Headlines – Week of September 11, 2011

September 22, 2011

Florida is Bouncing Back

According to the outlook of Wells Fargo, Florida’s improving economy should avoid recession, even as the recovery faces significant headwinds from a devastated real estate industry.

The report  sees South Florida and Tampa leading the rebound in hiring this year. Both markets have seen modest job growth in recent months, and payrolls are up about 1 percent in both regions during the last three months.

Wells Fargo expects economic growth to hit 2.2 percent next year in Florida, despite growing anxiety that the nation is heading for a second recession.

The Wells Fargo report credits a strong rebound in foreign tourism for Florida’s improving fortunes, with South Florida and Orlando enjoying a boost from their popularity with travelers from Europe and Latin America.

However, the report gives special mention to South Florida in the report saying the region’s recovery from the Great Recession has been painfully slow.

Among the biggest problems Wells Fargo cites: nearly 40 percent of the region’s mortgages are either in foreclosure or at least 90 days overdue, compared to the national average of 11 percent.

Full Report

Twelve Housing Markets Seeing the Biggest Turnarounds

The National Association of Home Builders has created a new economic index that highlights metro areas that are seeing the most improvement in their housing markets. The “First American Improving Markets Index” reveals 12 metro areas that have seen a turnaround for at least six months in three core economic areas; housing permits, employment, and housing prices.

This new index was created to highlight those housing markets across the country that have stabilized and have begun to show signs of recovery.

Here are the 12 cities that have seen the biggest improvements, according to NAHB’s new index:

  1. Anchorage, Alaska
  2. Bangor, ME
  3. Bismarck, N.D.
  4. Casper, Wyo.
  5. Fairbanks, Alaska
  6. Fayetteville, N.C.
  7. Houma, La.
  8. Midland, Texas
  9. New Orleans, La.
  10. Pittsburgh, Pa.
  11. Waco, Texas

Press Release

Mortgage Default Warnings Surged in August

According to RealtyTrac, the number of U.S. homes that received an initial default notice; the first step in the foreclosure process, jumped 33 percent in August from July as banks have stepped up their actions against homeowners who have fallen behind on their mortgage payments.

The increase represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.

Foreclosure activity began to slow last fall after problems surfaced with the way many lenders were handling foreclosure paperwork, namely shoddy mortgage paperwork comprising several shortcuts known collectively as “robo-signing”.

Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.

Other factors have also worked to stall the pace of new foreclosures this year. The process has been held up by court delays in states where judges play a role in the foreclosure process (such as Florida), a possible settlement of government probes into the industry’s mortgage-lending practices, and lenders’ reluctance to take back properties amid slowing home sales.

A pickup in foreclosure activity also means a potentially faster turnaround for the U.S. housing market. Experts say a revival isn’t likely to occur as long as there remains a glut of potential foreclosures hovering over the market.

Foreclosures weigh down home values and create uncertainty among would-be homebuyers who fret over prospects that prices may further decline as more foreclosures hit the market. There are about 3.7 million more homes in some stage of foreclosure now than there would be in a normal housing market.

Banks have been working through a backlog of properties that first entered the foreclosure process months, if not years ago. But the August increase in homes entering that process sets the stage for a host of new properties being targeted for foreclosure.

That’s bad news for homeowners who may have grown accustomed to missing payments for several months without the threat of foreclosure bearing down on them. In states such as New York and Florida, processing delays have helped some homeowners stay in their homes for more than two years before banks got around to taking back their properties.

In all, 78,880 properties received a default notice in August. Despite the sharp increase from July, last month’s total was still down 18 percent versus August last year and 44 percent below the peak set in April 2009.

Some states, however, saw a much larger increase.

California saw a 55 percent increase in homes receiving a default notice last month, while in Indiana they climbed 46 percent. In New Jersey, where last month a judged ruled that four major banks could resume uncontested foreclosure actions in the state under court monitoring, homes receiving a default notice increased 42 percent.

Lenders repossessed 64,813 properties last month, a drop of 4 percent from July and down 32 percent from a year earlier. Home repossessions peaked September last year at 102,134.

Banks are now on track to repossess some 800,000 homes this year, down from more than 1 million last year.

The firm had originally anticipated some 1.2 million homes would be repossessed by lenders this year.

In all, 228,098 U.S. homes received a foreclosure-related notice last month, a 7 percent increase from July, but a nearly 33 percent decline from August last year. That translates to one in every 570 U.S. households, said RealtyTrac.

Nevada still leads the nation, with one in every 118 households receiving a foreclosure-related notice last month.

Rounding out the top 10 states with the highest foreclosure rate in August are California, Arizona, Georgia, Idaho, Michigan, Florida, Illinois, Colorado and Utah.

Posted by Scott R. Lodde

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