45,000-plus Valley properties remain in foreclosure

(The Arizona Republic) Thomas Kelly explains the foreclosure process to those outside the banking industry by likening it to a tube.

“You get put in the tube when you’re 90 days late, and you might come out the other end of the tube six months later,” said Kelly, spokesman for JPMorgan Chase & Co.

What Kelly’s analogy doesn’t explain is how, for the past three years, thousands more Phoenix-area property owners have been entering the tube each month than coming out of it.

At present, the system is backed up with more than 45,000 “pending” foreclosures, up from about 2,300 in June 2006, according to a historical analysis by the Information Market, a Phoenix research firm.

Most experts expect pending foreclosures to increase even more before leveling off sometime within the next 12 months.

There has been much speculation among real-estate professionals about reasons for the apparent backlog of houses and condominiums headed toward foreclosure.

There’s a widespread belief that banks are purposely limiting the flow of foreclosure homes onto the market, which helps prevent home prices from sliding even further but could prolong the market’s long-term recovery.

Likewise, some say lenders are dragging their heels on repossessing and selling extravagant homes, and to a lesser extent commercial properties, including raw land, because the demand for big-ticket real estate is too low and because selling off large assets at sharply reduced prices could cause some smaller banks to fail.

Lenders have been relatively quiet about their strategies for working through pending foreclosures, which has only fueled various theories.

But Kelly said such theories give the banks too much credit.

“We’ve got such an enormous portfolio of homes to deal with, we don’t have time to say, ‘Let’s do this with this one, and let’s do that with that one,’” he said.

Monthly foreclosure totals have risen and fallen a number of times since the housing market peaked in 2006, although the general trend has been upward.

However, the number of pending foreclosures, properties on notice for a trustee sale but not yet sold, has increased steadily without exception since April 2006. In the past year, it has climbed by anywhere from 500 to 5,000 properties each month.

As of Friday, there were 45,709 total pending foreclosures in Maricopa County , according to the Information Market. Those are in addition to the roughly 73,000 foreclosures completed during the past three years.

Also as of Friday, the county was on track to reach 5,000 foreclosures by the end of this month, which would be the second-highest monthly total on record, having reached a high of 5,240 in February.

Even if 5,000 properties complete the foreclosure process this month, an even greater number will enter it.

As of Friday, lenders had served pre-foreclosure notices on 5,700 additional properties, a net increase of at least 700 in pending transactions for the month.

Actual foreclosures in the past three years total about 73,000, according to the data.

Some Valley foreclosures may be taking longer than the usual 91 days from notice to sale because the borrowers are attempting to work out a loan-modification or “short sale” agreement with the lender.

In Maricopa County, short sales have increased in the past year but still account for less than 5 percent of property sales.

 

Modifications help

 

Colleen Gunderson, Tempe-based Century 21 All Stars owner and designated broker, believes banks have intentionally slowed the release of foreclosure properties onto the market at the behest of the federal government, which provided many banks with bailout funds.

“There is a process in place to sort of warehouse these properties until a time when it’s more beneficial to place them on the market,” she said.

It’s the right approach, Gunderson added, because dumping 45,000 foreclosed-on properties onto the market all at once would deliver the knockout punch to a real-estate economy already leaning against the ropes.

New, standardized loan-modification guidelines issued by the Obama administration in March appear to be doing a better job of keeping some borrowers out of foreclosure than modifications made in 2008, according to two federal bank regulators, but it’s still too early to know for sure.

More than half of loan modifications negotiated before the Treasury Department launched its $75 million Making Home Affordable program in early March were back in default within six months, according to a study conducted by the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

Those same officials said in May that the rate of re-default fell by about 12 percent among those borrowers whose monthly payments were reduced.

However, the number of loans headed toward foreclosure has risen significantly despite better modifications.

In March, the Investigative Reporting Workshop at American University in Washington, D.C., conducted a study of the nation’s roughly 8,000 banks with online-news service msnbc.com and reported finding a 150 percent increase in loans at risk of foreclosure compared with a year earlier.

Kelly said job losses are one likely reason for the continued high volume of foreclosures, in addition to people walking away from mortgages even though the payments are affordable because they owe far more than the home is worth.

 

Commercial is next

 

Although most Valley foreclosures thus far have involved residential property, commercial-property owners and lenders are preparing for apartment, office and retail foreclosures to rise sky-high in the coming months.

Selling those properties back to the market could take years in some cases, analysts said, because there is little interest in new office and retail space, even at the low-rent end.

Craig Henig of commerical real estate brokerage CB Richard Ellis in Phoenix said banks aren’t in any rush to foreclose on commercial real estate because it forces the lender to adjust the property’s book value to today’s considerably lower market price.

Significant write-downs on a few multimillion-dollar commercial loans could put a small or financially stressed bank out of business, he said.

“I don’t know how they could sustain the amount of markdowns,” Henig said.

However, Kelly said the holding costs associated with thousands of foreclosed-on properties outweigh any benefit the bank might realize from waiting to sell them.

He also noted that the value of commercial real estate and high-end homes is still on the decline, which means waiting is likely to cost lenders even more.

“The goal is to get that asset back earning money for you,” he said.

Be prudent about sharing vacation data online

(SFGATE.COM)  These days, kids and even many adults think nothing of telling the world – or at least their 795 closest friends – that they’re not at home by posting their whereabouts or vacation plans on Twitter, Facebook or other social media.

Israel Hyman, an Arizona video editor who says he has close to 2,000 people following him on Twitter and also uses Facebook “a lot,” recently was burglarized while he was in Kansas City.

“We had mentioned that we were going out of town for an extended period and even Twittered about the trip as we drove for three days,” he told an Arizona television station. While he was gone, video-editing equipment was stolen from his home. Although he is not sure his tweeting tipped off the burglars, he says he will be more careful in the future about what he shares online.

“People just don’t realize the kind of information they give out in social-networking sites can be used on its own or with other information to commit identity theft and other fraudulent activity,” says Paul Stephens, director of policy and advocacy with the Privacy Rights Clearinghouse.

Most social-networking operations let users restrict access to people they approve. But many people fail to take this important step, especially if they are seeking a wide audience or trying to look ultra-popular.

Others assume they are safe because they restrict access to the kind of friends they would share their vacation plans with in person. What they forget is that these friends may share that information. “There is nothing to stop them from showing it to someone else or doing a screen capture and sending it on to somebody,” Stephens says.

According to the British government Web site Get Safe Online, 13 percent of social-network users report posting friends’ pictures without their consent and 7 percent report posting friends’ contact information without consent. Those most likely to give away their friends’ information are 18- to 24-year-olds.

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Know your friends

If your kids tell you they are networking only with “friends,” beware. “What an adult thinks of as a friend and what a friend is in social media are two different things,” says Peter Spicer, communications manager with Chubb Personal Insurance.

Spicer says parents should remind their kids “not to post the fact that we are going on vacation. That’s a heads-up to criminals.” Tell them it’s OK to post pictures and talk about the trip after they’re home.

Joanne McNabb, chief of the California Office of Privacy Protection, says she hasn’t received any complaints from people who think they were robbed because they disclosed their whereabouts on social networks. But, she says, “It’s a risk in the online world just like in the offline world.”

Robbers have long been known to scour the newspaper for death or wedding announcements and target homes when families are likely to be at the funeral or on a honeymoon.

“It’s not that these Web 2.0 things are creating new crimes. They are providing some new vectors or venues for the crimes that can happen anyway,” McNabb says.

While you’re away

Stephens says vacationers also need to protect themselves against identity fraud when they’re away from home.

His Web site, www.privacyrights.org, offers these tips for travelers:

– Photocopy or make a list of the contents of your wallet. Keep it in a locked location at your hotel or with a trusted person at home whom you can contact if your wallet is lost or stolen.

– Don’t carry unnecessary credit cards, your Social Security card or other documents that could compromise your identity if lost or stolen. If you have a Medicare card, make a photocopy without the last four digits of your Social Security number.

– Carry two credit cards. If you carry only one and it is deactivated because of suspected fraud or the magnetic strip gets damaged, you’ll be in trouble until it is replaced.

– Use traveler’s checks or credit cards. Leave your checkbook in a secure locked place at home. Do not use debit cards (check cards). This reduces your vulnerability to having your checking account emptied while you are on vacation.

– When dining in a restaurant, try to keep an eye on your credit card. If the server removes your card from sight, he may be able to create a “clone” by using a portable card skimmer that will copy the information from the card’s magnetic strip.

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– If you are bringing your laptop, be careful when using it to access online banking or other password-protected services from Wi-Fi networks. Be sure to use Wi-Fi hotspots that are secure. For Wi-Fi tips, see links.sfgate.com/ZHHR.

– Don’t access sensitive information from a cybercafe or other public computer because keyloggers (software that can track your keystrokes) may be tracking you.

Vacation tips

– Don’t post your vacation plans or whereabouts on social-networking sites until you return.

– Ask the post office to hold your mail. Mail piling up in an unlocked box indicates to burglars that you are not home and puts you at risk for identity theft.

– Suspend (but please don’t cancel) your newspaper subscription.

– Ask a trusted neighbor to report suspicious activity around your house to the police and remove any free newspapers that pile up in your yard.

– Park a car in the driveway.

– Set your lights, TV or radio on a timer, preferably one that switches on and off at varying times.

– Have package deliveries sent to your office or make sure they won’t be left on your doorstep.

– Unplug toasters and other appliances; shut off the water to your washing machine.

– Don’t leave a voice-mail message saying you are out of town or your return date.

– If you must leave an out-of-office reply on your e-mail, don’t say you are on vacation or when you will return.

Is the job market really turning around?

Experts say the employment picture will start to improve soon. Workers say the proof is in the pink slip.

NEW YORK (CNNMoney.com) — According to some recent headlines, conditions are finally starting to improve for the unemployed.

Some indicators are showing positive signs in the job market for the first time since the credit crisis caused job losses to soar last fall. But for the growing number of unemployed workers in the U.S., macroeconomic statistics aren’t worth much.

After peaking in January, the pace of job losses has slowed dramatically , according to the Labor Department. Employers cut 345,000 jobs from their payrolls in May — 32% fewer than the previous month. And the number of Americans filing for continuing claims for unemployment insurance fell last week for the first time since early January.

But for those unemployed workers pounding the pavement, jobs are still hard to come by.

That’s because even though job cuts have slowed, employers have not started hiring just yet. According to the Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics, the number of new hires remains near an all-time low.

“In general, companies have been in a wait-and-see posture,” explained Dr. Jane Goldner, a human resources expert and author of “Driven To Success: A 10-Point Checkup for Achieving High Performance in Business.” “There’s some level of confidence coming back,” but in terms of hiring, “I don’t think we’re there yet,” she said.

Many unemployed workers agree.

Ann Fry made a good living as professional speaker and executive coach in New York until last fall. Now the companies that hired her in the past have cut back and individual clients signed off.

“I completely rely on whether conferences are happening and whether they are hiring speakers,” she explained. “What I notice is that companies are reluctant to pay for ‘extras’ like corporate training and coaching,” she said. “Also, the professional associations I speak for nationally are cutting their budgets way back.”

With fewer clients and fewer gigs this year, Fry, 63, has had to tap into her savings in recent months to make ends meet. As a self-employed professional, there is no safety net such as unemployment insurance to fall back on, but she’s hopeful that business will pick up again.

“I think we’re already seeing some signs of improvement,” Fry says of the economic environment. “Do I see it turning around yet?” she asked of her own employment status, “no, not yet.”

“For the job seeker it’s probably not necessarily obvious right now that things are improving,” said Jennifer Schramm, the manager of workplace trends and forecasting for The Society for Human Resource Management.

Although anecdotal evidence suggest that hiring expectations will improve in the second half of the year, “we have to wait a few months to see if this is a trend,” she said.

Once companies stop decreasing headcount, it could still take time before hiring plans take hold, and even longer for there to be a noticeable change in workers’ attitudes.

Chuck Jentlie has been through this before. His career as a recruiter for the tech industry was rocked by the dot-com bust earlier in the decade. Since then the 52-year-old went back to college at Arizona State University to get a degree in architecture.

But once a growing industry, architectural services has steadily lost jobs since the beginning of the year. Now a large percentage of architects are out of work, including recent graduate Jentlie.

“None of us can find a job,” he said of his classmates.

Although the industry as a whole could bounce back quickly once the economy improves, “a lot of the reports seem like wishful thinking,” Jentlie said.

“I’m definitely not seeing [employers] saying ‘yeah we’re looking for workers,’” he said. “Realistically I think we’re probably looking at another year.” 

Investors not flipping houses, but renting

I found this in the Arizona Republic.  I believe it might shead some light on the state of our market.  As related to insurance, we have seen a significant increase in Landlord policies, as well as Vacant Home policies (this are typicly homes in the renovation process).  Enjoy.

by J. Craig Anderson – Jun. 12, 2009

Real-estate investors have returned to the Valley in a big way, prompting concerns that the housing market is becoming too speculative to sustain the recent buyer activity.

The lure of once-in-a-lifetime deals on bank-owned homes is driving investor purchases, which experts say account for 50 to 70 percent of recent home-buying transactions. Still, it’s the ability to generate revenue by renting the homes to tenants – in some cases, previous owners – that makes the properties such attractive investments.

The Phoenix-area housing market has been flooded with homes for rent in recent months, raising concerns about whether there will be enough tenants to keep the Valley’s estimated 130,000-and-growing rental properties out of financial jeopardy.

Even some longtime supporters of the home-investment market say they’ve noticed a disturbing return of the can’t-lose mentality that got so many speculators and house-flippers into trouble a few years ago.

“Investors are starting to look at the market from a speculative standpoint,” said Alan Langston, who runs the Arizona Real Estate Investors Association. “We could end up with an oversaturated rental market.”

Although the demand for rental homes is still strong, Langston said, speculators seeking big returns could be in for an unpleasant surprise, especially if they don’t treat rental-home ownership as a business that requires time, effort and cash reserves.

Dealing with tenants also requires legal knowledge, he added. “You need to have a good lease, and you need to know how to enforce it,” he said.

Langston has created a second organization, the Arizona Rental Property Owners and Landlords Association, to provide resources such as proper lease agreements, market data and legal advice in exchange for an annual fee of $129.

Rental-home owners who lack a full understanding of the financial risks and recommended precautions could find the homes they purchased from lenders right back on the market, which would be bad for investors, tenants and the area’s economic recovery.

Home foreclosures have created an atypically high demand for rental properties, but that demand is not unlimited, and rental investments are not immune to financial risks such as tenants losing their jobs or continued decline in rental rates as supply increases. The glut of single-family homes for rent, overbuilding of apartments and failed condominium projects have created a difficult and highly competitive market for rental-property owners.

Many apartment managers have responded by boosting incentives such as lower rents, waived or reduced fees and complimentary services.

Many rental-home investors have purchased the properties with cash, which means there is little chance of those homes going into foreclosure. Of the estimated 131,000 rental homes in the Phoenix area, only about 5,000 are currently in the foreclosure process, according to Valley market-research firm NetValueCentral Inc.

Langston said it’s likely that many of the houses in foreclosure are owned by what he calls “reluctant landlords,” people who were forced to leave their homes and rent them to tenants because of financial problems.

But whenever there is a perceived opportunity for investment gains, he said, it will attract what Langston calls “stupid money.” Stupid money was flowing like water during the housing boom, he added.

“The idea is that you could make money even if you didn’t do anything right,” he said.

Chaz Smith, senior vice president of the LandSource Group at Colliers International in Phoenix, said first-time buyers in the current market are all too aware of the investor presence.

“Young people looking for a starter home, they get outbid by investors,” Smith said.

Still, Smith and Langston see real-estate investment as a positive. The competition that’s causing frustration for other buyers is keeping prices from falling further, they said. Starter-home buyers alone would not create enough demand to absorb the supply of bank-owned homes coming on to the market each month, they said.

Investors have fixed up many dilapidated or trashed homes and prevented the Valley from having neighborhoods littered with abandoned properties.

“Homes are being bought, neighborhoods are recovering,” Langston said. “Imagine this market today without investor activity.”

However, he said, there is a big difference between an investor and a speculator.

“Investors follow solid investment practices. They add value to the transaction,” Langston said. “Speculators are looking for a very quick turnaround and a very large return.”

Despite the economic benefits of investor participation in the market, some observers say, the return of investors – even responsible ones – has disturbing moral implications.

Jim LaVanway, vice president of Homeowners Financial Group in Phoenix, is among those who blame the investment community for creating a bubble in the first place.

“That’s the irony of it,” he said. “Now, we’re waiting for those same guys to come back and buy those same homes at a lower price.”

FENDER-BENDERS IN MICRO CARS CAN BE COSTLY

Ken Thomas (Forbes.com) Recent crash tests conducted by the Insurance Institute for Highway Safety indicate that even a minor accident in a minicar can require thousands of dollars to repair. On June 10 the institute reported that repairing damage to microcars in crashes of speeds as low as three to six miles per hour could cost from $474 to $3,701. The crash tests were conducted on the front and back bumpers and the front and rear corners of seven 2009 model year minicars. These cars have become more popular as a result of rising fuel costs in recent years. The Kia Rio sustained the most damage among the minicars, requiring $3,701 to repair the full front bumper. In the four tests the cost of repairing the Rio averaged $2,705. Of the seven vehicles, the Smart fortwo had the lowest average repair cost of $899.

Sonia Sotomayor has varied record in business cases

Posted On: May. 31, 2009 6:00 AM CST

Judy Greenwald / BUSINESS INSURANCE

Business-related cases in which U.S. Supreme Court nominee Sonia Sotomayor has been involved as both a federal district court and appeals court judge include: 

In her 1995 opinion as a district court judge in National Labor Relations Board vs. Major League Baseball Player Relations Committee Inc. and the Constituent Member Clubs of Major League Baseball , Judge Sotomayor issued a temporary injunction that restored terms and conditions of employment provided under an expired collective bargaining agreement, which effectively ended the 232-day baseball strike.  

In her 2002 decision in George and Judy King vs. American Airlines Inc. , Judge Sotomayor wrote an opinion stating that the Warsaw Convention pre-empted a lawsuit filed by a black couple contending they had been bumped from an overbooked flight because of their race.  

In Shadi Dabit vs. Merrill Lynch, Judge Sotomayor ruled in 2005 that federal law did not pre-empt a private securities fraud class action in state court. The U.S. Supreme Court subsequently decided unanimously to overturn the decision.  

In her 2007 Riverkeeper Inc. vs. U.S. Environmental Protection Agency decision, which a divided U.S. Supreme Court subsequently overruled, Judge Sotomayor wrote for the majority in saying the Clean Water Act prohibits the EPA from conducting a cost-benefit analysis in establishing the best technology available to preserve aquatic organisms. 

In 2008′s Rajkumar Singh vs. the City of New York , she ruled that even though fire alarm inspectors are required to carry inspection documents during commutes, they are not entitled to be compensated under the Fair Labor Standards Act for their commuting time.

In Frank Ricci vs. John DeStefano , Judge Sotomayor joined a three-judge panel last year in upholding the decision by New Haven, Conn., to reject fire department promotion tests that failed to pass minority candidates. A U.S. Supreme Court decision in the case is pending.

AUTO INSURANCE FOR YOUR DOG

A dog driving

(KOTV NewsOn6.com – Tulsa , OK ) Some auto insurance companies are offering a unique type of coverage and it may not cost you a dime. It’s not unusual to take Fido for a ride in the car. And now car insurance companies are offering pet owners some peace of mind by allowing customers to add animals to their policy.

Besides making sure they get daily exercise, Cheryl Steckler, the owner of the Pet Limousine Service, drives her clients’ pets to important appointments.

“I pick up animals and take them to the kennel and to the groomer, places like that,” Steckler said. She knows how much the animals mean to their owners and makes sure they are safe inside the van and covered in the event of an accident.

But Steckler had a hard time finding an auto insurance company to cover the pets.

“It’s not something everybody offers,” Steckler said.

But now several large car insurance companies are offering at no extra charge coverage of $500 to $1,000 for pets injured or killed in car accidents.

“We’ve had several calls asking about the coverage for pet insurance,” Farmers Insurance agent Loretta Bond said.

Farmers Insurance is one of the companies that offer the unique coverage. Bond said unfortunately Farmers does not offer it yet in Oklahoma , but when it is offered she knows it will be a popular request because it will save owners money if their pet needs medical care after a car accident.

“It’s no different than a human being, they have bones that break, they need surgery and things like that,” Bond said.

Progressive Insurance does offer this free coverage.