ORLANDO, Fla., - A national survey found 301,874
"zombie" properties dotting the U.S. landscape in which homeowners in
foreclosure have moved out, leaving vacant property susceptible to
vandalism and degradation.
Florida tops the list of zombie properties with 90,556 vacant homes in foreclosure, according to a foreclosure inventory released on Thursday by RealtyTrac, a real estate information company in Irvine, California.
Illinois and California ranked a distant second and third with 31,668 and 28,821 zombie properties respectively on the list.
The number of homes overall in foreclosure or bank-owned rose by 9 percent to 1.5 million properties nationally in the first quarter of 2013 compared to a year ago, according to RealtyTrac.
Another 10.9 million homeowners nationwide remain at risk because they owe more than their property is worth, according to company vice president Daren Blomquist.
RealtyTrac for the first time analyzed data on zombie properties after a Reuters' special report in January examined the special problem of zombie titles, Blomquist said.
Reuters revealed the plight of people who walked away from their homes not realizing that their names remained on the deed and that they were financially liable for taxes and other bills related to the abandoned property.
In some cases, homeowners vacated after receiving a notice from the bank of a planned foreclosure sale, only to find out later the bank never followed through.
Zombie properties can be easy to spot as they deteriorate into neighborhood eyesores and havens for criminal activity.
While Florida leads in volume of zombie properties, Kentucky, with less than 1,000 zombie properties, leads in percentage, with zombies representing 54 percent of its total foreclosure inventory, Blomquist said.
Zombies in Washington, Indiana, Nevada and Oregon also constitute 50 percent or more of the properties in foreclosure, according to the report.
Blomquist said the number of zombie properties could be higher than represented in the RealtyTrac report, which used a conservative methodology.
In Florida, for example, the company does not count any property that has been in foreclosure longer than the state average of 853 days and for which there has been no significant recent activity. The report also does not take into account cases in which a bank chose not to follow through on a foreclosure judgment, leaving the property in limbo.
Blomquist said the long average time to complete a foreclosure case in Florida likely contributes to the high number of zombie properties, as people give up hope over time and walk away.
Blomquist said the findings overall show a housing recovery is under way but not yet deeply rooted.
"I think the empty foreclosures is less of a long-term threat but it certainly is affecting individual communities and neighborhoods," Blomquist said.
According to the Reuters special report, municipalities are left to deal with the mess when people move out after receiving a notice of a planned foreclosure sale that the bank then cancels.
Some spend public funds on securing, cleaning and stabilizing houses that generate no tax revenue. Others let the houses rot.
Unsuspecting homeowners have had their wages garnished, their credit destroyed and their tax refunds seized. They've opened their mail to find bills for back taxes, graffiti-scrubbing services, demolition crews, trash removal, gutter repair, exterior cleaning and lawn clipping.
In some cities, people with zombie titles can be sentenced to probation, with the threat of jail if they don't bring their houses into compliance.
The backlog is blamed on homeowners allegedly dragging their feet. In reality, banks have been the cause because of federal directives to pursue loss-mitigation alternatives or by voluntarily slowing down the process to explore settlement options in the interests of both parties and the market.
However long it takes to conclude a foreclosure in Florida, given the unprecedented magnitude of the fraud, forgery and abuses to which banks have admitted, we should exempt this category of civil court cases from “time to complete” requirements.
We should not make public policy decisions based on unverified, incorrect and misleading information, particularly when the data are provided by the same industry that admitted wrongdoing.
The next problem behind any push for foreclosure reform is that the real-estate market is improving. Prices have rebounded in Florida because, in part, inventories of foreclosed homes are being managed by the banks and homeowners.
Short sales and negotiated resolutions of foreclosure cases yield higher returns than faster foreclosures, but these settlements would disappear under the proposed legislation.
The big winners would be institutional buyers. When they buy properties in bulk, they exclude Realtors who profit from short sales and from other end user transactions. Instead of supporting the legislation, Florida’s Realtors should be following California’s lead and opposing all actions to speed foreclosures.
Foreclosure-legislation proponents have also convinced homeowner associations to support their bills by arguing that this legislation will help them. It’s true that the so-called, “show cause” provisions of both bills would allow any lien holder to show cause as to why a final judgment of foreclosure should not be entered. But if the plaintiff chose not to file any of the evidence needed to obtain a foreclosure judgment, a court could not enter a judgment.
Associations already can demand status conferences and existing law allows judges to force a plaintiff to move a case forward. Also, associations already can move their own cases to judgment, and pending legislation will allow them to move their cases much more quickly.
Since 2012, the market for third-party investors to purchase association liens at foreclosure auctions has been robust. Investors pay the $4,000 to $20,000 in HOA liens, take title to the property and rent it out before a bank forecloses. This market will be eliminated, and associations will be stuck with large inventories of unpaid lien cases, making things even worse.
It is undisputed that those responsible for the foreclosure crisis are the financial institutions that filed these cases, as admitted in two recently signed federal settlements. These settlements should lead to more protections, not lowered standards. The full magnitude of bank wrongdoing has not been fully revealed, and even more will be swept under the rug.
Americans are starting to feel a sense of hope about our economy for the first time in half a decade -- and a big reason is the rebound in the housing market. It certainly hasn't always been this way. It was only a few years ago when we learned that many of the same financial institutions responsible for causing the housing crisis -- through predatory loans and exploding adjustable rate mortgages (ARMs) -- were actually making it worse by foreclosing on homeowners without verifying paperwork, losing documents, and failing to provide even the most basic assistance that might have helped families save their homes.
That was why one year ago, we took action, through a historic, bipartisan settlement between the Federal government, 49 state attorneys general and the five largest mortgage servicers -- the second largest consumer relief settlement in the nation's history. As a result, between March and December over 550,000 homeowners received nearly $46 billion in overall consumer relief, with homeowners receiving roughly $82,000 in benefits on average.
At a moment when Americans have been looking for Washington to put partisanship aside to deliver results, the most recent report
from the National Mortgage Servicers Settlement's Independent Monitor
indicates that families and struggling homeowners can get what they are
promised when we work in a bipartisan way.
The cash payments, consumer relief and servicing standards imposed by that settlement are bearing fruit. State attorneys general across the nation have allocated more than $300 million for housing counseling and legal aid to help borrowers avoid foreclosure. The report also demonstrates significant progress on the broadest and most robust principal reduction program in our nation's history. Because of the settlement, banks have provided more than $22.5 billion in completed and trial principal reduction that helps borrowers stay in their homes, lowering the monthly payments on more than 266,000 loans and reducing struggling homeowners' loan balances by more than $84,000 on average.
The settlement has already far surpassed our initial expectations of total consumer relief and will likely grow to more than $50 billion. When we began the settlement negotiations, many critics claimed that large-scale principal reduction could not work or families would purposely default to unfairly receive a modification. Those predictions have been proven wrong. Indeed, the principal reduction provided through the settlement has made a real, significant and lasting difference for thousands of struggling homeowners.
The settlement has helped single mothers like Vanessa Fair in Chicago who has four foster children and fell behind on her adjustable rate mortgage because of medical issues. She worked with a HUD-approved housing counseling agency and is now current on her mortgage and in a trial modification that will reduce her principal by $40,000.
Another single mother, Maria Garcia, fell behind on her mortgage when she was laid off in 2009. Concerned about her three children growing up in an unsafe neighborhood, she worked with a housing counseling agency and not only is she current on her mortgage again, she has received a permanent modification that has reduced her loan balance by $120,000. Maria credits the Mortgage Settlement with helping her family keep their home.
And yet, despite many stories like Vanessa's and Maria's nationwide, some remain unconvinced that the settlement is really making a difference or that banks are beginning to meet their obligations. Still others have criticized the settlement based on inaccurate assumptions about the data or the settlement terms.
For example, a number of recent articles inaccurately state that short sales are the equivalent of foreclosures and that the bulk of relief provided under the settlement thus far comes from short sales. Neither of those statements is true. It is important to note that principal reduction modifications, not short sales, are the bulk of the relief provided by the settlement. Short sales represent less than 43 percent of the total assistance provided and have decreased as a share of relief in every Monitor's report since August 2012. Furthermore, the settlement requires that, regardless of what a snapshot of relief looks like at the time a report is published, ultimately at least 60 percent of the servicer's credits must come from principal reduction, and at least half of that must be for first lien principal reduction.
The increase in short sales, combined with the settlement's requirements that borrowers be properly evaluated for modifications, is a positive, not a negative sign. Short sales are helpful for borrowers who need to leave their underwater home or those who cannot make sustainable payments, even on a modified loan. When we negotiated this settlement, too many borrowers in those circumstances were forced into foreclosures and were left with a deficiency balance when a short sale would have been better for them, their neighborhood, and the loan's investor.
There have also been recent press accounts indicating that banks are eligible to receive credit for activities that are not, in fact, creditworthy. These examples include banks forgiving a homeowner's second lien while foreclosing on the first they also hold. In fact, as the settlement makes clear, and Joe Smith, the independent Settlement Monitor confirms, he will not give any credit for a modification that does not provide a tangible benefit to a homeowner.
Approximately $1.5 billion of the funds recovered in the national
settlement are being used to compensate borrowers who lost their home to
foreclosure during the period of January 1, 2008 to December 31, 2011.
Checks to borrowers who submitted claim forms are expected to be mailed
by the mid-summer. However, this money is not, nor was it ever, intended
to fully compensate families who were wrongfully foreclosed upon. That
is why the settlement has carefully preserved those borrowers' rights to
seek additional restitution.
The job's not done -- and we will continue to watch the banks like hawks to ensure they live up to their obligations as they complete their consumer relief requirements and we measure their progress on implementing new and improved servicing standards.
No settlement by itself can turn the housing market around or right all wrongs. But by failing to accurately describe the results, recent reporting does a disservice to the more than 550,000 homeowners and their communities who have benefited from the settlement.
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Foreclosure filings in Colorado metro counties were down 43.6 percent during February 2013, falling year over year to the lowest level recorded in any month since the Colorado Division of Housing began collecting monthly totals.
According to a report released Wednesday by the Colorado Division of Housing, foreclosure filings in Colorado metropolitan counties dropped from 2,056 in February 2012 to 1,160 in February 2013.
At the same time, foreclosure auction sales in Colorado's metropolitan counties were down 41.9 percent in February 2013 compared to February 2012, falling from 1,248 to 725 .
Foreclosure filings are the initial filings that
begin a foreclosure process, and foreclosure auction sales totals are
number of foreclosures that have been sold at auction at the end of the foreclosure process.
"There are few ways to describe this other than as a big drop off in foreclosure filings," said Ryan McMaken, an economist for the Colorado Division of Housing. "It's getting easier to sell a house to get out of trouble. Low mortgage rates and low inventory continue to be big factors."
Comparing foreclosures through February this year to the same period last year, the counties with the largest drops in foreclosure filings were Douglas and Larimer counties, where filings decreased by 44.5 percent and 41.2 percent respectively.
Broomfield County, on the other hand, reported a 6.1 percent increase in foreclosure filings over the same period. It was the only county surveyed to report an increase in foreclosure filings.
All of the 12 counties surveyed showed decreases in foreclosure auction sales during the first two months of 2013 when compared to the same period in 2012. The counties with the largest decreases in foreclosure auction sales, year over year, were Douglas and Jefferson counties, where auction sales decreased by 46.3 percent and 41.0 percent, respectively.
The smallest decreases for the period were found in El Paso and Pueblo counties where auction sales fell 1.9 percent and 20.1 percent, respectively.
The county with the highest rate of foreclosure sales during February was Mesa County, with 1,022 households per foreclosure sale. Pueblo County came in second with 1,351 households per foreclosure sale.
The lowest rate was found in Boulder County, where there were 6,383 households per foreclosure sale.
Foreclosure bill clears
Fla. Senate panel
TALLAHASSEE, Fla. — For the second year in a row, Florida lawmakers on Wednesday debated a proposal to speed up the state's residential mortgage foreclosure process and make it fairer to homeowners.
But critics on the panel and in the audience, including former Lt. Gov. Jeff Kottkamp, raised alarms about a provision that would allow notices of sale of foreclosed homes to be published only on the Internet.
Advocates for newspapers and senior citizens, among others, said that would reduce the chance of such notices being seen.
Nonetheless, the Senate's Banking and Insurance committee cleared the bill (SB 1666) by an 8-2 vote.
The collapse in the real estate market that began in 2008 resulted in millions of foreclosures across the country. Those cases quickly swamped an already overworked court system. Florida still has about a quarter of the nation's foreclosures, according to surveys.
More problems arose when it was learned that paperwork in many foreclosures was the product of "robo-signers," people hired to sign documents in assembly-line fashion, often without knowing what's in them. Such documents included affidavits that a bank actually owns the mortgage on a property being foreclosed when the original paperwork can't be found. Many cases of mistaken and outright fraudulent filings were then found.
Sen. Gwen Margolis, a Miami Democrat, expressed surprise about the Internet-only provision to the bill's sponsor, Sen. Jack Latvala, a Republican from Clearwater.
She wanted to know why he wasn't "willing to compromise on ... issues that are important to the people and really have created quite a stir here today."
Latvala responded that he'd continue to work on it, insisting more people use the Internet than read newspapers. But, referring to newspapers, he added, "Do we need to ... keep an industry alive that's having problems? Is that our place? I don't know."
Latvala's bill, among other things, also includes provisions for:
- Reducing the statute of limitations, or amount of time, for banks to go after foreclosed homeowners on deficiency judgments from five years to one year. Deficiencies are the difference between the money obtained from selling a foreclosed home and what the original homeowner still owes on it.
- Requiring banks to prove in more detail that they own the mortgage or explain why they can't prove ownership.
- Creating a process for others besides mortgage-holders to ask the court to speed up foreclosure cases.
- Creating legal protections for people who buy foreclosed homes in good faith, not knowing of defaulted mortgages or problems with titles.
- Allowing senior, or semi-retired, judges to also hear foreclosure matters for at least the next three years to relieve the backlog, estimated at 371,000 cases. Those judges will be paid $350 per day.
Other opponents of the bill said a faster process will trample on the rights of homeowners already being hounded by banks and their attorneys.
Booker T. Perry retired after 25 years as a firefighter in Central Florida, only to have to go through a foreclosure and divorce at the same time. At one point, his bank - unknown to him at the time - was wrongly sending his paperwork to his wife's divorce lawyer.
Under this bill, he said, there'll be less time to catch mistakes. And "if there are flaws," Perry said, "the case shouldn't move forward."
The Senate bill next stops at the Judiciary committee. A companion bill is in the House
Wall Street Institutions Behind Home Price Surges In Markets Like Phoenix
It’s no secret that Wall Street has been bullish on real estate. Housing stocks have surged over the past year, many teetering on the edge of overbought, and billionaire investors like Warren Buffett have been exceedingly vocal about the investment opportunities brick and mortar properties have represented. Private equity and hedge fund firms have been sinking billions into single family rentals, buying distressed homes off of banks’ balance sheets in discounted bulk.
Now it turns out those Wall Street bulls have been helping fuel the home price surge in some of the hottest housing markets across the U.S.
The March MarketPulse report from CoreLogic examines the rise of institutional investors and the effects they are having on distressed inventory. The analysis, compiled by CoreLogic deputy chief economist Sam Khater, looked at 16 major U.S. housing markets where bank-owned inventory (REOs) have been relatively high since the housing bubble burst. He assessed whether local activity was comprised of mom-and-pop individual investors or institutional investors, defined as either entities that have purchased five-plus properties a year under the same name or under an incorporated name.
Here’s what Khater found: institutional investors have been targeting specific markets and then accelerating purchases of REOs in those markets, driving down distressed inventories and leading to notable increases in REO prices that have in turn led to larger market upticks. Institutional investors have focused buying efforts strongly on south and southwestern cities that were hit hardest by the foreclosure crisis. The cities where investors activity has been particularly robust in the past year are Atlanta, Ga., Detroit, Mich., Las Vegas, Nev., Phoenix, Ariz., and Calif.’s Los Angeles, Riverside and Sacramento.
Interestingly, many of these areas have welcomed notable year-over-year price increases as well — though none quite as much as Phoenix, which welcomed a nearly 23% uptick in prices throughout 2012, amid reports of frenzied bidding wars. The share of institutional investors in the desert metropolis was 16% in 2011; it jumped to 26% in 2012. Not surprisingly inventory levels plummeted as demand increased, putting upward pressure on prices that have created a ripple effect. Explains Khater:“In Q4 2012, Phoenix REO prices were 37% higher than a year ago, followed by Las Vegas (30%) and several California markets. All six markets with rising shares of institutional investors experienced double-digit increases and were among the top nine for REO price appreciation
'More importantly, the ripple effects are greatly impacting the broader market. Lower-end home prices in markets with rising shares of institutional investors are up 15% from a year ago, compared to only 6% for the remaining markets.”
Institutions are most active in five states: Florida, Georgia, Arizona, Nevada and California. Interestingly the metro area that welcomed the most institutional activity in 2012 was Miami, Fla., with firms funding 30% of all sales. Single-family home prices for the Miami metro area rose about 11% in 2012 (including distressed homes), according to CoreLogic.
Institutional investors accounted for 21% of all sales in Charlotte, N.C., 19% in Las Vegas, and 18% in Orlando.
Major investment firms have been setting aside billions of dollars for large scale acquisitions in single family housing since the downturn, with activity jumping in 2012 as analysts called a market bottom. The strategy: snap up dozens, hundreds, even thousands, of distressed homes, fix them up and rent them out for robust returns. JPMorgan Chase recently estimated that institutional investors had amassed a combined $10 billion for single family rentals.
It makes sense. Home prices fell to historic lows following the bubble’s burst and bank-owned homes (REOs) trade at prices further depressed. (Nationally, foreclosed homes sold at an average discount of 20% in January, according to the National Association of Realtors.) Meanwhile, the rental market has climbed for the past several years, rising about 4% nationally in 2012, according to NAR, even as new multifamily construction returns. NAR and others expect rates to rise by about 4% per year for the next several years.
JPMorgan Chase, which also offers its wealthiest clients the opportunity to invest directly in a rental portfolio of about 5,000 homes, says its clients can expect annual returns as high as 8%, according to Bloomberg. Colony Capital, a real estate equity company privately owned by billionaire Thomas Barrack, has allocated $2 billion for investments nationwide. It plans to sink more than $150 million per month this year into rental homes, including an anticipated 1,000 units in South Florida, after snapping up 5,000 across the country in 2012.
Waypoint Homes expects to own 10,000 homes by year’s end; it has already amassed upward of 3,300 properties. Other investors include BlackRock, which is making housing plays both stateside and in the E.U., Apollo Global Management, Och-Ziff Capital Management Group, KKR& Co, and Oaktree Capital Group — to name a few.
Even Buffett’s Berkshire Hathway has been building out a residential real estate brand called Berkshire Hathaway Home Services that it plans to franchise with joint venture partner Brookfield Asset Management this year. The venture has amassed the loan portfolio of bankrupt Residential Capital, acquired realty firms like Prudential Real Estate and Real Living Real Estate, and bought out several construction companies like brick maker Jenkins Brick.
By far the biggest player in this arena is private equity giant Blackstone Group. “Blackstone is now the largest owner of individual houses in the United States,” asserted Stephen Schwarzman, chief executive and chairman of Blackstone Group, on CNBC recently. “We’ve purchased about $3 billion of houses that had been foreclosed and we are fixing them up.” The private equity billionaire also noted that it’s a new business for the company, which plans to hang onto the rental properties for the long term.
Still, for all of the money Wall Street firms are plowing in single family rentals — and all of the impact it is having on home prices –their stakes are still relatively small. While BlackStone has committed to amassing 15,000 properties in 2013, individual investors purchased a staggering 600,000 properties through financing in 2012.
WASHINGTON — A little-known career bureaucrat temporarily filling a key government job has emerged as the person with the most impact on the nation's battered housing market — and is rapidly making enemies.
As the regulator over Fannie Mae and Freddie Mac, which own or back 60% of the nation's mortgages, Edward J. DeMarco is considered by a growing number of people to be the single biggest obstacle to the housing market recovery for opposing the use of a major foreclosure prevention measure.
DeMarco, interim director of the Federal Housing Finance Agency, won't instruct the government-owned companies to lower loan principals for distressed homeowners, as many banks nationwide have been doing.
Kamala D. Harris, attorney general for California, the nation's largest distressed real estate market, and many congressional Democrats want DeMarco replaced. Some have been especially sharp in their criticism.
"Here's some random idiot who ends up in charge of this agency, who is doing actual damage to the housing industry and my constituents," said Rep. Zoe Lofgren (D-San Jose). "He is intransigent, incompetent and should be removed."
Republicans don't agree that writing down loan principals would be worth the additional risk to taxpayers, but some also have been critical of DeMarco for not fully embracing their attempts to shut down Fannie Mae and Freddie Mac quickly or for not doing more to reduce executive pay.
For his part, DeMarco warned in an interview that writing down loan amounts is no panacea and that, regardless, "there's no free lunch."
DeMarco has his admirers in Congress and elsewhere, and he said he has no intention of bowing to outside pressures or leaving his post, which he has held since mid-2009.
"He's the bravest guy in D.C." for steadfastly resisting the call for write-downs, said Jaret Seiberg, a senior policy analyst with financial services firm Guggenheim Partners. "Agree with him or disagree with him, you've got to respect him."
For months, Obama administration officials, lawmakers and others have pushed DeMarco to direct the companies to reduce the amount owed on mortgages held by delinquent, underwater homeowners. Many economists have said that those principal reductions could stem the tide of foreclosures.
Such a move could jolt the market because Fannie and Freddie play such a major part in the roughly $10-trillion mortgage market. Yet DeMarco has said his priority is protecting the $188 billion of taxpayer money that has been pumped into the companies since the government seized them in 2008.
Despite his opposition to write-downs, DeMarco said he is considering new incentives from the administration that could make it less costly for Fannie and Freddie to reduce loan amounts. The incentives include increased financial aid to mortgage owners that agree to lower principal owed on home loans.
"We all recognize this is a very challenged environment for the country and there's been a whole lot of hurt out there. We want to do the right thing," DeMarco said. "But we're also mindful that there's no free lunch here, that there are people who have to pay this bill."
So far, DeMarco has argued that principal reductions would reduce the value of bad mortgages owned by Fannie and Freddie by about $100 billion, increasing losses on the huge taxpayer investments in the companies.
A wide-scale program also could encourage homeowners who have been making their payments to fall behind intentionally so they could get a reduction on their mortgages, he said.
DeMarco has insisted that there are more effective — and less costly — ways to help struggling homeowners, such as reducing interest rates. Fannie and Freddie already are doing that.
He's also concerned that principal reductions could benefit large banks by making it more likely that the second mortgages they hold would be paid off by underwater homeowners, while taxpayers still would be on the hook for any losses on the first mortgages.
But many analysts said that most borrowers who owe more than their homes are worth don't have second mortgages and that those who do would find that those lenders too may be required to share in the loss.
DeMarco's opposition to principal reductions has sparked calls for his firing. But it is very difficult for a president to remove the head of an independent agency. And Republicans have blocked Obama's attempts to appoint a new director, who must be confirmed by the Senate.
"We're kind of stuck with him," said Rep. Elijah Cummings (D-Md.), who has met with DeMarco several times to plead for a change in policy. "The president is stuck, the Congress is stuck and folks who are going through foreclosure, they are stuck."
In the face of intense pressure, DeMarco said he's committed to staying in the job.
"My career's been devoted to an array of government jobs in which doing the right thing ... for the country and the taxpayer has been central to my oath of office and to the work that I have done," he said.
DeMarco, 52, who holds a doctorate in economics, has been a Washington bureaucrat for about 25 years with stops at the Government Accountability Office, Treasury Department and Social Security Administration.
In 2006, he became deputy director of the Office of Federal Housing Enterprise Oversight, which morphed into the FHFA.
"He's really a devoted public servant," said the housing agency's former director, James Lockhart. "In many ways, he's the most experienced person in the government on these issues."
When Lockhart, a political appointee of President George W. Bush, left the FHFA in August 2009, DeMarco became acting director. But DeMarco, a civil servant, lacks the backing of the Obama administration, which makes the job more difficult, Lockhart said.
Lockhart said there is a role for principal reductions to help the housing market, but he said he understands DeMarco's concerns. So do many congressional Republicans.
"If you start doing write-downs, the loss to taxpayers will be even greater," said Rep. Scott Garrett (R-N.J.), who chairs a House subcommittee that oversees Fannie and Freddie. "He's in a very tough situation, and I think he's handling it as well as anybody could."
DeMarco said he's only trying to follow the law, which requires him to "preserve and conserve" the assets of the companies. If members of Congress believe principal reductions are a priority, they should change the law, he said.
But given the bitter partisan divide in an election year, Democrats said they would never be able to get such legislation passed. Obama could try to use a recess appointment to replace DeMarco, but analysts said he's unlikely to do that after the controversy surrounding his recess appointments in January.
Instead, administration officials are working with congressional Democrats to try to change DeMarco's mind.
"If somebody were to write a book about this situation 20 years from now," Cummings said, "they'll write that here was a man who could have made a difference and didn't."
WASHINGTON -- Attorneys general from California and eight other states on Monday publicly urged President Obama to replace Edward J. DeMarco, the controversial acting regulator for housing finance giants Fannie Mae and Freddie Mac.
The state officials criticized DeMarco, who heads the Federal Housing Finance Agency, for his steadfast refusal to allow government-owned Fannie and Freddie to reduce principal on mortgages it backs to help struggling homeowners avoid foreclosure.
"Unfortunately, under the leadership of Acting FHFA Director Edward DeMarco, Fannie Mae and Freddie Mac remain an obstacle to progress by refusing to adopt policies that will help maximize relief for homeowners," the attorneys general wrote in a letter to Obama and congressional leaders.
"In particular, FHFA's refusal to adjust its policies to allow for principal forgiveness and forbearance stands as a major impediment to addressing the foreclosure crisis," the letter said.
Fannie and Freddie own or back 60% of the nation's mortgages.
The letter came amid reports Obama might be ready to nominate a replacement. Among the candidates mentioned are Rep. Melvin Watt (D-N.C.) and Phyllis Caldwell, a former Treasury official who worked on housing issues.
California Atty. Gen. Kamala Harris, who has been pushing for DeMarco's replacement for more than a year, was among the attorneys general, all Democrats, who signed the letter organized by New York's Eric Schneiderman and Massachusetts' Martha Coakley.
"The time has come for the President and Congress to work together to install a new, permanent leader at FHFA that will be a partner, not an impediment, in the national effort to comprehensively address the foreclosure crisis," Schneiderman said.
The attorneys general said that principal reductions by five large banks have been a key component to a nationwide settlement of foreclosure abuse allegations.
"When loan modifications employ principal write-downs as necessary to create an affordable modified loan, countless more families will avoid unnecessary foreclosure," the letter said
DeMarco, a career bureaucrat who been the acting head of FHFA since 2009, has infuriated many Democrats by not allowing Fannie and Freddie to reduce the amount of principal owed by distressed homeowners.
Obama administration officials unsuccessfully have pushed DeMarco to let Fannie and Freddie reduce principal on mortgages.
DeMarco said that such a move could cost taxpayers money in the bailouts of Fannie and Freddie and also could worsen the housing market by encouraging people to fall behind on their payments to get principal reductions.
Many Republicans have cheered DeMarco's stand, saying it is protecting the approximately $132 billion in federal money that Fannie and Freddie owe to taxpayers after the companies were seized in 2008.
Because of that Republican support for DeMarco, it would be difficult for the White House to get Senate confirmation for a nominee to replace him.
A White House spokeswoman did not immediately respond to a request for comment.
Indicating a revival of the housing market, the foreclosure market
report – released by RealtyTrac – revealed that the overall foreclosure
activity in Feb 2013 showed a downward trend on-year-over year basis. As
per this leading online marketplace of foreclosure properties,
foreclosure filings plunged 25% from Feb 2012 but increased 2% from Jan
2013. This brought the aggregate number of properties receiving default,
auction or repossession notices to 154,281.
Foreclosure starts – default notices issued and foreclosure auctions (depending on the state’s foreclosure procedure) – declined 25% from Feb 2012 but rose 10% from Jan 2013 to 71,488 properties in the reported month. Bank repossessions (REOs) plunged 29% from the prior-year month and 11% from the last month to 45,038 properties. This was the lowest level since Sep 2007.
The top 10 states with the highest foreclosure rates were Fla., Nev., Ill., Ohio, Wash., Md., Ariz., Ga., Utah and Mich.
Moreover, the drop in overall foreclosure activity was a result of the switching of mortgage servicers and the government to other options to prevent foreclosures. Yet, the dip is expected to be at an uneven pace, as processes that are being used in handling these vary from state to state.
Foreclosure activity is expected to rise in the judicial states as the states have substantial backlogs to clear. Further, as the major lenders – JPMorgan Chase & Co. ( JPM - Analyst Report ) , Bank of America Corporation ( BAC - Analyst Report ) , Citigroup Inc. ( C - Analyst Report ) , Ally Financial Inc. and Wells Fargo & Company ( WFC - Analyst Report ) – adjust to the new rules set under the National Mortgage Settlement as well as several other state laws, foreclosure activity is bound to rise in the following months.
Yet, we believe that the stabilizing housing sector is likely to aid homeowners to avoid foreclosures in the near term. Also, the rate at which properties are entering the foreclosure procedure is expected to trend down gradually, lifting the housing prices going forward. Moreover, the housing market will get an opportunity to regain a strong foothold if there are sufficient buyers for these properties.
FIGHT THE BANK
REAL ESTATE LITIGATION FORECLOSURE DEFENSE NATIONWIDE
Principal reduction is clearly a critical strategy for saving homes and stabilizing the economy
Rates starting at 2.99% 30 Year Fixed
NO-DEFICIENCY JUDGMENT AGAINST YOU..
RESTORE YOUR CREDIT AND START OVER .
CALL TOLL FREE