A real estate source I knew recently told me about a guy he knows in Atlanta who has been hired by several different banks to winterize their REO’s (real estate owned, i.e. the bank-owned foreclosures).

The homes are abandoned and empty, and clearly the banks think they’re going to stay that way for a while.

The winterizer didn’t want to do an interview, for fear he would lose his clients, the banks, who might not want us all to know about this.

A new study by an economist at the Cleveland Federal Reserve finds today’s foreclosures stay vacant far longer than the historical norm. Studying one Ohio county, Stephan Whitaker found, “foreclosed homes go through more than a year of very high vacancy rates following the auction and are substantially more likely to be vacant up to 60 months after the foreclosure.” The higher the poverty rate in the area, the longer the property stays vacant.

Foreclosed homes obviously lower the value of surrounding homes, but Whitaker says the damage can go on much longer than we might think. “The data suggest that foreclosure may permanently scar some homes,” he writes in his research.

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Article source: http://www.cnbc.com/id/43913483?__source=RSS*blog*&par=RSS

Home prices in May were down 7.4 percent year-over-year, according to a new report from CoreLogic. This is the first of the May numbers, as SP Case Shiller, which was released earlier this week, looks back two months.

CoreLogic’s [ CLGX 16.71  +0.13 (+0.78%) ] report is unique, though, in that it gives the big bad number (which was a bigger dip than the 6.7-percent annual drop in April) and then it strips out the distressed sales and comes up with a new number. Distressed sales include foreclosed properties (bank-owned/REO) and short sales, where the home is sold for less than the value of the mortgage to avoid foreclosure.

Without the distressed sales, home prices fell just 0.4 percent in May, essentially flat. Overall, according to the report, “including distressed transactions, the peak-to-current change in the national HPI (Home Price Index, from April 2006 to May 2011) was -32.7 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -21.2 percent.”

So should we consider that home prices are really just fine? After all, they might not be moving up, but they’re not falling, and they’re down far less than the headlines scream.

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Article source: http://www.cnbc.com/id/43594875?__source=RSS*blog*&par=RSS

Yesterday I had the great opportunity to moderate a symposium on mortgage liquidity with a pretty heavy panel of mortgage bankers and industry executives.

I knew they would be guarded in their answers, as I asked about the new world of underwriting, the wind down of Fannie Mae and Freddie Mac, the tighter more expensive FHA, new federal regulation in the industry and a controversial new appraisal process.

And they were guarded, until I opened up the floor to the Realtors, who hammered them hard on foreclosures, short sales, and mortgage credit for independent contractors like themselves.

A Realtor from Wilmington, NC asked what are the plans for companies to put the shadow (foreclosed) inventory onto the market? Most agents believe banks are holding on to these properties to somehow game the market, but the bankers were firm in their rebuttal:

Cara Heiden/Wells Fargo [ WFC 28.23  +0.07 (+0.25%) ]: “With respect to shadow inventory, we are not holding on to properties. On average we do hold the REO about 160-70 days, but once they’re listed they’re sold in 90 days and the reason that we hold them for a period of time prior to listing is so that we can get them in better shape for sale and uphold, to the extent that we can, market values. So we’re not holding other than for the purpose of getting that property to a level that does help maintain market values whenever possible.”

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Article source: http://www.cnbc.com/id/42992433?__source=RSS*blog*&par=RSS