Banks have a new remedy to America’s ailing housing market: Bulldozers.




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Banks have a new remedy to America's ailing housing market: Bulldozers.

There are nearly 1.7 million homes in the U.S. in some state of foreclosure. Banks already own some of these homes and will soon repossess many more. Many housing economists worry that near constant stream of home sales from banks could keep housing prices down for years to come. But what if some of those homes never hit the market.

Increasingly, it appears banks are turning to demolition teams instead of realtors to rid them of their least valuable repossessed homes. Last month, Bank of American announced plans to demolish 100 foreclosed homes in the Cleveland area. The land is then going to be donated back to the local government authorities. BofA says the recent donations in Cleveland are part of a larger plan to rid itself of its least saleable properties, many of which, according to a company spokesperson, are worth less than $10,000. BofA has already donated 100 homes in Detroit and 150 in Chicago, and may add as many as nine more cities by the end of the year.

(LIST: Top 10 Most Affordable Cities for Renters)

And BofA is not alone. A number of banks are ramping up their efforts not just to rid themselves of their unwanted homes, but to fully dispose of them. Fannie Mae has a program to sell houses to local municipalities for around a few hundred dollars. Wells Fargo has donated 800 homes to be demolished since 2009. JPMorgan Chase says it was one of the first banks to begin donating houses it couldn't sell, or didn't think were repairable. Since 2008, the JPMorgan has donated or sold at a discount 1,900 houses to city or county officials.

The banks do the deals because once the properties are donated they no longer have to pay taxes or for upkeep. Tax experts say the banks may also be able to get a write off for the donation. That appears to be a better deal than trying to repair some of these homes, which according to a BofA spokesperson are more economical to demolish than fix up. The local governments like these deals because they get free land to develop or use for open space. Cleveland-based Cuyahoga County Land Reuntilization Corp., which inked the deal with BofA, has been one of the most aggressive local government organizations in striking these deals. Housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all, dragging down home prices in general. An oversupply of homes on the market has been once of the big problems plaguing real estate. At the end of June, it would take nine and a half months for the current number of homes on the market to sell. The housing market is considered healthy when supply equals six months of sales. So taking some of these homes off the market for good could remove some of the inventory drag.

(MORE: How To Fix the Housing Market)

The question is whether the banks will ever put up enough housing for demolition to make a difference. The Obama administration says it is working on its own plan to revamp its loan modification program in order to help keep more people in foreclosure in their homes, reducing the number of foreclosed properties on the market. Some areas of the country are looking at how to speed up foreclosures in an effort to return some normality to the market. It's not clear that any of this will work. Certainly, the idea that we are at the point where banks would be better off knocking down houses that reselling them shows there is still something very wrong with the housing market. But what is clear is that banks and others are at the point where they are ready to try something new to boost the housing market. And that is a good sign for the future.

Stephen Gandel is a senior writer at TIME. Find him on Twitter at @stephengandel. You can also continue the discussion on TIME's Facebook page and on Twitter at @TIME.


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Federal Housing Administration (FHA)

1) Foreclosure is 3 years

2) Deed-in Lieu is 3 years

3) Short Sale is 3 years

4) Bankruptcy is 2 years

Veterans Administration (VA)

1) Foreclosure is 2 years

2) Deed-in Lieu is 2 years

3) Short Sale is 2 years

4) Bankruptcy is 2 years

Conventional Conforming (FNMA/FHLMC)

1) Foreclosure is 7 years

2) Deed-in-Lieu is 4 years < 80% LTV and 5 years > 80% LTV for primary residences. 7 years for second homes and investment properties regardless of LTV.

3) Short Sales is 2 years < 80% LTV and 5 years > 80% LTV and 7 years > 90% LTV

4) Bankruptcy is 4 years

Conventional Non-Conforming (JUMBO)

1) Foreclosure is 7 years

2) Deed-in-Lieu is 7 years

3) Short Sale is 7 years

4) Bankruptcy is 7 year



Report: 8 months of 'shadow inventory'

CoreLogic says REOs could weigh on price appreciation, exacerbate declines

Source: CoreLogic

The "shadow inventory" of homes likely to be repossessed by lenders or already in their real estate owned (REO) inventory but not yet on the market reached 2.1 million units in August, up from 1.9 million a year ago, according to the latest analysis by data aggregator CoreLogic.

Because home sales also slowed, the shadow inventory represented eight months of housing supply, up from five months a year ago, CoreLogic said.


"It's not the hurricane hitting the shore, it's just a long and persistent rain, and that dampens the spirit all the way through." –Mark Fleming, chief economist, CoreLogic

Weak demand for housing is "significantly increasing the risk of further price declines in the housing market," said CoreLogic Chief Economist Mark Fleming — a problem that's exacerbated "by a significant and growing shadow inventory that is likely to persist for some time" because of the length of time it takes loan servicers to liquidate properties.

Combine the 2.1 million "shadow inventory" with the 4.2 million homes that were actually on the market in August, and the total months' supply of unsold homes was 23 months — about double the 11.6 months the National Association of Realtors estimated in September.

Mainers file lawsuit against GMAC

Seek court order to freeze foreclosure sales and evictions of homeowners

By Trevor Maxwell


Staff Writer


PORTLAND — The plaintiffs in a class-action lawsuit against GMAC Mortgage Co. are seeking a court order to freeze foreclosure sales and evictions of homeowners in Maine whose loans are owned or serviced by the mortgage giant.



A hearing on the request could be scheduled as early as this week in U.S. District Court, where the case has been assigned to Judge D. Brock Hornby.

Lawyers for the plaintiffs say their clients — and potentially hundreds of others in similar circumstances — deserve to stay in their homes as the courts sort through allegations that GMAC has used fraudulent paperwork to speed foreclosures through Maine's court system.

Revelations about GMAC's back-office practices came to light through depositions taken earlier this year by lawyers for homeowners in Maine and Florida. That prompted attorneys general in all 50 states to announce last month that they would investigate the practices of GMAC, JPChase Morgan, Bank of America and other leading mortgage companies.

It's unclear how many homes in Maine are in foreclosure proceedings begun by GMAC, the nation's fourth-largest mortgage lender. According to court documents, the company has initiated 1,156 foreclosure actions in Maine since January 2005, but the documents don't say how many of those cases remain open, or how many are on the brink of sales.

"Those situations are the most urgent," said Tom Cox, a lawyer in South Portland whose work on behalf of homeowners helped prompt the national probe. "We don't know how many of these cases are out there because we don't have access to GMAC's records."

Cox is one of six lawyers who brought the class-action lawsuit against GMAC last month, on behalf of six plaintiffs who hope eventually to represent a much larger class. The plaintiffs are Michael Holmes, Steven Archibald of Windham, Nicolle Bradbury of Denmark, Thomas True of Belfast, Shawn Morrissette of Saco and Joseph Phillips of Mechanic Falls.

Originally filed in Cumberland County Superior Court, the case was transferred last week to federal court at the request of GMAC.

Jim Olecki, a spokesman for GMAC's parent company, Ally Financial, said in a prepared statement, "The underlying facts of default in the named plaintiffs' cases are not in dispute. The average property is not foreclosed on until the mortgage is unpaid for 18 months and all other home preservation options have been exhausted. We will vigorously defend the allegations in the class-action lawsuit."

The company issued a statement to the media Oct. 12, announcing that it had hired several legal and accounting firms to review its foreclosure procedures in all 50 states.

The plaintiffs in Maine filed their motion for a temporary restraining order last week. Time is of the essence, Cox said, noting that True's home in Belfast is scheduled to go to auction Thursday.

Like the other plaintiffs, True claims that the legal paperwork used by GMAC to support the foreclosure was signed by Jeffrey Stephan, a GMAC processor in Pennsylvania.

In a deposition for a different Maine foreclosure case, Stephan admitted that he signed more than 10,000 foreclosure documents a month and did not verify the information those documents asserted, as required by Maine law.

That practice by GMAC and other lenders, dubbed "robo-signing," is a main target of the nationwide investigation. Observers have noted that to process 10,000 documents a month during eight-hour workdays, a person would have about 90 seconds to review each file.

"I do see this case being about making sure servicers and lenders in general, if they are going to bring a foreclosure action, that they do it correctly and according to the rules of our courts," said Andrea Bopp Stark of the Molleur Law Office in Biddeford.

Stark and Charles Delbaum of the National Consumer Law Center in Boston are the lead lawyers for the plaintiffs.

Stark said the first issue is the request for the temporary restraining order. A telephone conference between the parties and U.S. Magistrate Judge John Rich is set for this morning, and Stark hopes a hearing on the request will be set up as soon as possible in front of Judge Hornby.

"Basically, we're asking the court to stay all sales and evictions until we can get resolution on the merits of the case," Stark said.

That could take months or even years.

The next step would be an extensive discovery period, during which the sides would take depositions and gather information. Then the plaintiffs would need Hornby to certify the case as a class action, and to define the class – the pool of people who would be allowed to seek damages.

In their complaint, the lawyers for the plaintiffs say the class should be defined as any homeowner in Maine who had a foreclosure initiated against them by GMAC in the past six years, and whose case included paperwork that was not processed in compliance with state law.

"We're essentially asking for the money the former homeowners were charged by GMAC to bring the foreclosure action against them. That cost always gets passed on to the homeowner," Stark said. "Plus, we're asking for any punitive damages that the court sees fit."

Cox said the plaintiffs also seek a permanent court order to require GMAC to change its practices in foreclosure proceedings in Maine's courts.

"What we're doing in Maine is part of the national pattern of trying to make sure that the past improper practices are not continued," Cox said.

Sales of Previously owned homes rose in September

WASHINGTON (Reuters) – Sales of previously owned homes rose in September, but remained at subdued levels that did little to undermine the case for additional monetary stimulus next week from the Federal Reserve.

Existing home sales increased for a second straight month, rising 10 percent from August to an annual rate of 4.53 million units, theNational Association of Realtors said on Monday.

Although the increase far exceeded economists' expectations for a 4 percent rise to a 4.30 million-unit pace, they remained below the 5 million-unit pace normally associated with a healthy market.

"The September data shows that the post-tax-credit bust in home sales has come to an end and we are now on a gradual recovery path," said Zach Pandl, a U.S. economist at Nomura SecuritiesInternational in New York.

U.S. stocks extended gains on the report, while Treasury debt prices were steady at higher levels. The U.S. dollar trimmed losses versus the euro.

The report came ahead of the Federal Reserve's meeting next week at which policymakers are expected to decide to inject more money into the economy through bond purchases, to drive borrowing costs down further and stimulate demand.

The Fed cut overnight interest rates to near zero in December 2008 and has already bought about $1.7 trillion worth of Treasury and mortgage-related debt.

The housing market is showing signs of having bottomed after hefty declines in the aftermath of the end of apopular tax credit for home buyers. Activity, however, remains very subdued and recovery will be very slow given a 9.6 percent unemployment rate.

Last month, the inventory of previously owned homes for sale fell 1.9 percent to 4.04 million units from August, representing a supply of 10.7 months.

The national median home price fell 2.4 percent from September last year to $171,700.

But an investigation into the processing of foreclosures by some banks is casting a cloud over the housingmarket, which was the main catalyst of the 2007-09 recession.

There are concerns that the investigation could slow the housing market correction as banks hold back foreclosures.

"The current foreclosure (situation) is a potential negative. Less foreclosures mean the supply of these homes for sale will go down and people will be more reluctant to buy them," said Jim O'Sullivan, chief economist at MF Global in New York.

According to the NAR foreclosed properties constitute about 20 percent of homes on the market. TheRealtors group cautioned against any government mandated moratorium.

Last month foreclosed properties accounted for 23 percent of sales while short sales made up 12 percent.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama

Bank of America resumes Foreclosures in 23 states

NEW YORK ( — Bank of America reviewed foreclosures in the 23 states where a court must sign off on the proceedings, and it is now restarting the process on 102,000 cases, the company said Monday.

The company said the first of the new affidavits will be submitted by Oct. 25, and that it will continue its review in 27 other states

According to a spokeswoman for the bank, no errors were found during the review, and fewer than 30,000 foreclosure sales across all 50 states will be delayed as a result of the investigation.

State attorneys general have stepped up pressure on banks in recent weeks after it was revealed that some bank employees had signed foreclosure affidavits without verifying that the documents were accurate, a process known as "robo-signing."

Maine Foreclosure Freeze: What affect will it have on the housing market in Maine?

Fallout from a nationwide foreclosure freeze will have very little affect on the Maine housing market, says industry analysts. GMAC, Chase, and Bank of America have imposed a foreclosure moratorium in all 50 states after the revelation that they may have been practicing illegal foreclosure tactics. 


Sales of some foreclosures stopped dead in their tracks following this announcement.

"There is an agent in my office who has had to pull many listings because of this foreclosure freeze." said Marty Macisso, Short Sale specialist with Regency Realty Group in South Portland, Maine "Its unclear at this point what will happen to those bank owned listings because they need to straighten out their foreclosure paperwork." 


Banks who must submit proof of a homeowner's default on their mortgage, must do so in the form of Affidavits from bank employees who have "personal, first hand knowledge" of the homeowner's loan. Questions about document fraud raised by Thomas Cox, a retired lawyer from South Portland who is active in the Maine Attorneys Saving Homes advocacy group, helped force GMAC Mortgage Co./Ally Financial Inc. to stop foreclosures last month in 23 states, including Maine.

From January through August of this year, 6,887 sales of existing homes were recorded by the Maine Association of Realtors. During that period, Maine had 132 foreclosure sales — roughly 2 percent of the total — according to RealtyTrac, which records foreclosure activity. 


It's still very early in the game, but many think this problem will be resolved, while some think it could be the beginning of a larger mess involving wrongful foreclosure law suits.

Marty Macisso is a Maine Realtor specializing in short sales, bank owned homes.

September home foreclosures top 100,000 for first time

WASHINGTON (Reuters) – The number of homes taken over by banks topped 100,000 for the first time in September, though foreclosures are expected to slow in coming months as lenders work through questionable paperwork, real estate data company RealtyTrac said on Thursday.

[Related: Effects of the foreclosure halt]

Banks foreclosed on 102,134 properties in September, the first single month above the century mark, RealtyTrac said. There were 347,420 total foreclosure filings in September, 3 percent higher than August and 1 percent higher than a year earlier.

"We expect to see a dip in those bank repossessions — and possibly earlier stages of the foreclosure process — in the fourth quarter as several major lenders have halted foreclosure sales in some states while they review irregularities in foreclosure-processing documentation that has been called into question in recent weeks," said James J. Saccacio, chief executive officer of RealtyTrac.

[Related: Can a short sale prevent foreclosure?]

On Wednesday, all 50 states launched a joint investigation of the mortgage industry after widespread reports of mortgage industry officials signing foreclosure documents without knowing their contents.

For the quarter, there were 930,437 foreclosure filings, an increase of 4 percent over the prior three months and 1 percent lower than a year ago. One in every 139 homes received a foreclosure filing in the third quarter.

The firm said foreclosures could spike after a brief lull if lenders are able to quickly resolve the paperwork questions.

[Related: Loan modification tips and warnings]

"However, if the documentation issue cannot be quickly resolved and expands to more lenders we could see a chilling effect on the overall housing market as sales of pre-foreclosure and foreclosed properties, which account for nearly one-third of all sales, dry up and the shadow inventory of distressed properties grows – causing more uncertainty about home prices," Saccacio said.

Nevada posted the highest foreclosure rate for the 45th straight month, followed by Arizona, Florida, California and Idaho.

In 2005, before the housing bust, banks took over just about 100,000 houses, according to the Irvine, California-based company.

THE WORLD OF CRAZY: Banks halt foreclosures in 50 states because they get caught committing FRAUD!

by Marty Macisso

Distressed Property Specialist

There are some major rumblings in the foreclosure and bank owned property world right now, as the nations largest foreclosing lenders are finding themselves in hot water over recent illegal and fraudulent foreclosure procedures.

The fraud all stems from GMAC Mortgage's revelation that one of its employees, Jeffrey Stephans, was committing Notary Fraud and presenting to the various Courts across the Nation – Fraudulent Affidavits.

In a nutshell, to foreclose on a homeowner, a Lender/Bank/Other must present to a Court (in Judicial States) a Lawsuit that claims they, the Plaintiff, can PROVE based on the evidence in its possession – that the Homeowner is in default according to the Mortgage and Note.


In order to PROVE this claim by the Plaintiff, they must submit to the Court a Motion for Summary Judgement and Affidavit of The Facts. The Judge or fact finder of the case, reviews the Motion and the Facts and then rules either in favor of the Plaintiff or the Defendant.

An affidavit is a document sworn to as true and accurate in the presence of a Notary Public, and is acceptable evidence in Court, in place of an actual testimony(these banks are in other states and must submit affidavit in place of testimony) and the person testifying in the document is doing so on the presumption that they have "personal first hand knowledge of the facts"

This is the PROBLEM! How can Mr. Fraudster Stephans claim to have personal, first hand knowledge of "The Facts"  in each and every case that he submitted Affidavits for. He admitted in deposition that he was signing up to 10,000 Affidavits per month and had NO KNOWLEDGE of anything particular to the cases. This is whats known as Robo-Signing and law firms employing this dirty and illegal tactic are considered Foreclosure Mills.

Where do we go from this 30 Day foreclosure moratorium? Chances are that the Banking Industry's Lobbyists are working overtime in drafting emergency bills to remedy this problem, and although unfairly to homeowners, many of these foreclosures will continue through with substitute Affidavits.

But consider this moratorium – 1 win for the consumer.


HUD Sees Stabilization, but Frailty, in Housing Market Conditions

by Carrie Bay (

Housing conditions continued to show signs of stabilizing during the second quarter of this year, following a downward trend that began to reverse itself in mid-2009, HUD says in a new report. The federal agency immediately follows that assessment, though, with “the housing market’s recovery remains fragile.”

HUD’s 92-page quarterly commentary on the state of housing in the United States sums up a dichotomy of positives and negatives in market indicators.

In the marketing sector, sales of existing homes rose, but sales fell for new homes, the agency notes. In the production sector, single-family housing permits and starts both fell in the second quarter of 2010, although the number of single-family housing completions rose.

HUD cited numbers from the National Association of Realtors(NAR), which showed that the second quarter’s seasonally adjusted annual rate (SAAR) of existing-home sales was 5.607 million, up 9 percent from the first quarter.

According to a supplemental NAR practitioner survey, sales to new homebuyers accounted for 46 percent of all transactions in the second quarter compared to 42 percent in Q1. Foreclosures and short sales represented 32 percent of all home sales in the second quarter, down from 36 percent.

The SAAR for new single-family homes in Q2 was 340,000, a drop of 6 percent from the 360,000 rate in the first quarter.

Inventories of available homes at the current sales rate increased in Q2, reaching an average rate of 8.5 months’ supply for existing homes and a 7.8 months’ supply of new homes,HUD noted. Those figures represent a 14 percent increase and 8 percent decrease from last year, respectively.

“Of concern is the ‘shadow inventory’ of homes resulting from the high rate of delinquencies and foreclosures, which has the potential to increase the supply of homes for sale and further depress home prices,” HUD said in its report.

NAR reported that the median price of existing homes sold was $176,900 in the second quarter, up 6 percent from the prior three-month period. The median price of new homes sold was $210,200, down 6 percent from the first quarter.

The federal agency also pointed out that the national homeownership rate declined to 66.9 percent in the second quarter of 2010. HUD says the drop in homeownership “reflects the subprime lending crisis, the high rates of unemployment, and the recent severe recession.”

Addressing the nation’s still-present foreclosure crisis, HUDsays servicer emphasis on home retention actions, including those under the federal government’s Making Home Affordable program, are helping to keep the number of newly initiated and completed foreclosures down, despite rising delinquencies.

“These programs cannot help all delinquent borrowers, however,” HUD stressed in the report. “In this regard, servicers have indicated that completed foreclosures are likely to increase as alternatives for seriously delinquent borrowers are exhausted.”





Recent Articles

FREDDIE and FANNIE jump on the HAFA band wagon…will it work?

Fannie Mae and Freddie Mac loans were exempt from the HAFA short sale program that was put into effect by the Treasury on April 5, 2010. Fannie Mae has just created its own version of HAFA with regulations that you can find at Similarly, Freddie Mac has created its version of HAFA with regulations you can read at .


Short Sales – Its emerging as a savior to the Foreclosure Crisis many homeowners currently find themselves in, but can it be an investment opportunity? Yes indeed, sir… or mam.

What's the difference between buying a Short Sale or a Bank Owned home? Anyone? Anyone? Well, the difference is vast even though both scenarios involve making bids on distressed properties and requiring a 3rd party approval.

In simple terms, a short sale involves a property that is still owned by a human being and not a corporation, not a bank. However, in order to sell a property that has a mortgage lien far larger than the current fair market value, the Seller needs to apply to the bank by presenting a Hardship Package as well as an Offer from a buyer sufficient enough to gain approval from the Bank's Loss Mitigation and garner a lien release and appropriate transfer of title to the new owner/buyer.

Making a bid on a short sale, often times, is a longer waiting process for a decision on an Offer (30-45 days) than bidding on a bank owned property(7 days) , however, there exist better opportunities for buyers in a short sale.

Things to remember:

1. The house is being listed by a Real Estate agent specializing in Short Sales and if they're worth their salt, they can often price the property below market value and get a supporting value from the bank.

2. There are so many short sale listings, the buyer can cherry pick their favorite, throw out a lowball offer and the Seller's will take it, submit it to the bank – only for the purpose of getting the process started. So, even if the offer is so low its "insulting", ie. $100,000 on a home worth $199,000, the seller(who is still the decision maker on whether to submit offers or not) will often agree to submit the offer – to jump start the process. NOW – the bank will conduct their own appraisal and likely make a much higher counter offer or outright REJECT the offer.

3. The Seller is fine doing this because they can keep marketing for backup offers and always submit a Substitution bid to the lender/lien holder.

4. The buyer is also able to submit bids on multiple properties, akin to throwing darts at the dartboard and trying to hit the Bulls Eye! Disclaimer: The buyer when making an offer must be able and willing to close on the transaction, if not, this is considered a Straw Buyer and that is not lawful.

5. Where a bank owned property is "AS-IS" and seller concessions are often not considered, Short Sale transactions involve multiple payouts to cover: existing liens, back taxes, current taxes, repair credits and seller relocation funds. Lien holders are only looking at the bottom line – "Will we net more money doing this versus the costly action of Foreclosure?"

6. There is very little competition in the bidding process and even if a bank Rejects the Offer, there are procedures that a competent Short Sale Real Estate Specialist can fall back on to Escalate the file, challenge a wrong Appraisal and outright fight for the deal.

For more information on the Short Sale process or to speak to a professional visit:





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