Average Foreclosure Discount 34%

In the third quarter of 2011, homes that were in foreclosure accounted for 20 percent of all residential sales in the country, according to RealtyTrac in its latest Foreclosure Sales Report. 

While a high number of foreclosures still persist, the bulk of foreclosed home sales is shrinking. In the second quarter of 2011, foreclosures accounted for 22 percent of all sales and 30 percent of all sales in the third quarter of 2010. For comparison, in 2005 and 2006, foreclosure sales accounted for less than 5 percent of all sales.

Foreclosures continue to sell at big discounts compared to non-foreclosures. Foreclosures in the third quarter sold for about a 34 percent discount compared to the average home not in foreclosure, according to RealtyTrac. The average sales price of a home in foreclosure was $165,322, which is up 1 percent from the second quarter, yet down by 3 percent from the third quarter of 2010. 

Mortgage Modification Scams

The foreclosure crisis that has spread across the country is producing another epidemic: mortgage modification scams that have cost desperate borrowers thousands of dollars — even their homes.

There are devastating consequences to this fraud. However keep in mind that aplying for HAMP is free, as is the loan modification advice of housing counselors approved by the U.S. Department of Housing and Urban Development.

Don't become a victim

You can apply for the government's Home Affordable Modification Program (HAMP) on your own or with free help from a housing counselor approved by the U.S. Department of Housing and Urban Development. Applying for HAMP is always free.

To find a housing counselor, or for more information, contact the Homeowner's HOPE Hotline at 888-995-4673 (888-995-HOPE) or go to www.MakingHomeAffordable.gov.
Other tips:
• Only your mortgage servicer has the discretion to grant a loan modification. No third party can guarantee or pre-approve a HAMP application.
• Beware of anyone seeking to charge you in advance for mortgage modification services. In most cases, charging fees in advance is illegal.
• Paying a third party to assist with a HAMP application does not improve the likelihood of receiving a mortgage modification. Beware of individuals or companies that ask for payments, tout success rates or claim to be HAMP experts.

• Beware of individuals or companies that offer money-back guarantees.
• Beware of individuals or companies that instruct borrowers to stop making mortgage payments or to stop dealing with their mortgage servicer. Avoid working with someone who promises to stop the foreclosure process.
• If an individual or company claims to be affiliated with HAMP or displays a seal or logo representing the U.S. government, either in correspondence or on the Web, check the connection by calling the Homeowner's HOPE Hotline.
• Beware of anyone who wants the deed to your property. Do not transfer title to your home to a foreclosure rescuer.
If you suspect you have been a victim of a mortgage modification scam related to HAMP, contact the SIGTARP hot line at 877-744-2009.

Yet scam artists have convinced struggling homeowners to pay an ILLEGAL upfront fee in return for false promises of lowering their debt or their mortgage payments.

Other scammers have had homeowners turn over the deeds to their homes, told borrowers to stop making their payments, or insisted they stop dealing with their mortgage servicer.

These scam artists may advertise on Web search engines, television and radio; illustrate their materials with government logos; give their companies official-sounding names, or use scare tactics.

Unfortunately tens of thousands of borrowers across the country are at risk of losing their homes.

The stories of the people who are victims of these scams are really heartbreaking and unfortunately, the HAMP mortgage modification scams have become a nationwide epidemic.

In November, SIGTARP announced it had shut down 125 alleged schemes advertised on Yahoo, Bing and Google.

SIGTARP's investigation has led to criminal charges against 17 people, including three sentenced to prison; the other cases are pending.

Homeowners should educate themselves about the hallmarks of the scams.

"HAMP is a free program, so homeowners need to be wary of anyone who charges them for their work on a HAMP application," she said. "Homeowners also need to be wary of anyone who guarantees them they will get a successful modification through HAMP."

You should never have to pay for foreclosure counseling or foreclosure assistance. Save your money to make your mortgage payments. Do not listen to people who tell you to stop paying your mortgage. Why would a lender want you to stop paying your mortgage? That is not how you can solve your financial issue with someone you owe money to.

Every time a scam artist victimizes a family, there's a huge ripple effect. When scam artists run away, they leave a worse situation than when they found the family, the family is more likely to lose their home. When a home is lost, the property is at risk for property crimes, theft of copper and piping and other materials from the house, and there is a destabilizing impact on the neighborhood. . . . The ripple effect of this unethical act is enormous all around the country.

Where Can You Find the Cheapest Homes?

Buyers can snag plenty of deals in housing today. Falling home values and record-low interest rates continue to push affordability to record highs. 

Nationally, the median list price for a home is $189,900, up 4.05 percent year-over-year. 

The following cities offer the lowest median list prices in the nation as of November: 

• Detroit: $84,900
• South Bend, Ind.: $102,000
• Dayton-Springfield, Ohio: $109,900
• Fort Wayne, Ind.: $109,900
• Toledo, Ohio: $109,900
• Las Vegas, Nev.-Ariz.: $122,000
• Cleveland-Lorain-Elyria, Ohio: $129,900
• Lakeland-Winter Haven, Fla.: $129,900
• Akron, Ohio: $129,900
• Ocala, Fla.: $129,500
• Springfield, Ill.: $129,250
• Wichita, Kan.: $130,828

38% of Homes Purchased in 2011 Bought with Cash

Despite record low mortgage rates, 2011 has seen an amazingly high-level of cash home purchases, according to the real estate research firm Hanley Wood Market Intelligence. No doubt that investors love that real estate environment and know that in the future they will be making big profits when real estate goes back up.

Jonathan Dienhart and Ken Lee, two analysts with the company, say between tight lending standards and a desperate search for yield by investors, cash purchases of homes – particularly for distressed properties – became even more common in 2011 than last year.
Dienhart and Lee analyzed data collected through Hanley Wood’s Housing IntelligencePro, and shared their findings in a blog post.

The two discovered that 38 percent of homes purchased in 2011 were bought with all cash. That’s up from 34 percent in 2010, and double the 19 percent rate in 2006.
According to Dienhart and Lee, this trend is likely to continue in the near term. They note that cash-paying investors are responsible for an increasing share of home purchases nowadays as prior homeowners abandon the ownership market and head back to rentals.

5 States With the Most Mortgage Fraud

Mortgage fraud continues to climb in the country as $1.3 billion in questionable loans surfaced in the third quarter, according to a mortgage fraud index by Mortgage Daily.

Florida continues to have the most cases of mortgage fraud, according to the index. In Florida alone, mortgage fraud activity included more than $144 million in loans that were questioned in court, and Florida’s mortgage fraud index soared 45 percent in the third quarter compared to the previous quarter.
The five states that had the worst index ranking with mortgage fraud cases, according to Mortgage Daily, are:

1. Florida
2. California
3. Minnesota
4. New York
5. Texas

10 States Hit Hardest by Foreclosures

The following are the top 10 states with the highest foreclosure rates in the country in November, according to RealtyTrac data.

1. Nevada: 1 in every 175 home received a foreclosure filing in November
2. California: 1 in every 211 homes
3. Arizona: 1 in every 256 homes
4. Utah: 1 in every 290 (This state saw a 74 percent increase in November from October in foreclosure activity.)
5. Georgia: 1 in every 330 homes
6. Michigan: 1 in every 330 homes
7. Florida: 1 in every 358 homes
8. Illinois: 1 in every 427 homes
9. Ohio: 1 in every 500 homes
10. South Carolina: 1 in every 517 (This is the first time South Carolina has made it into the top

BofA Considers Renting REOs Back to Previous Homeowners

In facing large inventories of foreclosures, Bank of America is considering a program that would allow investors to buy a foreclosed home and then rent it back to the former home owner, HousingWire reports.
Bank of America is looking for ideas on how to handle the large inventories of foreclosures in some areas where demand hasn’t picked up.

"We are looking at programs where you can capture somebody before the REO process and offer a deed-for-lease," Ron Sturzenegger, who leads the bank's legacy asset servicing division, explained to HousingWire. "We would go to the customer and say, 'We'll do a short sale. Will you be interested in leasing your property back? We're still going to sell the property. You will no longer be the owner. But you can be a tenant now in that same property and save you from moving on.'"

The program is still in very early stages and more details need to be worked out, Sturzenegger noted.