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Foreclosures: Are They Increasing or Decreasing?

by Allyson Hoffman

There seems to be much confusion about the number of distressed properties which are currently entering the North Shore housing market. This inventory has a tremendous impact on pricing in any particular region. For this reason, we want to bring a little clarity to the situation. Mortgage delinquencies are decreasing and foreclosures are increasing. Still confused? Let us explain.

Delinquencies are decreasing

The great news at this time is that the number of people 90+ days behind on their mortgage payment is falling. As the employment picture slowly brightens and families adjust to their current financial situation, more people are paying their mortgage on time. This has created headlines touting that the foreclosure situation is easing. Those headlines are correct. However…

Foreclosures are again flowing to the market

We must still clear the large inventories of foreclosed properties that exist. We had a small reprieve over the last few months as many distressed properties were caught in a logjam created as banks corrected faulty paperwork. That bottleneck is beginning to clear. This month’s LPS Mortgage Monitor shows exactly this situation in this graph:

 

As further evidence, Campbell/Inside Mortgage Finance just released their HousingPulse Distressed Property Index (DPI). The Index indicated that:

… nearly half of the housing market is now distressed properties. This trend is likely to continue as a backlog of foreclosures and mortgage defaults make their way through the housing pipeline. 

What does this mean?

We will keep hearing what seems to be conflicting reports on the foreclosure situation. Remember that delinquencies and foreclosures are two different measures and can go in different directions. Here is an additional slide from the Mortgage Monitor to help you distinguish the differencies.

Bottom Line

More people are paying their mortgage. Once we clear through the existing distressed property inventory, the market will finally gain momentum.

Article from KCM Blog

 

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Foreclosure Filings Down Nationwide

by Allyson Hoffman

In mid-July, RealtyTrac, one of the nation’s largest foreclosure listing firms (pre-foreclosure, auction and REO properties) reported that foreclosure filings were down by 5% in the first half of 2010, but numbers remain above those from 2009 by 8%. This is the latest in the good news/bad news reporting when it comes to the U.S. housing market.

"The second quarter was a tale of two trends," said James J. Saccacio, chief executive officer of RealtyTrac. "The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009."

According to Saccacio, U.S. housing market will exceed three million properties with foreclosure filings by the end of the year. As with the stock market, the housing market has rolled up and down in 2010 and has not shown signs of stabilization. Even with some positive numbers being reported and a level of improvement in housing inventory, the market is sitting on a significant number of distressed properties and delinquent loans.

The foreclosure rates are also very regional in nature – Nevada posts the highest rates this year (6%), with Arizona and Florida following.

Other states with foreclosure rates ranking among the nation's 10 highest were California (2.54 percent), Utah (1.91 percent), Georgia (1.79 percent), Michigan (1.73 percent), Idaho (1.68 percent), Illinois (1.61 percent), and Colorado (1.40 percent).

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Mortgage Workouts, Tax-Free for Many Homeowners

by Allyson Hoffman

There is now tax relief for struggling homeowners. If your mortgage debt is partly or entirely forgiven during 2007, 2008 or 2009 you may be able to claim special tax relief by filling out Form 982 and attaching it to your federal income tax return for that year.

Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from tax up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.

Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. The debt must have been used to buy, build or substantially improve your principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.

If your debt is reduced or eliminated you will receive a year-end statement (Form 1099-C) from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

The IRS urges borrowers to check the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for your home (Box 7).

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit the IRS Web site at IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. This publication and Form 982 can be downloaded from IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

This article is courtesy of the www.irs.gov.  Visit their website for more information.

Image courtesy of http://401kcalculator.org/Flickr.com

Displaying blog entries 1-3 of 3

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Allyson Hoffman
RE/MAX Villager
1245 Waukegan Road
Glenview IL 60025
847-310-5300
Fax: 847-400-0881

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Allyson Hoffman
RE/MAX Villager
1245 Waukegan Road
Glenview, IL, 60025

(847) 310-5300
[email protected]

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