Report reveals impact of moratorium expiration on foreclosure activity
Foreclosure activity spiked 27% month over month and 60% year over year in August following the expiration of the federal moratorium. The number of homes facing foreclosure grew to a total of 15,838 properties, according to ATTOM’s Foreclosure Market Report released Thursday. The figures reflect the first month since the government foreclosure ban ended. “As expected, foreclosure activity increased as the government’s foreclosure moratorium expired, but this doesn’t mean we should expect to see a flood of distressed properties coming to market,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. Sharga expects increased foreclosure activity to continue over the next three months “as loans that were in default prior to the moratorium re-enter the foreclosure pipeline, and states begin to catch up on months of foreclosure filings that simply haven’t been processed during the pandemic. But it’s likely that foreclosures will remain below normal levels at least through the end of the year,” he said. Nationwide, one in every 8,677 housing units had a foreclosure filing in August, with Illinois at the top of the list of states with the highest foreclosure rates (one in every 3,848 housing units with a foreclosure filing). Nevada (one in every 4,738 housing units), New Jersey (one in every 4,868 housing units), Delaware (one in every 5,348 housing units), and Ohio (one in every 5,517 housing units) followed. Foreclosure starts were also up 27% from the previous month and 49% from a year ago. Lenders started the foreclosure process on 8,348 properties in August. “While foreclosure starts increased significantly compared to last month and last year, it’s very important to keep these numbers in context,” Sharga said. “Both last year’s and last month’s foreclosure starts were artificially low due to the government’s moratorium. But in August of 2019, the last year we had ‘normal’ foreclosure activity, there were almost 28,000 foreclosure starts – over three times more than this year.”
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Consumer missteps come back to haunt it
Wells Fargo & Co. will pay a $250 million fine after the Office of the Comptroller of the Currency said the company has deficiencies in its home-lending business and violated a 2018 order tied to past consumer missteps. The order, the first such sanction under chief executive officer Charlie Scharf, cited problems in home-lending loss mitigation practices -- the steps firms take to avoid foreclosure -- that have impaired the bank from being able to “fully and timely” make harmed customers whole. Bloomberg reported last week that the regulator had warned the company it may bring new sanctions tied to the company’s pace in fulfilling its obligations. “Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank,” Michael Hsu, the regulator’s acting chief, said in a Thursday statement. “This is unacceptable.” In addition to the penalty, Hsu said the OCC is putting limits on the bank’s future activities until it fixes problems tied to mortgage servicing. The regulator ordered the bank not to acquire certain third-party residential mortgage servicing and to ensure borrowers aren’t transferred out of its loan-servicing portfolio until remediation is provided. Scandals have plagued Wells Fargo since 2016, beginning with the revelation that employees opened millions of fake accounts to meet sales goals. Problems multiplied across business lines, leading to additional sanctions from regulators including a costly asset cap from the Federal Reserve. The problems also led to leadership shakeups including the resignations of two CEOs, and a six-month search for an outsider to do the job. Scharf, who took over almost two years ago, has called satisfying US authorities' demands his highest priority. “Our work to build the right foundation for a company of our size and complexity will not follow a straight line,” Scharf said in a statement Thursday. “We are managing multiple issues concurrently, and progress will come alongside setbacks. That said, we believe we’re making significant progress, the work required is clear, and I remain confident in our ability to complete it.” Shares of Wells Fargo rose 1.2% to $44.90 at 6:25 p.m. in New York after-market trading. The stock has gained about 47% this year. Latest S&P CoreLogic Case-Shiller Index report reveals all…
US home prices continued to accelerate at a record-breaking pace in June, with an 18.6% annual gain in the S&P CoreLogic Case-Shiller National Home Price NSA Index – the highest reading in more than 30 years. This growth is also reflected in the 10- and 20-City Composites, which were up 18.5% and 19.1% year over year, respectively. Among the 20 cities, Phoenix’s 29.3% spike led all cities for the 25th consecutive month, with San Diego (+27.1%) and Seattle (+25.0%) close behind. “Tireless home buyer demand pushed price growth to a new record high in June, with S&P CoreLogic national Case-Shiller Index clocking in an 18.6% year-over-year growth rate,” said CoreLogic deputy chief economist Selma Hepp. “While the housing market feels like it has legs that never get tired, inventory and affordability constraints are still expected to put a damper on price growth. Some early data suggests that the buyer frenzy experienced this spring is tapering, though many buyers still remain in the market.” Craig Lazzara, managing director and global head of index investment strategy at S&P DJI, added that June’s data were consistent with the pandemic-induced trend of potential buyers moving from urban apartments to suburban homes. “This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years,” he said. “Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing.” Hepp said that these shifts in the market suggest prices are likely peaking. She expects home price growth to ease off but to stay in double digits through year-end. |
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