Foreclosure Analyst predicts housing rally on the way

(SACRAMENTO, CA) — Despite government efforts to stem the foreclosure tide, California-based housing analyst Alexis S. McGee predicts a buying rally is imminent.

“I see a housing rally ahead because consumers simply can’t afford to sit on the sidelines any longer,” adds McGee.

She says her company has been in business 20 years. McGee stands by her prediction even though her own numbers paint a different picture.

Completed foreclosures in February reached the highest monthly total since the foreclosure crisis began, soaring by more than 67 percent over January’s reduced foreclosures, according to the latest U.S. Foreclosure Index released today by
In February, 121,756 new foreclosures were completed, up from 72,694 in January, which had seen a 26 percent drop from December’s 97,841 foreclosures.

The February number topped the previous monthly high of 104,243 new foreclosures seen last September – then the high-water mark for this crisis.

McGee’s U.S. Foreclosure Index also found the number of pre-foreclosure filings – the original filings that can lead to a foreclosure – increasing to the highest monthly total since the foreclosure crisis began, hitting 207,703 in February, up more than 24 percent from 166,860 in January and up 9 percent from 190,467 in December, the previous monthly high.

“Despite the efforts to stem foreclosures by government and many banks, the hopeful signs of the last quarter of 2008 and January didn’t follow through in February,” acknowledges McGee.

“Many homeowners are in trouble and rising unemployment continues to threaten to intensify the problem.”

She says foreclosures increased across all regions despite temporary halts by major banks and Fannie Mae and Freddie Mac, primarily in the second half of February, in anticipation of the Obama administrations foreclosure mitigation effort.

Fannie Mae and Freddie Mac previously had foreclosure moratoria from Nov. 26 to Jan. 31, which helped to slow down foreclosures during that period, and reinstated the moratoria in mid-February. Nearly all the bank moratoria have since expired or are about to expire.

“Annualizing the first two months of this year, if foreclosures were to continue unabated, we could end up with another 1.2 million homes back in lenders’ hands by year-end,” McGee notes.

“However, I am hopeful that our new administration’s plan to stem the foreclosure tide will take hold and we will see fewer foreclosures by year end.”

She adds, “The Fed means business, and they’re throwing money–lots of it–behind the foreclosure crisis.”

She points out that  “just last week, the Mortgage Banker’s Association’s National Delinquency Survey reported that the delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a new record seasonally adjusted rate of 7.88 percent of all loans outstanding as of the end of fourth-quarter 2008.

‘Those numbers don’t include loans somewhere in the foreclosure process (a record 3.3 percent of all loans outstanding). MBA numbers also show that foreclosure inventory jumped sharply in the fourth quarter, while the number of loans entering foreclosure was relatively unchanged due in part to all the foreclosure moratoriums.”

Tables prepared by McGee’s U.S. Foreclosure Index, showing regional activity, are below:


Rescue Effort Includes Commercial Real Estate
2009/02/12, 8:13 pm
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The U.S. Treasury’s announcement that commercial mortgage-backed securities will now be accepted as eligible collateral for the Term Asset-Backed Loan Facility (TALF) will encourage investment in the commercial real estate market, according to the NATIONAL ASSOCIATION OF REALTORS®.

Over the past year, the broader credit crisis that has permeated the world’s capital markets has increasingly curtailed commercial lending activity. Banks have tightened their credit standards and reduced loan volume while the commercial mortgage-backed securities market has stopped functioning effectively. Without liquidity, commercial borrowers face a growing challenge of refinancing maturing debt and the threat of rising delinquencies and foreclosures.

“A severe lack of credit threatens commercial real estate and poses significant risks for the whole economy,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Expanding the TALF and opening it up to commercial mortgage-backed securities is a movement in the right direction, and welcome news for the American economy.”

The announcement implements policy directions recommended and endorsed by NAR’s REALTORS® Commercial Alliance through its Commercial Economic Stimulus Work Group. The work group developed a plan to address high-priority issues like lack of credit to avoid further losses in the commercial real estate markets as a part of the national economic recovery plan.

“Though much still remains to be done, this policy decision will help reassure investors in the vital commercial real estate sector, which provides more than 9 million jobs and generates roughly 70 cents out of every dollar in local government budgets,” said RCA Chair Robert Toothaker. “There is no secondary market for commercial mortgages, so it is important to encourage lenders and investors whose activity will be essential in refinancing the performing commercial real estate loans in the marketplace, many of which are due to reset soon.”

Under the new approach, TALF credit facilities will be extended to newly originated AAA-rated securities backed by commercial real estate loans. “This important measure will enhance liquidity and ease the lending crisis facing commercial markets,” said Toothaker.

Expanding the TALF program to include commercial mortgage-backed securities has been a key part of NAR’s message to policymakers and is integral to the commercial economic stimulus plan developed by the association’s commercial leaders.

“NAR is encouraged by this positive announcement and will continue to work with Congress and the regulatory agencies as further policy options are considered to address the crisis in the credit market and ensure overall economic recovery so that real estate will once again lead the economy to recovery,” Toothaker said.

Source: NAR