July 2, 2020

A City Invokes Seizure Laws to Save Homes

Scarcely touched by the nation’s housing recovery and tired of waiting for federal help, Richmond is about to become the first city in the nation to try eminent domain as a way to stop foreclosures.

The results will be closely watched by both Wall Street banks, which have vigorously opposed the use of eminent domain to buy mortgages and reduce homeowner debt, and a host of cities across the country that are considering emulating Richmond.

The banks have warned that such a move will bring down a hail of lawsuits and all but halt mortgage lending in any city with the temerity to try it.

But local officials, frustrated at the lack of large-scale relief from the Obama administration, relatively free of the influence that Wall Street wields in Washington, and faced with fraying neighborhoods and a depleted middle class, are beginning to shrug off those threats.

“We’re not willing to back down on this,” said Gayle McLaughlin, the former schoolteacher who is serving her second term as Richmond’s mayor. “They can put forward as much pressure as they would like but I’m very committed to this program and I’m very committed to the well-being of our neighborhoods.”

Despite rising home prices in many parts of the country, including California, roughly half of all homeowners with mortgages in Richmond are underwater, meaning they owe more — in some cases three or four times as much more — than their home is currently worth. On Monday, the city sent a round of letters to the owners and servicers of the loans, offering to buy 626 underwater loans. In some cases, the homeowner is already behind on the payments. Others are considered to be at risk of default, mainly because home values have fallen so much that the homeowner has little incentive to keep paying.

Many cities, particularly those where minority residents were steered into predatory loans, face a situation similar to that in Richmond, which is largely black and Hispanic. About two dozen other local and state governments, including Newark, Seattle and a handful of cities in California, are looking at the eminent domain strategy, according to a count by Robert Hockett, a Cornell University law professor and one of the plan’s chief proponents. Irvington, N.J., passed a resolution supporting its use in July. North Las Vegas will consider an eminent domain proposal in August, and El Monte, Calif., is poised to act after hearing out the opposition this week.

But the cities face an uphill battle. Some have already backed off, and those that proceed will be challenged in court. After San Bernardino County dropped the idea earlier this year, a network of housing groups and unions began working to win community support and develop nonprofit alternatives to Mortgage Resolution Partners, the firm that is managing the Richmond program.

“Our local electeds can’t do this alone, they need the backup support from their constituents,” said Amy Schur, a campaign director for the national Home Defenders League. “That’s what’s been the game changer in this effort.”

Richmond is offering to buy both current and delinquent loans. To defend against the charge that irresponsible homeowners who used their homes as A.T.M.’s are being helped at the expense of investors, the first pool of 626 loans does not include any homes with large second mortgages, said Steven M. Gluckstern, the chairman of Mortgage Resolution Partners.

The city is offering to buy the loans at what it considers the fair market value. In a hypothetical example, a home mortgaged for $400,000 is now worth $200,000. The city plans to buy the loan for $160,000, or about 80 percent of the value of the home, a discount that factors in the risk of default.

Then, the city would write down the debt to $190,000 and allow the homeowner to refinance at the new amount, probably through a government program. The $30,000 difference goes to the city, the investors who put up the money to buy the loan, closing costs and M.R.P. The homeowner would go from owing twice what the home is worth to having $10,000 in equity.

Alan Blinder contributed reporting.

Article source: http://www.nytimes.com/2013/07/30/business/in-a-shift-eminent-domain-saves-homes.html?partner=rss&emc=rss

Irish Legacy of Leniency on Mortgages Nears an End

“I still deal with my lender, and they threaten with legal action now and again,” said Mr. Gilroy, whose electrical business failed in the crisis. With no income since, he has no hope of paying off the €310,000, or $398,000, loan on the four-bedroom house in Navan, north of Dublin, that he shares with his wife and three children.

The lender is “only threatening by letter at the minute,” said Mr. Gilroy, who is betting the odds are in his favor, for the time being at least. Although there are more than 143,000 delinquent home mortgages in Ireland, foreclosures have been so politically and legally difficult that, in the last three months of last year, they numbered 38.

That could change.

Under pressure from the international lenders who agreed to a €85 billion, or about $109 billion, bailout of the Irish economy in 2010, the law is being amended to overturn a legal ruling that has been restricting banks’ right to repossess property. As Ireland’s fellow euro zone member Cyprus may be about to learn, bailouts come with strings that can bind for years to come.

Besides pushing for changes to property-repossession law, Ireland’s creditors, collectively known as the troika — the European Commission, the European Central Bank and the International Monetary Fund — has also prompted the government to introduce the country’s first property tax in more than 15 years, a measure intended to raise €500 million a year.

Unlike Cyprus, where wealthier depositors are being forced to help pay for ruined banks, the Irish government picked up the tab for its broken lenders before it, too, had to seek help.

More than two years after the bailout, officials say that the dead weight of debt, mostly in bad property loans, is still hanging over the economy, stifling confidence and suffocating recovery. New rules that take affect later this year are designed to help troubled borrowers and cut their debt loads. But critics fear that the latest tightening could nonetheless cause thousands of Irish households to lose their homes and hamper the broader recovery efforts.

If people cannot make their mortgage payments, it is unlikely that many will suddenly be able to pay property tax bills. Mr. Gilroy has refused to open his assessment but thinks it would demand an additional €300 a year.

No one anywhere likes to lose their home, of course. But repossessions strike an especially resonant chord in Ireland, which has an acute memory of forced evictions under British rule.

“Being a country with a long history of colonial oppression, people being evicted touches a bit of a raw nerve with a lot of people,” said Paul Joyce, senior policy analyst at Free Legal Advice Centers, a rights organization that campaigns on debt and other issues. “The notion of people being put out of their homes is not one that sits too easily in Ireland.”

Mr. Gilroy, who represented a new party, Direct Democracy Ireland, in a parliamentary election Thursday — finishing fourth — came to prominence in part through You Tube clips of verbal confrontations with officials trying to seize properties.

He admits he was naïve in not checking the repayment terms on his mortgage, which he sought in a hurry to buy the house he coveted in 2008, a time when newly listed homes were often being snapped up within days. But his borrowing was not reckless, he said, adding that he had accepted a loan with high repayments on the basis that he could switch after six months, something he discovered too late was impossible.

“After three and a half years of not missing one payment, I was eventually broke, the business was failing, house prices were dropping,” said Mr. Gilroy. He said he and others would need 70 to 80 percent knocked off their mortgages to make them remotely affordable and reflective of current property prices.

He blames his plight on “criminal activity by the bankers” and “stupid” policies by the government which bailed out the banks at the taxpayers’ expense. Many other Irish share his anger, Mr. Gilroy contends.

Bankers see things a bit differently.

Article source: http://www.nytimes.com/2013/03/30/business/global/irish-legacy-of-leniency-on-mortgages-nears-an-end.html?partner=rss&emc=rss

Federal Reserve Transcripts Open Window on 2007 Housing Crisis

Officials decided not to cut interest rates. The Fed did not even mention housing in a statement announcing its decision. The economy was growing, and a transcript of the meeting that the Fed published on Friday shows officials were deeply skeptical that problems rooted in housing foreclosures could cause a broader crisis.

“My own bet is the financial market upset is not going to change fundamentally what’s going on in the real economy,” William Poole, president of the Federal Reserve Bank of St. Louis, told his colleagues at the meeting.

That was on a Tuesday. By Thursday, the European Central Bank was offering emergency loans to continental banks, the Fed was following suit, and an alarmed Mr. Poole had persuaded the board of the St. Louis Fed to support a reduction in the interest rate on such loans. The somnolent Fed was lurching into action.

“The market is not operating in a normal way,” the Fed chairman, Ben S. Bernanke, told colleagues on a hastily convened conference call the next morning. Mr. Bernanke, a former college professor and a student of financial crises, was typically understated as he explained that the Fed was pumping money into the financial system because private investors were fleeing. “It’s a question of market functioning, not a question of bailing anybody out,” he said. “That’s really where we are right now.”

More than five years later, the Fed continues to prop up the financial system, and the transcripts of the 2007 meetings, released after a standard five-year delay, provide fresh insight into the decisions made at the outset of its great intervention.

They show that Mr. Bernanke and his colleagues continued to wrestle with misgivings about the need for action, because at the time there was little evidence of a broader economic downturn. Several officials worried that the economy would instead overheat, causing inflation to rise. By December, as the Fed began to act with consistent force, the economy was already in recession.

Officials lacked clear information, relying on anecdotes like a reported conversation with a Wal-Mart executive who said Mexican immigrants were sending less money home. They were also limited by economic models that could not simulate the problems that seemed to be unfolding.

“This may be a situation in which you will have to resolve your ambivalence quickly,” Timothy F. Geithner, then president of the Federal Reserve Bank of New York, warned in September. “You may not be able to resolve it.”

They questioned, too, the Fed’s ability to stimulate the economy, an issue that is still at the center of the debate about its policies.

“There’s no guarantee whatsoever that this thing will do what we’re trying to do,” Donald Kohn, then the Fed’s vice chairman, said at a meeting later in August. As the Fed debated a strategy to encourage bank lending, he said, “I just think it’s worth giving it a try under the circumstances.”

But eventually, Mr. Bernanke and his colleagues concluded that they could see the future, that they did not like what they saw and that it was time to act.

“At the time of our last meeting, I held out hope that the financial turmoil would gradually ebb and the economy might escape without serious damage,” Janet L. Yellen, then president of the Federal Reserve Bank of San Francisco, said in December. “Subsequent developments have severely shaken that belief. The possibilities of a credit crunch developing and of the economy slipping into a recession seem all too real.”

The Fed’s eventual response, which it expanded significantly in 2008 and 2009, is now widely credited with preventing an even more catastrophic financial crisis and a deeper recession. It is not clear that quicker or stronger action in the fall of 2007 would have made a big difference. Critics focus instead on the Fed’s earlier failure to keep banks healthy and to prevent abusive mortgage lending, and on its later role in allowing the collapse of the investment bank Lehman Brothers.

“The outcome would have been different only if the Fed and others had reacted back in 2004, 2005, 2006” to curtail subprime mortgage lending, Mr. Poole, now a senior fellow at the libertarian Cato Institute, said on Friday in an interview on CNBC.

The transcripts show that the Fed entered 2007 still deeply complacent about the housing market. Officials knew that people were losing their homes. They knew that subprime lenders were blinking out of business with each passing week. But they did not understand the implications for the rest of the nation.

“The impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained,” Mr. Bernanke said in March.

Officials said at the time that they took particular comfort in the health of the largest banks. Even as the housing market deteriorated, the Fed approved acquisitions by some of the banks with the largest exposure to subprime mortgages, like Citigroup, Bank of America and the Cleveland-based National City.

Annie Lowrey contributed reporting from Washington.

Article source: http://www.nytimes.com/2013/01/19/business/economy/fed-transcripts-open-a-window-on-2007-crisis.html?partner=rss&emc=rss

F.H.A. Hopes to Avoid a Bailout by Treasury

An independent audit released on Friday projects that the agency’s expected losses will swamp its anticipated revenue, with a shortfall amounting to about $16.3 billion in its portfolio of insured home mortgages. That has raised the question of whether it will need an infusion of cash from taxpayers for the first time in its eight-decade history.

“This is the first time that they’ve totally run out of money,” said Representative Spencer Bachus, Republican of Alabama, said on Thursday. “They have about $600 million, as I understand, that they’re burning through. And within a month, because of the number of foreclosures, they indicated they will have to come to the American people and ask for money.”

But federal housing officials stressed that the shortfall was projected, and that they were adopting measures to avoid tapping taxpayer funds. Shaun Donovan, the secretary of housing and urban development, announced a series of steps to reduce losses and increase revenue at the F.H.A.

These measure include bumping up its annual mortgage insurance premiums on new loans by 10 basis points. That will cost borrowers about $13 a month, Mr. Donovan said. The F.H.A. will also sell off about 10,000 delinquent loans each quarter, increase short sales of homes where the loan exceeds the value and amplify its efforts to keep families in their homes, avoiding costly foreclosures.

The F.H.A. expects these changes, plus other measures it recently put into effect, to contribute $8 billion to $10 billion to its overall value in fiscal years 2013 and 2014. The agency said the new steps would begin as soon as January.

The agency also is asking Congress for new administrative capabilities to better manage its portfolio of loans and cut losses. “We need help from Congress,” Mr. Donovan said.

In a meeting with reporters, Carol J. Galante, F.H.A.’s acting commissioner, said, “It’s literally impossible to say that we will or won’t need a draw” from the Treasury at this point. “We’re doing all this to increase the likelihood that we will not.”

The F.H.A. insures a portfolio of more than $1 trillion in mortgages. The new actuarial report shows that it expects losses on its portfolio of loans originated between 1992 and 2009, including about $70 billion in expected insurance claims on loans endorsed between 2007 and 2009. The agency anticipates profits on insured loans originated from 2010 on.

During those years, some of the worst of the housing downturn, the F.H.A. continued to provide insurance on loans to help stabilize the housing market. “At some level, the government has already accepted” losses on those loans, Ms. Galante said. “They’re obligations of the government at this point.”

The F.H.A. also said loans where the seller put down money for a buyer’s down payment were a significant drain on its books.

Such “seller-funded down payment assistance” loans make up only 4 percent of the F.H.A.’s portfolio but account for 13 percent of its seriously delinquent loans. The F.H.A. said it expected to lose $15 billion on such loans, which it no longer insures.

Despite the projected shortfalls, the F.H.A. does not have an immediate need for cash, housing officials stressed.

“This does not mean F.H.A. has insufficient cash to pay insurance claims, a current operating deficit or will need to immediately draw funds from the Treasury,” a statement from the agency said.

The determination on whether F.H.A. needs to draw on the Treasury will come next fall, said federal housing officials. In February, the White House will perform its own projections of F.H.A.’s capital needs as part of its budget. Then, the F.H.A. will reassess its books as the fiscal year ends in September, and might request a bailout to shore up its capital ratio. Congress would not need to approve an F.H.A. draw from the Treasury.

Last year, the White House budget showed the F.H.A. in the red, but the agency improved its financial situation over the course of the year and did not require taxpayer financing.

Politicians in Washington, particularly Republicans, have voiced concerns that the F.H.A. could become a drain on the taxpayer, much like Fannie Mae and Freddie Mac. Those mortgage finance giants have not required additional taxpayer financing in recent quarters, as the housing market has stabilized. But they have nevertheless received about $190 billion in federal financing in the last four years.

The F.H.A. cites three reasons for its deteriorating financial position this year. First, its actuarial review uses “significantly lower” house price appreciation estimates than it used last year.

Second, low interest rates — while a boon for the housing market, as they drive refinancing activity and entice new borrowers to buy a house — have hurt the F.H.A.’s bottom line. More borrowers are paying off their mortgages, reducing revenue for the F.H.A. On top of that, borrowers who are not able to refinance are defaulting at higher rates, requiring higher F.H.A. payouts.

Finally, refinements to the forecasting model that the actuaries use led to a higher estimate of losses on defaults and reverse mortgages.

More broadly, the agency is still struggling from housing downturn — and its mission is, in part, to help make homes accessible to the millions of low-income people who might otherwise be shut out of the mortgage market.

Article source: http://www.nytimes.com/2012/11/17/business/audit-shows-housing-agency-facing-shortfall.html?partner=rss&emc=rss

Bucks Blog: New Refi Rules Offer Help to More Underwater Borrowers

A home sale after foreclosure in Tigard, Ore.Associated PressA home sale after foreclosure in Tigard, Ore.

The federal government on Monday announced changes that could make it easier for many borrowers who owed more on their home loans than their houses were worth to refinance into lower-cost mortgages.

The changes are aimed at helping homeowners who are current on their loans, but who have been unable to take advantage of historically low interest rates by refinancing because they are “underwater” on their mortgages. Ultimately, the government hopes the move will help stabilize the housing market, which has been stagnant due to falling prices and foreclosures.

Previously, to refinance under the two-year-old Home Affordable Refinance Program, or HARP, borrowers could owe no more than 125 percent of their home’s value. But the Federal Housing Finance Agency is eliminating that cap, making the program available to many more underwater homeowners. Other changes include eliminating the need for most appraisals and scrapping many refinance fees.

Lenders are expected to get detailed information on the changes by Nov. 15; some could begin offering refinancing under the new rules as soon as December. Borrowers who owe more than 125 percent of their home’s value, however, likely will have to wait until early 2012, according to the housing agency.

As of Aug. 31, about 894,000 borrowers had refinanced under HARP; at least that many are expected to be able to refinance under the updated program, the agency said.

To qualify, your home loan must be owned or guaranteed by either Freddie Mac or Fannie Mae, the quasi-governmental mortgage outfits; you can check this here for Freddie and here for Fannie. I found the Fannie site a bit frustrating to use, so another option is simply to call: 800-7FANNIE , or 800-FREDDIE. (Freddie and Fannie own or guarantee roughly half of all home loans in the United States).

Here’s some other details:

  • Your loan must have been sold to Freddie or Fannie before May 31, 2009.
  • You must be up-to-date on your mortgage payments, with no more than one late payment in the prior 12 months.
  • Your current loan-to-value ratio (the amount of your loan, divided by the value of your home) must be greater than 80 percent.

Think the new rules will help you refinance your home? Or is this just the latest federal mortgage effort that will fall short of its goals?

Article source: http://feeds.nytimes.com/click.phdo?i=237f860ded1c34f991abb412a8005334

Nevada Accuses Bank of America of Breaching Mortgage Accord

In a complaint filed Tuesday in United States District Court in Reno, Catherine Cortez Masto, the Nevada attorney general, asked a judge for permission to end Nevada’s participation in the settlement agreement. This would allow her to sue the bank over what the complaint says were dubious practices uncovered by her office in an investigation that began in 2009.

In her filing, Ms. Masto contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending and failed to meet the settlement’s 60-day requirement on granting new loan terms, instead allowing months and in some cases more than a year to go by with no resolution, the filing says.

The complaint says such practices violated the settlement Bank of America reached in the fall of 2008 with several states and later, in 2009, with Nevada, in which the states accused its Countrywide unit of predatory lending. As the credit crisis grew, the settlement was heralded as a victory by state offices eager to help keep troubled borrowers in their homes and reduce their costs. Bank of America set aside $8.4 billion in the deal and agreed to help 400,000 troubled borrowers with loan modifications and other financial relief, such as lowering interest rates on mortgages.

But foreclosure problems mounted in Nevada, where Countrywide originated 262,622 loans, and complaints about the bank’s loan servicing practices began flooding into Ms. Masto’s office shortly after the settlement was struck. She started investigating and found that Bank of America had “materially and almost immediately violated” the terms of the settlement, according to the complaint.

Ms. Masto declined to comment beyond the court filing.

Bank of America did not immediately respond to a request for comment.

Ms. Masto’s request to terminate the 2008 deal against Bank of America could raise further questions about the extent of its liabilities arising from Countrywide’s lending practices and from the bank’s own loan servicing activities in the foreclosure crisis. The move by the Nevada attorney general could also imperil the already shaky negotiations over improper foreclosure practices being conducted by state attorneys general and the four largest banks, including Bank of America.

Those talks, which also involve federal officials, have stalled over the summer with disagreements over whether the deal would allow state regulators to bring future lawsuits against the institutions for questionable practices. Attorneys general who do not want to give up the right to file additional suits against the banks — including Ms. Masto, Eric Schneiderman of New York and Beau Biden of Delaware — have declined to endorse a proposed settlement.

The breadth of the new Nevada complaint indicates that Bank of America’s problems extend throughout its mortgage operations, including origination, loan servicing and securitization. Nevada officials also found broad problems in the bank’s interactions with imperiled borrowers.

For example, the complaint says the bank advised credit reporting agencies that consumers were in default on their mortgages when they were not, and contends that Bank of America employees deceived borrowers about why their requests to modify loans were denied. In addition, it says, the bank falsely claimed that the actual owners of loans had refused to allow changes to their mortgages, and it incorrectly claimed that borrowers had failed to make payments on trial loan modifications when in fact they had. Bank of America also misled borrowers, the Nevada attorney general’s filing noted, by offering loan modifications with one set of terms only to come back with a substantially different deal.

Among the more troubling findings in the Nevada complaint is the contention by several Bank of America employees that the company imposed strict limits on the amount of time they could spend on the phone assisting troubled borrowers seeking help with their loans.

One worker said in a deposition cited in the complaint that employees were punished if they spent more than seven minutes or 10 minutes with a customer. Even though these limits allowed almost no time for assistance, Bank of America employees who did not curtail their conversations with troubled borrowers were reprimanded or fired, this employee said.

The Nevada filing also maintains that Countrywide, which Bank of America acquired in 2008, did not deliver necessary loan documentation when it put together mortgage securities and sold them to investors during the boom. Under the typical pooling and servicing agreements struck between Countrywide and investors who bought the securities, the bank was required to endorse the mortgage note and deliver it to the trustee overseeing the pool. Countrywide routinely failed to do so, the complaint notes.

These paperwork failures should have barred the bank from foreclosing on borrowers, the Nevada complaint says, but it went ahead nonetheless. This aspect of Ms. Masto’s complaint echoes a lawsuit filed in early August by Mr. Schneiderman, the New York attorney general, to block a settlement between Bank of New York and Bank of America covering 530 Countrywide mortgage pools. In that case, Mr. Schneiderman contends that Countrywide did not deposit loans into the mortgage pools as required by contract and that the bank had no right to bring foreclosure actions against these borrowers.

Article source: http://feeds.nytimes.com/click.phdo?i=dd29695a855fcd729ff3d8bcaf96dd26

Fewer Americans File for Bankruptcy

The number of bankruptcy filings in June was 120,623, or an average of 5,483 a day, a drop of 6.2 percent from May, when filings totaled 122,775, or 5,846 a day, according to a report from Epiq Systems, which tracks bankruptcy filings. There was one additional day to file in June compared with May. Average daily filings are down nearly 10 percent from June of last year.

Though economic factors like foreclosures and unemployment play a role in bankruptcy, over the long run, the filing rate tends to be more closely tethered to the amount of outstanding consumer debt.

Access to credit, however, can influence the bankruptcy rate over the shorter term: as lenders tighten their standards, filings tend to rise because struggling consumers can no longer rely on credit cards or other loans to get them through a rough period. But when more new loans are being made, filings tend to fall — at least for a while.

“There is a lot of mythology about what drives bankruptcy rates,” said Robert M. Lawless, a professor at the University of Illinois College of Law who specializes in bankruptcy. “But consumer credit appears to be the most significant indicator.”

Over all, he said he expected filings to decline 5 to 10 percent this year, leveling off at about 1.46 million, largely because consumers have slightly more access to credit now than in recent years. But he also said that consumers had taken on less debt in the past three years, which means there is less debt to discharge and fewer incentives to file bankruptcy.

That estimate compares with about 1.56 million bankruptcy filings in 2010 and nearly 1.45 million in 2009. Filings surpassed two million in 2005, when many people rushed to declare bankruptcy before a new law went into effect that made it more difficult, and significantly more expensive, to file.

There have been 731,237 filings this year. “If they keep going the way they were,” Professor Lawless said, “bankruptcy filings will keep going down a little bit.”

So far this year, the vast majority of the bankruptcy cases — nearly 70 percent — were Chapter 7 filings, which provide individuals with the proverbial “fresh start” because their debts are forgiven. (To qualify, filers need to pass a means test to determine whether they are unable to repay their debts.)  

In contrast, a Chapter 13 filing requires individuals to use their disposable income to pay back a portion of their debts through a three- or five-year repayment plan. Some people choose Chapter 13 because it allows them to save their primary homes from foreclosure, though they are required to catch up on their mortgage payments. Slightly more than 27 percent were Chapter 13 filings. (The remainder were mostly commercial filings.) The overall split between Chapter 7 and Chapter 13 filings is consistent with last year’s ratio.

While the overall number of bankruptcy filings was down last month, there were variations from state to state. For instance, filings in Georgia rose 13 percent and were up 33 percent in Delaware, compared with May. But filings in Wyoming fell 30 percent, in South Dakota 21 percent, in West Virginia 18 percent and in Wisconsin 17 percent.

In both New York and New Jersey, the number of bankruptcy cases dropped by 5 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=1c19c29aaac7aee76b751676b8720de9

Backlog of Cases Gives a Reprieve on Foreclosures

In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm.

Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years. In Florida, Massachusetts and Illinois, it would take a decade.

In the 27 states where the courts play no role in foreclosures, the pace is much more brisk — three years in California, two years in Nevada and Colorado — but the dynamic is the same: the foreclosure system is bogged down by the volume of cases, borrowers are fighting to keep their houses and many lenders seem to be in no hurry to add repossessed houses to their books.

“If you were in foreclosure four years ago, you were biting your nails, asking yourself, ‘When is the sheriff going to show up and put me on the street?’ ” said Herb Blecher, an LPS senior vice president. “Now you’re probably not losing any sleep.”

When major banks acknowledged last fall that they had been illegally processing foreclosures by filing false court documents, they said that any pause in repossessions and evictions would be brief. All of the major servicers agreed to institute reforms in their foreclosure procedures. In April, the Office of the Comptroller of the Currency and other regulators gave the banks 60 days to draw up a plan to do so.

But nothing is happening quickly. When the comptroller’s deadline was reached last week, it was extended another month.

New foreclosure cases and repossessions are down nationally by about a third since last fall, LPS said. In New York, foreclosure filings are down 85 percent since September, according to the New York State Unified Court System.

Mark Stopa, a St. Petersburg, Fla., specialist in foreclosure defense, has 1,275 clients, up from 350 a year ago. About 75 clients have won modifications, dismissals or sold their properties for less than they owed. All the other cases are pending.

“Banks aren’t even trying to win,” said Mr. Stopa, who charges his clients an annual fee of $1,500.

J. Thomas McGrady, the chief judge of Florida’s Sixth Circuit, which includes St. Petersburg, agreed. “We’re here to do what we’re asked to do. But you’ve got to ask. And the banks aren’t asking,” he said.

A spokesman for Bank of America said, “Any suggestion that we have a strategy to delay foreclosures is baseless.” A Wells Fargo spokeswoman blamed changes in state laws governing foreclosure for any slowdown. A GMAC spokeswoman said it was following “regulatory and investor expectations.” JPMorgan Chase declined to comment. Servicers said some of the decline in foreclosures could be traced to an improved economy.

There are many reasons that foreclosure, which has been slowing ever since the housing bubble burst, has been further delayed in many states.

The large number of cases nationally — about two million, plus another two million waiting in the wings — have overwhelmed many lenders and the courts.

Lenders, who service loans they own as well as those owned by investors, tried to circumvent the time-intensive process by using “robo-signers” who mass-produced documents, many of which made inaccurate claims. When the bad practices were discovered last fall, the lenders were forced to revisit hundreds of thousands of cases.

Over the last two years, most defaulting homeowners were people who had lost their jobs. Housing analysts say these homeowners are more likely to hire a lawyer and fight repossession than borrowers who had subprime loans that swelled beyond their ability to pay.

Judges these days are also more inclined to scrutinize requests for eviction rather than automatically approve them. The so-called foreclosure mills — law firms that handled many of the suits for the banks — are in retreat under law enforcement pressure. And some analysts suggest that banks are reluctant to take too many houses onto their books at any one moment for fear of flooding a shaky market.

Article source: http://feeds.nytimes.com/click.phdo?i=47abcd045a950881698cb24dc00f85a1

Sales of New Homes Rise, but Pace Remains Slow

Buyers signed contracts for 29,000 homes in March, an 11 percent increase from the month before but down from 36,000 in March 2010. In March 2005, at the peak of the housing boom, buyers put down money for 127,000 houses.

The millions of homes built during the boom have created a drag on the current market as the owners surrender them to foreclosure. Builders cannot compete against relatively recent listings offered by banks for large discounts.

In a separate report issued Monday, the HousingPulse Tracking Survey indicated that nearly half of the entire housing market is distressed properties. Since banks have generally pulled back on foreclosures over the last six months, the survey underlined the long-term pressures facing the market.

If the banks start processing foreclosures faster, that will create further downward momentum on the housing market. A coalition of state attorneys general and the Obama administration is negotiating with the lenders to get them to do more loan modifications instead.

One good sign for home builders is the increase in sales of new homes from February, whose numbers were also revised up by the Census Bureau. February sales were the lowest for any month since records were first kept in 1963.

“Sales remain very low by historical standards and, considering that a number of homebuilders reported large drops in orders recently, there is likely more weakness ahead,” wrote Jennifer Lee of BMO Capital Markets.

Article source: http://feeds.nytimes.com/click.phdo?i=e6a94bf8cdf1e4fb88d4caee085979a2