The PHSI, a forward-looking indicator based on contract signings, rose to 97.0 in January from a downwardly revised 95.1 in December, and it’s 8.0 percent higher than January 2011 when it was 89.8. The data reflects contracts but not closings.

The January index is the highest since April 2010 when it reached 111.3 as buyers were rushing to take advantage of the homebuyer tax credit.

“Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year,” says Lawrence Yun, NAR chief economist. “With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”

The PHSI in the Northeast rose 7.6 percent to 78.2 in January and is 9.8 percent above a year ago. In the Midwest the index declined 3.8 percent to 88.1 but is 10.8 percent higher than January 2011. Pending home sales in the South increased 7.7 percent to an index of 109.1 in January and are 10.5 percent above a year ago. In the West, the index fell 4.4 percent in January to 101.9 but is 0.7 percent above January 2011.

“Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” Yun says. “If and when credit availability conditions return to normal, home sales will likely get a 15 percent boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater.”

© 2012 Florida Realtors®

The government has control over roughly 250,000 foreclosed homes owned by Fannie Mae, 1 percent of which will be sold and converted into rentals through the pilot program.

Officials say converting the homes into rentals can reduce credit losses and stabilize home values. Homes in foreclosure sell at a 20 percent discount on average, which can hurt surrounding home values.

Investors can submit applications to purchase properties owned by Fannie in some of the nation’s hardest hit metro areas – Atlanta, Chicago, Las Vegas, Phoenix and parts of Florida.

The government rescued Fannie and its sister organization Freddie Mac in September 2008 and has funded them since the financial crisis.

For more investor info, visit the Federal Finance Housing Agency website.

© 2012 Florida Realtors®

A narrow 6-4 vote Monday in a specially scheduled meeting of the Senate Banking and Insurance Committee was the final hurdle for the proposal (SB 1890) to be heard by both chambers. The plan aims to reduce the amount of time a bank can pursue a homeowner for unpaid mortgage debt, while speeding foreclosures on abandoned homes and in cases where homeowners have no legitimate defenses.

Bill opponents fear borrowers will get caught up in a quickie foreclosure wheel without time to question bank documents, and argue that not only are portions of the plan unconstitutional, but that the overall proposal is unnecessary.

“Most of this bill is just totally useless,” said Sarasota-based attorney Henry Trawick, an expert on Florida’s judicial rules and author of Trawick’s Florida Practice and Procedure. “The courts already have the ability to do virtually everything they want to do here.”

Trawick blames overwhelmed bank attorneys for the delay in processing foreclosure cases. He said if the bill passes it will face a constitutional challenge on a provision that attempts to define abandoned homes so that a faster foreclosure can occur.

“Florida courts have held for many years that a person’s absence from his home does not constitute abandonment of it,” Trawick said.

House sponsor Kathleen Passidomo, R-Naples, and Senate sponsor Jack Latvala, R-St. Petersburg, amended the bill Monday to remove a portion that restricted damages from a fraudulent foreclosure to a monetary award. Homeowner advocates opposed the language because it barred homeowners from reclaiming their property.

Another homeowner protection the sponsors tout is the reduction from five years to one year that banks would have to file for a deficiency judgment against a homeowner. A deficiency judgment is basically the amount of leftover debt owed after the bank recoups money from a sale.

“Right now, that’s hanging over their heads for five years and that kind of uncertainty is one of the things in my opinion that is hampering the growth of Florida’s economy,” Latvalla said.

The proposal would allow any lien holder to hasten a foreclosure case if a property is abandoned or the homeowner does not respond with a “meritorious” defense within 20 days of being served.

Currently, only the bank that owns the primary lien can file for what is called a “show cause” order, in which a homeowner must show why the bank doesn’t have a foolproof case. If a judge sides with the bank, a final foreclosure judgment can be issued immediately.

The number of foreclosure filings on Florida properties dropped 62.5 percent last year compared to 2010, according to a year-end report released during the weekend by the Irvine, Calif.-based RealtyTrac.

The robo-signing scandal is the likely cause for the steep dropoff in filings, and recent months have seen an uptick in foreclosure activity.

There are an estimated 368,000 backlogged foreclosure cases in Florida’s courts.

Public testimony Monday against the bill touched on the issue of fraudulent foreclosure documents.

“At a show cause hearing the defendant has had no opportunity to engage in discovery or fact finding,” said Lynn Drysdale, an attorney with the Jacksonville-based Legal Aid Society. “Many of the documents filed at the beginning are false, and you can’t tell that based on their face.”

The bill would become effective July 1 if it becomes law and could be applied retroactively to current foreclosure cases.

“I’ll vote for the bill today, and I’ll vote for the bill on the floor because the only properties affected are those where the mortgages are delinquent and we need to keep that in mind,” said Sen. Don Gaetz, R-Destin. “It certainly doesn’t solve all our problems, but I’ve never voted for a perfect bill.”

© 2012 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services.

The premium changes will impact new loans insured by FHA beginning in April 2012. Details will soon be published in a Mortgagee Letter to FHA-approved lenders.

“After careful analysis of the market and the health of the Mutual Mortgage Insurance Fund (MMI) fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” says Galante. “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”

The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent for case numbers assigned on or after April 1, 2012. FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500 assigned on or after June 1, 2012.

The UFMIP will increase from 1 percent to 1.75 percent of the base loan amount, which FHA says will apply regardless of the amortization term or LTV ratio. FHA will still allow buyers to finance this charge through the mortgage. It’s effective for case numbers assigned on or after April 1, 2012.

FHA estimates that the increase to the upfront premium will cost the average borrower about $5 more per month.

Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.

The official announcement will be posted online in HUD’s mortgage letter web page.

© 2012 Florida Realtors®

The limited time offer has received little promotion from the Charlotte, N.C.-based bank, which sent emails to select Florida Realtors earlier this week outlining basic details of the plan.

Only homeowners whose short sales are submitted for approval to Bank of America before Nov. 30 will qualify. The homes must have no offers on them already and the closing must occur before Aug. 31, 2012.

A short sale is when a bank agrees to accept a lower sales price on a home than what the borrower owes on the loan.

Realtors said the Bank of America plan, which has a minimum payout amount of $5,000, is a genuine incentive to struggling homeowners who may otherwise fall into Florida’s foreclosure abyss.

The current timeline to foreclosure in Florida is an average of 676 days – nearly two years – according to real estate analysis company RealtyTrac. The national average foreclosure timeline is 318 days.

“I think this is a positive sign that the bank is being creative to try and help homeowners and get things moving,” said Paul Baltrun, who works with real estate and mortgages at the Law Office of Paul A. Krasker in West Palm Beach. “With real estate attorneys handling these cases, you’re talking two, three, four years before there’s going to be a resolution in a foreclosure.”

Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance, called the short sale payout a “bribe.”

“You can call it a relocation fee, but it’s basically a bribe to make sure the borrower leaves the house in good condition and in an orderly fashion,” Cecala said. “It makes good business sense considering you may have to put $20,000 into a foreclosed home to fix it up.”

Homeowners, especially ones who feel cheated by the bank, have been known to steal appliances and other fixtures, or damage the home.

“This might be the banks finally waking up that they can have someone in there with an incentive not to damage the property,” said Realtor Shannon Brink, with Re/Max Prestige Realty in West Palm Beach. “Isn’t it better to have someone taking care of the pool and keeping the air conditioner on?”

A spokesman for Bank of America said the program is being tested in Florida, and if successful, could be expanded to other states.

Wells Fargo and J.P. Morgan Chase have similar short sale programs, sometimes called “cash for keys.”

Wells Fargo spokesman Jason Menke said his company offers up to $20,000 on eligible short sales that are left in “broom swept” condition. Although the program is not advertised, deals are mostly made on homes in states with lengthy foreclosure timelines, he said.

And caveats exist. The Wells Fargo short sale incentive is only good on first lien loans that it owns, which is about 20 percent of its total portfolio.

Bank of America’s plan excludes Ginnie Mae, Federal Housing Administration and VA loans.

Similar to the federal Home Affordable Foreclosure Alternatives program, or HAFA, which offers $3,000 in relocation assistance, the Bank of America program may also waive a homeowner’s deficiency judgment at closing.

A deficiency judgment in a short sale is basically the difference between what the house sells for and what is still owed on the loan.

HAFA, which began in April 2010, has seen limited success with just 15,531 short sales completed nationwide through August.

But Realtors said cash for keys programs can work.

Joe Kendall, a broker associate at Sandals Realty in Fort Myers, said he recently closed on a short sale where the seller got $25,000 from Chase.

“They realize people are struggling and this is another way to get the homes off the books,” he said.

© 2011 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services

Still, the recession officially ended in 2009 and Wells Fargo economist Mark Vitner say the chance of a second recession is relatively low. However, he also thinks the recovery will be anything but robust, calling it “incredibly sluggish.”

For a housing recovery, jobs are key, and the report foresees a total of 40,000 new jobs added by the end of this year and an additional 64,000 in 2012.

Vitner says Florida’s recovery seems to have some legs as it expands beyond the tourism and health areas. The report points to an upswing of jobs, albeit small, in retail and trade, as well as professional and business jobs.

Wells Fargo report predictions

• Foreclosures will continue to impact home prices.

• The number of foreign investors could decline. European money problems have dampened demand from across the Atlantic, while a weaker Canadian dollar has impacted the value to Canadians. The flow of investors from the Americas has also declined.

• People will continue to move to Florida, though at a still-subdued pace: an expected 110,000 in 2011 and predicted 130,000 in 2012.

• The Florida economy will continue to grow. Wells Fargo predicts 2 percent in 2011 and 2.2 percent in 2012.

• Floridians’ personal income will also grow: 4.2 percent in 2011 and 4.3 percent in 2012.

• Home construction, while improving, won’t hit its full stride again – 1.2 million new homes – until 2015.

The full Wells Fargo report is available online.

Source: St. Petersburg Times, Jeff Harrington

With foreclosures taking an average of 21 months to get through the court system in Florida – longer than in almost any other state – the couple could presumably continue forgoing payments and still stay for years in the three-bedroom, waterfront home with pool that they bought a quarter century ago.

“I no longer have any problem not making payments,” said 72-year-old Neil Strawbridge, who had never missed making at least partial payments until last December, when Bank of America rejected his request to permanently lower his monthly payment.

His lawyer, Justin Clark, has advised the couple to try protecting their credit by selling the house before the bank files for foreclosure and seizes it. But Neil Strawbridge, who was diagnosed with Parkinson’s disease in 1995, said he could see himself and his wife simply staying put until the day comes when they are forced to leave.

Florida is among 26 states that require banks to file foreclosures through the court system, a process that takes an average of 728 days to complete, according to Lender Processing Services. In states where foreclosures aren’t routinely handled by the courts, a foreclosure takes an average of 550 days to process, from default notice to repossession, the research firm reported recently.

Pressured by the Florida Bankers Association, state lawmakers are now grappling with the lingering court process.

Legislators are considering proposals that would divert non-contested foreclosures from the courts, allowing banks to handle them in much the same way they repossess cars. If such a measure became law, it would likely affect houses entering foreclosure after June 2012.

State Sen. David Simmons, R-Altamonte Springs, said that, while the foreclosure process needs to be expedited, Florida homeowners shouldn’t lose their day in court – if they want it.

“A non-judicial foreclosure remedy doesn’t solve an immediate problem for us. … We need to focus on courts cleaning out the backlog sooner,” said Simmons, a member of the Senate Judiciary Committee.

The immediate problem, as Simmons said, includes not only the 22,000 Floridians who received a foreclosure-related legal filing in July alone, according to the research company RealtyTrac Inc. It also includes homeowners like the Strawbridges who haven’t received a foreclosure notice but who have been sitting tight without making payments for months and months.

“I’ve talked to some judges who believe foreclosures are not being filed because banks don’t want to pay association fees – they don’t want the property yet because they can’t liquidate it fast enough,” he said. “We don’t want to be too quick to condemn the judicial system. The delays are, in fact, partially due to lenders not wanting to have the property on their real estate rolls.”

Ripping off the bandage

No one tracks the number of homeowners who have stopped paying their mortgages but are able to continue living in their houses without drawing a foreclosure notice from their lender. But one of the main reasons the foreclosure process has slowed in Florida and elsewhere is because banks temporarily stopped adding cases to the court system about a year ago and pulled many others from the system when it became apparent that documents in some cases had been lost or illegally signed.

Banks have also been criticized for agreeing to short-term, trial mortgage modifications for customers, only to later refuse to grant any kind of long-term solution for the strapped homeowners, many of whom are living in houses now worth half what they paid for them just a few years ago.

With foreclosures taking almost a half-year longer in Florida than in states that don’t require a court process, the Sunshine State has fallen behind California in recovering from the nationwide housing slump in part because the West Coast state doesn’t funnel foreclosures through its courtrooms, said Mark Fleming, chief economist for CoreLogic Inc., a California-based analytical company.

“Ripping the Band-Aid off quickly helps house prices stabilize and rebound better than ripping it off slowly,” said Fleming, though he added that a longer foreclosure process might give local markets more time to recover and a better chance of absorbing houses that revert to bank ownership.

Planning next move

In Oviedo’s Twin Rivers community, the grass surrounding the Strawbridges’ home is thick and green. A small sign shows a lawn-treatment company fertilized it. Even though they aren’t making loan payments, the couple still tries to maintain the house.

They started having trouble making their $2,298 mortgage payments, the result of a refinanced loan, when Neil Strawbridge retired two years ago from his job managing a coffee service. Their income further eroded when Marilyn, 61, cut her hours as a nursing aid about a year ago to get her degree as nurse practitioner from Seminole State College. They handled the $1,194 payments that Bank of America agreed to as part of a four-month trial, but the giant lender refused to extend the offer.

The couple like the suburban feel of the Oviedo/Winter Springs area and say that, if and when they lose their home, they will likely move into a smaller, modular house nearby, which will cost them about $40,000 of their cash savings.

Sitting on his pool lanai, Neil Strawbridge said he and his wife grew tired of wrangling with the bank over the loan modification. “We decided we just couldn’t do this anymore,” he said.

Clark, the Strawbridge’s lawyer, says the majority of the clients he sees in the couple’s situation have not made a mortgage payment in 18 months.

“Most people come in after at least a year of trying to deal with the bank,” he said, at which point “they’re either homicidal or suicidal.”

Short selling

Clark said he’s not convinced the foreclosure process would speed up if the Legislature diverts mortgage-default cases from state courts.

And until the state changes the process, he added, homeowners must time their exit strategy so that they save some of the money they would have been putting toward mortgage payments without getting dinged by a foreclosure on their credit report, which can haunt a consumer’s credit history for as much as seven years.

Clark advises such homeowners to try selling their houses as short sales – for less money than the mortgage balance – which ultimately requires their lender’s cooperation. The Strawbridges, for instance, owe about $200,000 on their home and think it could possibly sell now for about $120,000.

The short-sale process in Florida is faster than the foreclosure process, taking about 410 days on average to close from the time a property’s lender files the first foreclosure notice, according to RealtyTrac.

Even at that pace, the Strawbridges could stay in their home without making payments for another year or more. But first they have to get a foreclosure notice.

Copyright © 2011 The Orlando Sentinel, Orlando, Fla., Mary Shanklin; Knight Ridder/Tribune Business News. Distributed by MCT Information Services.

In discovering the short sale fraud scam, CoreLogic analyzed 450,000 nationwide short-sale transactions in the last two years.

Here’s how the scam often works: Borrowers who are underwater or in financial distress are approached, often by an investment group, and persuaded to sell the property in a short sale at a low price. Soon after the bank accepts the lowball offer, the investment group then resells the house to legitimate buyers at a higher price.

Sixty-five percent of short sales resold within six months that net profits of 40 percent or higher were flagged “suspicious,” which means there is a high likelihood that the lender accepted a low offer, according to the CoreLogic study. These transactions often go undetected by banks, too.

Source: “A Short Way to Short-Sale Fraud,” The Real Deal (June 3, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

Law firms now have 450 days (about 15 months), up from 185 (six months), to move a foreclosure from the first referral to an attorney to a foreclosure auction before fines can be levied.

As of the end of 2010, Fannie Mae had $184 billion in unpaid home loan principal in Florida with a seriously delinquent rate of 12 percent.

According to the new deadlines announced Monday, New York City has the longest time frame to complete a foreclosure at 570 days. Florida and New Jersey are tied for the second longest.

Monday’s change is the second time in less than a year that Fannie Mae has adjusted Florida’s foreclosure deadline. It was last increased in August, jumping from 150 days to 185.

“We review them periodically and come up with a timeframe that best reflects the existing conditions in that state,” Fannie Mae spokeswoman Amy Bonitatibus said.

If law firms don’t meet the time frames, they can be fined on a case-by-case basis and depending on the amount remaining on the loan in foreclosure.

Whether the longer deadline will have any impact in Florida remains to be seen. RealtyTrac, a California-based company that monitors foreclosures, estimated last month that the average Florida foreclosure takes 619 days from the initial court filing to bank repossession.

“They can’t get foreclosures done in 185 days and I don’t think they can get them done in 450 right now,” said Boca Raton-based foreclosure defense attorney Ron Kaniuk. “They can tell the bank attorneys whatever they want, but without funding, the courts are going to grind to a slow, pathetic halt.”

Florida lawmakers decided against extending a one-time $6 million fund this year to hire more judges, case managers and clerical assistants to clear the state’s foreclosure backlog.

The additional help allowed the courts to process 16,972 Palm Beach County cases between June 2010 and February of this year, reducing a backlog of 46,438 cases to 29,466. Statewide, the 462,339-case backlog in June 2010 was reduced by 139,615 cases.

Palm Beach County Chief Judge Peter Blanc is working on a new schedule for his judges to manage the foreclosure cases. He had an additional $640,000 to work with from last year’s extra stipend, which runs out at the end of the fiscal year June 30.

“We’ll be able to handle it, but I think it will be a little slower,” Blanc said about the workload.

Palm Beach County is also still sorting through an estimated 9,000 foreclosure cases previously handled by the Plantation-based Law Offices of David J. Stern.

The company collapsed after being fired by Fannie Mae and Freddie Mac in the fall. The two entities cut ties with the firm following the announcement of an investigation by the Florida attorney general’s office and allegations of wrongdoing.

Former Stern employees interviewed by attorney general investigators mentioned the intense pressure to meet lender foreclosure deadlines. One paralegal said screaming matches would erupt between Stern and a top firm employee about the speed at which foreclosures were being processed.

Attorney Gerald Richman, who is representing the Boca Raton-based foreclosure law firm Shapiro & Fishman, said the extended foreclosure deadline may take some of the pressure off processing files quickly.

But he added that a tight timeline “doesn’t justify anyone cutting corners.”

Copyright © 2011 The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.