties:

Average Sales Price 2011:

REO/Bank Sales: $231,598

Short Sale: $333,450

Regular Sale: $474,383

This indicates that the lower priced housing market has been the most affected by the down turn in our economy.

Distressed Property Sales Reach 48% in Snohomish County

2011-10-07T10:39:00.000-07:00

Click on graph to enlarge.

Distressed property sales in Snohomish County have reached 48% of closed residential transactions, up from 36% for the same time last year.

Bank sale REO property represented 35% and short sales represented 13%.

We are sure that short sales could easily pass the REO numbers if banks could get them closed.

Today there are 735 Pending residential short sale transactions. However, on average, on 72 close per month. That tells us it will take over 10 months just to get those closed, not including new ones that go pending!

King County Foreclosures Hit Lowest Levels Since 2008

2011-10-04T14:30:00.000-07:00

Click on graphs to enlarge

The rate of foreclosure filings dropped to their lowest point in nearly 3 years. Is this a sign that the worst is over? We think it is. But what does this really mean? We think that there are many people still struggling to meet their mortgage payments, but banks are working more to keep people in their homes through loan modifications and short sales.

There is also a new milestone in our graphs. Foreclosure "Notices" were lower than "Foreclosures" in the month of September. This is the first time ever that Foreclosures exceed the amount of Foreclosure Notices.

This trend is most likely due to two reasons:

1. Banks are only filing foreclosure notices on homes they are serious about foreclosing on;

2. With the enactment of the new Washington State "Foreclosure Fairness Act", it slows down the process and allows for homeowners to have "face to face" meetings with the bank to work out an agreement before moving forward with foreclosure.

The trend is also showing up in the Snohomish County foreclosure rates as Notices and Foreclosures continue dropping.

King County & Snohomish County Foreclosure Rates For July 2011

2011-08-08T11:27:00.000-07:00

Snohomish County foreclosure rates hit their 2nd all time high last month as 339 homes were lost through foreclosure. The all time high was hit in January 2010 at 397 homes. Clearly indicating that homeowners are still struggling financially to make their mortgage payments. We believe that a large percentage of these are strategic defaults as more homeowners walk away from their upside down mortgages.

Click on graph to enlarge.

King County foreclosure rates remain equally high reaching levels seen in the peek of 2010.

King County & Snohomish County Foreclosure Rates For June 2011

2011-07-18T14:55:00.001-07:00

Snohomish County Foreclosure rates have dropped off their highs as Notice of Defaults have dropped 4 months in a row.

King County foreclosure rates have dropped as Notice of Defaults have dropped significantly over 2010.

Click on graphs to enlarge.

The FDIC Needs to Learn To Use The "F" Word

2011-05-04T09:16:00.000-07:00

An investigative report issued yesterday by the FDIC regarding Foreclosure practices by large banks including Bank of America, Citibank, JPMorgan Chase, Wells Fargo, GMAC, Ally and third party providers MERS and LPS and others, is missing some important "F" words.

The 12 page document investigating the breakdown during the "robo signing" scandal outlines what they feel were "inadequacies" during the foreclosure process.

They applied a consistent formula and result to each file review that included:

~ Policies and procedures - Rated "Inadequate"
~ Organizational structure and staffing -Rated "Inadequate"
~ Management of third-party service providers - Rated "Inadequate"
~ Compliance with applicable laws - Rated "Inadequate"
~ Loss mitigation - Rated "Inadequate"
~ Critical document control - Rated "Inadequate"
~ Risk Management - Rated "Inadequate"

"Compliance with Applicable Laws"
Can someone tell me when breaking the law became an "inadequate" offense rather than a criminal offense?

"Affidavit and Notarization Practices"
The investigation found that foreclosure affidavits were signed improperly and failed to conform to State Legal requirements.

The FDIC report misses the first "F" word that needs to be used here. FORGERY.

This was just recently on "60 Minutes" regarding the whole Linda Green story.

Certainly the FDIC watches "60 Minutes" don't they?

Next let's turn to "Documentation Practices":

The investigation found:

"...widespread unsafe or unsound operational practices, including missing documents, execution of documents by unauthorized person, failure to notarize documents in accordance with local laws, inaccurate affidavits..." This is where the FDIC needs to learn the "F" word: FRAUD.

One laughable comment in the report says that Banks need to oversee third party servicers (robo-signers) to:

"...minimize reputation damage..."

What the heck? The FDIC is now giving PR advice? Priceless.

The FDIC evaluates activities conducted through third-party relationships as though the activities were performed by the institution itself."

Does that mean that the institution will be held accountable for third-party actions?

There is no recommendation for penalties or fines. This is a fluff piece with no teeth.

And to top it off it ends with:

"To the extent an institution has a practice of paying law firms, servicers, and employees bonus incentives to process high volumes of foreclosures, the practice should be discontinued"

What the FDIC continues to fail (another "F" word) to understand and question:

WHY THE RUSH TO FORECLOSE?

Answer: To cover up the massive fraud in the loan paperwork from origination.

The rush to foreclose is to white wash or "launder" the lender fraud that can be exposed in the original loan documents.

Just ask Bill Black.

Predatory Lending is THE Cause For Systemic Mortgage Defaults and Foreclosures.

Trashy Homes Pulling Home Values Down Further

2011-04-27T08:12:00.001-07:00

Home prices are being affected by more than just foreclosures and short sales.

In years past we had a "flipper" market. Investors bought homes that needed updating and it was easy to drop a few thousand dollars into paint and carpet and turn around and sell the home for a good profit.

That was then.

That was when money was easy.

That was when home prices were rising.

Those days are gone.

We are now seeing homes in a serious state of neglect like never before. And this is contributing to further errosion of home prices.

These pictures are of a home that just sold in March for $115,000. A pretty cheap price for sure. But just how much money would need to be put into this home to make it habitable again?

And after improvements could the home be sold for a profit?

There is obvious mold issues and one would question whether it should be just torn down.

Because of these types of properties, we forecast that future average and median homes prices will continue to show declines.

But these declines need to be clarified.

1. Average prices will show decline based on deteriorating home conditions.

2. Average prices will drop because most of the home sales are under $300k.

3. Home sales above $500k are scarce and this anomaly pulls down the averages as a whole. There just isn't alot of home buyers looking in this range.

This can skew the data and give false signals that all home values are declining. Which may not be the case.

Homes that are in great condition with good street appeal are selling and selling quickly. This home sold in 17 days for around $315,000.

Home buyers are out there taking advantage of lower home prices and low interest rates. If you're looking for a home that is a "place to live" for years to come, there are plenty of fine homes to choose from.

If you're looking for a "fixer" to flip, be careful. Know what you are getting yourself into. Prepare to spend money on pre-inspections before sealing the deal. There may be many hidden defects that only a professional inspector can determine. Know what your improvement costs are going to be and then add another 20% for unexpected items. Unless it's the right house at the right price, in the right neighborhood we don't advise it. This not the right market for the unexperienced "flipper".

Where Are All The Foreclosures?

2011-04-21T14:50:00.000-07:00

So where are all the foreclosures?

When looking at the charts below we can see that most of the bank owned properties are listed under $300,000.

What this tells us is that banks are NOT foreclosing on upper end homes for the most part.

In Snohomish County there are 414 bank owned properties on the market under $300K but only 58 over $300K.

In King County we have 589 listed under $300K but only 184 over 300K.

CLICK ON GRAPHS TO ENLARGE

So where are all the foreclosures? Most are listed under $300K and most are selling quickly!

When we look at the Absorption Rate Graphs (available in the right hand column under graphs) we see that bank properties are selling almost as quickly as homes are being foreclosed on and they come on the market as REO listings.

We believe that banks are working with most struggling homeowners through loan modifications and approving short sales.

We also believe we are through the worse of times. The market is already showing small signs of improvement and we are on track for a slow but hopefully steady recovery.

Washington State Legislature Moves to Extend Foreclosure Timelines and Require Face To Face Meeting With Homeowner Before Initiating Foreclosure

2011-03-18T14:00:00.000-07:00

The State is putting together legislation to require lenders to offer face to face discussions with distressed homeowners before initiating foreclosure. This new legislation is called the "Foreclosure Fairness Act". In a move to protect distressed homeowners from unnecessary foreclosures, the State of Washington is working on HB1362 . The legislature states that Washington's non-judicial foreclosure process does not have a mechanism for homeowners to access a neutral third party to assist them in a fair and timely way for a work out or mediation regarding their mortgage delinquency. The legislation intends to:

Encourage homeowners to utilize the skills of housing counselors;

Create a framework for homeowners and lenders to communication with each other;

Provide a process for mediation when recommended.

The 3 main parts of the new legislation are:

Opportunity for borrower to request a "face to face" meeting with lender;

Opportunity for mediation with a neutral third party;

$250 filing fee for Lender's Notice of Default.

One important change for the homeowner is that if the homeowner responds to the initial contact by the lender within 30 days, the bill provides the homeowner an additional 60 days to attempt a work out solution with the lender, before a Notice of Default can be filed. During this period the homeowner can request a "face to face meeting" with the lender and at this "meeting", a representative of the lender must be in person. TIP: I would definitely be recording this conversation!

"The subsequent meeting scheduled to assess the borrower's financial ability to repay the debt and discuss options to avoid foreclosure must be in person, unless the requirement to meet in person is waived in writing by the borrower or the borrower's representative"

It is important to note that the borrower must contact an approved housing counselor or attorney to protect their right to mediation, as mediation can only be requested by an approved housing counselor or attorney.

This must be done before issuance of a Notice of Trustee Sale. Once a referral to mediation has been made, a mediation session must occur within 45 days, or can be extended by agreement of all parties. This mediation could be a very powerful and effective tool for homeowners who are having difficulty with loan modification efforts with their lender. WHY? Because at this mediation session the lender must "lay all their cards on the table". Information that may have been withheld from the borrower will be disclosed including:

"A Net Present Value (NPV) of receiving payments pursuant to a modified mortgage loan as compared to the anticipated net recovery following foreclosure."

Sound confusing? You bet. This is a formulated spreadsheet that the lender uses with undisclosed numbers to determine if they will come out ahead better through modification or foreclosure! Also, the lender will not disclose this information to you if you are attempting to modify your loan yourself. Additional documentation must also be provided, such as:

An accurate statement containing the balance of the loan;

Copies of the Note and Deed of Trust;

Proof the Lender is the owner of the Note;

An itemized statement of arrearages;

An itemized list of fees and charges;

Payment history for last 12 month or since default, whichever is longer;

All borrower-related and mortgage-related input data used in any net present value analysis;

An explanation regarding any denial for a loan modification or alternative;

The most recently available appraisal or broker price opinion;

The excerpt of the pooling and servicing agreement AND documentation or a statement detailing the efforts of the beneficiary to obtain a waiver of the pooling and servicing agreement.

The last item is of particular interest. Keep in mind most lenders no longer "own" your mortgage. They are only collecting (servicing) your monthly payment on behalf of the owner of your mortgage, usually a security instrument owned by a pool of investors. This item requires the lender to disclose any efforts that have made with the investors to try to get them to negotiate a modification on your mortgage, unless there is already language in the agreement that prohibits modifications. There are many other condition and time lines contained in the bill and we highly encourage homeowners that are suffering financial hardship to seek professional guidance through these issues. This new bill will result in the State having to set up programs for homeowners that are not now in place. This will include forms, websites, lists of approved housing counselors, attorneys and mediators for the homeowners to access, along with training for all those involved. There is also a $400 cap on the mediation session up to 3 hours. This charge is split 50/50 between the homeowner and lender and must be paid 7 days before mediation. TIP: Mediation is only for owner-occupied residential properties. Do not abandon your home and mortgage if you wish to have access to mediated loan modifications. It may be the best $200.00 a distressed homeowner can spend! Although this legislation is a step in the right direction, the success of the program will be dependant on getting the word out to consumers. I didn't see anywhere in their program regarding any PR or advertising costs. Also, as is with all rules, there are exceptions. Lenders who file less than 250 foreclosures per year are not held to the mediation rules. If the consumer is not opening their mail from the mortgage lender because "they know it's just another late notice", they may not see the information included that explains these new rules and their rights to request a "face to face" meetings and mediation possibilities. Second, I feel that the consumer is in need of a "Home Owner's Bill of Rights".

How is it that someone who makes timely mortgage payments for 10-20 years and suffers a temporary financial hardship or loss of income can lose their home to foreclosure in 120 days? There is something fundamentally wrong with this scenario. We are well versed on foreclosures, short sales and loan modifications. If you or anyone you know need some help or direction, please call us. We are here to help and there is never any charge or Fee. Please use us as a resource to help during these difficult times.

AND never pay anyone for a loan modification - If someone wants to charge you a fee up front - run in the opposite direction because it's a scam. Disclosure: This bill has not been finalized and is subject to change. Nothing in this article should be construed as legal advice and homeowners are always encouraged to consult with an attorney for legal interpretation of the bill, as there are many other requirements and timelines that must be met that are not covered in this article. The full House Bill 1362 can be read here: HB1362

Where Are All The Seattle Foreclosures?

2011-03-07T14:29:00.000-08:00

Have you been house-hunting and having a hard time finding that great buy?

If you've been looking at Bank owned properties in the $400,000 - $500,000 price range in King County, have you found there are few to choose from? Did you know there are only 31?

The same price range in Snohomish County will offer you a whopping 18.

You might say "wait, but where are all the foreclosures we read about in the media?"

Well, they are out there, but unless you are looking for a "fixer upper" under $200,000 the choices will be few.

Click on graphs to enlarge.

When we look at the current inventory of distressed properties in King County, we have found that most fall under $300,000. As a matter of fact, 76% of all the active listings under $200k are distressed property listings which include short sales.

Distressed properties are defined as bank owned (REO) properties and short sales (home owners who owe more on their mortgage than the current listing price).

Now we're not saying you can't find that diamond in the rough, but if you're looking to buy a great bank owned property, you're mostly likely just going to find the "rough". But there are some definate bargins to be found!

Checking bank owned homes in Seattle under $300,000 there are only 126 out of 586 in King County. That means that a majority of them are in outlining areas such as Renton & Federal Way. Here's a sampling of bank owned inventory under $300K by area:

White Center Area = 31

West Seattle =40

South Seattle/Rainier = 34

Beacon Hill = 8

North of Lake Union = 11

Even with all the headlines about foreclosures these days, we are finding that the banks are changing their tune regarding foreclosures. We know there are many who are struggling to meet their mortgage payments, but we also see banks pushing through more home loan modifications and starting to approve short sales quicker.

Short sale properties can be a good buy, but few are willing to wait the 4 months it takes to get an offer approved. So until that process is streamlined by the banks, we don't see a rush to short sale purchases.

For 2010 we see that in King County 15% of closed sales were bank owned properties and 10% were short sales. So keep in mind that 75% of all home sales for 2010 were non-distressed home transactions. See graphs in right hand column for distressed properties sales for 2010.

We continue to watch the trends, stay tuned for monthly updated charts on foreclosure and short sale stats.

King County Home Prices Rise First Time In 3 Years

2011-01-13T10:06:00.001-08:00

King County home prices posted their first gains in three years. After three years of continued decline, King County home prices may have finally reached their bottom. December 2010 ended the year with a surprise jump in home sales along with home prices. Many communities in King County posted year over year price gains, while others are still showing losses.

This reinforces the popular tag line "location, location, location" .

When checking the individual communities on the City Charts in the right hand column, we see that several cities posted positive price gains:

Bellevue
Kirkland
Redmond
Edmonds
Lake Forest Park
Woodinville

We track only north and east of Seattle communities, there may be gains in other areas.

An increase in average home prices doesn't necessarily mean homes have risen in value, but rather higher priced homes have been selling which brings up the overall average. This is important to keep in mind, as we still see downward pressure on home prices overall.

Rising inventories of distressed home sales and foreclosures will certainly keep the pressure on prices, but the tide could be changing. This is also a clear indication that prices are no longer "falling off the cliff" and we are reaching a level of stabilization.

Certain economic conditions play a role in our local home prices, so while we still have lackluster employment numbers the market is most likely to remain flat until conditions improve.

Does that mean it is a good time to buy a home? If we take into consideration interest rates being at all time lows, it could be. There are many reasons people purchase homes. A place to live, an investment property, or a money maker.

For most home owners, buying a home was always a long term investment. That's what went wrong during the housing bubble. The days when one talked about paying off their mortgage so they could live rent free. Not irrational exuberance in sucking out equity to buy more things.

Homeowners make a community. They have long term visions associated with their home. They get involved in community and neighborhood organizations. Communities with higher home ownership have better educational performance and lower crime rates.

Still, while financial advantages shouldn't be the first and only thing to consider when we think about owning a home, it would be foolish to discount these benefits altogether. The opportunity to take advantage of tax deductions for mortgage interest and property taxes or the ability to benefit from the capital-gains exclusion on the sale of a home up to $500,000.

So there are other factors to consider when deciding to purchase a home other than sales price. Interest rates, tax benefits, community benefits, and the emotional benefits.

So is the market finally reaching a bottom? We will only be able to tell when we see price increases over a longer period of time. However, we see the market is opening up some great buying opportunities for some who are taking advantage of them now.

Snohomish County Foreclosure Rates Last 10 Years

2011-01-04T11:14:00.000-08:00

Snohomish County foreclosure rates rose 50% YOY from 2009 to 2010. Looking at the chart we see the last peak in foreclosure rates was in 2003 following a 3 year rise. Hopefully the trend repeats and 2010 will be the peak with a leveling off in 2011.

Snohomish County Foreclosure Rates 2010

2011-01-03T15:51:00.000-08:00

Snohomish County foreclosures took a breather for the holidays. December's numbers dipped to 119 from 209 in November. The last two years showed the same trend and we fully expect foreclosures to raise during the next few months.

The worst month so far has been January 2010 followed by August, 2010 and October 2010. The next few months' numbers will give us a better idea of what the trend will be for the year.

King County and Snohomish County Foreclosure Rates for November 2010

2010-12-02T13:20:00.000-08:00

The foreclosure rates for both King County and Snohomish County dropped in November 2010. Default notices dropped significantly. The question is whether this is just a holiday seasonal slowdown or if this indicates that the worst is over.

Predatory Lending is THE Cause For Systemic Mortgage Defaults and Foreclosures

2010-10-18T10:32:00.000-07:00

Ask yourself this question: Why are the banks foreclosing so quickly on struggling homeowners?

Why the rush to foreclose on millions and millions of families?

We have already gone through 1.5 million foreclosures and look what it has done for the economy.

These numbers might shock you. But you need to know.

Currently there are 7 million homeowners in default and in some stage of foreclosure. There are 2.3 million more that are late on the mortgage payments.

Defaults are rising 200,000 per month.

Shortly we will have 10 million homeowners in foreclosure.

This is a systemic failure of the entire banking system and we need to dig deeper to see what caused it in the first place if we have any hope of coming up with solutions.

We don't have 10 million irresponsible families. We have 10 millions victims. Victims of predatory lending that ultimately crashed the economy and jobs.

It started with the sub-prime, Atl-A, and Pic a payment loans. All predatory products.

There are 7.5 million sub-prime loans.

Why were these predatory loans made available?
Answer: Demand from investors looking to buy mortgage back securities.

And before you call the next guy a deadbeat for not paying his mortgage or say he was stupid to get a loan that he couldn't afford.... I suggest you read and watch what I have to share with you.

And before you give up on this long blog - There is a solution to this mess at the end!

This is one of the most important videos you can watch:

WILLIAM BLACK PBS INTERVIEW ON MORTGAGE FRAUD:

"The Fed had unique authority. And it had it since 1994 to regulate every single mortgage lender in America. And you might think that the Fed would use that authority. And you might especially think that, if you knew that Gramlich, one of the Fed members, went personally to Alan Greenspan and said, there's a housing bubble. And there's a terrible crisis in non-prime. We need to send the examiners in. We need to use our regulatory authority. And Greenspan refused.

Lehman was brought down primarily by selling liar's loans. It was the biggest seller of liar's loans in the world. And when we look at these liar's loans, we find 90% fraud. 90 percent, and we find that most of the frauds are not induced by the borrower, but they're overwhelmingly done by the loan brokers"

http://www.pbs.org/moyers/journal/04232010/watch.html

"IT WAS FRAUD. IT WAS FRAUD AND THE BANKS KNEW IT."

AMERIQUEST - ANOTHER STORY OF MASSIVE FRAUD IN LENDING PRACTICES

In February 2005, reporters Michael Hudson and Scott Reckard broke a story in the LA Times about "boiler room" sales tactics at Ameriquest. Their investigation found evidence that the lender had various questionable practices, including "deceiving borrowers about the terms of their loans, forging documents, falsifying appraisals and fabricating borrowers' income to qualify them for loans they couldn't afford."

Former employees from Ameriquest, which was the leading wholesale lender, described a system in which they were pushed to falsify documents on bad mortgages and then sell them to Wall Street banks eager to make fast profits. There is growing evidence that such mortgage fraud may be at the heart of the entire Financial Crisis.

http://www.npr.org/templates/story/story.php?storyId=10165859

INTERVIEW WITH AMERIQUEST LOAN OFFICERS:

ARNOLD: Russum says managers encourgaged loan officers to conceal the actual costs and interest rates on loans. He says the bulk of these subprime loans that the company was selling adjusted sharply upwards after two years. The payments would then rise by hundreds of dollars a month.

MR RUSSUM: Let's say the borrower said to the loan officer, the account executive, I don't like the fact that this is only fixed for two years. And the branch manager would come back to him and say, listen, you need to tell these guys it's fixed for as long as they need it to be.

ARNOLD: Even though, Russum says, that wasn't true. The Russum says he started seeing things that were even more over the line. Russum says he was honest with customers, but says many of his co-workers weren't. He says some would "white out" income numbers on W2's and bank statements and fill in bigger amounts basiclly to qualify people for loans they couldn't afford. That was called taking the loan to the "art department.

MR. RUSSUM: You started seeing forging of signatures on loan documentation. You started seeing a lot of bait-and-switch tactics.

ARNOLD: Russum says some loan officers would even print up fake fixed loan documents and put them on the top of the stack of papers the customer was signing at their closing.

MR. RUSSUM: Maybe the first couple of documents they saw in their package were fixed rate, and then they would slip in the adjustable rate docs at the end and then trashing the fixed-rate docs.

This interview was May 2007.

INDYMAC: WHAT WENT WRONG?
Michael Hudson, investigative reporter who wrote Merchants of Misery: How Corporate America Profits from Poverty. He is also author of The Monster: How a gang of predatory lenders and Wall Street bankers fleeced America - and spawned a global crisis which will be published in October 2010 by Times Books. The book focuses on two firms - Ameriquest Morgage and Lehman Brothers - that were key players in the rise and fall of the subprime mortgage industry.

Hudson wrote for the Center for Reponsible Lending. He found evidence that the banks had "engaged in unsound and abusive lending during the mortgage boom, routinely making loans without regard to borrowers' ability to repay." Shortly before the bank was seized by federal regulators, an IndyMac spokesman dismissed the report as a "hit piece" that "relies on unsubstantiated anecdotal evidence." The U.S Department of the Treasury inspector general's office later reported that it's invistigation indicated that IndyMac had done "little, if any, review of borrower qualifications, including income, assets and employment.

http://en.wikipedia.org/wiki/Michael_Hudson_(reporter)

PREDATORY LENDING: A DECADE OF WARNINGS

A little more than a decade ago, William Brennan foresaw the financial collapse of 2008.

As director of the Home Defense Program at the Atlanta Legal Aid Society, he watched as subprime lenders earned enorrmous profits making mortgages to people who clearly couldn't afford them.

The loans were bad for borrowers - Brennan knew that. He also knew that the loans were bad for the Wall Street investors buying up these shaky mortgages by the thousands. And he spoke up about his fears.

"I think this house of cards may tumble some day, and it will mean great losses for the investors who own stock in those companies,"

he told members of the Senate Special Committee on Aging in 1998.

It turns out that Brennan didn't know how right he was.

I HIGHLY suggest reading this website. There is a lot of info, charts and videos.

http://www.publicintegrity.org/investigations/economic_meltdown/articles/entry/1309/

SO WHY THE RUSH TO FORECLOSE?
Are the banks rushing through the foreclosures to hide the fraud that can be found in the mortgage documents? What do you think?

IS THERE A SOLUTION TO THIS MESS?
Short of a lot of lawsuits and bankers going to jail, there just may be something that can be done to save us from this catastrophe.

We need to immediately re-write all existing mortgages with a fixed rate 4% interest rate for 30 years, regardless of credit, income, debt or loan to value.
Roll in all missed back payments into the new mortgage and effectively "start over".

Sound like a crazy plan? Well the professors at the Columbia Business School think it can work and stimulate the economy at the same time.

Benefits of the plan include:

Reducing mortgage payments frees up descretionary money so that people start spending again.
The program can be implemented without costs to taxpayers.
Minimal loan costs would be added to the new mortgage.
Title Insurance for $250 - no appraisal, no credit.
To fund the program, the agencies would issue new mortgage backed securities (MBS) and use the proceeds to pay off existing MBS.
The program will help reduce the federal deficit.
The plan will reduce foreclosures and stabilize home prices.
This is not a subsidy or bailout.

and much, much, more.....

Read the Plan Here:

http://www4.gsb.columbia.edu/realestate/research/housingcrisis/refinancing

Housing Crisis Hits New Low - Breaking Into Homes

2010-10-07T07:54:00.000-07:00

Local News | Wells Fargo to pay $24M to end mortgage probe by Wash., 7 other states | Seattle Times Newspaper

2010-10-06T15:35:00.000-07:00

Local News Wells Fargo to pay $24M to end mortgage probe by Wash., 7 other states Seattle Times Newspaper

Snohomish County Foreclosure Rates August 2010

2010-09-27T14:35:00.000-07:00

We saw an increase in the number of foreclosures for August 2010. We expect the foreclosure rates to remain elevated for the next 12 months as the banks work through their distressed mortgages.

Snohomish County Foreclosure Rates July 2010

2010-08-09T10:48:00.000-07:00

The Snohomish County foreclosure rates remain elevated for July 2010. The Notice of Trustee Sales remain near their highest levels for the year. As typical, only about 25% of the Notice of Trustee Sales turn into actual foreclosures. There are various reasons why a home won't be foreclosed on. Those could be homeowners who have entered into a loan modification, those that catch up on their late payments, and those that end up selling their home.

Snohomish County Foreclosure Rates June 2010

2010-07-14T12:11:00.000-07:00

The Snohomish County foreclosure rates show us that homeowners are still struggling to meet their mortgage payments. However, what is most interesting is that the numbers show us that the banks are not aggressively foreclosing. We hope this is a result of banks working with homeowners on loan modifications through the government's Making Home Affordable Plan.

With the HAMP program there is really no need for someone to loose their home through foreclosure. This program not only helps those that have had income reductions, it will help those that have had a job loss.

"By August 1, all mortgage servicers participating in the Making Home Affordable Program will offer extra help for homeowners struggling to make their monthly mortgage payments because of unemployment. The Unemployment Program will offer homeowner's a forbearance period to temporarily reduce or suspend their monthly mortgage payments while they seek re-employment"

If you know of someone who is struggling to meet their payments, have them give us a call. We would be more than happy to explain the Making Home Affordable Program and how it may help them stay in their home. We have already helped 2 families keep their homes after going through a home loan modification.

As Realtors, we find it is important to provide education to those in need - and we are here to help!

Snohomish County Average Home Prices June 2010

2010-07-14T11:49:00.000-07:00

Snohomish County average home prices for June 2010 dropped about 2% over May. This is indicitive of the fact that so many homes in the lower price ranges are selling as opposed to those in the upper price ranges. This drags down the average as a whole.

Distressed property sales continue to be a factor in the market. Bank sales or REO properties represent 20% of the sales and Short Sales represented 11% of the sales for the period of January to June 2010.

Snohomish County Average Sales Prices May 2010

2010-06-07T17:50:00.000-07:00

Snohomish County average sales prices for May 2010 continue to show market stabilization. Average home price sales have been hovering around $310,000 for the last six months.

Distressed property sales represented 23% of the sales for May. For May there were 713 residential property sales of which 171 were distressed properties.

Bank owned properties sold for an average price of $241,757.
Short sale properties sold for an average price of $292,855.

There are many more homes in the lower price ranges that are distressed properties which is reflected in their average sales prices.

REO Sales Outpace Foreclosures in Snohomish County

2010-05-14T19:41:00.000-07:00

Where are all the foreclosures? Certainly not in Snohomish County. As a matter of fact, Snohomish County is holding up pretty well. There has been no flood of foreclosures or bank owned properties known as REO's to come on the market.

In fact the number of REO properties sold on the market in April 2010 exceeded the number of actual foreclosures for the same period.

For the 10 months shown in the graph above there were 1,851 foreclosures. Of those, 1,387 were sold on the open market. Approximately 10% sell at auction on the courthouse steps and the rest are listed for sale.

Currently there are 409 REO properties listed for sale, which is about a 3 month supply based on current sales rates of about 139 per month.

The Snohomish County real estate market continues to show stabilization along with median and average home prices.

Snohomish County Foreclosures Rates April 2010

2010-05-04T11:44:00.001-07:00

The Snohomish County foreclosure rates for April 2010 indicate continued stress on homeowners' ability to make their mortgage payments. The increase in filing of Notice of Trustee Sales is partly due to Bank of America's announcement to step up it's process in foreclosing on homes that are delinquent in their mortgages.

A secondary reason is most likely "strategic defaults". Those are homeowner's willing to walk away from properties which they owe more than they are worth. Many are realizing that sacrificing their credit for a couple of years is worth it. Many homeowners are more than $100,000 underwater in their homes. These are mostly homes that were purchased at the peak of the market in 2006 and 2007.

The 3 Most Overlooked Tax Deductions For Home Buyers

2010-04-13T12:05:00.000-07:00

Most of us all know about the 2 most common home ownership tax deductions available.

· Home Mortgage Interest
· Real Estate Taxes

But did you know that there are 3 MORE VERY IMPORTANT ADDITIONAL tax deductible items that are usually overlooked?

These are 3 important deductions that every homebuyer needs to know!

1. Points Paid By Seller (for borrower):

You say what? How could dollars contributed by the Seller (which shows up on the Seller side of the HUD statement) be a tax deduction for the buyer?

Well according to the IRS, their position is this:

“A borrower is treated as paying any points that a home seller pays for the borrower’s mortgage”

The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points.

If you purchased a home and the seller paid “points”, these are fully deductible to you as the homebuyer! They are not deductible to the home seller.

Important Exception: The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Also, the deduction cannot exceed the amount of money you used as down payment, earnest money or other contribution totals.

Tip: Make sure your lender/escrow doesn’t apply the seller paid points directly to charges such as appraisal fees, credit reports, document preparation fees, etc. The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. The points may be shown as paid from either your funds or the seller's.

2. Mortgage Insurance Premiums: New IRS Effective Rule January 1, 2007

You can take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2009 for qualified mortgage insurance in connection with home acquisition debt on your qualified home.

Those that had to pay an up front Mortgage Insurance Premium at closing are allowed to claim that amount as a deduction.

Important Exception: If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. See Line 13 in the instructions for Schedule A (Form 1040) and complete the Qualified Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums.

Tip: Don’t forget to deduct the mortgage insurance premium included in your mortgage payment every month at the end of the year as well, and for the years to come.

3. Late Charges on Mortgage Payments:

You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan.

Advice: Please consult your tax accountant for advice regarding restrictions and limitations for your personal situation.

For more information on Home owner/buyer tax deductions go to:

http://www.irs.gov/publications/p530/index.html

Snohomish County Average Home Prices March 2010

2010-04-08T16:57:00.000-07:00

Snohomish County average homes prices for March 2010 were $308,299. Average home prices so far this year are:

January $310,883
February $312,299
March $308,299

Prices look like they are "bouncing around the bottom". However, prices remain under pressure with bank sales and short sales. We will need to watch how the expiration of the home buyer credits, increased interest rates and more foreclosures coming on the market affect prices in the coming months

Keep in mind that these statistics are all about homes that are selling. Home sale averages are weighted heavily by sales under the $400,000. This doesn't necessary mean that home prices are still falling... it means more homes are selling in the lower price ranges.

By looking at the chart below you can see that the majority of home sales are under $300K. With so many home sales in the lower price range and few homes sold above $500K, will drag down the average.

Those looking to sell a home above $500K will find few buyers.

King County Average Home Prices March 2010 Show Continued Market Stabilization

2010-04-05T14:05:00.001-07:00

King County average home price sales for March 2010 continue to show stablization in the Seattle real estate market. The last 14 months have home sales ranging near the $450,000 average price. March 2010 home sales came in at $458,546.

King County Foreclosure Rates March 2010

2010-04-05T10:56:00.001-07:00

Click on graphs to enlarge.

The King County Foreclosure rates for March 2010 show that homeowners are continuing to struggle with making their mortgage payments. March foreclosures were 339 homes. However the uptick in Notice of Trustee Sale filings (mortgages in default) may indicate that banks are starting to catch up with those that haven't been making their payments.

Banks have been struggling to keep up with demand on the Making Home Affordable Plan that modifies mortgages with lower interest rates for a more affordable monthly payment.

Banks have been scrambling to hire thousands of employees to help process the backup of loan modifications applications, as well as stream line their computerized systems to meet demand.

Their are several programs now available to help those in financial distress.

The HAMP Program. This program can reduce your interest rate to as low as 2%. As of March 26th, 2010, President Obama updated the plan to include those that are unemployed.

The HAFA Program. This program is available for homeowners who: 1. do not qualify for a trial mortgage modification under the Making Home Affordable Program; 2. do not successfully complete the trial period for their modification; 3. miss at least two consecutive payments during their modification period; or 4. request a short sale or deed-in-lieu of foreclosure.

Also be aware that all these programs are FREE. You should never pay anyone a cent for a loan modification. Your current mortgage holder processes your application for FREE.

If you need some guidance on these or other programs, give us a call, we can help.

Snohomish County Foreclosure Rates March 2010

2010-04-02T07:32:00.001-07:00

Snohomish County foreclosures rates for March 2010 were 217 homes. The uptick in Notice of Trustee sales for March 2010 indicates many homeowners are still struggling to meet their mortgage obligations.

The Hamp Program (Making Home Affordable Program) specifically designed to help these homeowners is working for some. Banks are painfully slow in processing the applications, which can take 6 months to a year or more to complete.

New programs are being unrolled as well which will include mortgage balance reductions and Short Sales under the HAFA Program.

This area of the market is changing daily. Bank of America recently introduced a Principal Forgiveness Plan to enhance it's National Homeownership Retention Program. It will systematically lower the principal balance on some mortgages. More banks are likely to follow.

Last week, the Obama adminstration announced that the HAMP program should be extended to those that are unemployed. The Wall Street Journal's recent article states "The revisions, which will also include temporary help for unemployed borrowers, serve as a recognition that the administration 's foreclosure rescue plan hasn't kept pace with the rising number of souring loans."

Programs are constantly changing, sometimes daily. If you or someone you know is struggling to meet their mortgage obligations, give us a call and we can direct you to all the current resources that are available.

Snohomish County Average Home Prices Remain Stable For February 2010

2010-03-10T13:47:00.001-08:00

Click on graphs to enlarge

Snohomish County average sales prices remained stable for February 2010. Prices have remained between $310,000 and $315,000 for the last 6 months, which is a good indicator of market stablization.

Distressed home sales still weigh heavily on home prices. 27% of the currently available inventory (residential only) are either short sales or bank owned properties.

Currently listing activity (residential only) shows 3,893 homes. Of those, 761 are short sales and 311 are bank owned properties.

Snohomish County Foreclosures January 2010

2010-02-12T16:02:00.001-08:00

CLICK ON GRAPHS TO ENLARGE

We saw the January foreclosure rates jump up because of the November-December break. Perhaps the banks chose to not foreclose during the holidays. The average of the three months together is 183 per month.

The foreclosure rates for the last 6 months are running about 200 per month. The next 6 months should give us a better indicater of whether Obama's Home Affordability Mortgage Plan (HAMP) is working on home mortgage modifications as new orders come down from the White House putting pressure and timelines on the banks to quit sitting on the modfication applications and push them through.

We hope the banks are finally see the light "loan modifications cost less money than foreclosures"!

Bank Foreclosures Absorbed Into Market Sales - No Excess Inventory

2010-01-26T18:24:00.000-08:00

Current statistics show that for the last 6 months of 2009, most bank foreclosed properties that came on the market were sold through the Northwest Multiple Listing Service.

The Snohomish County Treasurer reported 1,155 foreclosures and the Northwest Multiple Listing Service showed 920 bank properties sold in the same period of time. Adjusting for the few that are sold through auction, left us a total of only 185 unsold for the end of the year.

The numbers show that approximately 153 bank owned properties were sold per month on average leaving slightly more than one month of standing inventory of bank owned properties.

Average days on market for residential properties was 57 and they sold for 98.6% of asking price. Current statisics show that for the last 6 months of 2009, most bank foreclosed properties that came on the market were sold through the Northwest Multiple Listing Service.

The Snohomish County Treasurer reported 1, 155 foreclosures and the Northwest Multiple Listing Service showed 920 bank properties sold in the same period of time. Adjusting for the few that are sold through auction, left us a total of only 185 unsold for the end of the year.

The numbers show that approximately 153 bank owned properties were sold per month on average leaving slightly more than one month of standing inventory of bank owned properties.

Average days on market for residential properties was 57 and the and they sold for 98.6% of asking price.

Bank Foreclosures Absorbed Into Market Sales - No Excess Inventory

2010-01-26T16:07:00.000-08:00

Current statisics show that for the last 6 months of 2009, most bank foreclosed properties that came on the market were sold through the Northwest Multiple Listing Service.

The Snohomish County Treasurer reported 1, 155 foreclosures and the Northwest Multiple Listing Service showed 920 bank properties sold in the same period of time. Adjusting for the few that are sold through auction, left us a total of only 185 unsold for the end of the year.

The numbers show that approximately 153 bank owned properties were sold per month on average leaving slightly more than one month of standing inventory of bank owned properties.

Average days on market for residential properties was 57 and the and they sold for 98.6% of asking price.

Snohomish County Foreclosure Rates For 2009

2010-01-25T12:43:00.000-08:00

The foreclosure rates for Snohomish County dropped off during the holidays to their lowest levels of the year. However, Notice of Defaults remain steady at around the 400 mark. This tells us that about 25% of the homes that are delinquent on their mortgage turn in to actual foreclosures.

Many distressed homeowners are either applying for home loan modifications through the Making Home Affordable plan put in place by President Obama or are attempting to sell their homes before a foreclosure takes place through a "short sale". A short sale is a transaction where the home sells for less than what is owned on the mortgage.

BREAKING NEWS ! New Expanded Home Buyer Tax Credit Approved

2009-11-09T15:25:00.000-08:00

Congress has expanded the home buyer credit to now include current homeowners. This is great news for the move-up buyer.

Qualifying purchasers can receive a credit up to $6,500.

The income limit for singles is $125,000 and $225,000 for married couples. If your income is higher than that, you can still qualify, but the credit will be less.

The credit can be applied to home purchases up to $800,000 and is effective on purchases until April 30, 2010 (must close escrow before 7/1/09).

With home prices finally stabilizing, now is a great time to take advantage of lower home prices and lower interest rates!

Snohomish County Residential Average Sales Prices Hold Steady

2009-10-16T14:40:00.001-07:00

Snohomish County average residential home prices continue to show stablization as average prices have remained around $330K for the last 6 months.

King County Foreclosure Rates 2007 Through September 2009

2009-10-16T13:04:00.001-07:00

The foreclosure rate for September in King County rose slightly over August. Foreclosure rates remain high overall but show signs of recovery as August and September are the 2 lowest foreclosure notice filing months posted so far this year. We hope the trend continues as the market continues to show show signs of stabilization.

Everett Condo Annual Sales Prices for 2004 - 2009

2009-10-16T12:16:00.000-07:00

The sales numbers of resale condos in Everett has bounced around a bit during the year. Average monthly sales prices can be swayed easily by one or two high or low priced sales. The chart below shows a more reliable annual average for median condo prices.

These statistics only include condominiums that are at least 5 years old. The numbers tell us that on avereage, resale condo prices have come down to 2006 prices or about 15% on average since peaking in 2007 at $204,950.

FORECLOSURE NOTICES DROP 50% FOR AUGUST 2009

2009-09-02T10:51:00.000-07:00

Are we over the worst? Let's hope so! The significant fall of Notices of Foreclosure filings show positive signals of stabilization. Even though the foreclosure rates continue to be the worst on record - they appear to be coming off their peak of June 2009.

Even how terrible it is for just one person to loose their home to foreclosure, a closer look at the big picture is in order.

For 2009 there have been 2,247 foreclosures.

Not all of those are your "typical family" losing their home. That number represents investors, speculators, home builders and flippers. Taking a guess, I would imagine about only 50% of that number represents a typical family losing their home.

The King County census records indicate that 59.8% (from 2000 - the current number for 2008 would be higher, but that info is not available) of 816,764 households, are homeowners. That gives us 2,247 of 488,425 homes lost through foreclosure this year, representing only .0046%.

Sounds like a pretty low number compared to what we read and hear in the media. Our local real estate market is not even close to the turmoil of markets in other states.

Actually, we are holding up fairly well when we look at the big picture!

Snohomish County Homes Prices Show Stabilization

2009-07-13T10:45:00.000-07:00

Snohomish County average home prices continue to stabilize. For the last 6 months home prices have averaged around $330,000, off the high of $425,000 in March of 2007. The housing bubble has been effectively wiped out of the market and sale prices have returned to the trend line.

2009-07-01T08:54:00.000-07:00

The Notices of Trustee Sales jumped significantly for June of 2009. Actual foreclosures based on filings 90 days ago represent 29%, down from 31% for May. If we expect that 30% of filings turn into actual foreclosures 90 days later, we could predict that there will be about 485 actual foreclosures filed in September, which would be the highest on record. Only time will tell us if the banks are making any progress in getting through the backlog of loan modifications. Banks have informed us that it is taking 4 - 6 months to complete loan modifications.

Snohomish County Average Home Prices May 2009

2009-06-16T14:59:00.000-07:00

Average home prices for May 2009 show trends of stabilizing home prices for Snohomish County. The last 5 months average approximately $330,000.

Homes sales continue to rise has home buyers take advantage of today's lower home prices and the $8,000 Home Buyer Tax Credit.

King County Foreclosure Rates May 2009

2009-06-01T14:08:00.000-07:00

King County foreclosure rates ticked up to 262 homes for May 2009. Actual foreclosures take place and are recorded about 90 days after the Notice of Sale filing.

Snohomish County Homes Sales By Price Through April 2009

2009-05-05T18:28:00.000-07:00

Snohomish County homes sales are weighted heavily in the $200k - $400k price range. The market for the over $500K home remains anemic.

This is having an effect on the average and median home price charts.

This does not necessarily mean prices are continuing to fall in Snohomish County. The charts and graphs reflect the numbers from "homes that are currently selling".

Snohomish County Average Home Prices April 2009

2009-05-05T16:46:00.000-07:00

Snohomish County Average sales priced dipped slightly from March, but remain higher than January and February of 2009.

The total number of homes closed have steadily increased since November 2008.

King County Foreclosures Notices Drop in April 2009

2009-05-05T14:19:00.000-07:00

Foreclosure Notices dropped for April 2009 while Trustee Deeds (actual foreclosed homes) remained steady in the low 200's.

No spike in foreclosure activity has occured in spite of media reports that foreclosure rates are on the rise. The rate has held steady since peaking in October 2008 at 294.

Distressed Properties Are Being Snatched Up in Snohomish County!

2009-04-24T10:36:00.000-07:00

Currently distressed homes sold in Snohomish County represent 46% of all closings. This number compared with new foreclosures happening at the courthouse shows that current home sales are easily absorbing the amount foreclosed properties coming available.

Distressed properties sales represent a big chunk of the current sales because they can be purchased at very reduced prices and some are selling quickly.

January through March shows 334 foreclosures, of which 144 were snatched up at auctions or sold on the open market leaving a net of 190 homes left to sell, of which most are currently on the market either in active or pending status. This also shows that banks are not holding back on putting foreclosed properties on the market. Also, providing further evidence that banks are now looking to modify loans rather than resort to foreclosure.

The foreclosure process can add additional costs of more than 10% of the price of the home. Coupled with heavily discounting the property at auction.

Not surprisingly, a majority of foreclosures are found in out-lining areas, hardest hit by lower income home buyers. As you move closer in to Everett, Mill Creek and Bothell communities, the rates go down. The Marysville, Stanwood and Arlington areas have been hit the hardest, with south Snohomish County in Bothell and Woodinville holding up pretty well.

Areas:
610 = South Snohomish County: Bothell, Canyon Park, Woodinville
730 = Lynnwood, Edmonds, Brier, Mountlake Terrace
740 = Mukilteo, Everett, Mill Creek
750 = Sultan, Gold Bar, Index
760 = Granite Falls, Darrington
770 = Marysville, Arlington, Stanwood

April Trend

Current trends for April show dropping foreclosure rates for both King County and Snohomish County. Pending sales are up, which will show in the May statistics.

Through April 24th there are 133 foreclosures filed vs. 203 for the month of March for King County. For Snohomish County there are 76 foreclosures filed vs 106 for the month of March.

Additional evidence to this fact is that Notice of Trustee sale filings (mortgages in default) are also falling. For King County through 4/23 there are 728 filings vs. 1089 for the month of March. And Snohomish County shows 351 vs 499 for the month of March. Unless there is a huge spike in filings in the next last 4 days of the month total numbers should be down.

So far, there is no evidence to support the idea that the lifting of foreclosure moritoriums by several banks would flood the market with more foreclosures.

CURRENT INVENTORY:

New graphs for April will be posted the 1st week in May.

Snohomish County Foreclosure Rates 2009

2009-04-23T14:58:00.000-07:00

Snohomish County Home Prices up 3.75% From January 2009

2009-04-06T15:08:00.000-07:00

Click on picture to enlarge.

Snohomish County home prices have risen February and March after 5 straight months of decline and 22 months since prices peaked in March 2007.

Two months of data is not long enough to predict a trend - but it does tell us that home prices have stopped diving off the cliff.

There is still downward pressure on average home sale price data.

Does this mean that home prices are still falling? NO. This just means that there are more sales in the lower price ranges which drags down the average number for all.

Homes that are price right are selling in under 30 days, while those that are still overpriced languish on the market.

King County Foreclosure Rates March 2009

2009-04-06T10:05:00.000-07:00

Click on graph to enlarge.

A curious thing happened last month. Even though Notice of Trustee Sale filings have risen, the actual homes that were foreclosed on went down.

To understand this we must look at 4 months prior, which would be November, where Notice of Trustee Sale filings dropped slightly. It is important to know that once a Notice of Trustee's Sale is filed it will take four months to turn into an actual foreclosure.

Now look at the increase of Notice filings for January, February and March. Will the increase in filings turn into foreclosures for April, May and June? We'll have to wait until May 1st to see.

Breaking News: Interest Rates to Drop Near 4%

2009-03-18T19:29:00.000-07:00

Bernanke announces new stimulous plan to push down interests rates near 4%. “They wanted to shock the market and they succeeded,” said Ajay Rajadhyaksha, the head of fixed-income strategy at Barclays Capital in New York. If the Fed’s action “succeeds in driving primary mortgage rates” to about 4.25 percent to 4.5 percent, that would increase “affordability, which will in turn lead to increased housing demand.”

The Truth About the Seattle Area Foreclosure Rates - Exposing the Real Numbers

2009-03-18T12:31:00.000-07:00

By Julie Lyda, RE/MAX Northwest Realtors
For Immediate Release:

The foreclosure market in the Puget Sound area has been way over-hyped. This first article, in a series of articles, is about King and Snohomish County foreclosure rates.

Whatever happened to fact checking? When a company or corporation publishes statistics, who’s checking up on the real facts? Who’s digging through the real numbers to check their validity?

A very timely topic considering the on-air sparring between Jon Stewart of Comedy Central and Jim Cramer of CNBC.

When it comes to housing numbers, consider me a watchdog.

RealtyTrac, one of the nation’s leading sources of foreclosures statistics, and commonly used by the media, produces data that is seriously flawed and skewed for their own financial benefit. They are misleading the entire country. A quick Google search will reveal communities across the country who have called them on the misleading data and they choose not to change the way they report the numbers.

Also, newspaper and television media use their numbers, because they have no other reliable sources to use for foreclosure data. So I started checking the numbers myself and was startled at what I found.

There is no argument that foreclosures are on the rise. But RealtyTrac is overstating the numbers in our area by 75%.

The actual numbers paint a very different picture. So when you read the front page of the paper or see on the evening news that hundreds are losing their homes to foreclosure every day in the Seattle area, don’t believe what you hear. That may be happening in other parts of the country, but not here in the Puget Sound area.

RealtyTrac reports only on homes that have received a Notice of Trustee’s Sale. This is a document filed when someone is usually at least 90 days late on their mortgage payment. What Realtytrac doesn’t tell you is that only 28% of these will turn into an actual foreclosure.

As published by Realtytrac for February 2009:

The first problem is Realtytrac reports 971 homes in foreclosure for February, however research of the of the King County Recorder’s office shows the real number to be 838.

Second, Realtytrac fails to account for Discontinuances of Notice of Trustee Sales which numbered 174. These are notices that have been canceled, meaning the homeowner cured the default.

That brings the net to 664, not the 971 they reported. The actual number is 34% lower than what they reported. And let’s not forget that this number only represents “people who are late on their mortgage payments”. Not actual foreclosures.

Thirdly, and most importantly Realtytrac fails to account for actual Trustee Deed filings, which are the deeds filed upon actual foreclosure.

A check of those numbers for February would tell you that number is 233.

What is wrong with this picture?

It’s simple, Realtytrac is a for profit website selling paid subscriptions for the public to find perceived foreclosure homes and a portal to sell internet advertising. The more sensationalized the numbers, the more traffic they can steer to their website and it’s advertisers.

They are not independent economists forecasting trends based on factual numbers. I have some serious issues with this because it thrives on the emotional fear of the public to drive traffic to their website for profit. It benefits them to inflate the numbers.

On average Notices turn into foreclosures about 28%. That is over a 70% success rate of stopping foreclosure. That statistic has been consistent for the last 10 years. Snohomish County conversion rates have jumped higher over the last two years from an average of 25% to 44%. Snohomish County Foreclosures averages 119 per month for 2008.

Many are finding ways to save their home. Some refinance, some borrow money from family or friends, some modify their mortgages and others sell. There are some who will argue that this is just delaying the problem and that ultimately these people will end up in foreclosure.

Statistics show that 55% of all modified loans in the third quarter of 2008 were in re-default at the five month mark, up from 49% reported for the first quarter. However, a typical modification only delayed payments, reinstated the loan, and most importantly provided no monthly financial relief to the homeowner. Source: OCC and OTS Mortgage Metrics Report, Third Quarter 2008.

The Modification Game Has Changed
We now have Obama’s Home Mortgage Plan. Not only are late payments being forgiven, but interest rates and monthly payment amounts are coming down in line to match the income of the borrower. Modifications were not done this way in the past.

Real Estate is still Local

Real estate statistics still need to be studied on a local basis. The Seattle area is not California, Las Vegas or Miami and it's inappropriate to compare our market with their markets, which were the leaders of the subprime market, out of control prices, mortgage fraud and more.

Recovery won't happen everywhere at once. If you pay too close attention to the national numbers, you'll miss the opportunities that will start to appear locally.

Now lets look at the numbers and see what they tell us.
1. The foreclosure rate has remained steady at around 230 per month since peaking in October 2008 with 294.

2. There is a four month delay between the Notice of Sale and Foreclosures statistics. Meaning that when you see a drop in Notices, you will see a drop in Foreclosures 4 months later.

What the numbers don’t tell us.
1. What affect will the new Obama Home Mortgage Plan on foreclosures.

2. Short sales are not included in these numbers. My market study for Bothell properties on the NWMLS indicates that 35% of the active listings are short sales and 4% represent REO (foreclosed properties).

What questions the numbers create.
1. Notices dropped in February – does that forecast a drop in foreclosures for June? But we won’t be able to analyze that data until July 1st.

2. Will foreclosures go up until then, as Notices have risen for the months of January and February over December?

I think it’s foolish for anyone to be forecasting which direction the housing market is going with the upheaval in the unemployment numbers and the stock market. At this point all we can do is follow the statistics and over a period of time watch for any consistent improvement in the numbers.

With the past history of statistics, we will now be able to see if Obama’s stimulus plan has any affect on future numbers.

Keeping things in perspective: The Department of Treasury reports that 91% of homeowners are still current on their mortgage payment.

Sources: King County Records, RealtyTrac.com, Department of Treasury, Snohomish County Auditor.

Upcoming articles: Recovery of the Market, Bothell Statistics, The True Value of a Home.

Graphs & Stats Blog Page

2009-02-05T16:33:00.000-08:00