Thanks to LionsGate Financial for this data on the supply of foreclosures on the market.

July 21, 2009, 10:06 AM ET
Are Banks Holding a Shadow Inventory of Homes? By Nick Timiraos
The number of homes listed for sale in several housing markets fell last month to levels last seen at the start of the housing downturn. That’s raising hopes that several of the hardest-hit housing markets may be stabilizing.

But the housing cynic may wonder: how much does that have to do with banks holding foreclosed properties off the market to prevent a new glut of properties from hitting the market?

Figures released by ZipRealty, a national real estate brokerage that tracks Realtor listings in 28 major U.S. markets, showed that the number of active listings in those markets decreased by 2.1% in June from May.

California posted the most dramatic declines, with inventory falling by 54% in Los Angeles—a level last seen in Sept. 2005— while listings fell by 56% in San Bernardino. The number of homes listed in the San Francisco Bay Area dropped below 20,000 for the first time since Dec. 2006. Listings fell to a Jan. 2006 level in Orange County and a Feb. 2006 level in Phoenix.
It may be too soon to know if these are genuine “green shoots” in the West. After all, there are some signs that banks may be delaying foreclosures, either because they’re overwhelmed with a glut of delinquent loans or because they’re strategically holding off on oversaturating the market. That so-called “shadow inventory” could lead to an uptick in foreclosure listings later this year. (Jim Klinge, a Carlsbad, Calif-based real estate agent, shows off a few new shadow inventory listings here.)

For example, notices of default, which mark the first step in the foreclosure process, jumped by 10% in California last month from the previous year, according to ForeclosureRadar. But notice of trustee sales—the second step in the process, where lenders set a foreclosure sale date—fell by nearly 15% in June from the same month one year ago. (The L.A. Times housing blog has more).

It’s unclear why trustee sales have fallen even as defaults has risen. While California has a new foreclosure moratorium, banks that have loan modification programs in place have been exempted, so that’s not a terribly satisfying answer.
Readers, what do you think? Are inventory declines a sign of good news, or a head fake? If you’re seeing any evidence that shadow inventory is on the uptick, shoot me a note: nick.timiraos@wsj.com.

First American CoreLogic Sees Improvement in Home Price Declines Carrie Bay 07.21.09
National housing prices fell 9.2 percent in May compared to a year ago, representing the smallest year-over-year decline recorded in 2009 and the lowest since December 2007, according to newly released data from First American CoreLogic and its LoanPerformance Home Price Index (HPI). May’s decline was a 0.5 percent improvement over the 9.7 percent decline in April.

Since U.S. home prices hit their highest levels in July 2006, they have fallen an estimated 20.1 percent. First American CoreLogic’s market data shows that the rate of national price declines for residential single-family detached properties peaked at 11.9 percent in January 2009 and has since slowed by more than 2.5 percentage points through May. The company’s June preview data suggests further improvements in the rate of decline.

Despite the positive national trend, First American CoreLogic says the geographic breadth of price declines has not improved. The company reported 41 states with price drops in May, and 16 states with double-digit depreciation – well above the number of states experiencing declines a year ago.

Based on First American CoreLogic’s index, Nevada (-26.4 percent) remained the top-ranked state for annual price depreciation, with Florida (-25.5 percent) close behind. California’s (-19.8 percent) price trends continued to improve in May and is currently more than 10 percentage points better than the peak decline of 30.3 percent set in August 2008.

Arizona (-18.1 percent) and Illinois (-16.9 percent) round out the top five states for price declines, according to First American CoreLogic’s study. The company said Florida and Illinois are the only two states that are not currently showing signs of moderation or improvement among areas with the largest price decreases.

First American CoreLogic says that over the past few months, there has been a divergence in single-family detached residential properties as compared to single-family attached residential properties, which include condos and townhomes. As of May, prices of attached properties declined 12.0 percent from a year ago, compared to a 9.2 percent decrease for detached properties. The company says the gap reflects a very weak condo market, tighter underwriting guidelines for this type of property, and the faster run-up in prices for condos during the bubble market.

Mark Fleming, chief economist for First American CoreLogic, commented, “Although there has been some improvement in the national HPI, collateral risk will continue to be the main driver of the housing market for the remainder of 2009. Until home prices and the economy stabilize, mortgage performance will continue to worsen and home sales activity will remain flat nationally through 2010.”

Freddie Offers Warranties on REO Homes Carrie Bay 07.20.09
Purchasers of single-family foreclosed homes offered through Freddie Mac’s HomeSteps division will receive a comprehensive two-year home warranty paid for by Freddie Mac, the company announced Monday. In addition, for a limited time, the McLean, Virginia-based mortgage financier said it will pay up to 3.5 percent of the sales price in closing costs, potentially saving buyers of HomeSteps homes thousands of dollars in transaction costs.

The new warranty incentive is part of a HomeSteps' SmartBuy sales promotion, which began on July 17 and is scheduled to run through October 30, 2009. HomeSteps, the REO disposition and sales unit of Freddie Mac, markets a nationwide selection of Freddie Mac-owned homes.
Chris Bowden, VP of HomeSteps, said, "This unprecedented offer will enable HomeSteps buyers to protect against unexpected repair costs which could interfere with their ability to meet their mortgage obligation. Combined with our offer to pay up to 3.5 percent of the sales price in buyer's closing costs, we believe HomeSteps homes will have a competitive edge at building buyer confidence and increasing sales for our affordable homes."

The two-year warranty, called Home Protect, is provided by Cross Country Home Services, which has nearly 30 years’ experience providing home warranty and home service-related plans on a national basis. Home Protect will cover electrical, plumbing, air conditioning and heating systems, as well as ductwork and many major appliances. Freddie Mac will pay for the first two years of the warranty after which buyers will have an option to continue the warranty on their own.

The warranty is available only on single-family HomeSteps homes. The home must be sold as primary residence for at least $25,000 in the 48 contiguous states or Washington, D.C. The warranty and closing cost opportunities are not available on HomeSteps homes sold as investor properties, second homes, or vacation homes. To qualify for the limited-time buyer's closing cost offer, buyers must submit initial purchase offers by October 31, 2009 and complete the closing by December 31, 2009.

Ingrid Beckles, SVP of default asset management at Freddie Mac, commented, "We expect SmartBuy's comprehensive two-year warranty and closing cost offer to help more families buy and own HomeSteps homes, which in turn will help support home values and stabilize communities."

Federal, State Agencies Go After Foreclosure Rescue Companies Carrie Bay 07.17.09
The Federal Trade Commission (FTC) and prosecutors in 19 states have filed 189 legal actions against companies and individuals they say are carrying out loan modification scams and deceptively marketing foreclosure rescue services.

All of the lawsuits were filed in the U.S. district Court for the Central District of California, except for one filed in the U.S. District Court for the District of Idaho. Officials are asking the court for a permanent bar against the companies, including U.S. Foreclosure Relief, Loss Mitigation Services, Lucas Law Center, and Apply2Save. They are also seeking millions of dollars in civil penalties and restitution for the victimized homeowners.

FTC Chairman Jon Leibowitz and California Attorney General Jerry Brown made the announcement at a press conference in Los Angeles this week as part of Operation Loan Lies, a coordinated national law enforcement effort to crack down on mortgage modification scams.
FTC Chairman Jon Leibowitz said, “These con artists see the high foreclosure rates as an opportunity to prey on people in distress. They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline.”

Leibowitz also encouraged homeowners to avoid foreclosure consultants that charge upfront fees, guarantee to stop a foreclosure or modify a loan, or advise against continuing payments to the mortgage company.

Operation Loan Lies follows a pledge made in early April by Leibowitz, when he was joined by Treasury Secretary Timothy Geithner, HUD Secretary Shaun Donovan, and several state attorneys general – a united front to step up enforcement efforts against those who target struggling homeowners with false claims of mortgage relief

Yours to Count On,
Erika Madsen
Real Estate Consultant
Re/Max Power Realty
"Your Advisory Team" Founder/Manager
480-695-6572

p.s. if you or anyone you know is considering a move in the current real estate market- you deserve an agent who has a strong knowledge to help you succeed! Visit http://www.PhoenixAreaMls.com/ to learn more about Your Advisory Team!!