Maui Owie

From The Maui News we hear of the pressures on condo associations as more owners fall behind on their dues. I'm not clear on what recourse associations have there for collecting, in many mainland states associations actually can foreclose units themselves ahead of the banks that hold the mortgage (giving banks an incentive to pay the fees). Here they resorted to drier methods with a tenant who's still squatting after the bank foreclosed:

Ron Wilson's condo was foreclosed and sold at auction, although he is continuing to live in the unit until Bank of America tells him to move out. After he stopped paying fees, his association warned that it would cut off his water if he didn't settle the debt. Wilson filled buckets and tubs with water, and his service was turned off Sunday morning. "It's a good lesson in conservation," he said Monday. "I realized how much water you waste and how much you really need." He said he "could hold out all summer," but since BofA will have to file notice of its takeover within a few days, the bills will then be the responsibility of the bank, which should answer at least part of the Kanani association's problems.

These fees will motivate banks to unload condo properties more quickly than houses, so perhaps there will be some REO bargains in Maui soon?

The North County Times notes a sharp increase in foreclosure auction notices coming from BofA, likely to Countrywide customers. Southwest Riverside county (just northeast of San Diego) is catching this particularly hard, perhaps in an effort to catch up with the rest of Riverside county.

More oil stat

From Dana Olick at CNBC

The new foreclosure wave is here.

Yes, banks are ramping up loan modifications and ramping up short sales and ramping up deeds in lieu of foreclosure, but the plain fact is that as the systems are oiled, the loans are moving through faster, and the pig in the python is showing its face.

As the Little Prince pointed out, it's probably an elephant in there, not a pig.

wonder if they've seen Brazil

Haste makes waste, or at least for sloppiness. From Tampa Bay comes the story of a foreclosure gone awry:

Charlie and Maria Cardoso are among the millions of Americans who have experienced the misery and embarrassment that come with home foreclosure.

Just one problem: The Massachusetts couple paid for their future retirement home in Spring Hill with cash in 2005, five years before agents for Bank of America seized the house, removed belongings and changed the locks on the doors, according to a lawsuit the couple have filed in federal court.

The bank had an incorrect address on foreclosure documents — the house it meant to seize is across the street and about 10 doors down.

Look for stories like this to become increasingly common as banks try to clear the incredible backlog of foreclosures.

On the 12th of Christmas my banker gave to meeee

OneWest FSB, born of the carcass of IndyMac and now proud owner of recently failed First Federal Bank of California had this little bit of holiday cheer for the soon to be foreclosed upon:

OneWest Bank, FSB today announced it is temporarily suspending all foreclosure sales and evictions to assist borrowers over the holidays. The moratorium, which goes into effect Saturday December 19th, 2009, applies to all single family residential loans it services through its IndyMac Mortgages Services division, and will extend until January 4, 2010. The Bank will implement the moratorium for First Federal Bank of California borrowers as well.

The temporary suspension will allow affected borrowers to remain in their homes through the holidays and provide additional time to work with the Bank

Since the 1st is a holiday and the 2nd and 3rd are weekends I count 12 days of moratorium from today through the 31st. How very spiritable of them.

New Records...

From the in-case-you-thought-the-worst-was-behind-us-already-department, the Mortgate Bankers Association reports:

The percentage of loans in the foreclosure process at the end of the third quarter was 4.47 percent, an increase of 17 basis points from the second quarter of 2009 and 150 basis points from one year ago. The combined percentage of loans in foreclosure or at least one payment past due was 14.41 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.42 percent, up six basis points from last quarter and up 35 basis points from one year ago.

The percentages of loans 90 days or more past due, loans in foreclosure, and foreclosures started all set new record highs.

CR has some nice graphs showing the divergence in the delinquency and foreclosure rates, almost certainly attributable to banks dragging their feet on foreclosing while trying (fruitlessly) to follow the governments directive to modify more loans.

D4L

The pragmatist in me likes this idea, though it seems like there are enough restrictions on eligibility to make the program unlikely to have much effect in the grand scheme of things.

Fannie Mae is offering a way around foreclosure that will actually let some families stay in their homes (as renters) for at least a year. It's called Deed for Lease (D4L 4 short), and is a combination of Deed in Lieu (DIL) plus a rental agreement. If you're unfamiliar with DIL the quick synopsis is the homeowner simply gives the house back to the bank and the loan is forgiven, skipping foreclosure and short sale. This is sometimes colloquially known as "just walking away", but what if you don't actually want to leave? D4L is the answer--mortgage goes away, but you stay in the house, presumably at rent you can afford.

Even if that rent is substantially below the old mortgage payment the bank may come out ahead of the alternatives. Since all of the loan mod programs are proving to be utter failures and the appeal of ruthless defaults is rising many people are simply staying in their homes paying nothing until they've exhausted all of their tactics for delaying foreclosure (see e.g. the Kempffs' story).

Deed-for-Lease Program (efanniemae.com)