We are still working our way out of this epic foreclosure crisis. As lenders such as Bank of America and Wells Fargo delay foreclosures, we see a sporadic trend of foreclosures across the country. We are anxiously waiting to see what will happen during the 2009 holiday season.

WASHINGTON (AP) – Oct. 15, 2009 – The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.

The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released Thursday by RealtyTrac Inc. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.

Unemployment is the main reason homeowners are falling into trouble. While the economy is likely out of recession, the unemployment rate — now at a 26-year high of 9.8 percent — isn’t expected to peak until the middle of next year.

Mortgage companies sometimes allow unemployed homeowners to defer three to six months of payments while they are looking for a job. But there’s little else they can do.

“The sheer scale of the problem is preventing the loan modification programs from having the kind of impact we’d all like,” said Rick Sharga, RealtyTrac’s senior vice president for marketing.

Last week, the Obama administration hailed a milestone in its mortgage relief effort, reporting that 500,000 homeowners have received help since the program was launched in March. But new defaults are still exceeding the number of borrowers getting help.

Mortgage companies have slowed down the pace of foreclosures as they evaluate whether borrowers qualify for the administration’s program. Analysts, however, forecast that many of those homeowners won’t qualify, and foresee a new wave of foreclosed properties hitting the market next year. That’s likely to further depress home prices.

Some homeowners are in such a massive financial hole that it’s hard to design a modification that will actually provide lower payments. And some have avoided paying their monthly bills for a long time.

Carlos Estrada, 57, of Tulare, Calif., for example, hasn’t made a mortgage payment since February 2008. The construction jobs that kept him working more than 40 hours a week during the housing boom have all but vanished.

Earlier this year, he turned down a modification offer from Bank of America because it would have incorporated his unpaid balance and raised his monthly bill. But a bank spokeswoman said Wednesday that Estrada’s foreclosure sale had been postponed until late next month while the bank reviews whether he can qualify for help.

“I’m still here waiting for them to help me resolve this situation,” Estrada said in Spanish.

According to the RealtyTrac report, there were nearly 344,000 foreclosure-related filings last month, down 4 percent from a month earlier but still the third-highest month since the report started in early 2005.

It was the seventh-straight month in which more than 300,000 households received a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes.

Banks repossessed nearly 88,000 homes in September, up from about 76,000 a month earlier.

On a state-by-state basis, Nevada had the nation’s highest foreclosure rate in the July-September quarter. Arizona was No. 2, followed by California, Florida and Idaho. Rounding out the top 10 were Utah, Georgia, Michigan, Colorado and Illinois.

AP LogoCopyright © 2009 The Associated Press, Alan Zibel, AP real estate writer. AP Real Estate Writer Alex Veiga contributed to this report from Los Angeles.

The Federal Government has dedicated billions of funds of  TARP money to help banks recover from the massive economic downturn in the housing industry. What have they done with the money and why aren’t they averting foreclosures?

I get questions every day of why mortgage modifications never apply to my customers and if they do qualify, why are the modification programs ultimately a less favorable financial solution then before the modified their loan. If there are billions of dollars being spent, where it is going?

There is a great article that talks extensively about the issue of service providers badgering, manipulating and lying to their customers. They have even stuck customers with bogus fees or improperly foreclosed on them. The article can be read below and is definitely worth your time to read.

Firms are getting billions, yet aren’t averting foreclosures

WASHINGTON – Oct. 6, 2009 – The federal government is engaged in a massive mortgage modification program that’s on track to send billions in tax dollars to many of the very companies that judges or regulators have cited in recent years for abusive mortgage practices.

The firms, called mortgage servicers, have been cited for badgering, manipulating or lying to their customers, sticking them with bogus fees, or improperly foreclosing on them.

Mortgage servicers are the middlemen between homeowners and the investors that hold their mortgages, collect homeowners’ checks and disburse payments for the mortgages, property tax and insurance. They’re a necessary player for any modification.

The reliance on such companies points to an ironic paradox for federal regulators: Cleaning up the nation’s financial crisis often rewards the firms that helped create the mess. Those Wall Street banks and mortgage servicing companies argue that they’re best positioned to repair the damage they’ve helped cause. In the case of the mortgage program, the firms getting the taxpayers’ money are, after all, the firms that control the troubled mortgages.

To make matters worse, the Government Accountability Office, Congress’ watchdog, has said that the Treasury Department hasn’t done enough to oversee the companies participating in what’s known as the Home Affordable Modification Program, which emerged from the bank bailout bill Congress passed last fall.

The modification program has been slow to get off the ground. Since it began this spring, only 12 percent of a potential 3 million delinquent mortgages have begun the process of being reworked, or put into “a trial modification,” according to Treasury Department data through August, the most recent available.

“We’ve consistently been behind this problem,” said Mark Pearce, North Carolina’s chief deputy commissioner of banks, who works with a state-level group of attorneys general from across the country. “Two years ago, maybe some were caught by surprise. But we still haven’t gotten to a point where the servicers have demonstrated an ability to handle the problem.”

Housing advocates say homeowners still face “reluctant lenders,” said Irwin Trauss, an attorney who represents low-income homeowners for Philadelphia Legal Assistance. He recently testified at a hearing of the Congressional Oversight Panel, the watchdog that monitors the Treasury’s Troubled Asset Relief Program, better known as TARP, or the bank bailout bill.

Trauss said that Bank of America, at least through July, told homeowners that they couldn’t participate in the program when they should’ve been allowed to do so, and he alleges that Saxon Mortgage forced one of his clients into bankruptcy without providing a valid reason for turning down her modification request. Trauss’ comments were echoed by other housing advocates, who’ve found mortgage servicers slow to respond and confused about modification rules.

“Servicers look for reasons to avoid making the modifications when they are most needed, rather than for opportunities to make them,” Trauss said.

Saxon Mortgage said it couldn’t comment on Trauss’ testimony because it wasn’t provided with specific details of the account in question. Bank of America said there could have been instances in which improperly trained employees were confused about the modification rules, but the vast majority of customers have been given proper information.

Although it’s early in the Treasury Department’s program, housing advocates say the servicer industry for years has resisted helping customers with modifications. Donna and Ronnie Fruia, of Troutman, N.C., learned firsthand how difficult it can be.

The couple was in the midst of a series of health crises, and three members of the family – the couple’s son, Donna’s mother and Ronnie – were in the hospital.

It was then that Donna got an urgent call that somebody from her mortgage company, CitiFinancial, had just showed up in her husband’s hospital room, where he was recovering from a stroke.

“They said, ‘Some guy’s in there aggravating him,’ “ she said.

“At the time, I couldn’t even really talk that good,” Ronnie said. “But he wanted me to sign a bunch of papers.”

The Fruias had been trying to get a mortgage modification from CitiFinancial. The company, however, was pushing the Fruias to accept a modification that wouldn’t have cut their interest rate, they said.

Only after the episode in the hospital room and the involvement of state regulators did CitiFinancial cut the mortgage’s interest rate from 11.5 percent to 5 percent, lowering their monthly payment from $985 to $602. The process took from the start of the year until July.

“They were the perfect candidate for someone with a subprime rate getting a modification,” said Henrietta Thompson, who as housing coordinator for United Family Services, a United Way-funded organization in Charlotte, helped the Fruias. “I know if the banking commissioner hadn’t gotten involved, it wouldn’t have happened.”

While CitiFinancial, a unit of Citigroup Inc. – one of the largest recipients of TARP bailout funds – said it couldn’t talk about specific customers, it’s “pleased” that the case was resolved.

“We have strict guidelines concerning the behavior of our representatives, and the incident you described would not be acceptable under our policies, even if well-intentioned,” said Mark Rodgers, a spokesman.

It shouldn’t have been a surprise that the mortgage service companies would have trouble executing wide-scale mortgage modifications. They generally aren’t set up for the complicated business of reworking loans.

In 2007, an assistant attorney general in Iowa, Patrick Madigan, analyzed the looming mortgage meltdown and found that mortgage service companies have a “highly automated process, spending as little time as possible on an individual loan and preferably no time actually talking to the customer.”

“Loan modifications, by contrast, are a time-intensive process that requires a great deal of individualized attention,” he wrote. “In some situations, it may be easier and cheaper for a servicer to simply foreclose on a borrower than to try to fix the underlying problem.”

Service companies had high turnover and employees who saw their jobs as akin to that of collection agents. Some were known to hang up on callers if they started to get tough questions, Madigan wrote. He urged mortgage service companies to hire far more staff and boost training.

That year, Iowa Attorney General Tom Miller convened a group of state officials (Iowa’s Madigan helped coordinate the effort), who then contacted the nation’s 20 largest servicers of risky subprime mortgages.

By September 2008, however, as the economy went into free fall, the mortgage industry’s efforts had been “profoundly disappointing.”

“Too many homeowners face foreclosure without receiving any meaningful assistance by their mortgage servicer, a reality that is growing worse rather than better,” said a report from the State Foreclosure Prevention Working Group.

By this year, more federal and private efforts were under way to modify millions of troubled mortgages, and customer service was beginning to improve. Companies, though, were still having trouble getting the job done.

“It is difficult for homeowners to initiate productive discussions with lenders because many servicers lack the capacity to deal with a large volume of modifications,” the Congressional Oversight Panel reported. “Servicers are generally understaffed for handling a large volume of consumer loan workouts.”

The panel found that it’s “unlikely” that mortgage servicers will be able to do all they’re being asked to do: “Servicers are simply in the wrong line of business for doing modifications en masse,” it said.

Madigan, the assistant Iowa attorney general, said in an interview that “the mortgage industry has responded to this crisis with a series of half steps based on a notion that a turnaround in the housing market was just around the corner.”

Under the Treasury Department’s mortgage modification program, three parties can participate: the company that owns the loan, the company that services the loan, and the homeowner. All get a portion of the more than $20 billion that the federal government currently estimates it could spend to keep homes out of foreclosure.

While the Treasury said it’s necessary to take in as many mortgage service companies as possible, the GAO found that the department wasn’t doing enough to monitor the process.

In a July report, the GAO said that the department had “significant gaps in its oversight structure,” and was short-staffed in the office monitoring the modification program. As of July – eight months into the program – the Treasury had filled fewer than half the positions in a key modification office. (Many of those jobs have since been filled, the department said.)

Beyond that, the government had conducted “readiness reviews” of only seven of 27 mortgage servicers the GAO examined; no more were planned. The reviews only included interviews with senior executives – and the information gathered wasn’t verified.

“Treasury cannot identify, assess and address risks associated with servicers that lack the capacity to fulfill all program requirements,” the GAO said.

Treasury said it’s beefing up its review procedures and also said it recognizes many of the problems and has been working to correct them. “Clearly, we’re not there yet,” said Seth Wheeler, one of the Treasury officials who oversees the modification effort. “Clearly there’s still inconsistent application of the program, even though we have made progress.”

Several companies in the Treasury program have been cited by judges or regulators for engaging in improper behavior with their customers.

They include Select Portfolio Servicing Inc., a Utah-based company formerly known as Fairbanks Capital Corp.; Countrywide Home Loan Servicing, now a unit of Bank of America Corp.; Carrington Mortgage Services LLC, based in California; Saxon Mortgage Services Inc., a unit of Morgan Stanley; EMC Mortgage Corp., now a subsidiary of JPMorgan Chase & Co.; and Green Tree Servicing, a Minnesota company.

Ocwen Financial Corp., a Florida-based company that services more than 300,000 mortgages nationwide, could receive more than $200 million in TARP payments.

“Ocwen has screwed up my finances so bad you can’t believe it,” said Brad Rhoton, whose rental properties in the Houston suburbs are part of a nationwide lawsuit against Ocwen. “It’s been the most maddening process you can imagine.”

Rhoton’s lawsuit charges that Ocwen constantly misapplied Rhoton’s mortgage payments and tacked on unnecessary fees and insurance, causing his accounts to fall behind.

So far under the Treasury’s modification program, Ocwen has started trial modifications in 8 percent of potential mortgages – below the national average and well below some other servicers.

Paul Koches, a company spokesman, said the number is misleadingly low. Ocwen, he said, has set rigorous standards in documenting its modifications and is therefore likely to have a far higher share of its modifications stick than other companies. He said that Ocwen undertook its own loan modification program in 2007 and has beefed up its staff substantially since then.

As for the suits against it, Koches said they represent a fraction of the firm’s customer base, and many were copycat lawsuits that tried to paint Ocwen with the same brush as other mortgage servicer firms. He said the company continues to vigorously defend itself against lawsuits.

Over the years, Ocwen has lost other lawsuits and has been slapped down by a federal judge for its conduct.

In one Texas bankruptcy case, for example, a federal judge blasted Ocwen after it tried to pass the cost of a $1,000 sanction onto the customer it was cited for mistreating. When the judge found out, he said, “Ocwen’s course of conduct in this proceeding bordered on the outrageous.” He fined the company an additional $27,500.

The case was far from isolated, however. A jury in Galveston, Texas, ordered the company to pay $11.5 million, and one down the coast in Corpus Christi ordered it to pay $3 million for unfairly foreclosing on homeowners (both cases were then settled in the appeals process for undisclosed amounts).

In both cases, the plaintiffs were on the edge financially, and so when Ocwen added extra fees to their accounts, they quickly fell behind.

That was part of their strategy, plaintiffs’ attorneys said. One of the key witnesses before both juries was a former Ocwen account officer who said the company trained its sights on customers who had substantial equity in their homes. In those cases, the company had the most to gain if customers lost their homes in foreclosure.

“We didn’t treat the people very well, but the money was pretty good,” the former account officer, Ron Davis, testified during one of the trials. (Davis couldn’t be reached for further comment.)

The motive, he said, was simple: force people into foreclosure as a way to earn higher bonuses.

“We would call the customers and ask them what bridge they were going to live under,” Davis testified.

Ocwen lost that lawsuit. A Texas jury found that the company engaged in “fraudulent, deceptive, or misleading” tactics that it called “unconscionable.” The case involved an elderly Texas woman the bank tried to evict from her home even after a local judge had ordered it not to. The jury awarded her $11.5 million, which was reduced to $1.8 million, according to Ocwen’s Securities and Exchange Commission filings; the case was settled during appeals.

Outside the courts, federal regulators in 2004 approached Ocwen to request that the company enter into a formal supervisory agreement under which it promised to improve its customer service. It required, for example, that Ocwen beef up its ombudsman to take customer complaints; adopt a “borrower-oriented customer service commitment plan”; take reasonable actions to see if homeowners already have hazard insurance before adding it to customers’ accounts; and regularly report to federal regulators about outstanding customer complaints.

Koches of Ocwen said the agreement was merely an attempt to formalize many of the steps the company was already taking – and that the company and federal regulators wanted to avoid the kind of problems other firms had experienced.

Later that year, however, Ocwen took steps to ensure that such regulatory findings wouldn’t come again.

By successfully petitioning to have itself removed from the oversight of the Office of Thrift Supervision, the supervisory agreement hatched just months before was ended, according to Ocwen’s regulatory filings. Ocwen said it removed itself from OTS oversight for business reasons unrelated to the supervisory agreement and that it continues to follow the intent of the agreement.

© 2009 McClatchy-Tribune Information Services, Chris Adams. Distributed by McClatchy-Tribune News Service.

Destin, FL – September 12, 2009  – Keller Williams Emerald Coast Distressed Property Short Sale Division is hosting a limited seating seminar for distressed sellers to be held on Saturday September 12 from 10AM to Noon at their office located at 151 Regions Way Suite 4A in Destin (across from Bass Pro on 98). The primary objective of this seminar is to afford homeowners and investors who find they can no longer make payments on their properties dignified alternatives to Foreclosure that benefits the property owner and the bank as well.  Keller Williams Emerald Coast has always been a frontrunner in the community when comes to their concern for the welfare of others.

Pat Perrotta, who holds the Certified Short-Sale Professional (CSP) designation heads up that division and along with Joe Baranowski and Craig Baranowski who both hold the Certified Distressed Property designations  (CDPE, CFS) has organized this event which will include a panel of experts consisting of an attorney, an accountant, a lender and experienced Real Estate Professionals to answer all the myriad of questions distressed sellers may have.  Some of the topics to be discussed will be “What are a person’s options to foreclosure? What is a short sale and how can someone qualify? What kinds of programs are in place to help distressed owners?  Myths and Facts about alternatives” and much more.  In today’s difficult economic climate and increasingly competitive real estate market, trained agents set themselves apart by helping homeowners navigate through the process of selling their property before it goes into foreclosure.

Unlike normal real estate transactions a short sale requires particular care and additional work to be completed smoothly and, if done improperly, may cause the homeowner to go into foreclosure.  Armed with the specialized experience and an increased awareness of the principles of short sales and pre-foreclosures, this panel of professionals are immediately able to better serve their current and prospective home sellers that may need to sell their home.  This knowledge sets these individuals apart from their peers, because they have the tools to assess a homeowner’s situation and properly guide them and the buyer of the property through all the necessary approval processes required to sell a distressed property.  These professionals are able to pre-qualify a property owner with their particular lender, and then help them prepare the required documentation.   They navigate through the mortgage framework on the property owner’s behalf and keep them from being foreclosed upon.  If you or someone you know are facing the possibility of foreclosure, or just struggling to make mortgage payments, please get help before the process starts and be at this FREE informative seminar.  There are many myths and horror stores about pre-foreclosure situations, so ask the experienced professionals at Keller Williams Emerald Coast Distressed Seller’s Solutions seminar for their advice before you make a decision in buying or selling a distressed property. For more information, to secure your seat or to send advance questions for our panel, please call Pat at 850-830-5541 or e-mail to soldbypat@topproducer.com or Craig at 850-259-1788 or email to craig@teambaranowski.com.

Below is a summary of Industry Statistics for Mortgage Delinquencies across the nation for Q2 2009. This is a snap shot across all mortgages, prime, subprime, FHA and VA. The numbers are still staggering but it appears there is some stabilization. We need to keep a close eye on the market and the unemployment rate. Also, we must pay close attention to see how the market holds up through the traditionally slow winter months.

It has been a very busy summer for Team Baranowski and The Short Sale Gurus LLC. Every short sale that we engage in is an emotional roller coaster. We hear first hand the heart wrenching stories of homeowner’s financial hardship and their struggle to keep from loosing their home. We also get the see a new family be able to afford a home, sometimes as a first time home buyer, in a very difficult economy and give us hope that the market will stabilize and turn for the better.

This week Team Baranowski and The Short Sale Gurus successfully closed on another short sale in Windswept Estates. It is a wonderful 2,796 square foot 3 Bedroom 2 Bath home built in 2005 by Marlin Design and Construction. It had all the essentials to making a beautiful home: hardwood floors, a fireplace, granite countertops, 10′ foot ceilings and lots of built in cabinetry. The home was located on the popular Windswept Estates golf course, Windswept Dunes.

The home was originally purchased in 2005 at the height of the market for $483,000. The home was listed in March of 2009 and put on a specific marketing and listing plan customized for a short sale. The home went under contract in May and we received approval in July due to the excellent negotiation skills of Joe Baranowski of the Short Sale Gurus LLC. Joe has been negotiating and helping homeowners with short sales for over two years and helps train negotiators across the country. He has negotiated over $15 million in deficiencies!

The buyers had a USDA loan under the SHIP program and it took 30 days to get the loan ready for closing once the short sale was approved. The entire transaction went very smooth and the both the sellers and buyers were a pleasure to work with. The selling agent also was a joy to work with and very professional. I hope to do more transactions with Don. Angie with South Walton Title kept the closing process smooth and streamlines as possible.

Here is a breakdown of the short sale:

Original Purchase price 2005: $483,000

Short Sale Purchase price 2009: $225,000

1st Mortgage: Nationpoint $392,000

2nd Mortgage: Nationpoint $95,000

New Loan: USDA Loan under SHIP program

Total Deficiency forgiven less closing costs: $292,147

Total time to negotiate with Lender: 9 weeks

100% Deficiency forgiven, no promissory notes or cash out from seller

If you or someone you know is looking at buying or selling distressed property…rely on the experts, The Distressed Property Experts of Team Baranowski! Call 850-259-1788 or email us for a free consultation.
Note: The information provided is for informational purposes. No legal advise is given or implied. Please check with a qualified attorney in your area

This is the follow up survey to the survey we completed during the Seaside 4th of July parade. We polled on-line visitors to Sowal.com, 30A.com, our websites southwaltonluxuryhomes.com, distressedpropertyexpert.net and Facebook fans of the 30A area.

Here are the survey results!

8% of the people interviewed are Real Estate Round Up listeners. Over 50% that said they have not listened intend on listening to the show.

28% Were FULL TIME Residents, 28% visit 3-6 times per year. All but one visited more than once a year.

47% Are looking to buy 86% of which is a home, 38% Land, 15.4% Condo

-          Majority were greater than 12 months time frame.

46% Are looking to SELL 60% Land, 40% Home, 40% Condo [many interviewed are looking to buy and sell multiple properties]

-         Majority were 6-12 months

Areas – Seagrove #1, Seacrest, Rosemary, Alys Beach, WaterSound and Blue Mountain and one in Miramar Beach

36% Think the market has hit bottom in South Walton Beach. 4th of July survey results were 37.5%

64% This we still have not hit bottom in South Walton Beach. 4th of July survey results were 62.5%

- 40% believe it will be in another 6 months

- 40% believe it will be in the next 1-2 years

- 20% greater than 2 years

62.5% Believe the stimulus package, TARP funds and new buyer tax credit are helping the housing recovery

37.5% believe that it is not helping

Thanks to everyone who participated in the survey!!

Single-Family Home Prices Rise in May

Nationwide, detached, single-family home prices gained 1.6 percent in May, according to Integrated Asset Services, a specialist in default management and residential collateral valuations.

The increase is the largest since July 2005, IAS reported. The index had previously declined more than 19 percent from its peak in June 2007. Compared to April, the Northeast was up 3.2 percent, the Midwest 1.9 percent, the South 1.1 percent, and the West 0.9 percent.

“Two month’s worth of positive data hardly signals a turn in the national housing market,” says Dave McCarthy, President and CEO of Integrated Asset Services. “But we have to be encouraged by what we’re seeing in several important counties and neighborhoods.”

Hardest-Hit Counties since their peak in 2006

IAS also tracks monthly changes in median sale prices in 15,000 struggling communities. It identifies the following counties where prices have fallen furthest since the 2006 peak. South Walton’s price peak hit in 2006. During this peak we had over shot the market on the high and the number of sales transactions plummeted from the 2005 high.

South Walton Area – 53 percent from 2006 [Peak value]

South Walton Area – 48 percent from  2005 [Peak sales]

Fresno, Calif. -28.1 percent

Imperial Calif. -45.2 percent

Kern, Calif. -33.8 percent

Monterey, Calif. -37.9 percent

San Bernardino, Calif. -29.1 percent

San Joaquin, Calif. -42.8 percent

Charlotte, Fla. -37.6 percent

Hernando, Fla. -38.7 percent

Lee, Fla. -45.2 percent

Pasco, Fla. -50 percent