By Dan Levy
Feb. 24 (Bloomberg) -- Homes in the foreclosure process sold at an average 28 percent discount last year and may continue to drive down U.S. housing prices as the supply of distressed properties grows, according to RealtyTrac Inc.
A total of 831,574 homes that sold in 2010 had received notices of default, auction or repossession, the Irvine, California-based data seller said today in a statement. Properties in distress accounted for almost 26 percent of all home sales last year, down from 29 percent in 2009.
A “bloated supply of foreclosures and weak demand from homebuyers” are depressing the market, James J. Saccacio, RealtyTrac’s chief executive officer, said in the statement. Residential real-estate prices dropped 4.1 percent in the fourth quarter from a year a earlier, according to the S&P/Case-Shiller index of home values in 20 cities.
“While accelerating foreclosure sales will help clear the oversupply of distressed properties and return balance to the market in the long run, in the short term a high percentage of foreclosure sales will continue to weigh down home prices,” Saccacio said.
Foreclosure filings may rise 20 percent to a peak this year as unemployment remains high and banks resume seizing property after a slowdown to investigate documentation procedures, the company said Jan. 13.
Distressed properties sold at a discount of 27 percent in 2009 and 22 percent the previous year, according to RealtyTrac. The discount reflects the sales price of homes in the foreclosure process compared with those not in distress, the company said.
Foreclosure Sale Price
The average foreclosure sale in 2010 was $172,030, up from $170,775 in 2009 and down from $200,708 in 2008, Daren Blomquist, a RealtyTrac spokesman, said in an e-mail.
Sales of previously owned homes in the U.S. rose in January to the highest level in eight months as investors used all-cash transactions to snap up distressed properties, according to figures from the National Association of Realtors released yesterday. The share represented by foreclosures and short sales climbed to a 12-month high, pushing the median price to the lowest level in almost nine years.
Bank-owned properties sold for an average discount of 36 percent last year, up from 33 percent in 2009, RealtyTrac said. Such homes accounted for 16 percent of all U.S. sales, compared with almost 18 percent in 2009 and 13 percent in 2008. Residences in default or scheduled for auction sold for a discount of 15 percent, down from almost 17 percent in 2009.
Highest Distressed Sales
Nevada had the highest proportion of distressed sales of any U.S. state, with 57 percent of its residential transactions involving homes seized by banks or at risk of foreclosure. Arizona ranked second at 49 percent, and California was third at 44 percent.
Distressed sales accounted for at least a quarter of residential transactions in Florida, Michigan, Georgia, Idaho, Oregon, Illinois, Virginia and Colorado, RealtyTrac said.
Ohio had the highest average price discount for foreclosed homes at almost 43 percent, followed by Kentucky at 40 percent. Tennessee, California, Pennsylvania, Illinois, New Jersey, Michigan, Georgia and Wisconsin all had average distress discounts of at least 35 percent, RealtyTrac said.
The company sells default data from more than 2,200 counties representing 90 percent of the U.S. population.
--Editors: Daniel Taub, Kara Wetzel
Monday
A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style
By MICHAEL POWELL
Published: August 30, 2009
The judge waves you into his chambers in the State Supreme Court building in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear before engaging mouth” — and into his inner office, where foreclosure
motions are piled high enough to form a minor Alpine chain.
"I don't want to put a family on the street unless it's legitimate," Justice Arthur M. Schack said.
Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.
He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.
The judge’s lips pucker as if he had inhaled a pickle; he rejected this one.
“I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”
The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear.
He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.
His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a “dangerous precedent” by acting as “both judge and jury,” throwing out cases even when homeowners had not responded to foreclosure motions.
Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.
Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.
“If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”
Justice Schack has small jowls and big black glasses, a thin mustache and not so many hairs combed across his scalp. He has the impish eyes of the high school social studies teacher he once was, aware that something untoward is probably going on at the back of his classroom.
He is Brooklyn born and bred, with a master’s degree in history and an office loaded with autographed baseballs and photographs of the Brooklyn Dodgers. His written decisions are a free-associative trip through popular, legal and literary culture, with a sideways glance at the business pages.
Confronted with a case in which Deutsche Bank and Goldman Sachs passed a defaulted mortgage back and forth and lost track of the documents, the judge made reference to the film classic “It’s a Wonderful Life” and the evil banker played by Lionel Barrymore.
“Lenders should not lose sight,” Justice Schack wrote in that 2007 case, “that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and ‘cattle.’ Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions, or else they have become the Mr. Potters of the 21st century.”
Last year, he chastised Wells Fargo for filing error-filled papers. “The court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’ ”
Then there is a Deutsche Bank case from 2008, the juicy part of which he reads aloud:
“The court wonders if the instant foreclosure action is a corporate ‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006 film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis, explains: ‘A Kansas City Shuffle is when everybody looks right, you go left.’ ”
The banks’ reaction? Justice Schack shrugs. “They probably curse at me,” he says, “but no one is interested in some little judge.”
Little drama attends the release of his decisions. Beaten-down homeowners rarely show up to contest foreclosure actions, and the judge scrutinizes the banks’ papers in his chambers. But at legal conferences, judges and lawyers have wondered aloud why more judges do not hold banks to tougher standards.
“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”
Banks and the cottage industry of mortgage service companies and foreclosure lawyers also pay rather close attention.
Published: August 30, 2009
The judge waves you into his chambers in the State Supreme Court building in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear before engaging mouth” — and into his inner office, where foreclosure
motions are piled high enough to form a minor Alpine chain."I don't want to put a family on the street unless it's legitimate," Justice Arthur M. Schack said.
Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.
He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.
The judge’s lips pucker as if he had inhaled a pickle; he rejected this one.
“I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”
The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear.
He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.
His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a “dangerous precedent” by acting as “both judge and jury,” throwing out cases even when homeowners had not responded to foreclosure motions.
Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.
Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.
“If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”
Justice Schack has small jowls and big black glasses, a thin mustache and not so many hairs combed across his scalp. He has the impish eyes of the high school social studies teacher he once was, aware that something untoward is probably going on at the back of his classroom.
He is Brooklyn born and bred, with a master’s degree in history and an office loaded with autographed baseballs and photographs of the Brooklyn Dodgers. His written decisions are a free-associative trip through popular, legal and literary culture, with a sideways glance at the business pages.
Confronted with a case in which Deutsche Bank and Goldman Sachs passed a defaulted mortgage back and forth and lost track of the documents, the judge made reference to the film classic “It’s a Wonderful Life” and the evil banker played by Lionel Barrymore.
“Lenders should not lose sight,” Justice Schack wrote in that 2007 case, “that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and ‘cattle.’ Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions, or else they have become the Mr. Potters of the 21st century.”
Last year, he chastised Wells Fargo for filing error-filled papers. “The court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’ ”
Then there is a Deutsche Bank case from 2008, the juicy part of which he reads aloud:
“The court wonders if the instant foreclosure action is a corporate ‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006 film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis, explains: ‘A Kansas City Shuffle is when everybody looks right, you go left.’ ”
The banks’ reaction? Justice Schack shrugs. “They probably curse at me,” he says, “but no one is interested in some little judge.”
Little drama attends the release of his decisions. Beaten-down homeowners rarely show up to contest foreclosure actions, and the judge scrutinizes the banks’ papers in his chambers. But at legal conferences, judges and lawyers have wondered aloud why more judges do not hold banks to tougher standards.
“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”
Banks and the cottage industry of mortgage service companies and foreclosure lawyers also pay rather close attention.
Friday
See Who's In Foreclosure - Celebrity Foreclosures and Evictions
Celebrity Foreclosures and Evictions
By Amy and Nancy Harrington, GetBack.com
Sometimes even the rich and famous find themselves kicked to the street. Check out this list of celebrities who've faced eviction and foreclosure due to bankruptcies, unpaid taxes, and missed mortgages.
Let Aretha Franklin's story be a cautionary tale to all of you who let your advisors manage your funds (and don't keep a watchful eye on them yourselves). According to the Queen of Soul, she almost lost her Detroit home in 2008 because of a clerical error her attorney made years earlier. It seems the hoopla was brought about over $445 in unpaid taxes and late fees from 2005. By 2007, unpaid taxes had reached a total of $19,192. Aretha had no intention of losing her home, but she did not take PETA up on their offer either. The animal rights group had said they would pay Franklin's tab if she promised to stop wearing fur. Stephen BaldwinStephen Baldwin should be careful when he says, "I'm a Celebrity, Get Me Out of Here." The actor and sometimes-reality TV star recently faced foreclosure on his Nyack, New York, home when he defaulted $824,488.36 on his mortgage. His financial troubles didn't end there. On July 21, 2009, Baldwin and his wife filed for Chapter 11 bankruptcy with an overall debt of an estimated $2.3 million.
Fantasia Barrino didn't have it easy growing up. But the high school dropout, who became a mother at age 16, fought hard and became the winner of "American Idol" Season Three. Still, success doesn't guarantee an easy path, and somewhere between her 2004 "A.I." win, the release of her debut single, "I Believe," her turn on Broadway in "The Color Purple," and the Grammy-nominated album "Fantasia," Barrino found herself in trouble again. As her best-selling memoir and TV movie warned, "Life Is Not a Fairy Tale." In 2008, the singer was at risk of losing her 6,500-square-foot, $1.3 million home in Charlotte, North Carolina. But Fantasia's fairy godmother must have been looking after her: a settlement was reached, and Barrino's home never went to auction.
In 2008, baseball All-Star Jose Canseco admitted that he had foreclosed on his $2.5 million, 7,300-square foot home in Encino, California. According to Jose, "It didn't make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else." Maybe that's why he decided to crash in that "Surreal Life" house for a couple of weeks.
Boxing champ Evander Holyfield almost lost his Fayette County, Georgia, home not once but twice. That's an especially big blow when you live on a street named after you (in this case, that's Evander Holyfield Highway). But, luckily, the Real Deal was able to sidestep foreclosure auctions against his $10 million mortgage and has kept his modest 109-room, 54,000-square-foot home. After all, could any man live without his three kitchens, a bowling alley, and 235-acre spread? Maybe he should try downsizing and avoid going through this whole mess a third time.
Not sure who had the job of telling Victoria Gotti, daughter of mob boss Sam Gotti, that she might lose her Long Island mansion (the backdrop for her former reality series, "Growing Up Gotti") to foreclosure, but we're glad it wasn't us. Still, she couldn't have been caught off-guard. She allegedly hadn't paid her mortgage in more than two years and owed $650,000 on the home. Gotti blames her ex-husband, Carmine Agnello, for getting her into the financial mess.
From "The Real Housewives of Orange County"It's hard to feel sorry for someone when you hear they are in foreclosure on one of their FOUR homes. So when news broke that Jeana Keough from "The Real Housewives of Orange County" had a notice of default for roughly $37,000 filed on her Coto de Caza estate, we weren't really all that upset for her. Turns out that she was in the process of getting loan modifications on all four of her homes (three are rental properties) and quickly got things squared away. But the now single mother who lives with her son, Colton, says she's going to sell the $5 million house anyway. As she herself said in a letter to the Orange County Register, "8,500 feet with a guest house on a 1.2 acre lot with six garages is more than Colton and I need." Life can be so hard.
In 2008, it was announced that everyone's favorite sidekick, Ed McMahon, was about to be kicked out of his Beverly Hills home. Ed was in arrears $644,000 on his $4.8 million mortgage. Enter Donald Trump. The real estate mogul offered to buy Ed's home and rent it back to him. Known as a cutthroat businessman, Trump said he wasn't out to make a dollar on this one. He was simply lending a hand to a celeb in need. Turned out that Ed didn't need help after all; he sold the home to an anonymous buyer not long after.
Early in 2008, Michael Jackson faced eviction from his former sanctuary, Neverland Ranch. The suit filed against Jackson stated that he owed $24,525,906.61 and that if Neverland went to auction, not only would the house be put on the block but so would all of its contents, including lighting fixtures, furniture, and "all merry go round type devices." Colony Capital investment firm swooped in, and bailed Michael out. But still, we're really amazed that Jermaine Jackson was fighting so hard to make sure his brother was buried at Neverland Ranch -- it doesn't really sound like a very peaceful resting place after all.
By Amy and Nancy Harrington, GetBack.com
Sometimes even the rich and famous find themselves kicked to the street. Check out this list of celebrities who've faced eviction and foreclosure due to bankruptcies, unpaid taxes, and missed mortgages.
Let Aretha Franklin's story be a cautionary tale to all of you who let your advisors manage your funds (and don't keep a watchful eye on them yourselves). According to the Queen of Soul, she almost lost her Detroit home in 2008 because of a clerical error her attorney made years earlier. It seems the hoopla was brought about over $445 in unpaid taxes and late fees from 2005. By 2007, unpaid taxes had reached a total of $19,192. Aretha had no intention of losing her home, but she did not take PETA up on their offer either. The animal rights group had said they would pay Franklin's tab if she promised to stop wearing fur. Stephen BaldwinStephen Baldwin should be careful when he says, "I'm a Celebrity, Get Me Out of Here." The actor and sometimes-reality TV star recently faced foreclosure on his Nyack, New York, home when he defaulted $824,488.36 on his mortgage. His financial troubles didn't end there. On July 21, 2009, Baldwin and his wife filed for Chapter 11 bankruptcy with an overall debt of an estimated $2.3 million.
Fantasia Barrino didn't have it easy growing up. But the high school dropout, who became a mother at age 16, fought hard and became the winner of "American Idol" Season Three. Still, success doesn't guarantee an easy path, and somewhere between her 2004 "A.I." win, the release of her debut single, "I Believe," her turn on Broadway in "The Color Purple," and the Grammy-nominated album "Fantasia," Barrino found herself in trouble again. As her best-selling memoir and TV movie warned, "Life Is Not a Fairy Tale." In 2008, the singer was at risk of losing her 6,500-square-foot, $1.3 million home in Charlotte, North Carolina. But Fantasia's fairy godmother must have been looking after her: a settlement was reached, and Barrino's home never went to auction.
In 2008, baseball All-Star Jose Canseco admitted that he had foreclosed on his $2.5 million, 7,300-square foot home in Encino, California. According to Jose, "It didn't make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else." Maybe that's why he decided to crash in that "Surreal Life" house for a couple of weeks.
Boxing champ Evander Holyfield almost lost his Fayette County, Georgia, home not once but twice. That's an especially big blow when you live on a street named after you (in this case, that's Evander Holyfield Highway). But, luckily, the Real Deal was able to sidestep foreclosure auctions against his $10 million mortgage and has kept his modest 109-room, 54,000-square-foot home. After all, could any man live without his three kitchens, a bowling alley, and 235-acre spread? Maybe he should try downsizing and avoid going through this whole mess a third time.
Not sure who had the job of telling Victoria Gotti, daughter of mob boss Sam Gotti, that she might lose her Long Island mansion (the backdrop for her former reality series, "Growing Up Gotti") to foreclosure, but we're glad it wasn't us. Still, she couldn't have been caught off-guard. She allegedly hadn't paid her mortgage in more than two years and owed $650,000 on the home. Gotti blames her ex-husband, Carmine Agnello, for getting her into the financial mess.
From "The Real Housewives of Orange County"It's hard to feel sorry for someone when you hear they are in foreclosure on one of their FOUR homes. So when news broke that Jeana Keough from "The Real Housewives of Orange County" had a notice of default for roughly $37,000 filed on her Coto de Caza estate, we weren't really all that upset for her. Turns out that she was in the process of getting loan modifications on all four of her homes (three are rental properties) and quickly got things squared away. But the now single mother who lives with her son, Colton, says she's going to sell the $5 million house anyway. As she herself said in a letter to the Orange County Register, "8,500 feet with a guest house on a 1.2 acre lot with six garages is more than Colton and I need." Life can be so hard.
In 2008, it was announced that everyone's favorite sidekick, Ed McMahon, was about to be kicked out of his Beverly Hills home. Ed was in arrears $644,000 on his $4.8 million mortgage. Enter Donald Trump. The real estate mogul offered to buy Ed's home and rent it back to him. Known as a cutthroat businessman, Trump said he wasn't out to make a dollar on this one. He was simply lending a hand to a celeb in need. Turned out that Ed didn't need help after all; he sold the home to an anonymous buyer not long after.
Early in 2008, Michael Jackson faced eviction from his former sanctuary, Neverland Ranch. The suit filed against Jackson stated that he owed $24,525,906.61 and that if Neverland went to auction, not only would the house be put on the block but so would all of its contents, including lighting fixtures, furniture, and "all merry go round type devices." Colony Capital investment firm swooped in, and bailed Michael out. But still, we're really amazed that Jermaine Jackson was fighting so hard to make sure his brother was buried at Neverland Ranch -- it doesn't really sound like a very peaceful resting place after all.
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