Phoenix Finds Its Way Out of the Downturn: A Model for Recovery

The Arizona capital of Phoenix was one of the hardest hit markets by the housing crisis, with home values plunging nearly 60 percent from 2006 through mid-2011 and foreclosure filings soaring.

As recently as June 2011 Phoenix held the second highest metro foreclosure rate in the country, behind only Las Vegas, according to RealtyTrac. By the end of 2011, it had dropped to No. 6, and by March 2012, slipped to No. 9.

Adam Artunian, senior research analyst with John Burns Real Estate Consulting (JBREC), says it wasn’t too long ago that Phoenix was considered ground zero of the housing market’s collapse. “Phoenix has orchestrated a dramatic turnaround in recent months and has considerably outpaced other distressed markets such as Las Vegas, Riverside-San Bernardino, and Sacramento,” according to Artunian.

So what’s going on in the Valley of the Sun that’s so different from the rest of the country? What market forces are strong enough to lift the nation’s sixth most populous city from the depths of the downturn?
Analysts and local real estate professionals alike attribute the market’s turnaround to investors who are snapping up properties to fix and flip or fix and rent.

While Phoenix has always been an attractive investment market, Artunian says investors have literally flooded the area since the downturn and now make up close to 45 percent of all buyers.

Investor demand is so strong in fact that Artunian says first-time buyers are having difficulty competing with investors who are paying with all cash. Local agents are reporting bidding wars among prospective buyers, with homes going for more than the asking prices.

Artunian notes that single-family rental rates are now averaging $12,500 a year. With the selling price of a distressed home usually well below the median home price of $127,000, he says investors can expect to achieve between a 5 percent and 10 percent annual return, after operating expenses and before any home price or rental appreciation.

Investor demand has served to drive up home prices in the area. According to Michael Orr, director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University, the median price of single-family homes in the Phoenix area rose to $134,900 in March of this year, up more than 20 percent from a year earlier.

He says the increase signals a shift in the mix of properties being sold, with fewer low-price foreclosures moving through the market. Median and per square foot pricing is moving up as traditional sales account for a greater percentage of activity, Orr explained.

The average price per square foot for homes in Phoenix during the first quarter of this year was $956, according to the online real estate marketplace Trulia. That’s an increase of 999.9 percent compared to the same period last year.

Local investors say homes priced at the lower end of the market – under $100,000 – are becoming increasingly harder to find, and once you do find a bargain-priced gem, it’s snapped up and off the market before you know it.

Artur Ciesielski, a Realtor and partner with inPhoenix Realty Group, noted in a recent blog post that the nose-dive in Phoenix home prices since the bubble burst is now fueling investor appetite, especially in a market with such high rental demand.

“Expect investor demand to continue and to be part of the demand that is driving prices up,” Ciesielski writes, “and forget about shadow inventory, it’s not coming.”

The housing inventory in Phoenix has fallen to a mere 2.4 months, down from nearly 5 months just one year ago and over 12 months in early 2008. According to JBREC, months-of-supply has not been this low in Phoenix since late 2005 when sales activity was at feverish levels.

Listings of existing homes for sale have fallen 43 percent since March 2011, and local practitioners are now calling “shadow inventory” nothing more than a myth. They say if banks were holding properties off the Phoenix market, now would be the time to release them and it’s just not happening.

Where are all the real estate investors descending from? Artunian points to Canada. While there are a growing number of local investors taking advantage of current conditions, he says Canadians are increasingly flush with cash, many because of their own real estate boom in recent years.

That combined with a favorable currency exchange rate has given them “unusual buying power,” according to Artunian. He cites data from the Cromford Report, a local real-estate publication, which shows one in every 25 sales registered in February went to a buyer that listed a Canadian address.

by Carrie Bay dsnews.com May 2, 2012



Phoenix Finds Its Way Out of the Downturn: A Model for Recovery

Pace of short sales increases

Short sales outnumbered foreclosure sales in 12 states in January, indicating that more homeowners are finding an easier way out of a distressed home loan.

Short sales -- which occur when a lender agrees to a home sale for less than what's owed -- were up 33(PERCENT) in January year-over-year, and preliminary February numbers also look strong, according to market researcher RealtyTrac.

Its data underscore lenders' increased willingness to do short sales, which tend to harm neighborhoods less than foreclosures. Homeowners also may regain eligibility for a new mortgage sooner than those who go through foreclosure.

More short sales "is mostly a good thing," says Ira Rheingold, of the National Association of Consumer Advocates. One concern is that homeowners may have to short sell after being denied loan modifications that would have enabled them to stay in homes, he says.

RealtyTrac says foreclosure sales, which occur after a bank has repossessed a property, still outnumber short sales nationwide but the gap is closing.

Earlier this week, Bloomberg News reported that data from mortgage tracker Lender Processing Services show short sales surpassed foreclosures in January for the first time.

RealtyTrac's data shows that occurred in key states at the forefront of the housing downturn, including California, Arizona, Florida and nine others.

Lenders are pricing short sales more aggressively, RealtyTrac adds. In January, the average short sale price was 10(PERCENT) lower than a year earlier, exceeding the drop in U.S. home prices.

Some mortgage servicers started pursuing short sales more aggressively months ago. Bank of America says it did 107,000 short sales last year, up from 92,000 in 2010 and double the 2009 volume.

New measures are also likely to boost short sales.

Freddie Mac and Fannie Mae, which own or guarantee 60(PERCENT) of home loans, will soon require lenders to decide short sale offers within 60 days. Realtors have complained that short sale offers often linger. The recent $25 billion mortgage settlement also encourages short sales.

New rules have slowed foreclosures in many states, increasing short sales, says Florida foreclosure defense attorney Roy Oppenheim.

by Julie Schmit - Feb. 20, 2012 10:42 AM USA TODAY



Pace of short sales increases

US gov't proposes new mortgage lending rules

WASHINGTON - The federal government proposed new rules on Tuesday that will give homeowners more ways to avoid foreclosure and get an accurate accounting of their monthly mortgage payments.

Congress mandated changes in the rules covering the mortgage servicing industry in the wake of the 2008 financial crisis.

The Consumer Financial Protection Bureau's proposed rules would require mortgage servicers to give all borrowers standardized monthly statements and warn borrowers about interest rate or insurance change.

The mortgage servicers would also be required to make "good-faith efforts" to contact borrowers at risk of foreclosure and give them options to avoid losing their homes. There are also stipulations for improving record-keeping and providing foreclosure counseling to those who need it.

The agency said it will formally propose the rules this summer and finalize them by January 2013.

"By fixing these root causes of mortgage servicing problems -- and securing transparency and accountability for borrowers -- consumers would have clearer information about their options to keep their homes and would be in a better position to hold servicers accountable for their decisions," Richard Cordray, the agency's director, said during a speech in Washington on Tuesday.

The Consumer Financial Protection Bureau supervises U.S. payday lenders, mortgage companies and private student lenders. It also can write rules to supervise big lending companies and institute fines. Cordray said Tuesday the new rules would be backed up with "sharp teeth."

Nearly 8 million Americans have faced foreclosure since the housing bubble burst in late 2006. Many homeowners have said companies that process mortgages failed to verify information on foreclosure documents. The worst practices, known collectively as "robo-signing," included employees signing documents they hadn't read or using fake signatures to approve foreclosures.

In February, the nation's five largest mortgage lenders agreed to overhaul their mortgage servicing practices and pay $25 billion to U.S. states to help those who lost their homes or face foreclosure.

A mortgage servicer collects payments from the borrower on behalf of a loan's owner and typically handles customer service, escrow accounts, collections, loan modifications and foreclosures. Most borrowers do not choose their mortgage servicers. The owner of a loan frequently is not the original lender, even when the original lender is the servicer.

by DEREK KRAVITZ - Apr. 10, 2012 09:58 AM AP Economics Writer



US gov't proposes new mortgage lending rules

Americans Brace for Next Foreclosure Wave - US Business News - CNBC

Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end.

Housing experts say warning signs of a new wave of foreclosures are likely to be replicated across much of the country.

House sales are picking up across most of the country, the plunge in prices is slowing, and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio.

"Last year was an anomaly, and not in a good way," he said.

In 2011, the "robo-signing" scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.

Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.

More conclusive national data is not yet available. But watchdog group 4closurefraud.org, which helped uncover the "robo-signing" scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash.

Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo's rose 68 percent and Bank of America's, including BAC Home Loans Servicing, jumped nearly seven-fold — 251 starts versus 37 in the same period in 2011. Bank of America [BAC 9.23 0.03 (+0.33%) ] said it does not comment on data provided by other sources. Wells Fargo [WFC 33.73 -0.15 (-0.44%) ] and Deutsche Bank did not comment.

Housing experts say localized warning signs of a new wave of foreclosures are likely to be replicated across much of the United States.

Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).

RealtyTrac CEO Brandon Moore said the "numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed".

One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products — with high interest rates where banks asked for no money down or no proof of income — is that today it's mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.

"The subprime stuff is long gone," said Michael Redman, founder of 4closurefraud.org. "Now the folks being affected are hardworking, everyday Americans struggling because of the economy."

"Hard to Catch Up"

Until December 2010, Daniel Burns, 52, had spent his working life in the trucking industry as a long-haul driver and manager. When daily loads at the small family business where he worked tailed off, he lost his job.

Unable to cover his mortgage, Burns received a grant from a government fund using money repaid from the 2008 bank bailout. That grant is due to expire in early 2013 and Burns is holding out on hopeful comments from his former employer that he might get his job back if the economy recovers.

"If things don't pick up, I will be out on the street," he said, staring from his living room window at two abandoned houses over the road in the middle-class Cleveland suburb of Garfield Heights, the noise of traffic from a nearby Interstate highway filling the street.

Have Refis Run Out?Slideshow: Cities With the Most Underwater MortgagesAs Foreclosure Problems Persist, Fed Seeks More FinesJPMorgan's Dimon: Mortgage Woes Still Hit Earnings
Underscoring the uncertainty of his situation, Burns' cell phone rings and a pre-recorded message announces that his unemployment benefits are due to be cut off in April.

A bit further up the shore of Lake Erie, Cristal Fell, who works night shifts entering data for a trucking company in Toledo, has fallen behind on her mortgage a second time because her ex-husband lost his job and her overtime was cut.

"Once you get behind it's so hard to catch up," she said.

Fell, a mother of four, hopes the economy will gather enough speed to help her avoid any risk of losing her home. Her ex-husband has found a new job and she is getting more overtime, so she hopes she can catch up on her mortgage by the fall.

Burns and Fell are the new face of the U.S. housing crisis: Middle class, suburban or rural with a conventional 30-year fixed mortgage at a reasonable interest rate, but unemployed or underemployed. Although the national unemployment rate has fallen to 8.3 percent from its peak of 10 percent in October 2009, nearly 13 million Americans remain jobless, meaning many are struggling to keep up with their mortgage payments.

Real estate company Zillow [Z 37.08 -0.59 (-1.57%) ] says more than one in four American homeowners were "under water" or owed more than their homes were worth in the fourth quarter of 2011. The crisis has wiped out some $7 trillion in U.S. household wealth.

"We're seeing more people coming through who have good loans with reasonable interest rates," said Ed Jacob, executive director of non-profit lender Neighborhood Housing Services of Chicago, which provides foreclosure counseling. "But in many households only one person works now instead of two, or they had their hours cut."

"The answer to the housing crisis now is job creation."

Early Signs of Uptick?

Zillow expects the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes will contribute to a 3.7 percent national decline in prices before the market hits bottom in 2013 and stays there until 2016.

"The hangover from this crisis will far outlast the party of the boom years," said Zillow chief economist Stan Humphries.

Getting through the remaining foreclosures and dealing with the resulting flood of homes on the market in the wake of the bank settlement is a necessary part of the healing process for the U.S. housing market, he added.

According to leading broker dealer Amherst Securities, some 9.5 million homes are still at risk of default and in February it said it expected to see the uptick in foreclosures start to hit in March and April.

There is other evidence that many of the foreclosures that did not happen in 2011 will happen this year.

A January report by the Neighborhood Economic Development Advocacy Project in New York found that in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete.

"Now the banks have a settlement, foreclosure numbers for 2012 are going to be high," said NEDAP co-director Josh Zinner.

A recent survey by the California Reinvestment Coalition, an umbrella group of nearly 300 non-profit groups in the state, of member agencies found 75 percent of respondents expected increased demand for their foreclosure prevention services in 2012 but more than a third had to scale back services because of funding cuts.

"Funding is a major concern given what our members expect for this year," said associate director Kevin Stein.

All this has non-profits intensifying calls for the Federal Housing Finance Agency to drop its opposition to allowing the government-backed mortgage giants Fannie Mae and Freddie Mac it regulates to reduce principal for underwater homeowners.

Principal reduction involves reducing the amount borrowers owe in order to make a loan modification affordable for struggling homeowners. Republicans and the FHFA oppose principal reduction because of the risk of "moral hazard" — that homeowners who do not need help will seek to abuse largesse and have their mortgages reduced too.

ESOP in Ohio engages in "hits" on Chase branches — they say Chase [JPM 44.34 -0.07 (-0.16%) ] is the least accommodating major bank when it comes to working with struggling homeowners — where they try to hand letters to bank mangers calling on chief executive Jamie Dimon to lobby FHFA head Edward DeMarco for principal reductions. A Chase spokeswoman said the bank has made "extensive efforts" to work with homeowners, helping 775,000 borrowers stay in their homes since early 2009, avoiding foreclosure "more than twice as often as we have had to foreclose." Housing groups like ESOP maintain, as they have throughout the housing crisis, that unless the FHFA embraces widespread principal reduction, many more under water borrowers face losing their homes.

"Until banks engage in meaningful principal reduction as a matter of course," ESOP's Seifert said after a recent protest at a Chase branch in Cleveland, "this crisis will not end."

by Reuters Apr 5, 2012

Americans Brace for Next Foreclosure Wave - US Business News - CNBC

Building's shell to be resurrected as church

A Northeast Valley Episcopal church plans to resurrect the shell of an unfinished office building in north Scottsdale and transform it into a house of worship.

If all goes well, the Episcopal Church of the Nativity will hold services by Christmas in its new church at 22405 N. Miller Road, which is southeast of the former Rawhide theme park.

A monument to the recession, the foundation and walls of the 24,500-square-foot two-story building have been an eyesore in the Sonoran Hills neighborhood.

"It will be a wonderful home for the Christmas celebration," the Rev. Susan Snook said. "We're excited about being part of that neighborhood."

The Episcopal Church of the Nativity, like other commercial and residential buyers, has found a silver lining in the real-estate collapse of four years ago with far more affordable prices for property in Scottsdale.

The church paid $700,000 for the unfinished building, Snook said.

A developer started construction on the office building in 2007, but it came to a halt after the foundation and walls were erected, and the property went into foreclosure.

"It was bad timing on their part, but it turned out to be good fortune for us," said George Hartz, a DC Ranch resident who is a church board member.

The 7.6-acre property includes three other office-condo buildings of 8,000 square feet and one of 10,000 square feet, said Jason Hersker, a senior associate with Capital Asset Management, the company marketing the property.

The Sorenson Group family trust acquired the property in 2009 as part of a bundle of properties in a bank foreclosure, he said, adding that proceeds from the church sale are allowing the owner to complete the office condos.

The condos will soon be offered for sale or lease, but pricing has not been set, Hersker said.

The church, with about 350 members, was founded in fall 2006 and first had services at Grayhawk Elementary School. Its five-year lease for 5,000 square feet of space in an office building at 7010 E. Chauncey Lane is expiring at the end of this year.

Snook said the church looked for a suitable permanent location in an existing building or land for a new building, but it never found anything that would work until the building shell turned up.

"As we looked at it, we could see some real possibilities architecturally," she said.

The church had a structural analysis done, and it revealed the building is in good shape, Snook said.

"We can make good use of the walls and foundation that are there already, while redesigning the exterior and interior to look like a church," she added.

Arched windows and doorways and an entry facade will make it look like a modern church rather than a boxy building for medical or professional offices.

The Church of the Nativity's first level will include a two-story sanctuary and other facilities. The remaining space on the second level will be reserved for expansion, Snook said.

The church will also have weekend access to 200 parking spaces adjacent to the office condos.

Hartz said the church's location near the Vi at Silverstone retirement community and other planned apartments and homes at the development that is replacing Rawhide is ideal. The Appaloosa Library, Pinnacle Peak Elementary School and a post office are nearby.

"It's better when you're building a community place of worship for it to be in a community," he said.

by Peter Corbett - Mar. 30, 2012 02:26 PM The Republic |azcentral.com




Building's shell to be resurrected as church

Buying a home in a tax lien sale

As foreclosures continue to pile up, so do unpaid property taxes. That's an opportunity if you're willing to wade into the arcane world of property tax lien sales. Before you do, however, understand the risks that come with these little-known investments.

"Every year, $7 to $10 billion in property taxes go delinquent," says Howard Liggett, executive director of the National Tax Lien Association in Pensacola, Fla., a trade association of investors, tax collectors, and service providers involved in tax lien sales. "The subprime mortgage crisis has spiked those numbers. For example, four of the 67 counties in Florida saw spikes of 30 percent to 33 percent in the number of tax liens offered for sale last year."

Homes on the auction block

Tax collectors in 29 states, Washington, D.C., Puerto Rico and the U.S. Virgin Islands use tax lien sales to force owners to pay unpaid property taxes.

"It's a method for people responsible for collecting property taxes to make everyone pay their fair share," says James Hughes, president of SRI Inc. in Indianapolis, who's represented governments in tax lien sales for 20 years. "If there were no enforcement, nobody would pay their property taxes."

The process varies by state, but here's how it generally works: When property owners don't pony up for their property taxes, tax collectors wait the time period required by state law and then put those unpaid property taxes up for auction.

"The time period varies from just a few months to several years," says Hughes. "In Florida, if owners don't pay taxes due in April, tax collectors will sell a lien June 1. In Indiana, it's about 15 months before a property goes to a tax sale."

In most states, the person willing to pay the most cash for the tax lien wins the auction. Some states, however, have a bid-down process, where investors' bids indicate how much interest they're willing to accept on their investment, and the lowest bidder wins. Whatever method is used, the tax collector takes the payment for the overdue taxes from the winning bid. In exchange, the purchaser gets a lien on the property.

As the winning bidder, you'd get a return on your investment in one of two ways: interest on your bid amount, or ownership of the property.

1. Interest on your bid amount. If owners redeem their property by paying the overdue taxes within the time allowed under state law, you'll get your investment capital back, plus the amount of interest allowed in your state.

"Tax lien sales are good investments because they usually have a statutory interest rate, typically between 10 and 12 percent," says Walter Spader, an attorney at the Marcus Law Firm in North Branford, Conn., who represents tax lien purchasers. They can go much higher, too. For example, Connecticut offers 18 percent, and Nebraska offers 14 percent.

Assume Joe Smith, an Indiana homeowner, owes $500 in unpaid property taxes. Your $5,000 offer is the winning bid at the auction. If Smith redeems his property within a year, as required under Indiana law, he'll owe the tax collector the initial $500, plus a 10 percent penalty, totaling $550. He'll also be required to pay 10 percent interest on the amount of the bid over the initial tax bill, or $450. As the winning bidder, you'll get your capital investment of $5,000 back, plus that 10 percent interest payment of $450.

2. Ownership of the property. About 75 percent of owners redeem their property within a year. However, if owners fail to redeem their property, you'll have to file a lawsuit seeking title to the property. That process can be complicated, costly and time-consuming, but once it's complete, you take ownership.

Avoid the pitfalls of tax lien sales

What's the catch? There's no catch, but there are pitfalls to investing in tax liens. Here are four tips for avoiding them.

1. Scope out the property. "Make sure there's a house on the property and that it's still there when you bid," says Hughes, "The house could burn down or be damaged by something like a flood. If you paid $5,000 and the land is worth only $2,000 after the home burns down, you'll lose money. That doesn't happen very often, but it has happened."

2. Check the records. Spend time at your local tax collector's office combing through the records.

"Make sure the municipality followed all statutory procedures in placing the tax and the lien on the property," says Spader. "Look at what's on the land records. Did the tax notice actually go out? Were there partial payments that may not have been applied?"

3. Monitor your investment. If your state allows a long redemption period, protect your investment.

"If there's a two- to three-year redemption period, when next year's taxes are due, pay them and get another lien," says Spader. "If you don't also pay the next year's taxes, the municipality can lien that property again, another person could buy that lien, and then you'd be in trouble."

4. Be patient. "The return on your investment can be delayed for extended periods of time," says Liggett. "For instance, owners could file for bankruptcy, which may allow them more time to redeem the property." A bankruptcy could also mean a lower interest rate, since bankruptcy judges are sometimes permitted to lower debtors' interest rates to help them get back on their feet.

Start small and local

If you're interested in tax lien sales, do your legwork first.

"Go to the revenue officer charged with property tax enforcement," says Liggett. "Find out when sales are held, how they're conducted and how you'd participate. All that information is free because it's public record."

Then troll in your neighborhood pond. "Stay local and take advantage of being a little guy," says Spader. "Since you know local properties, you can better tell their value. Also, smaller towns don't have as many liens available, so you're less likely to be competing with big investors looking to buy portfolios of tax liens. You may even be able to go right to an individual government official and find liens that aren't being offered in a public auction."

Even if you're not sold on tax liens as an investment vehicle, they serve as a stark reminder to all property owners. "Pay your property taxes," says Hughes. "The penalty is too great to not pay them."

by G.M. Filisko Bankrate.com Mar 23, 2012

Buying a home in a tax lien sale

Foreclosures hit 4-year low in metro area

New data indicate that the number of Phoenix-area homes taken back by lenders in January fell to its lowest level since early 2008.

Last month, there were 2,263 foreclosures, or trustee sales, in the region, according to real-estate research firm Information Market. Pre-foreclosures, also known as notice of trustee sales, fell to 2,932, the lowest level since the summer of 2007.

A year ago, both foreclosures and pre-foreclosures were double what they are now. The number of pending foreclosures is one-third of what it was a year ago. Only 15,000 active foreclosures are making their way through the process now.

Some housing analysts continue to talk about shadow inventory, characterized as essentially unexpected foreclosures that will hit the market just as it begins to recover. But that phenomenon can't be tracked now.

Tom Ruff, analyst with Information Market, tracks notice of trustee sales, trustee sales and homes sold at the foreclosure auction daily. He said he sees no sign of a shadow-inventory problem in metro Phoenix.

The region's mortgage-delinquency rate has also fallen during the past year, meaning fewer homeowners are falling behind on their payments. Some market watchers say banks just aren't moving on many foreclosures and are not reporting all the loans borrowers are missing payments on, but lenders deny this.

So going by the numbers and word of lenders, it looks like the worst of metro Phoenix's foreclosure crisis is behind it.

Economic barometer

The southeastern corner of 25th Street and Camelback became a Christmas-tree lot in the mid-1980s during an office-construction boom in metro Phoenix, and the first Esplanade tower went up west of it. Then came the real-estate crash of 1990. The lot at 25th Street remained empty except around the holidays.

As the Phoenix office market rebounded in the mid-1990s, the lot was developed into a shopping center with an athletics store and two popular eateries, the Hard Rock Cafe and Marco Polo Supper Club.

But then came the slight downturn from the dot.com bubble, and by 2003, the center's stores and both restaurants had closed. Developer Donald Trump proposed a high-rise resort for the corner during the boom in 2005 but walked away from the project in 2006.

Last year, Alliance Residential bought the lot out of foreclosure.

The firm is building a 270-unit upscale-apartment complex there.

by Catherine Reagor - Feb. 3, 2012 02:39 PM The Arizona Republic





Foreclosures hit 4-year low in metro area

Mom who lost 3 kids in plane crash about to lose home, too

Karen Perry is losing her home, and the timing couldn't be worse.

The news came little more than a month after her three young children and their father were killed in a Thanksgiving eve plane crash in the Superstition Mountains.

Arizona plane crash in Superstition Mountains

The ridge where it happened looms large in the view from Perry's lawn in Gold Canyon, a largely retirement-oriented community about 40 miles east of Phoenix.

"I have a reminder outside my door every day of how they passed away," Perry said.

Morgan, 9, Logan, 8, and Luke, 6, were flying to Safford from Mesa to spend the holiday with dad Shawn Perry. Two of his co-workers, Russel Hardy and Joseph Hardwick, also perished. There were no survivors.

"There are a lot of memories here, and I personally find that very comforting," Perry said Wednesday. "I look at pictures, and I visualize (the children) around the house. It's going to be hard to leave."

Like many Arizonans, Perry is saddled with negative equity in her home. And while she was a single mother for two years, divorce-attorney fees nearly wrung her dry, she said.

Perry learned the house would be auctioned while she was seeking a loan modification -- and the date was set for less than two weeks, according to Nicole Hamming, Perry's friend and real-estate agent.

Within 10 days, Hamming said, they managed to secure a short-sale contract, which is now pending. A second buyer is also lined up.

Perry remains in a tight spot, Hamming said, but "at this point, we have to try to help her go forward."

Friends worry she's not emotionally ready to pack up the children's things. Toys are in the yard, and plastic, brightly colored playsets still flank the fireplace. The children's laundry hasn't been moved.

All will need to be boxed up soon, but Perry can take her time in other ways.

Perry's fellow flight attendants at Delta Air Lines donated enough paid-leave time for her to take a year off, Hamming said.

And Ladies Day Fund, a New Orleans-based charity founded by active and retired Delta flight attendants, has raised more than $12,550 since December by matching donations up to 20 percent. This month, Ladies Day Fund will match donations by 10 percent.

Perry expressed her gratitude for the support and well wishes she's received from across the globe.

While the outpouring doesn't change her situation, she said, it's made her feel closer to the community and given her strength.

"I don't feel angry now," Perry said. "I feel a lot of things ... but I don't want to feel sorry for myself. (I want to) take all the negative energy and use it in a positive way."

MORE ON THIS TOPIC
How to help

Donate -- Ladies Day Fund, www.ladiesdayfund.com, will match up to 10 percent of donations for every check written to Karen Perry through Feb. 28. Mail donations to Ladies Day Fund Inc., 1000 Bourbon St. #370, New Orleans, LA 70116.

Bid -- Listeners to KSWG 96.3 FM Real Country can bid on a pair of tickets to the sold-out George Strait concert. The auction is from 6:30 to 8:55 a.m. today.

Listen and buy -- A portion of proceeds from iTunes sales of the song "Fly," written by Tina Vallejo in honor of Perry's children, will go to help Perry.





by Lindsey Collom - Feb. 1, 2012 10:13 PM The Republic | azcentral.com




Mom who lost 3 kids in plane crash about to lose home, too

FHFA Takes First Step in Its REO Pilot Initiative | Mortgage News | Daily National and State Headlines

The Federal Housing Finance Agency (FHFA) has announced the first step of a Real Estate-Owned (REO) Initiative targeted to the hardest-hit metropolitan areas nationwide. Investors interested in participating may “pre-qualify” to establish eligibility to bid on transactions in the initial pilot phase as well as subsequent phases. The REO Initiative will allow qualified investors to purchase pools of foreclosed properties with the requirement to rent the purchased properties for a specified number of years. This rental period could provide relief for local housing markets that continue to be depressed by the volume of foreclosed properties, and provide additional rental options to certain markets. Pre-qualification ensures investors will have the financial capacity and operational expertise to manage properties in a way that is conducive to the stabilization of communities hard hit by the housing downturn.

The REO Initiative was developed in conjunction with the U.S. Department of the Treasury, the U.S. Department of Housing & Urban Development (HUD), the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, Fannie Mae and Freddie Mac. The Initiative was formulated by meetings with stakeholders and a review of more than 4,000 responses to a Request for Information (RFI) seeking input on options for selling single-family REO properties held by the government-sponsored enterprises (GSEs)—Fannie Mae, Freddie Mac—and the Federal Housing Administration (FHA).

“This is an important step toward increasing private investment in foreclosed properties to maximize value and stabilize communities,” said FHFA Acting Director Edward J. DeMarco. “I am grateful for the collaborative effort by the many stakeholders including investors, non-profit organizations, and state and local government officials, who have worked together on this Initiative.”

During the pilot phase, Fannie Mae will offer pools of various types of assets, including rental properties, vacant properties and non-performing loans, for sale with a focus on the hardest-hit areas. The first transaction will be announced in the near-term.

The pre-qualification will require those interested in receiving information regarding specific pilot transactions to meet certain minimum criteria including, but not limited to, (a) financial wherewithal to acquire the assets; (b) sufficient experience and knowledge in financial and business matters to analyze and bear the risks of the investment opportunity; and (c) agreement to keep certain information about the REO and related matters confidential.

Interested investors can register at FHFA’s REO Initiative page to pre-qualify. FHFA is also looking at ways to improve REO sales to homeowners and small investors, enhancing the existing retail sales strategy at the GSEs. Both companies sell the majority of their REO properties to owner-occupants at close-to-market value. The purpose of the pilot phase will be to examine investor interest in various types of assets, including the location, size and composition of pools of assets; the ways in which investors maximize the participation of experienced local firms and organizations that can provide the types of services and support needed to ensure community stabilization; the types of structures and/or financing that improve returns to the sellers as well as home values in impacted markets; and the process by which investors are qualified to and ultimately participate in the sales transactions.

by nationalmortgageprofessional.com Feb 1, 2012


FHFA Takes First Step in Its REO Pilot Initiative | Mortgage News | Daily National and State Headlines

Scottsdale renter fights to stay in foreclosed home

If Scottsdale had a railroad line, Bill Flood said, his rental house would be considered south of the tracks.

As it is, his three-bedroom home southwest of Hayden and McDowell roads is in a neighborhood hit hard by foreclosures over the past few years.

Flood got an eviction notice a few days after a Jan. 6 trustee sale but is fighting to stay in his home of 15 years on East Moreland Street. The home sold for $98,000, said Flood, who attended the trustee sale.


"It was like they stabbed me in the back," he said of the new owner, Patrick Kirker of Perth Development LLC of California.

Flood is among thousands of area renters affected by the housing meltdown. They often are unaware that their landlord is in default on their mortgage until after a foreclosure and a trustee sale.

That's when a new owner knocks on the door or sends a notice to evict them. Flood was aware his rental home had been sold but he believed his lease would protect him.

Rental tenants who are current on their rent have legal protections under the federal Protecting Tenants at Foreclosure Act of 2009.

Flood has a valid lease with former property owner Margret Williams through February 2013, said Robert Nagle, a Phoenix attorney representing Flood.

That gives him the right to stay in the home through the terms of the lease unless the new owner wanted to move into the home. Then Flood would be given 90 days to move out, Nagle said.

Fair-market rent

However, the federal act does not protect a tenant who is a child, parent or spouse of the previous owner. The lease has to be a proper arms-length transaction and the renter must be paying rent that is not substantially below market value.

In this case, the arms-length transaction and fair-market rent is in dispute, said Scottsdale attorney Mark Zinman, representing Perth Development. He declined further comment saying any evidence would be presented in court, unless a settlement can be reached.

Flood and Williams had been domestic partners but now are friends and she looks after Flood's 13 dogs when he is at work as a plumber, Nagle said.

Flood said he paid $500 a month in cash to Williams in rent and did repairs on the 1,200-square-foot home that was built in 1958.

Flood admits that the house is in poor condition with holes in the walls, a leaky roof and only an evaporative cooler that he installed to keep it habitable in the summer.

Forging a settlement

He said he has tried to work with the new owner to move out before the lease expires or pay more rent if they fixed the house up.

"They say the want to gut it, fix it up and rent it out," Flood said. "I think they just want me out."

Flood said he was offered $1,000 to move out within 30 days but it would take him at least 60 days to move all the belongings he has collected after 15 years in the home.

Nagle said there is a middle-ground solution that would be more cost-effective for both parties short of litigation.

Meanwhile, tenant leases are among the complicating risks for investors buying foreclosed property, he said.

"That's why people prefer to buy retail or short-sale homes," Nagle added.

by Peter Corbett - Jan. 27, 2012 08:36 AM The Republic | azcentral.com



Scottsdale renter fights to stay in foreclosed home

Maricopa County foreclosures improved in November

The foreclosure rate was down slightly in November compared with the same month of 2010, as Maricopa County entered the final month of a year that has brought mild recovery to the housing market but not as much bounce as analysts had hoped, according to a report issued Monday by Arizona State University.

Detached, single-family home foreclosures made up 29 percent of existing-home transactions in the Phoenix area in November, up from 26 percent in October but down from 31 percent in November 2010, the report said.

W.P. Carey School of Business Professor Emeritus Jay Butler, the report's author, said the increase in foreclosures from October to November was not surprising, because the same seasonal pattern occurred a year earlier.

"The foreclosure rate's movement is more of a cha-cha-cha, with a few steps forward and couple of steps back," Butler said. "Most people thought 2011 would be a better year for the housing market than it was, but it's a good transition year."

There were 5,030 existing, single-family home sales in November and 2,075 foreclosures for a total of 7,105 transactions, the report said.

October's activity was slightly better, with 5,315 existing-home sales and only 1,900 foreclosures, but in November 2010 things had been even worse, with 4,750 existing-home sales and 2,095 foreclosures, it said.

The median home-resale price in Maricopa County was $130,000 in November, up from $125,000 in October but down compared with the November 2010 median price of $134,000, the report said.

That's not a tremendous amount of progress, but Butler said the housing market's overall picture was just a shade rosier than it had been a year earlier.

"I think we're on our way out of this mess unless something major happens," he said. "We might see another surge in foreclosures in the spring after holiday foreclosure moratoriums by banks end and low consumer confidence possibly prompts more people to give up on their homes."

Butler said it's likely the housing market will experience a more significant recovery period in 2012.

One indicator to watch for, he said, is the loosening of foreclosure-home investors' iron grip on the market and a commensurate increase in sales to regular, primary-home buyers, often referred to as owner-occupants.

"The key issue in the coming year will be whether investors become less of a factor and the homeowner-occupant market begins to improve," Butler said.

The townhouse market also experienced mild recovery in November, according to the report.

There were 260 townhouse and condo foreclosures in November, nearly identical to the 265 foreclosures in October, and down slightly from 300 foreclosures in November 2010, the report said.

The median price for a townhouse or condo resold in November was $80,900, it said, up slightly from $79,125 in October and from $75,000 in November 2010.

by J. Craig Anderson The Arizona Republic Dec. 12, 2011 06:17 PM




Maricopa County foreclosures improved in November

Banks Revising Foreclosure Procedures

The Office of the Comptroller of the Currency (OCC) has reported that all banks targeted for investigation and review into foreclosure and lending practices have submitted letters detailing their plans for auditing said practices, which the OCC demanded be completed before the beginning of the new year. Bank of America, Citibank, JPMorgan Chase, Citigroup, Wells Fargo and a handful of others have so far entered into OCC compliance, although auditing has yet to be completed. Independent auditing firms involved in the overhaul include Deloitte & Touche, Ernst & Young and PricewaterhouseCoopers. For more on this continue reading the following article from TheStreet.

The Office of the Comptroller of the Currency said on Tuesday that the nation's largest mortgage servicers would "complete much of the work" required to clean up their loan servicing and foreclosure practices by early next year.

The OCC slapped the largest U.S. mortgage loan servicers, including Bank of America (BAC), Citigroup (C) subsidiary Citibank, HSBC (HBC), JPMorgan Chase (JPM), MetLife (MET) unit MetLife Bank, PNC (PNC), U.S. Bancorp (USB) subsidiary U.S. Bank, and Wells Fargo (WFC), with cease and desist orders in April, requiring the group to hire independent consultants to "conduct a multi-faceted independent review of foreclosure activities in 2009 and 2010," and "to correct deficient and unsafe or unsound practices in their mortgage servicing activities," along with beefing-up their oversight of third-party service providers, and their activities related to Mortgage Electronic Registration Systems, or MERS.

The regulator said that, as required, all the servicers had submitted "independent consultant engagement letters and servicer action plans" in July, and that the "OCC closely evaluated and approved consultants to prevent conflicts of interest."

The agency said work was "well under way on the actions necessary to comply with the consent orders," and that efforts "to correct deficiencies in foreclosure processes, management oversight, and internal audit [were] furthest advanced."

In Bank of America's updated engagement letter from Sept. 6, Promontory Financial Group said it would "conduct an independent review of certain residential foreclosure actions regarding individual borrowers with respect to BAC's mortgage servicing portfolio," including Bank of America's foreclosure actions as a lender, servicer, within 423 days.

Promontory Financial Group is also conducting the servicing and foreclosure audits for PNC and Wells Fargo.

Other independent consultants include Deloitte & Touche for JPMorgan, Ernst & Young, for HSBC and MetLife Bank, and PricewaterhouseCoopers, for Citibank and U.S. Bank.

The OCC said that on Nov. 1, "an integrated claims processor began mailing letters to borrowers who were in any stage of foreclosure on their primary residences between January 1, 2009 and December 31, 2010," describing the process "borrowers should follow for requesting reviews of their cases if they believed they suffered financial injury as a result of servicer errors, misrepresentations, or deficiencies in the foreclosure process."

The reviews of borrower petitions are expected to take several months.

by Philip Van Doorn Nuwire Investor Nov 25, 2011


Banks Revising Foreclosure Procedures

Phoenix-area foreclosures way down in October

Home foreclosures made up 26 percent of all home-resale transactions in October, the lowest percentage since April 2009, according to an existing-home sales report issued Monday by Arizona State University.

However, report author Jay Butler warned against investing too much significance in the reduced foreclosure rate.

"Just because we're seeing a drop in foreclosures, that doesn't mean we have a healthy housing market," said Butler, professor emeritus at ASU's W.P. Carey School of Business. "Other types of activity and purchases are not increasing in order to push us forward."

Butler said the generally poor economic environment and anemic growth are inhibiting consumer confidence.

The foreclosure rate has dropped from 43 percent of the area's single-family, existing-home transactions in January and February to 26 percent in October, down from 29 percent in September.

Still, Butler said he doesn't expect the downward trend to continue throughout 2012.

"The numbers are deceiving because they only look at recorded foreclosures," he said. "Many more foreclosures may be lingering in the pipeline just because more paperwork and rules are being followed in the process now."

There were 1,900 foreclosures in October, down from 2,295 foreclosures in September and 3,380 foreclosures in October 2010, the report said.

Existing-home sales in October totaled 5,315 sales, down from 5,645 sales in September but an increase over the 4,695 sales in October 2010.

The median home-resale price in October was $125,000, identical to September's median price.

by J. Craig Anderson The Arizona Republic Nov. 14, 2011 06:04 PM





Phoenix-area foreclosures way down in October

Reagor: Real-estate agents ask lenders key questions

Hundreds of metro Phoenix real-estate agents had the rare chance to ask executives from the nation's biggest lenders and some top distressed-property experts pressing questions about the region's housing market this week.

Fidelity National Title held a "Crystal Ball" housing conference in Tempe Thursday with this panel: JK Huey, senior vice president of Wells Fargo Home Mortgage REO and short-sale division; Bill Borda, senior vice president of Bank of America's short sale, deed in lieu and REO group; Stephanie Whittier, REO manager for Chase Banks Western region; Reginald Givens, foreclosure-assistance administrator with the Arizona Housing Department; Brent Taggart, senior vice president with REO assets-management company Green River Capital; Alex Charfen, president of Charfen Institute, which trains agents to handle distressed properties; Bruce Spowart, vice president of sales at data firm CoreLogic. (REO is an industry term for foreclosure properties that means "other real-estate owned.")

Hands started to shoot up as soon as the panel had been introduced.

Question: Despite a record number of short sales in Arizona, why are there still so many of the deals not getting lender-approval?

Huey: "Some buyers aren't getting financing. Lowball offers are wasting everyone's time." She also said some junior lien holders, companies with second mortgages on a home, won't accept offers so the short sale can't go through.

Charfen: "Agents are taking listings for homeowners who are only upside down. You can't make lenders solely responsible for unapprovable deals. Homeowners have to show hardship."

Huey: "Short sales were created to help homeowners with hardships. They aren't meant to help homeowners get out of bad investments."

Borda: "Do we really want to market that anyone can do a do-over on their home purchase?"

Q: "Why aren't real-estate agents compensated for helping homeowners with deeds in lieu? Those often take as much work gathering paperwork and negotiating as a short sale." (A deed in lieu involves a distressed homeowner signing over the house to the lender instead of going through costly foreclosure proceedings.)

Huey: "Deeds in lieu are quicker than foreclosures, but we have to be careful. It's a slippery slope paying an agent to get a homeowner to sign a deed in lieu, if the agent then tries to sell the home."

Green: "We are working on a program to compensate for deeds in lieu. We believe there's value in agents' work on those."

Q: Can homeowners be eligible for both HAFA (the U.S.-backed short-sale program) and the Arizona program funded by Hardest Hit money?

Givens: "Yes. Between the two programs, Arizona homeowners can receive up to $25,000 in aid."

by Catherine Reagor The Arizona Republic Nov. 4, 2011 05:22 PM



Reagor: Real-estate agents ask lenders key questions