Foreclosure filings fall in Michigan

By GRETA GUEST • FREE PRESS BUSINESS WRITER • February 26, 2008

Michigan was knocked out of the top five nationally as its foreclosure filings fell 7% in January as compared to a year ago.

Michigan now ranks 10th nationwide for foreclosure filings, according to figures released this morning by RealtyTrac Inc., an Irvine, Calif.-based foreclosure Web site.

Overall, foreclosure filings rose 8% nationwide from December and were up 57% from January 2007.

Michigan had 1,362 notices of default, 6,947 auction sale notices and 2,437 bank repossessions during January for a total of 10,746 properties in some stage of the foreclosure process, RealtyTrac said.

Michigan’s total was 7.7% below December’s tally.

Nevada, California and Florida had the highest foreclosure rates in the country for January, the Web site said. Other states in the top 10 were Arizona, Colorado, Massachusetts, Georgia, Connecticut and Ohio.

James J. Saccacio, chief executive officer of RealtyTrac, said that several key states had decreased foreclosure activity from December. That could mean that some government and lender efforts are making an impact to minimize foreclosures.

“The big question is whether those efforts are truly helping homeowners avoid foreclosure in the long term or if they are just temporarily forestalling the inevitable for many beleaguered borrowers,” he said.

Congress to consider bankruptcy relief, foreclosure assistance proposals to help homeowners

Sunday, February 24, 2008

March Gordon / Associated Press

WASHINGTON -- Congress is set to examine another round of possible repairs for consumers and investors threatened by widening cracks in the housing market.

Proposals include easing bankruptcy rules, shielding banks from lawsuits and providing government assistance to homeowners facing foreclosure.

Lawmakers also plan this week to question several high-profile mortgage and banking executives about industrywide losses and lavish executive-compensation packages.

The housing proposals percolating on Capitol Hill, many of them designed by Democrats, are expected to face much tougher resistance than the recently approved economic stimulus package, which touched on the mortgage crisis in a limited way.

Some of these proposals have been kicked around in one form or another for months. Others are considered attempts to address perceived shortcomings in the Bush administration plan to freeze interest rates on a small percentage of loans made to high-risk borrowers.

A bill likely to be debated on the Senate floor Tuesday includes a proposed revision to the U.S. bankruptcy code that would allow judges to cut interest rates and reduce what's owed on troubled borrowers' mortgages. Currently, mortgage lenders can foreclose against a homeowner in default on a primary residence 90 days after a bankruptcy filing, and judges have no authority to order changes in mortgage terms.

"This week we have an opportunity to pass a housing bill that will help the economy recover, help American families stay in their homes and change the law so this never happens again," said Sen. Richard Durbin of Illinois, the Senate's second-ranking Democrat and author of the proposal to ease bankruptcy rules.

The bankruptcy measure, a similar version of which has cleared a House committee, is fiercely opposed by lenders and many Republicans.

The Mortgage Bankers Association, which is lobbying against the measure, said it would end up hurting many more borrowers in the long run by requiring "higher interest rates and larger down payments to offset the risk" of bankruptcy court intervention on behalf of some homeowners.

Consumer advocates, meanwhile, are pushing senators to approve the change.

Also included in the Senate legislation is a measure mandating $200 million for foreclosure-prevention counseling services -- a near doubling of funds already committed by Congress -- and an allowance for states to issue more tax-exempt bonds so that housing agencies could help homeowners refinance high-cost mortgages.

In the House, lawmakers are considering whether the federal government should shield banks from lawsuits brought by investors whose holdings of mortgage securities are negatively affected by changes in loan terms or other measures intended to help at-risk borrowers. The plan was first put forward by Rep. Mike Castle, R-Del., but appears to have attracted support from key House Democrats.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, has proposed the creation of a federal corporation, funded with as much as $20 billion, to buy distressed mortgages and help struggling homeowners refinance into affordable loans.

The focus on new housing proposals isn't limited to the legislative branch.

The federal Office of Thrift Supervision, a division of the Treasury Department, is drafting a plan to help borrowers who owe more on their mortgages than their homes are worth.

The plan would allow an estimated 8 million homeowners with "upside-down" mortgages to refinance into government-backed loans covering the home's current value. To make up the difference, lenders would receive a special certificate equivalent to the remainder of the balance owed that they could redeem if the home were eventually sold at a higher price.

On Thursday, the House Committee on Oversight and Government Reform will scrutinize the compensation and retirement packages of one chief executive and two recently deposed CEOs of companies ensnared in the mortgage crisis. The witness list includes: Angelo Mozilo of Countrywide Financial Corp., the nation's largest mortgage lender; Stanley O'Neal, formerly of Merrill Lynch & Co.; and Charles Prince, formerly of Citigroup Inc.

Wayne County led nation in '07 foreclosures

February 13, 2008

By GRETA GUEST
FREE PRESS BUSINESS WRITER

Wayne County ended 2007 at the top of a list it would rather avoid.

It had the highest foreclosure rate among the nation's 100 largest metro areas for the year, according to RealtyTrac Inc. of Irvine, Calif.

It beat out Stockton, Calif., and Las Vegas, which held second and third place on the list.

But unlike the two western metro areas, metro Detroit's foreclosure problem is a bit more intractable, said James J. Saccacio, chief executive officer of RealtyTrac.

RealtyTrac defines metro Detroit as Wayne County.

"Most of the metro areas with the highest foreclosure rates were either cities like Stockton and Las Vegas, which experienced meteoric growth and unsustainable price appreciation over the past few years, or cities like Detroit, which are undergoing a more widespread economic downturn along with higher unemployment rates," Saccacio said.

Michigan's unemployment rate in December was 7.6%.

The state ranked third nationwide for foreclosures last year, with 1.9% of Michigan households in some stage of foreclosure.

Foreclosure filings that include default notices, auction sale notices and bank repossessions rose 75% nationwide in 2007 with 2.2 million filings on 1.28 million properties, according to RealtyTrac.

The 2007 rate for Wayne County was 4.9% of households entering some stage of the foreclosure process. That was a 68% increase from 2006 and about 4.8 times the national average of about 1% of households in some stage of foreclosure.

Wayne County had 72,616 foreclosure filings on 41,273 properties during the year.

The area including Warren, Farmington Hills and Troy ranked No. 17 on the list with more than 2% of households in the foreclosure process. The area had 30,378 filings on 21,607 properties, RealtyTrac said.

Tom Varner, associate broker and manager of Century 21 Elegant Homes in Southfield, said he hoped foreclosures soon would be cleared from inventories, as they are slowing sales of other properties and diminishing property values.

Varner said that of his 45 total residential listings, 30 of them are bank-owned foreclosed properties. His office, which has 54 agents, is handling about 360 listings, and 30% of them are foreclosures.

"I think we are going to have a very similar year this year," Varner said. "Until we get rid of the bank properties that are out here, we are going to continue to have the same problems. The foreclosed properties are just leveling our equity that we have built up over the years."

Lenders Step Up Effort to Avert Foreclosures

By DAMIAN PALETTA and JAMES R. HAGERTY

February 12, 2008; Wall Street Journal

Prodded by the Bush administration, six major mortgage lenders are due to announce today a stepped-up effort to rescue homeowners on the brink of foreclosure.

Under the latest plan, dubbed Project Lifeline, the lenders promise to seek contact with homeowners who are 90 or more days overdue on their mortgages. In some cases, homeowners will be given the chance to "pause" their foreclosure for 30 days while lenders try to work out a way to make the loans affordable. Lenders could begin sending letters to these borrowers as soon as this week.

Homeowners wouldn't qualify for the program if they are in bankruptcy, if they already have a foreclosure date within 30 days or if the loan was for an investment or vacant property.

Unlike the plan announced in December to freeze interest rates at current levels on certain adjustable-rate loans, this latest effort is to involve all kinds of home loans, not just subprime mortgages, a higher-cost variety for people with blemished credit records or high debt in relation to income.

The participating banks, which service about half of the U.S. mortgage market, are Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., J.P. Morgan Chase & Co., Washington Mutual Inc. and Wells Fargo & Co. -- all members of the so-called Hope Now Alliance. They are working with the U.S. Treasury and Department of Housing and Urban Development. Those two departments scheduled a briefing on the plan for 11:15 a.m. today. The plan was reported yesterday by the Reuters News Service.

Almost immediately after the Bush administration announced the freeze plan in December for certain subprime borrowers, Treasury Secretary Henry Paulson indicated an interest in developing a strategy to address a broader range of distressed homeowners.

At least 1.3 million home-mortgage loans were either seriously delinquent or in foreclosure at the end of the third quarter, according to the Mortgage Bankers Association. Not all of those loans would qualify for the program, however.

Analysts at the investment-banking firm Lehman Brothers recently estimated that the number of foreclosures will surge to one million this year and next, about four times the 2007 level.

Some nonprofit groups that work with troubled borrowers say lenders have become more flexible in recent months in efforts to find ways for more borrowers to keep their homes. But they also say the industry needs to do more.

Martin Eakes, chief executive of the Center for Responsible Lending, a nonprofit research group based in Washington that frequently bashes the mortgage industry, said moves announced so far have been "baby steps." He said lenders should move more aggressively to reduce loan balances to current home values and make monthly payments affordable. He acknowledged, however, that servicers of loans -- the firms that collect payments and handle foreclosures -- face the risk of lawsuits from investors that own loans if those investors believe borrowers have been given overly generous terms.

Bruce Marks, chief executive of Neighborhood Assistance Corp. of America, a Boston-based nonprofit that works with distressed homeowners, dismissed Project Lifeline as a "PR stunt." He said it already should have been automatic for loan servicers to pause foreclosure proceedings for homeowners seeking to qualify for a more affordable loan.

Congressional Democrats also have grown increasingly hostile toward the Bush administration and lenders over the past several months, arguing that not enough is being done to prevent foreclosure. Mr. Paulson is scheduled to testify before the Senate Banking Committee Thursday, and Project Lifeline could help blunt criticism from lawmakers.

The latest initiative came as Countrywide announced a plan to work with the Association of Community Organizations for Reform Now, or Acorn, to seek alternatives to foreclosure for distressed borrowers.