Although it's hard to pinpoint the reason why, in a report presented to Congress last month by TARP (the Troubled Asset Relief Program) we learned that many homeowners whose loans were modified under HAMP are defaulting on their modified mortgages. Nearly half of the people that were approved for permanent modifications when HAMP first started, in the summer/fall of 2009, have defaulted. Also, nearly 40% of the people whose loans were modified in the last quarter of 2009 have defaulted. And averaging across the year, about a third of mortgages modified under HAMP in 2010 have now re-defaulted.
That is a whole lot of defaulting. It's not easy to get a mortgage modified, much less to have it modified under HAMP. Generally homeowners are glad to receive the modification, so long as they believe they can make the payments. Then why all of these defaults?
Unfortunately, there is no data available that pinpoints the cause of the defaults. Why couldn't the homeowners sustain the payments? Why weren't the modifications viable in the long run?
While there are over 860,000 homeowners out there who have received permanent HAMP modifications, there are over 312,000 that have defaulted on their HAMP-modified mortgages.
What can HAMP do to stop this trend? Without further data, it's impossible to say.
Thursday, May 30, 2013
Friday, May 24, 2013
Mortgage Settlement Distributions in Illinois
Last year, the government reached a $25 billion settlement with five large mortgage lenders. During the last year, Illinois homeowners have slowly been receiving the fruits of that settlement. Over a year later, almost $1.8 billion has been distributed to over 25,000 Illinois residents. Initial estimates were that Illinois residents would receive between $1 billion and $1.5 billion, but it turns out we were owed more.
How have these benefits played out? Well, over 5,000 homeowners were able to complete short sales with their lender's permission. More than 8,000 homeowners had their secondary liens canceled entirely, leaving them with only their first mortgage. Over 3,500 homeowners received permanent loan modifications with large reductions in the principal owed, averaging over $118,000.
The government is still monitoring banks for compliance.
How have these benefits played out? Well, over 5,000 homeowners were able to complete short sales with their lender's permission. More than 8,000 homeowners had their secondary liens canceled entirely, leaving them with only their first mortgage. Over 3,500 homeowners received permanent loan modifications with large reductions in the principal owed, averaging over $118,000.
The government is still monitoring banks for compliance.
Friday, May 10, 2013
April 2013 Foreclosure Auction Activity
According to RealtyTrac, there were 2,945 scheduled residential auctions last month in Cook County. That's the most auctions in any given month in nearly three years. Just a year ago in April of 2012, there were only 1,844 scheduled foreclosure auctions.
Of course, not all of the properties actually end up auctioned. Some auctions get canceled because the homeowner is able to work out an alternative deal with the lender, such as a foreclosure or short sale. Some are simply postponed for a short while.
Of the auctions that did happen, only about ten percent went to third parties. Most of the time, the bank just ends up taking possession of the property and eventually selling it on the market.
Despite the increased auctions last month, RealtyTrac stated that in general, foreclosure activity is down in Illinois.
Of course, not all of the properties actually end up auctioned. Some auctions get canceled because the homeowner is able to work out an alternative deal with the lender, such as a foreclosure or short sale. Some are simply postponed for a short while.
Of the auctions that did happen, only about ten percent went to third parties. Most of the time, the bank just ends up taking possession of the property and eventually selling it on the market.
Despite the increased auctions last month, RealtyTrac stated that in general, foreclosure activity is down in Illinois.
Friday, May 3, 2013
Increased Rents on Streets with Name Recognition
What's in a name? Sometimes quite a lot. According to a report by Colliers International, in 2012 streets worldwide with strong name recognition saw double-digit rent increases. For example, Fifth Avenue (New York), Old Bond Street (London), and our very own North Michigan Avenue here in Chicago all saw significant rent increases.
A lot of retailers want to be on the "best" streets -- the streets that pull both the locals and the tourists -- and that drives the increased rent. In the United States, key streets in Miami and New York saw rent increases of over 30%; in fact, rents on Madison Avenue in New York increased nearly 40%. Key streets in Atlanta and San Diego saw rent increases over 10%.
That's great news for landlords, and also signifies that retailers are investing more. If retailers feel the increased rents are justified by profits, that's good news for the economy.
A lot of retailers want to be on the "best" streets -- the streets that pull both the locals and the tourists -- and that drives the increased rent. In the United States, key streets in Miami and New York saw rent increases of over 30%; in fact, rents on Madison Avenue in New York increased nearly 40%. Key streets in Atlanta and San Diego saw rent increases over 10%.
That's great news for landlords, and also signifies that retailers are investing more. If retailers feel the increased rents are justified by profits, that's good news for the economy.
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