Freddie Mac Announces New Foreclosure Prevention Guidelines, Revisions

Government-sponsored enterprise Freddie Mac has announced a set of new loss mitigation and foreclosure prevention guidelines and revisions in Guide Bulletins 2014-19 and 2014-20 that include a new deeds-in-lieu of foreclosure incentive, increased foreclosure timelines, and additional foreclosure relief for service members and their dependents.

Freddie Mac is offering a supplemental incentive of up to $7,000 for new borrower evaluations for deeds-in-lieu of foreclosure that are conducted on or before December 1, 2015. Borrowers in Connecticut, District of Columbia, Illinois, Maryland, Massachusetts, New Jersey, New York, or Pennsylvania who complete a Freddie Mac standard deed-in-lieu of foreclosure transaction are eligible. The new deed-in-lieu borrower incentive is scheduled to go into effect on February 1, 2015, but servicers at Freddie Mac have been encouraged to implement the new incentive as early as November 14, 2014.

Foreclosure timelines have been increased in 47 jurisdictions for all foreclosure sales completed on or after November 1, 2014, as a result of Freddie Mac's recent review of state foreclosure timelines. An updated list of Freddie Mac's state foreclosure timelines can be found in Guide Exhibit 83.

As part of Freddie Mac's commitment to active duty servicemembers, Freddie Mac is offering additional foreclosure relief to service members and their dependents. Foreclosure relief will be extended to mortgages while the service member is active for one year after military service ends when the borrower: 1) is a service member and the mortgaged property is the service member's primary residence, regardless of when the mortgage loan was originated; 2) is a dependent of the service member and the mortgaged property is the primary residence of the service member or his or her dependent; 3) was a service member who died during active military service and the mortgaged property continues to be the primary residence for a dependent of the service member. Servicers can determine if a borrower is eligible for these benefits by checking Freddie Mac's Mortgage Relief Options for Service Members web site.

Most Industry Professionals Expect Business to Change Little in Next Six Months

In a survey conducted as part of The Collingwood Group's Mortgage Industry Outlook Report for October 2014 released on Monday, the majority of mortgage industry professionals who were surveyed said they did not expect business conditions to be drastically different in the next six months.

Along a one to 10 scale with one being "much worse" and 10 being "much better," 34 percent of respondents said they expected business conditions to be "a little better" in six months (a six on the scale), while 22 percent said they expected business conditions to be "a little worse" (a five on the scale), The Collingwood Group reported. Many respondents said seasonal trends tend to affect their outlook on business conditions, such as one lender who reported that the winter months hurt production last year, and they expected that to be the case again this year.

Only about 3 percent of respondents said they thought business conditions would be much worse in six months, while only about 1 percent responded they thought business conditions would be much better, according to The Collingwood Group. A majority of respondents indicated "uncertainty, yet tepid optimism" regarding business conditions, The Collingwood Group said in the report.

The Collingwood Group reported that none of the survey respondents expected the results of the recent mid-term election to significantly impact the mortgage industry.

"I remain optimistic we’ll see a move towards collaboration," said Collingwood vice chairman Brian Montgomery, who is a former FHA commissioner. "The Republicans will hold both chambers for the first time in almost a decade so I suspect they’ll be anxious to move forward on a host of issues that go beyond housing finance reform."

Likewise, most survey respondents said there had been little change in business conditions since this time last year. Business conditions were either "a little worse" for 22 percent of respondents or "a little better" for 31 percent, according to The Collingwood Group. Overall, the numbers were almost split 50-50 when rating business conditions better or worse since last year – 48 percent said they were worse while 52 percent said they were better, according to The Collingwood Group. About 4 percent said business conditions were much worse since last year, while about 1 percent said they were much better.

For more information contact

Jerry Gusman, The Gusman Group

888-213-4208

Survey: Many Still Believe Housing Recovery Still Three to Five Years Away

In a quarterly survey of more than 100 real estate experts and economists, real estate data firm Zillowfound 40 percent of respondents believe it will take another three to five years for the housing market to normalize, based on current home price trends and homebuyer activity.

Nearly a third of panelists took a more optimistic view, predicting the market will stabilize one to two years from now, while one in five responded that housing has either already returned to normal or will within the next 12 months.

When asked about headwinds facing the market right now, respondents pointed to low household formation rates, which have been stymied in part by a challenged economy. According to another recent study from Zillow, more than a third of adults living in the U.S. were living with at least one roommate as of 2012, up from a quarter in 2000.

While those renters represent millions of potential new formations in the years to come, they remain stuck where they are as jobs and wages slowly grow.

Demographic issues are also at play, Zillow reported. While more millennials seem to be holding off on major commitments—including homeownership, marriage, and parenthood—a growing number of Americans nearing retirement age are also opting to stay in their homes longer, keeping the nation's housing inventory from making any meaningful recovery.

"We've reached a point in the recovery where the only real cure-all is time," Zillow Chief Economist Dr. Stan Humphries said. "[T]he landscape is slowly changing, as incomes begin to grow, negative equity fades and new households start to form. These shifts won't occur overnight, but they are happening. Patience will be a virtue over the next few years as we wait for these traditional fundamentals to more fully take hold in the market."

Repeat Foreclosure Percentage Increases to Tie All-Time High

The percentage of September's foreclosure starts that were repeat foreclosures rose by two percentage points month-over-month to account for 53 percent of foreclosure starts, tying the highest percentage for a single month, according to Black Knight Financial Services' September 2014 Mortgage Monitor.

In all, there were 91,000 foreclosure starts nationwide during September, an increase of 11.5 percent from August but a decrease of 16.5 percent from September 2013, when 109,000 foreclosure starts were reported, according to Black Knight. For September 2014, Black Knight reported that 48,200 of the 91,000 foreclosure starts were repeat foreclosures – a total of 53 percent, which tied July 2014 for the highest percentage in a single month since Black Knight began tracking the data in January 2008.

September 2014's percentage of repeat foreclosures represented an increase of 2 percentage points from August (41,500 out of 81,600, for 51 percent) and 4 percentage points from September 2013 (53,400 out of 109,000, a total of 49 percent). September 2014 was the eighth consecutive month in which the percentage of repeat foreclosures accounted for 50 percent or more of foreclosure starts and the 28th consecutive month in which the percentage totaled 40 percent or more. The percentage has not been below 40 percent since May 2012, when 80,800 out of 218,900 foreclosure starts were repeat foreclosures for a total of 37 percent, according to Black Knight.

The lowest percentage of repeat foreclosures was reported in February 2008, just prior to the housing bust, when 29,100 out of 205,000 foreclosure starts were repeats (14 percent). The percentage has been 20 percent or more every month since March 2009; the last month where repeat foreclosures made up less than 20 percent of foreclosure starts was February 2009 (48,200 out of 265,300, 18 percent), according to Black Knight.

The highest overall number of repeat foreclosures for any one month was reported in March 2011, when 109,500 repeat foreclosures were reported out of 263,900, for a total of 41 percent. The only other month in which the total number  of repeat foreclosures exceeded 100,000 for a month was in March 2012 (103,800).

For more information contact

Jerry Gusman, The Gusman Group

888-213-4208, jerryggroup@aol.com