Pasadena Short Sale: No Housing Recovery Until 2020 | Pasadena Area Short Sale Blog

Pasadena Short Sale: No Housing Recovery Until 2020 | Pasadena Area Short Sale Blog

Scary Housing Predictions

In case we weren’t depressed enough about the state of the economy and the state of our own personal finances, media outlets have to go and survey the powers-that-be for their opinions. Scary doesn’t really begin to describe it.

According to this CNBC story, home prices are unlikely to recover before 2020 and mortgage defaults will persist for years, says a recent survey of bank risk managers. That’s just wonderful news. The survey conducted by the Professional Risk Managers’ International Association for FICO, found that 49% of respondents do not expect housing prices to rise back to 2007 levels for another nine years. Only 21 percent of respondents said they would.

The findings, which authors called “a decidedly pessimistic outlook”, are a sharp reversal from cautious optimism the survey respondents expressed late last year and in early 2011. In addition, 73 percent of surveyed bankers say they expect mortgage defaults to remain elevated for at least another five years. And 46 percent believe mortgage delinquencies will increase over the next six months.

Only 15 percent of respondents expect mortgage delinquencies to decline during that period.

Why Are Bankers So Pessimistic?

These are opinions only, of course, but they do come from the very bankers who are studying the housing market and its continued declines in many markets. At this point, statistics tell us that 1 in 80 homes nationwide is in some stage of foreclosure. This was a 33% jump in just one month to a 9-month high. In Florida the figure is 1 in 44, in Illinois 1 in 43, 1 in 37 in Arizona. Nevada leads the nation with 1 in 20 homes in foreclosure while our own California has 1 in 48.

What Do These Figures Mean?

We all know that foreclosed homes are sold more cheaply as banks, not being in the real estate business, do everything in their power to sell them fast. Every home that goes into foreclosure pulls its local market down by a small increment. When many are sold as REOs [real estate owned], the local market as a whole is lowered. As prices dip, nearby homeowners are losing their equity; those on the edge are then driven underwater. Once a homeowner is underwater, the impetus to pay the mortgage lessens as it hardly seems worth it.

At this point, the economy as a whole is performing badly. Millions are out of work and can’t pay their bills, including their mortgages. Those that are able put more and more on credit cards until the issuers pull the plug. Millions of people are using retirement money to get through this tough spot. The trouble is the tough spot is lasting for years and their grown children cannot find work either.

Enter the banks. The banks, as we all know are wallowing in cheap cash from the Fed, but are reluctant to lend. On their books, left over from their giant party during the “bubble” years are trillions of dollars of bad mortgages which by now everyone is realizing will never be made good. Instead of settling for less by restructuring these bad loans or offering temporary loan mods, the banks are instead simply dumping these properties onto an already-saturated market.

We know what will happen next. As Bank of America, for instance, with huge inventories of bad loans from its acquisition of Countrywide, especially here in SoCal where the company was located, is slammed with plummeting stock prices, the urge to get the non-performing loans off the books is overwhelming. And, so more foreclosures hit the market, spiraling prices down and creating more underwater mortgages, more future foreclosures.

Is it any wonder the bankers are pessimistic about the chances for a housing recovery? Housing cannot recover until the wider economy pulls itself out of the ditch and gets back on track. When will that happen? In the meantime, should you be considering a short sale, call me.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at drdbroker@gmail.com. I will contact you for a free consultation. If you prefer to stay in your home, perhaps a loan mod, a refi or mortgage litigation is the best route for you. During our consultation, I will be happy to help you come to the right decision for you.

When we talk, I will explain how the short sale process works in detail and answer any questions you may have about either short sale or mortgage litigation. Or, if you prefer, you can call me at (626)641-0346.

Diane Butler specializes in helping Pasadena Homeowners short sale and never pay the bank another penny. Pasadena Loan Modification Help, Pasadena Short Sales, Pasadena Short Sale Realtor, Pasadena Realtors, Pasadena Realty, Pasadena Realtor. Altadena Short Sales, Altadena Short Sale Realtor. Azusa Short Sales, Azusa Short Sale Realtor.

Kamala Harris Comes Through: CA Out Of Big Banks Deal! « Diane’s Blog

Kamala Harris Comes Through: CA Out Of Big Banks Deal! « Diane’s Blog

Kamala Harris Comes Through: CA Out Of Big Banks Deal!

Kamala Harris Is My Hero, Too

This is terrific news: Kamala Harris, California’s Attorney General, has heard the people of this state, suffering under the worst mortgage and real estate crisis since the Great Depression. She has opted out of the proposed settlement of the 50 states Attorneys General with the Big Banks. That settlement, rumored to be about $25 billion, is really small potatoes and would have been a disastrous conclusion of their investigation. $25 billion would barely settle the monetary issues for California alone, not to mention the other 49 states. In addition, the banks are seeking to limit all their legal liability in return for the meager settlement. Despite the support of the Obama administration,hoping to end financial uncertainty with this settlement, Harris has decided that California will pursue a separate investigation and, if possible, make a separate settlement with the Big Banks.

Other States Are Reluctant To Sign

Harris follows in the footsteps of Eric Schneiderman of New York who has launched a wide-ranging investigation of the activities of the Big Banks which include Bank of America, Chase, Wells Fargo, Citigroup and Ally Financial. Other states have also signaled their displeasure with the proposed deal which, if rumors are correct, allots a huge windfall to the Big Banks and a meager settlement to the states. Besides New York and California, Delaware Massachusetts, Kentucky and Minnesota, along with our hard-hit neighbor, Nevada have all signaled intense dislike of the proposed deal.

California, already one of the worst foreclosure states in the nation, recently made headlines again when foreclosures jumped 55% in one month as BofA, a prime supplier of SoCal mortgages during the “bubble years” via Countrywide, prepared to “dump” more seized homes on an already-bloated real estate market. Stockton, CA is especially at risk for there, it is estimated, 1 in every 7 homes could be foreclosed in the near future. Likewise, Nevada’s Las Vegas is suffering from an especially difficult and long-lasting crisis as estimates say that 75% of Las Vegas homes are underwater and could potentially be foreclosed.

Fraudulent Mortgage Practices

As indicated in a previous post, some of the most notorious fraudulent practices of the Big Banks, such as robo-signing, continue despite their public exposure. Since California is a non-judicial state, meaning foreclosures do not have to be approved by a judge or, indeed, by anyone, fraudulent foreclosures are harder to spot. Judicial states, in general, are the ones which have brought such practices to light. Given the huge number of foreclosures in California, though, it stands to reason that large numbers of these were not legitimate. Victims of such practices should have the help of the state’s top lawyer, the attorney general, to help them seek redress. Except in rare cases, it is prohibitively expensive for individuals to launch suits against Big Banks. That should not give the Big Banks carte blanche to commit wholesale fraud against California mortgagees.

What Does This Mean For Distressed Homeowners?

The most likely scenario now with both New York and California posing uncomfortable questions to the Big Banks while launching probing investigations into mortgage abuse is that the 50-state deal will collapse. The Big Banks will have to live with uncertainty. Will they be brought to the bar for their crimes? How much will it cost them? Will heads roll? And the Big Question for Big Banks: will profits suffer? will stock prices dive? Few have much sympathy left for the banks, so, aside from Timothy Geitner and Henry Paulson, few will really care.

The outcome for the distressed and already-foreclosed-upon homeowner, though is a different story. With multiple ongoing investigations, quick relief in the form of monetary settlements is not in the cards. It is really, though, to everyone’s advantage to dig deeper into this morass of abuse. If the fraud is papered over, then, equally obviously, it will happen again. If the banks made trillions by fraud and nobody cares to demonstrate the modus operandi, then they will continue to behave in the same way. Showing the crime and punishing the criminal: That is the basis of our judicial system and it is a vital necessity in this case.

Some of the more flagrant practices are already known, publicized, and yet continuing. Big Banks could regulate themselves in order to regain public confidence. This is, apparently, what was expected of them after the 2008 bailout which seems to have been offered with no strings whatsoever. Did they regulate themselves? For those imprisoned in Siberian ice caves for the past 4 years, the Big Banks went right back to business as usual. Congress needs to regulate our messed-up financial sector. The sooner, the better if we are ever to get out of this nightmare.

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