Their story is getting ever more common, as total student loan balances nearly tripled between 2004 and 2012, according to a new survey from the Federal Reserve Bank of New York. Now $1 trillion in collective student loan debt is directly affecting the housing recovery.

“Short term, you see a decrease in the number of first-time home buyers,” said Brian Coester of Coester Valuation Management. “You’re going to see somebody who would have been able to afford a more expensive house maybe go for the lower version or the downgraded version.”

First-time home buyers usually make up over 40 percent of the home buying population, but their share has hovered at or below 30 percent during this recovery, according to the National Association of Realtors. The student debt burden has kept many potential buyers out of the market, either forced to rent or to move back in with their parents, like Sophia Chaale.

“Without the student loan debt, a year and a half, two years earlier would have been the time I could have afforded to buy a house, and probably something a little bit bigger,” Chaale said.

(Read More: Surging Student-Loan Debt Is Crushing the System

Chaale is facing $60,000 in student loans from graduate and undergraduate schools. She is paying $320 a month on a 30-year loan. Only after living at home for two years was she able to apply for a mortgage and put a down payment on a home. She is scheduled to close at the end of April.

“I consider myself lucky that I had a place where I could save, but what about other people who aren’t originally from this area, who have to pay an extra $1500 a month in rent, and that rent money is not going to savings. How are they going to be able to save up or even to make that transition from renting to owning, in addition to all the student loan debt?” Chaale wondered.

Article source: http://www.cnbc.com/id/100624148

A total of 263 notices of default were filed for Napa County
homes or condos in the third quarter, compared to 222 in the same
period the year before. It was the largest percentage increase in
nine Bay Area counties. 

However, the number of Napa County homes or condos completing
foreclosure dropped 13 percent, from 131 to 114, quarter over
quarter. 

“Napa County is not going down the tubes,” Susan Archer,
president of the North Bay Association of Realtors (NORBAR),
said. 

Archer attributed the notice of default increase to a backlog of
distressed homes that banks are still processing. 

Typically, a notice of default is filed after a homeowner is 90
days delinquent. But some homeowners might have stopped making
payments six to nine months ago — or more — and only just recently
received a notice, she said. 

Banks haven’t been able to process all the distressed properties
effectively, Archer explained. “Now they’re moving forward, causing
numbers to increase. 

“The (notice of default) jump is probably primarily from Bank of
America getting through of all these issues they’ve inherited from
Countrywide,” said Joe Brasil with Coldwell Banker Brokers of the
Valley. Bank of America purchased subprime mortgage lender
Countrywide Financial in 2008. 

“They’ve done a significant release in the last quarter,” he
noted.

According to DataQuick, the most active beneficiaries statewide
in the foreclosure process last quarter were Bank of America
(14,325), Bank of New York (11,052), and Wells Fargo (9,740).

“I also think notices of default don’t really reflect what’s
happening in the marketplace,” Brasil said. Distressed homeowners
may stave off foreclosure using some kind of work-out plan with the
bank or short sale, for example. Or, “They can pull themselves out
of foreclosure entirely.” 

“People used to want to call it ‘shadow inventory,’ but I think
banks have too much on their plate to process,” Julie Larsen of
Pacific Union International said. “Short sales are difficult,”
requiring multiple contacts with banks, lenders and other financial
institutions. 

Another reason banks are taking longer to process foreclosures
is that it takes time to evaluate the reasons for each individual
home foreclosure, she said. Some people have lost jobs and can’t
afford the mortgage payment. Others can make the payments but are
underwater and simply want to walk away from the home and start
over. 

“The banks (are) trying to muddle through that,” Larsen
said. 

Statewide, after dropping to a three-year low in the second
quarter of this year, the number of California homeowners being
pulled into the foreclosure process snapped back to prior levels
over the last three months, DataQuick reported.

A total of 71,275 notices of default were recorded at county
recorders’ offices during the third quarter. That was up 25.9
percent from 56,633 for the prior three months, and down 14.4
percent from 83,261 in third-quarter 2010, according to
DataQuick.

Last quarter’s NODs, which mark the first step in the formal
foreclosure process, jumped back to levels seen earlier this year
and late last year. Notices peaked in first quarter of 2009 at
135,431.

“Figuring out what’s actually going on when it comes to
foreclosures can be a logistical nightmare,” said John Walsh,
DataQuick president. “In each case there are at least six or seven
different legal entities contending with each other, each with a
different agenda and timeline: The original lender, the homeowner,
the current owner or owners of the loan, the servicing institution,
the outfit doing the actual foreclosing, and the county recorder’s
office.

“The way it looks right now, it’s reasonable to expect default
filings to run at a somewhat higher level than we saw earlier this
year,” Walsh added. “Obviously, some lenders and loan servicers
have begun to plow through their backlogs of delinquent loans more
aggressively.”

Of the state’s larger counties, mortgages were least likely to
go into default in Marin, San Francisco and San Mateo counties. The
probability was highest in Sacramento, Madera and Stanislaus
counties.

Trustees Deeds recorded statewide, or the actual loss of a home
to foreclosure, totaled 38,895 during the third quarter. That was
down 8.4 percent from the prior quarter, and down 14.3 percent year
over year. The all-time peak was 79,511 in third-quarter 2008. The
state’s all-time low was 637 in the second quarter of 2005,
DataQuick reported.

There are 8.7 million houses and condos in the state.

Foreclosure resales accounted for 34.2 percent of all California
resale activity last quarter. Short sales — transactions where the
sale price fell short of what was owed on the property — made up an
estimated 17.8 percent of statewide resale activity last
quarter.

At formal foreclosure auctions held statewide last quarter, an
estimated 29.7 percent of the foreclosed properties were bought by
investors or others who don’t appear to be lender or government
entities. That was up from an estimated 28.3 percent the previous
quarter and up from 22.7 percent a year earlier, according to
DataQuick.

Article source: http://napavalleyregister.com/business/notices-of-default-up-foreclosures-down-in-third-quarter/article_aaf39192-fe0c-11e0-b39d-001cc4c03286.html