As predicted by numerous housing experts, 2010 was another record-breaker in terms of numbers of foreclosures and bank REOs.   For the first time since foreclosure numbers began to be recorded, over a million homes were converted to REO properties, despite the slowdown in foreclosure activity in the final quarter of 2010, due to the discovery of invalid bank foreclosure processing.

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, hit 2.87 million U.S. homes in 2010, up 2 percent from 2009, or one out of every 45 homes in America.  “If not for the robo-signing controversy, which broke in early October, the total could have easily surpassed 3 million,” said James Saccacio, RealtyTrac CEO.

The five states that accounted for over half of all the foreclosure activity were California, Florida, Arizona, Illinois and Michigan.  Nevada, however, continued to have the country’s highest rate of foreclosures for the fourth year in a row, with over 9 percent of all homes in the state subject to foreclosure filings.

The overwhelming foreclosure numbers began to skyrocket four years ago and, since then, approximately 1 out of every 10 American homes, 5 million properties in all, has been subject to a foreclosure filing.

As for 2011, more record-breaking numbers may be on the way.  “Early indications in January were that this robo-signing related delay will be over by the end of first quarter if not sooner,” commented RealtyTrac’s Rick Sharga. “I think we’re going to see a significant spike in foreclosure activity early in 2011, and that will contribute in part to 2011 being a record year.”

Estimate are that as many as 250,000 foreclosures that would have happened in 2010 will now happen this year and add to an already-huge pool of bank REO properties.  Currently, the four biggest lenders have in their possession approximately $7 billion worth of REO homes, while Fannie Mae and Freddie Mac have a combined $24 billion pool of REOs.   This means there is at least a 3 year supply of REO properties in the pipeline.  REO sales already comprise roughly a third of all real estate activity.

The U.S. government is considering a number of incentive programs to help sell the massive amount of REO properties that are and will be shortly on the market.  The loan modification programs that the Obama Administration hoped would stem the foreclosure numbers have so far been ineffective.  The focus now is enabling the sale of the REO homes and helping the housing market to recover.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com

In this time of record-breaking foreclosures, many Americans, battered by the recession, find themselves without many alternatives to losing their house.  One such alternative, the short sale, in which the homeowner is allowed to sell their home below the value of their mortgage, was one way that someone could get “out from under” a home loan they could no longer afford.

However, the biggest impediment to a successful short sale is often the lender who holds the mortgage.  Because there is no short sale process set in stone, the approval process is inconsistent, unpredictable and all-too-frequently blocked, even when it’s in the lender’s best interests.

In a recent article, “The Boston Globe” detailed the ordeal of Christopher and Linda Robbins, who were ecstatic that they had managed to find a buyer for their condominium which they could no longer afford.  That joy turned to sorrow and disappointment when they learned their mortgage holder rejected the deal.  The reason?  The condo was worth more than what the buyer was willing to pay.

Instead, the parents of two small children went through the painful foreclosure process.  A few weeks later, the lender put the home back on the market – at a price of $7000 less than what the short sale buyer had offered them.  Now the family has moved out and the condo remains empty, with no buyer in sight.

Why are lenders denying such transactions, when clearly, it’s financially the best move for them as well as the homeowners?  These kinds of foreclosures are frequently sold at auction for less than the mortgage holder would have made in the proposed short sale.

“The irrationality in which these applications can be dealt with is absurd,’’ commented Thomas J. Percy, managing partner of a law firm that represents sellers and lenders in short sales, to the Globe. “You can get vastly different answers depending on, among other things, which bank negotiator you end up with.’’

Lenders say the reason they turn down many short sales is because they are concerned about fraud.  Around one in 50 transactions become piled up with difficulties.  Frequently, problems occur because an investor hires a real estate agent to assess the property for less than its value.   That investor then buys the property in a short sale and immediately turns around and sells it for a higher price, in a process known as flopping.

The banks lose around $300 million a year because of this kind of fraud.  The question, however, is how much are they losing on the other honest transactions that they’re stopping in their tracks – transactions that, by the lenders’ own admission, make up the overwhelming number of short sales?

In a market where lenders are holding hundreds of billions of dollars of REO properties, this is a question they need to be asking themselves.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com.

A new survey by RealtyTrac and Trulia, two online real estate powerhouses reveals that more and more Americans are realizing the benefits of buying REO properties.

49 percent of those surveyed said they were likely to consider purchasing a foreclosure, up from 45% last May.  Two-thirds of those expected to receive a discount of about 30% off the normal price of such a home – which is in line with the average 32% lower purchase price of a foreclosure currently on the market, according to RealtyTrac.

The survey, done in conjunction with Harris Interactive, one of the leading custom market research companies, was conducted in November of 2010.

The uptick demonstrates a growing acceptance of REO properties as a viable alternative by mainstream home buyers, which is good news for REO agents, brokers and other REO professionals.

Though there’s been a slowdown in foreclosures in the latter part of 2010, due to the foreclosure documentation problems the major lenders have been experiencing, as well as the traditional holiday season moratorium on foreclosures, most real estate analysts project that the first quarter of 2011will be an extremely busy one when it comes to REO listings.

That’s because the shadow inventory of foreclosures is again straining at the seams, because of the aforementioned slowdown.   “Even with this big drop in November we do have a continuing building inventory of properties in foreclosure or REO,” said Daren Blomquist, managing editor of the RealtyTrac reports. “We’re estimating those properties plus delinquencies to equal 3 million to 4 million homes waiting to hit the market.”

That will potentially create what “The Boston Globe” recently predicted would be a new “tidal wave” of foreclosures in 2011.  “The Wall Street Journal,” in an article from December 12^th, also sees a big increase on the horizon with the New Year.

“Next year could very well be a peak year for foreclosures”, commented Rick Sharga, a senior vice president at RealtyTrac, an online marketplace for foreclosure properties. “The market is expected to tally about 1.2 million bank repossessions in 2010, up from 900,000 in 2009.  We expect we will top both of those numbers in 2011.”

Adding to the shadow inventory of REO properties will be new foreclosures occurring as a result of continued high unemployment, as well as upcoming interest-rate resets on adjustable-rate mortgages that will increase the monthly payments for some homeowners.    Loan modification programs for homeowners that are currently behind also don’t seem to be working for the majority.

Between the increase in the number of REO listings and the growing willingness on the part of potential homebuyers to consider buying REO homes, 2011 could be the biggest year for REO sales yet.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com.

As 2010 comes to a close, the Federal Reserve has revealed that it expects approximately 4.25 million more foreclosure filings in the next two years, with two million plus expected in 2011 as well as in 2012, similar to the record amount of foreclosures that occurred during this year.

Elizabeth Duke, the Reserve Governor, reported these projections to a congressional subcommittee in late November.  She also reported that about five million mortgages are currently 90 days past due or more.

The pace of both foreclosures and REO sales has slowed in the final quarter of 2010, due to uncertainty over lenders’ problematic processing of foreclosures.  REO buyers have been reluctant to invest in distressed properties until these legal troubles have been resolved.

“Financial institutions face a number of risks if inadequate controls result in faulty foreclosure documents or failure to follow legal procedures,” Duke said. “We are gathering information to ensure that the institutions we supervise have adequately assessed these risks and have accounted for them properly.”

In addition, Fannie Mae and Freddie Mac, as well as other lenders, have suspended foreclosures through the end of the year due to the holidays as is the yearly tradition.

However, with a current REO inventory of around two million homes as well as the more than four million that are expected to come through the pipeline in the months to come, there is little doubt that 2011 will see a renewed boom both in foreclosures and in REO sales, due to continuing economic pressures – as experts see little chance of a housing recovery unless REO properties are promptly processed and sold.

“In the end, an overhang of homes awaiting foreclosure is unhealthy for the housing market and can delay its recovery, as well as that of the broader economy,” added Duke, indicating that the Federal government will continue to push for a swift solution so foreclosures and the REO marketplace can get back up to speed.

Foreclosure investor Rich Meyer told The Miami Herald that he expects a sharp spike in REO activity in early 2010.  “There’s a backlog of future filings,” Meyer said. “Once the litigation is settled, it’s going to be a wave.”

To illustrate how overwhelmed the system has been by the sheer number of mortgages gone bad, the average amount of time a homeowner is late with loan payments before facing foreclosure is 492 days or around 16 months.

All experts agree – REO homes will continue to be a dominate force in real estate sales for years to come.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com.

Despite investigations into lenders’ possible faulty processing of foreclosures, the number of REO repossessions broke new records in October of 2010, up by more than 20% year-to-year.

Experts expected the number of new REO repossessions to dip due to the ongoing questions about the banks’ supposed practice of “robo-signing” foreclosure papers.  Instead, they fell off only slightly from September’s numbers and still reached new heights from last October’s numbers.  Only a few thousand foreclosures ended up being delayed in October, with roughly 90,000 homes becoming REOs.  About the same number of foreclosures is expected in November.

“The controversy won’t cause as much of a drop-off in foreclosures as anyone anticipated,” commented Rick Sharga, senior vice president for RealtyTrac, regarding media reports regarding foreclosure processing. “It will almost be over before it started.”

With a reported settlement in the works between the Attorney Generals of all 50 states and the major mortgage lenders, that appears to be the case.  Bank of America and JP MorganChase are rumored to have already agreed to create a special fund for homeowners who have been wrongly foreclosed upon.  That fund will be administered by the individual states in which the homeowners reside.  New quality control measures will also be applied to the foreclosure process and homeowners will now be able to follow through on loan modification applications before default notices are sent.

This is good news to all of those in the REO industry, as well as the housing market in general, as there were widespread fears that a foreclosure freeze would negatively affect the possibilities of a real estate recovery as well as create a giant backlog of REO homes even larger than the already existing one.

For instance, in Phoenix, Arizona, one of the communities with one of the biggest amount of REO properties, 65% of all October home sales were either foreclosures or resales of previously foreclosed properties.  Other major cities such as Dallas, Texas, also had record foreclosures last month.

With REO listings making up anywhere from a third to two-thirds of home sales in many communities all across America, most housing experts agree that it’s important to keep the REO pipeline open while trying to resolve any foreclosure processing problems.   And that appears to be just what’s happening.

There are currently over two million REO properties across the country at the moment, all requiring the services of REO agents, brokers and other professionals to sell and market these homes.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com.

Fitch Ratings, a global credit rating agency, now estimates that the huge “shadow inventory” of REO properties still being held by lending institutions will take at least 40 months to process and sell.

With an estimated 7.5 million REO homes yet to be listed, it will take some time for major banks to liquidate these properties. Of all the family home loans JPMorgan Chase holds,  for example, one out of every thirteen are in foreclosure today for a total worth of $20 billion.  Currently, it takes roughly 18 months for an REO home to be processed and resold, from the date of the last mortgage payment.

These numbers all but guarantee that REO listings will continue to account for a huge chunk of all real estate sales for at least the next three to four years.

A new spike in foreclosures will also add considerably to the overall REO inventory.  Ongoing foreclosure actions are beginning to experience big jumps in other areas across America.  While most of the attention has gone to Florida, California, Nevada and Arizona – the “big four” which have experienced the biggest surge in REO properties over the past few years – other cities and states are suddenly seeing dramatic increases.

In the third quarter of 2010, foreclosure actions (which include everything from default notices to actual bank repossessions) rose in 65 percent of the country’s top 200 housing markets.   Seattle saw a 71 percent jump, Chicago a 35 percent jump and other cities such as Houston and Atlanta also saw double-digit increases.  When it came to actual bank repossessions, Boise, Idaho saw a 71 percent jump and Philadelphia saw a 38 percent rise.

Unemployment seems to be driving these new numbers – and it’s also affecting the number of prime mortgage delinquencies in recent months, which are also up sharply.  The managing director of the applied analytics division at Lender Processing Services, Kyle Lundstedt, said current mortgage delinquencies are above 7 million.

Loan modifications aren’t helping distressed homeowners either.  It was recently reported that, of the roughly 16,000 mortgage modifications done on Freddie Mac loans in the second quarter of 2009, 42% had fallen back into delinquency 12 months after the workout.  Which explains why Freddie Mac suffered a two and a half billion dollar loss in the third quarter and has requested another $100 million from the U.S. Treasury.

REO agents, brokers and other professionals skilled in this specialized field will continue to be desperately needed as this segment of the real estate market continues to dominate in the coming months.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com.

More than 3000 real estate agents surveyed nationwide were asked what’s really going on with today’s housing market – and, according to them, distressed home sales, including REO properties, made up over 47% of the total market in September of this year, up from August.   Inside Mortgage Finance, together with Campbell Surveys, polled the agents, who also revealed that REO sales were up sharply month-to-month.

Those REO sales will continue to make up a large part of real estate activity as, despite recent controversies over how banks and mortgage lenders were handling foreclosures, a nationwide moratorium on them now seems out of the question.   On Wednesday, October 20^th, Department of Housing and Urban Development Secretary Shaun Donovan said these foreclosure problems occurring at a few mortgage companies are not “systemic issues.”

“Where there have been mistakes made or errors, we will hold those entities, those institutions accountable to stop those processes, review them, and fix them as quickly as possible,” commented Donovan.

White House Press Secretary Robert Gibbs also weighed in with the Obama administration’s view that a nationwide moratorium on foreclosures would be “dangerous” and will not be pursued.

“We have talked about, over the past week or so, the danger that we see in…halting the entire housing market and the danger that it would provide — or potentially provide writ large — and its effect on the economy,” said Gibbs.

Most experts agree that the overwhelming majority of homeowners currently in the foreclosure process are, in fact, in default and have been unable to pay their mortgages.

There are also simply too many REO homes in the pipeline to ignore.  Three of the biggest banks, JPMorgan Chase, Wells Fargo and Bank of America, each reported they had more than $20 billion in single-family mortgages either already converted to REO properties or in foreclosure.

JPMorgan Chase has the largest volume of REO homes with $21.7 billion. It also has $43.4 billion in mortgages past due.   Bank of America has $20.3 billion in REOs, and $54.6 billion in past-due mortgages.

And there are billions more in REO properties out there with the smaller banks, such as Citibank with $6.3 billion in foreclosures and $19.2 billion in past-due mortgages.

With hundreds of billions of dollars worth of potential REO listings still to come, the demand for qualified REO professionals to handle those properties will continue to build.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com.

REO sales have become an increasingly important sector of the real estate market, especially in states that have been hardest hit by the housing crisis.  For example, foreclosure sales made up 56 percent of all home purchases in Nevada and 47 percent of them in Arizona this past August, while in Michigan, Rhode Island and Florida, they accounted for about a third of the share.

That’s why any attempt to slow down the foreclosure process could imperil the beginnings of a fragile housing recovery.

Some numbers in August pointed to the possible start of such a recovery; sales of previously-owned homes increased for the second month in a row.  Now, because of some paperwork irregularities by overwhelmed REO sellers and election-year posturing, some legislators have called for a halt to all foreclosures.

Economists and real estate experts are mostly in agreement on what the effect of that action would be:  “It will have an immediate negative impact on house sales volume, house prices, private label MBS investors, bank earnings, mortgage servicing values, and much more,” says mortgage consultant Mark Hanson.

Guy Cecala, Inside Mortgage Finance comments, “Instead of having a ton of mortgage borrowers who haven’t made any payments in at least a year, we would have a ton who haven’t made a payment in a year-and-half.  Do we seriously believe that a foreclosure moratorium can change the outcome of potentially 5 million or more homeowners losing their homes over the next two years? Ultimately, if we don’t do something to handle distressed properties more efficiently (and faster), the housing market is going to remain stuck in limbo with no recovery in sight.”

And foreclosure expert Rick Sharga from RealtyTrac agrees as well.  “If foreclosure sales are prohibited, home sales would tail off dramatically…foreclosures and REOs accounted for over 30% of all sales during the (third) quarter. Fewer home sales will put more pressure on home prices, reduce tax receipts for already-strapped municipal and state governments, and put even more pressure on an already-moribund economy. This could cause at least a temporary loss of jobs in a number of sectors. A 90-day moratorium would also extend the housing market downturn, pushing the anticipated recovery from early 2014 into late 2014 – and possibly even longer.”

Finally, even David Axelrod, the senior adviser to President Obama, doubts the need to stop foreclosures.  Axelrod said it would throw “a lot of uncertainty into the housing market that is, you know…is already fragile. …there are, in fact, valid foreclosures that probably should go forward.”

Fortunately, there is already a huge inventory of REO listings of over half a million REO homes that already need to be sold.    And no matter what the outcome of the current foreclosure debate is, there is also no question that the pending foreclosures are inevitable and bound to keep an extremely active REO market booming.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com

Just as predicted by many experts, bank foreclosures, instead of finally declining, are instead hitting new heights as we head into the final quarter of the year.

In August, according to online foreclosure sale site RealtyTrac, new REO properties reached a record-setting high of 95,364 properties, the highest monthly total in the history of the site.  That number represents an increase of 3% from July and a 25% jump from August 2009.  The second-highest number was 93,777 back in May of this year.  Three separate monthly records have, in fact, been set in the last five months.

J.P. Morgan Chase cited the “shadow inventory” of foreclosed properties as a reason for the continued high REO home numbers – and as one of their primary reasons that they believe a housing recovery may not come until possibly 2014.  There already exists over a year’s supply of existing homes for sale, and the number of foreclosures will put even more pressure on real estate prices.

John Burns Real Estate Consulting estimates there are approximately two and a half million homes in the foreclosure process (homes more than 90 days behind on their mortgage payments) at the moment.  In addition, almost five million homeowners are at least 30 days late on a mortgage payment.  The firm believes that the inventory of REO homes will continue to trend upward from its current official number of 562,000.

One reason for that?   At least one in five homeowners owes more on their mortgage than their home is worth -  and more and more of those homeowners think it’s perfectly acceptable to walk away from that mortgage, according to a Pew Research Center survey.   That trend will continue to increase as home prices continue to decrease.

While subprime loans constitute the bulk of the mortgage defaults, signs now point to increasing defaults on prime loans, which dominate the bulk of the market.  Prime loans survived the housing bubble without much effort because they weren’t as susceptible to price fluctuations – but the bad economy and continued unemployment are now hitting these homeowners as well.

There are less than 3.5 million subprime mortgages – and about 40 million prime loans in the marketplace, 6.2% of which were 60 days delinquent in June 2010 and 3% of which were 90 days delinquent.  Experts believe these delinquencies, if they continue trending as they are now, could end up affecting over six million homes.

All these facts clearly add up to an ever-increasing REO property inventory for all the major banks and lending institutions in the foreseeable future, meaning the demand for REO agents and brokers will still be growing in the next few years.

For those who want to know more about how to become an REO agent and how to get REO listings, one important resource is ASREOS (the American Society of REO Specialists).  ASREOS is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.

Find out more about ASREOS and what it has to offer at http://www.asreos.com.

Lender Processing Services (LPS), the country’s leading provider of mortgage processing services and the company that most of the largest U.S banks rely on for data, says the boom in REO listings is very far from over.

Kyle Lundstedt, managing director of LPS applied analytics, stated that the foreclosure crisis probably won’t be over until late 2013, when he spoke to 1600 people in the REO, mortgage and default servicing industry on August 18th.

Using 15 years of data (from 1996-2010), Lundstedt looked at the housing market bubble and the impact of that bubble bursting.  He also commented on the foreclosure timeline, which is becoming a longer and longer process, due to the sheer volume of REO homes that need to be dealt with.

“Today, if you entered foreclosure,” said Lundstedt, “it would be 16 months before you got out. How many people think that is a good thing? It’s tragic.”  He blamed some of those delays on well-intentioned efforts to help people keep their homes – even though, in many cases, it’s just putting off the inevitable and creating further obstructions to speedy processing.

He also said REO professionals need to be prepared for the massive amount of listings that will continue to come on to the market.  REO homes are some of the most sought-after values in real estate today, both by seasoned investors and first-time home buyers.

Besides the current huge number of REO homes on the market, Lundstedt also pointed to the fact that home mortgages that are 90 days or more delinquent, in foreclosure, or already in REO, will continue to rise.

“We are going to see delinquencies above today’s levels out into early 2012 if not late 2013. It suggests this problem is here to stay.”

Adding to the incredible REO opportunity is the “shadow inventory” of foreclosures yet to be officially recorded on the books.  Experts still disagree on the exact number of REO homes that fall into this category.

Thomas Lawler, an economist and housing consultant, estimates that as of the first quarter of this year, banks owned $14.5 billion worth of REO properties.   As banks aren’t required to report the number of homes they own that are on their books but not yet reported as foreclosures, an exact figure is hard to come by.

“My best guess right now is that REO held by Fannie, Freddie, and FHA, and other government entities, and banks and thrifts is just under 600,000, but unfortunately it is on the rise,” says Lawler.

Again, this means more and more REO agents and brokers will be needed by these financial institutions to handle these properties for them, making it an opportune time to become an REO agent and find out how to get REO listings.

One valuable resource for both experienced and novice REO agents is ASREOS.  ASREOS (the American Society of REO Specialists) is the first professional association for REO agents created by REO professionals and contains numerous tools to maximize REO opportunities and find REO listings – as well as the ability to interface with other REO Agents across the country in an exclusive forum.  Find out more about ASREOS and what it has to offer at http://www.asreos.com.