Freddie Foreclosure Timeline and Data Smackdown: Is REI Ready to Rumble?
Freddie Mac’s New State Foreclosure Time Lines and More!
To give distressed homeowners more time to scramble for cash in fast foreclosure states, Freddie Mac has spiked foreclosure time lines in 21 States and made several other tweaks to some of its increasingly more common procedures. In light of recent foreclosure news, these changes represent a much-needed policy shift, including some solid incentives to get the loan servicers rolling on short and pre-foreclosure sale deals.
According to a July press release from RealtyTrac, the year-over-year foreclosure increase of more than 50 percent indicates we have not yet reached the top of this cycle and bank repossessions are growing more quickly than default notices or auction notices.
In a better late-than-never response to soggy markets, pressure from lawmakers and its own financial woes, Freddie announced yesterday that, effective today, it’s standardizing its foreclosure referral time line requirements to require loan servicers to initiate foreclosure on all mortgages, including second mortgages, home improvement loans and previously modified mortgages by 150 days from the due date of last paid Installment (DDLPI), (DDLPI occurs on the 120th day of delinquency).
Before the change, Freddie required loan servicers to initiate foreclosure on second mortgages, home improvement loans and previously modified mortgages by the 90th day of delinquency and all other Mortgages by the 120th day of delinquency.
Two States Force Freddie to Tweak Foreclosure Time Tables
In June, Freddie issued a bulletin announcing an exention to its Maryland foreclosure time line by 55 days to conform to a new Maryland law requiring a 45-day notice of intent to foreclose.
At the same time, Freddie announced it would raise its Massachusetts foreclosure time line by 60 days to comply with a new Massachusetts law requiring a 90-day notice of right to cure default on all mortgages referred to foreclosure.
What Does this Mean for REI?
There are significant other changes and implications that could stand to benefit real estate investors down the line as the sluggish system takes greater steps to slow the bleeding, such as removing servicer incentives for fast foreclosures and doubling the booty on the following:
- Compensation for repayment plans from $250 to $500,
- Loan modification compensation from $400 to $800.
- Short sales or pre-foreclosure sales-related compensation from $1,100 to $2,200.
If the latter doesn’t speed up their short sale responsiveness, I don’t know what will!
I probably don’t need to tell you that this is great news for troubled homeowners and investors in pre-foreclosure and short sale markets. There’s a lot more nitty gritty to yesterday’s bulletin from Freddie, which makes more sense than the press release, if you’re interested in the rest of the details.
Foreclosure Data Smackdown
Because I couldn’t easily access to all this info elsewhere online, I’ve decided to devote the bulk of this post to crunching some data to light up the big picture for REI.
Below is Freddie Mac’s foreclosure time line information listed by state. Each state name is followed by: number of days from DDLPI to foreclosure sale/ number of days from initiation of foreclosure to foreclosure sale.
Just for kicks, I’ve marked with an “*” and underlined states affected by Freddie’s recent timeline extension and included RealtyTrac’s July “Top Ten Foreclosure State” data in, of course, red text. States that fall under Freddie’s changes and RealtyTrac’s list are cross-referenced in green for reasons totally related to innuendo and symbolism. Enjoy!
- *Alabama: 300/150,
- *Alaska: 300/150,
- *Arizona: 300/150 (One in 201 homes in foreclosure),
- *Arkansas: 300/150,
- *California: 300/150 (One in 192 homes in foreclosure),
- Colorado: 315/165 (One in 429 homes in foreclosure),
- Connecticut: 370/220,
- Delaware: 400/250,
- Florida: 320/170 (One in 211 homes in foreclosure),
- *Georgia: 300/150 (One in 444 homes in foreclosure),
- *Hawaii: 300/150,
- Idaho: 340/190,
- Illinois: 425/275,
- Indiana: 415/265 (One in 568 homes in foreclosure),
- Iowa: 465/315,
- Kansas: 330/180,
- Kentucky: 415/265,
- Louisiana: 370/220,
- Maine:505/355,
- *Maryland: 300/150,
- Massachusetts: 345/195,
- *Michigan: 300/150 (One in 375 homes in foreclosure),
- *Minnesota: 300/150,
- *Mississippi: 300/150,
- *Missouri: 300/150,
- Montana: 355/205,
- Nebraska: 305/155,
- Nevada: 305/155 (One in 122 homes in foreclosure),
- *New Hampshire: 300/150,
- New Jersey: 450/300,
- New Mexico:400/250,
- New York: 430/280,
- *North Carolina: 300/150,
- North Dakota: 340/190,
- Ohio: 415/265 (One in 382 homes in foreclosure),
- Oklahoma: 400/250,
- Oregon:330/180,
- Pennsylvania: 450/300,
- *Rhode Island: 300/150,
- South Carolina: 365/215,
- South Dakota: 355/205,
- *Tennessee: 300/150,
- *Texas: 300/150,
- Utah: 315/16 (One in 600 homes in foreclosure),
- Vermont:510/360,
- *Virginia: 300/150,
- Washington: 310/160,
- *Washington D.C.: 300/150,
- *West Virginia: 300/150,
- Wisconsin:460/310,
- *Wyoming: 300/150.
What’s Your Time Line for REI Success?
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