Wednesday, July 17, 2013

Homebuilder confidence and sales outlook soar Alex Veiga, AP Real Estate Writer 11:08 a.m. EDT July 16, 2013

Originally Appeared in USA TODAY

U.S. homebuilders are feeling more optimistic about their home sales prospects than they have in more than seven years, a trend that suggests home construction will accelerate in coming months.

The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday jumped to 57 this month from 51 in June. It was the third consecutive monthly gain.

A reading above 50 indicates more builders view sales conditions as good, rather than poor. The index hasn't been that high since January 2006, well before the housing market crashed.

Measures of customer traffic, current sales conditions and builders' outlook for single-family home sales over the next six months vaulted to their highest levels in at least seven years.

"Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten," said David Crowe, the NAHB's chief economist.

The latest confidence index, based on responses from 281 builders, points to continued improvement for new home construction, which remains a key source of growth for the economy.

Last month, Federal Reserve Chairman Ben Bernanke cited housing gains as a major reason the Fed's economic outlook has brightened.

Steady hiring and low mortgage rates have encouraged more people to buy homes over the past year. But the inventory of previously occupied homes on the market has declined sharply in many markets. On a national level, it was down 10% in May from prior-year levels as sales rose to an annual rate of 5.18 million.

With demand up, prices rising and few homes on the market, builders have grown more optimistic about their prospects, stepping up construction. In May, builders applied for permits to build single-family homes at the fastest pace in five years.

Meanwhile, sales of new homes climbed in May to a seasonally adjusted annual rate of 476,000, the fastest pace in five years. That's still below the 700,000 annual rate that's considered healthy by most economists, but the pace has increased 29% from a year ago.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB statistics.

In the latest builder survey, a gauge of current sales conditions for single-family homes jumped five points to 60, the highest level since February 2006, while a measure of traffic by prospective buyers improved five points to 45. It hasn't been that high since November 2005.

Builders' outlook for single-family home sales over the next six months increased seven points to 67, the highest reading since October 2005.

On a regional basis, confidence grew across the board, but posted the strongest among builders in the Midwest.

Tuesday, July 16, 2013

Italy to Spain Beckon as Yields Beat Germany: Real Estate

Originally Appeared in Bloomberg News

Europe’s biggest real estate managers are making their first investments in southern Europe since the financial crisis as low prices and diminishing risk make commercial properties more attractive.

Axa Real Estate Investment Managers, the largest European property fund manager, bought Barcelona office buildings from the Catalan government for 172 million euros ($224 million) last month, only its second purchase in the country in five years. When the unit of Europe’s second-largest insurer considered buying the same properties two years ago, it rejected the idea.

“There was too much uncertainty in the market at the time,” said Anne Kavanagh, the Paris-based insurer’s head of global asset management. “There’s an indication now that we’re at or near the bottom, even though there might be more volatility ahead.”

Insurance companies such as Germany’s Allianz SE (ALV), private-equity firms and sovereign-wealth funds are seeking deals in Spain and Italy as the economic prospects for the countries improve and the likelihood of a euro-currency breakup recedes. Returns in the commercial hubs of Madrid and Milan have become more attractive compared with other European cities after a slide in investment in both countries last year boosted yields.

Axa Real Estate, which has 45 billion euros of assets under management, agreed to buy an office park in Milan last month, its first commercial property transaction in Italy since 2008. Before the Barcelona acquisition, the French insurer’s only transaction in Spain in the past five years was the purchase of a chain of gasoline stations for 55 million euros in 2011.

Rome, Milan
Allianz, Europe’s largest insurer, in June bought a stake in two buildings in Rome and Milan, its first Italian deals in five years. Georg Allendorf, head of German property at Deutsche Bank Asset & Wealth Management, said he’s considering buying real estate in southern Europe for the first time since 2010.

Yields for prime offices were about 6.25 percent in Madrid in the first quarter, up from 5.75 percent a year ago, and in Milan they were unchanged at 6 percent. That compares with about 4.9 percent in Frankfurt and 4.75 percent in London, according to data compiled by CBRE Group Inc. The yield is the annual income that a property generates as a proportion of its purchase price. Yields tend to rise when values fall.

“There are many international investors who are coming back, or coming into the market for the first time,” said Mauro Montagner, head of Allianz Real Estate in Italy, which plans to invest 500 million euros over the next several years. “They realize it’s no longer like trying to catch a falling knife.”

Low Point
The renewed interest comes after commercial real estate investment in both countries tumbled in 2012 to the lowest level since at least 2001, according to research by DTZ. Investment dropped by almost 70 percent to 1.2 billion euros in Italy and by more than 50 percent to 2.3 billion euros in Spain.

Investment in both countries will begin to recover this year and return to pre-crisis levels as early as 2014, said Magali Marton, head of continental European research at DTZ. The money spent on commercial properties could amount to 3.5 billion euros in Italy and 2.5 billion euros in Spain in 2013, she said.

“The market is more dynamic than it seems from the outside,” said Allianz’s Montagner. In one case, Allianz is competing with eight other investors for an Italian property that probably wouldn’t have attracted any interest a year ago, he said.

Euro’s Survival
Buyers are drawn by the prospect of an improved economic outlook in Spain and Italy and growing confidence that the euro will survive, said Peter Damesick, chairman of Europe, Middle East and Africa research at broker CBRE Group Inc. in London.

“It’s certainly a shift compared to 12 or 18 months ago, when concerns about the euro zone and its integrity were running at a very high level,” he said.

The Spanish economy is set to grow by 0.9 percent in 2014 after contracting two years in a row, according to the European Commission. Italy will expand by about 0.7 percent after also shrinking for two years. Concern that the euro would break up began to abate in September, when ECB President Mario Draghi pledged unlimited bond buying to prop up the 17-nation currency.

Since then, the difference between the extra yield investors demand to hold Italian government bonds compared with German debt has narrowed by about 110 basis points, according to data compiled by Bloomberg. The difference, or spread, between Spanish and German debt has narrowed by 180 basis points. That shows that investors see diminishing risk in those countries.

The ECB expects to keep interest rates low for an “extended” period, Draghi said on July 4. The central bank that day left its main refinancing rate at 0.5 percent.

Risk Appetite
While countries such as Germany and the U.K. attract the bulk of investments because of their reputations as havens, buyers are increasingly willing to take on more risk to earn higher returns.
“We’re starting to see a rotation from defensive to riskier investment,” Kavanagh said.

The appeal of Italy, Europe’s fourth-largest economy, lies in robust consumer spending and increased political stability after the appointment of Enrico Letta as prime minister in April ended months of political gridlock, DTZ’s Marton said.

“The political class has demonstrated its capacity to manage the country and take the right decision to reduce public debt,” she said.

Italy’s real estate market is more promising than Spain’s because of the country’s strong industrial sector and because it didn’t experience the construction boom that has burdened Spain with an oversupply of buildings, she said.

Bad Bank
While the economic outlook in Spain is worse, with unemployment at 27 percent, the real estate market may benefit from discounted properties sold by Sareb, the bank set up by the government last year to acquire 90 billion euros of soured real estate assets from rescued lenders. Sareb is preparing to sell 1.5 billion euros of assets this year.

Apollo Global Management LLC (APO), a New York-based private-equity firm, plans to invest 1 billion euros to buy loans from banks in Spain as well as from Sareb, a person with knowledge of the matter said. The person asked not to identified because the company hasn’t announced the plan to the public. Apollo declined to comment.

Spain’s bank rescue fund, known as FROB, owns about 45 percent of Sareb, while other shareholders include 14 Spanish banks.

Lowered Expectations
Owners of Spanish property are facing financial and regulatory pressure to sell after holding assets for years to avoid realizing losses. Others have lowered their expectations as the country’s economic woes drag on.
The International Monetary Fund yesterday called on Sareb to use more conservative assumptions for house prices in its business plan “as these are still falling sharply and further correction is likely.”

“There is more reality in European pricing than there was 12 months ago,” Axa Real Estate’s Kavanagh said. “When owners start marketing an asset and getting the bids, they realize where the market is. That process can take a while,” he said.

Axa Real Estate will achieve a gross initial yield of about 9.5 percent with its Spanish office purchase, according to two people with knowledge of the transaction. A year ago, that deal would have probably yielded 8.45 percent, according to one of the people. They asked not to be identified because the information is private. The yield is the income return on an investment. Yields normally fall when prices rise.

Some companies are setting up new businesses ahead of an anticipated increase in transactions. NAI Global, a real estate adviser, added its first offices in Italy and Spain this year.

‘Good Timing’
“It’s a very good time to expand into those markets,” said Paul Danks, NAI Global’s managing director for Europe. “The majority of the big-name investors have always been in the market, but clearly over the last few years they haven’t been active.”

Some of the transactions are likely to come from banks that took over buildings or loans from troubled creditors and now face pressure to reduce their real estate holdings to comply with new rules. These include Basel III, the banking regulations that come into effect in 2019.

CR Investment Management, a Berlin-based firm that manages and restructures troubled properties and loans, opened an office in Madrid in July.

“As loans secured on Spanish assets start to trade, many of the capital sources we work with will require an operating partner to assist them with underwriting and managing the loans they are looking to buy,” said Richard Fine, head of CR’s international operations in London.

Different Targets
Investors are targeting deals for hotels, homes, offices and warehouses. Insurers such as Axa and Allianz are focused on modern, high-occupancy office buildings on busy streets. Private-equity firms such as Cerberus Capital Management and Fortress Investment Group LLC (FIG) are targeting distressed homes held by Spain’s Sareb, a person familiar with the information said in February.

Qatar’s sovereign-wealth fund in May agreed to buy a 40 percent stake in Milan’s newly built Porta Nuova business district. While the purchase price wasn’t disclosed, the project is valued at about 2 billion euros, the Qatari fund and developer Hines Italia SGR said in a statement in May. Qatar in June also bought the W Hotel in Barcelona for about 200 million euros, according to Property Investor Europe.

In February, Luxembourg-based asset manager GWM Group bought Italian logistics properties valued at about 220 million euros after the owner had trouble repaying loans from Deutsche Bank AG (DBK) and M&G Investments, according to a February statement from GWM.

In Spain, the past year has also seen the arrival of investments from wealthy families in Latin American countries such as Mexico, Chile and Venezuela, Damesick said. As deals close, more investors will be comfortable entering the markets, he said.

“One of the issues that held the market back in the past couple of years was a circular process of low liquidity creating uncertainty about pricing in the market,” he said. “When things go in the other direction, it gives more investors an incentive to move in.”

Tuesday, July 9, 2013

Hedge fund Perry Capital sues government over Fannie Mae, Freddie Mac

Originally Appeared in The Washington Post

Investors are placing more pressure on the government to release its hold on Fannie Mae and Freddie Mac as the mortgage finance giants return to profitability.

In the latest effort, hedge fund Perry Capital filed a lawsuit in federal court late Sunday to stop the government from seizing most of the profits at the finance firms.

The lawsuit, filed in U.S. District Court in Washington, alleges the Treasury Department and the Federal Housing Finance Agency (FHFA), which oversees the government-owned mortgage companies, violated a 2008 law that placed Fannie and Freddie into conservatorship to prevent bankruptcy.

Congress originally authorized Treasury to collect 10?percent dividend payments from Fannie and Freddie every quarter as a condition of the government’s $188?billion bailout of them. Treasury amended the terms of the agreement last year to make Fannie and Freddie give the government most of their profits, a move known as the “sweep amendment.”

The lawsuit alleges that the dividend sweep was tantamount to a purchase of new securities, which Treasury did not have the authority to make. It also says the FHFA has failed to conserve the assets of Fannie and Freddie by allowing Treasury to take most of their profits. Perry Capital is not seeking damages but is asking the court to strike down the Treasury amendment, a decision that would benefit its investors.

“This lawsuit seeks to uphold the rule of law,” Theodore Olson, a partner at Gibson, Dunn & Crutcher, which is representing Perry Capital, said in a statement. “If the government wanted to assume the powers of receivership, it could have chosen that course. Instead it chose conservatorship, and with the ‘sweep amendment,’ it overreached.”

Perry Capital alleges that the new arrangement has caused irreparable harm to all private investors, who are being shortchanged as Fannie and Freddie have returned to profitability. The hedge fund says the government “maneuvered to ensure that Treasury would be the sole beneficiary of the companies’ improved financial position,” according to the lawsuit.

Treasury and the FHFA declined to comment on the lawsuit.

Treasury has received $132?billion in dividend payments on the government’s nearly 80?percent stake in Fannie and Freddie. Shareholders say Treasury’s new terms prevent the companies from building capital that would help them redeem any of the shares the government has taken.

Perry Capital, which would not disclose its exact stake in Fannie and Freddie, began investing in the mortgage companies in 2010. It said it believed the beleaguered companies were positioned to return to profitability. In the aftermath of the financial crisis, Fannie, Freddie and other government-backed agencies have insured nearly 90?percent of new mortgages.

Investors, including Perry Capital and Paulson & Co., have urged Congress to quash plans to close Fannie and Freddie, which they say should be allowed to go private. But the overwhelming momentum in Washington is behind abolishing the troubled mortgage insurers.

A few weeks ago, Sens. Bob Corker (R-Tenn.) and Mark R. Warner (D-Va.) introduced legislation to replace the mortgage giants with a new government agency that would shift more of the risks of lending to the private sector. The lawmakers want to make the government the last line of defense in the event of another housing crash.

Monday, July 1, 2013

Mortgage rates: Nowhere but up?

Originally Appeared in USA TODAY

This week's sharp increase in mortgage rates — the biggest one-week leap in 26 years — won't likely be repeated, but a long era of historically low rates may be over.

Mortgage giant Freddie Mac said Thursday that the average 30-year fixed rate mortgage rose to 4.46%, the highest in almost two years, and up from under 4% the week before.

In the short run, this week's half a percentage point increase could push some home shoppers out of the market while spurring others to act before rates go higher, says John Burns, CEO of John Burns Real Estate Consulting.

Longer term, higher rates and more homes for sale could slow gains in home prices, whose rapid rise has spurred fears of another housing bubble.

n April, home prices were up 12.1% from a year ago and more than 20% in San Francisco, Phoenix, Las Vegas and Atlanta, Standard & Poor's Case-Shiller data show.

Higher interest rates will have a "small impact" on sales volume as well as prices, says Cameron Findlay, economist with Discover Home Loans. Gains of 20% year-over-year "are not sustainable or healthy," he adds.

Higher rates won't stop the housing market recovery, however, says Freddie Mac economist Frank Nothaft.

It has "enough momentum to continue," but sales volume and home price appreciation will be "less than what would've occurred," he says.

Nothaft expects rates to bounce between 4 3/8% and 4 5/8% through the end of the year. "The historic trough is history," he says.

The impact of the increase is already being observed in some places.

New customer volume was down 11% last weekend from the average of the previous three weekends at real estate brokerage Redfin, which tracks 19 major markets, says Glenn Kelman, Redfin CEO. Meanwhile, shoppers further along in the process rushed to close deals.

"We've had people calling us in tears. There were so many buyers at the outer limit of what they could afford," Kelman says.

The increases follow rising yields on the 10-year Treasury bond. They've climbed in the wake of Federal Reserve Chairman Ben Bernanke's comments last week that the Fed could start trimming its stimulus policies later this year if the economy continues to improve. Mortgage rates track the 10-year Treasury rate, which is at a two-year high.

Paul Diggle of Capital Economics expects 30-year rates of 4½% at year end, 5% next year and 5½ in 2015.

Average monthly rates have been below 4% since late 2011, Freddie Mac data show. But even at current levels, they're still low, having averaged 8.6% since 1971, Freddie Mac says.

At today's house prices and income levels, mortgage rates would have to be nearly 7% before the U.S. median-priced home would be unaffordable to a family making the median income in most parts of the country, a Freddie Mac analysis shows.

Higher rates will have the most impact on affordability in already high-cost areas, such as San Francisco south to San Diego and Washington, D.C., north to Boston, as well as in Seattle and Miami, Freddie Mac says.

Pending home sales rose in May to the highest level since late 2006, a potential sign that some fence-sitters jumped in to get ahead of higher rates, the National Association of Realtors said Thursday.

Monday, February 20, 2012

More Short Sales

First appeared in USA Today
Lenders are allowing more short sales by financially strapped homeowners and a few people are even getting cash to complete the sale. Such is the case with Durham Short Sales.

Short sales are when lenders allow borrowers to sell homes for less than their unpaid mortgages. They are an alternative to foreclosures.

Short sales have been increasing for months, but the financial incentives — which Realtors say are random and infrequent — are a newer wrinkle. Those who care about Brooklyn Home Insurance are paying attention.

·         JPMorgan Chase went national with short-sale incentive offers last year, paying up to $35,000 in some cases.
·         Bank of America is testing incentives from $5,000 to $25,000 in Florida to see if they should be expanded to more states. The Florida program began last fall, spokesman Richard Simon says.
·         Wells Fargo's incentive offers range from less than $3,000 to $20,000, spokesman James Hines says.

Short sales, even with incentive payments to borrowers, can save lenders money compared with the expenses involved in completing foreclosures. This is true of Triangle Homes for Sale Foreclosures.

In states such as Florida where foreclosures go through the courts, 50% of loans in foreclosure are more than two years past due, says a January report by mortgage tracker LPS Applied Analytics.

"It's a lot cheaper to shell out $10,000 or $20,000 to someone than it is to go through a long foreclosure," says Jim Gillespie, chief executive of Coldwell Banker.

Banks are more willing to do short sales now than in the past, Gillespie says. Cash incentives appear to be "limited but increasing" in number, he adds.

"When a loan modification isn't possible, a short sale may be a better and faster solution" than foreclosure, says JPMorgan Chase spokesman Thomas Kelly.

The lenders won't say how often they extend such incentives. Those in Cary Short Sales are curious, though.

"If you have two similar sellers, one might get it and another may not," says Colleen Badagliacco of Altera Real Estate in San Jose. "It's very random."

Typically, short sale incentives are more common for loans in states where foreclosures take more time, Hines says.

In November, short sales accounted for more than 9% of single family home sales and were up 32% from the year before, according to CoreLogic.

Market researcher Dataquick also shows short sales increasing from January 2011 through last month throughout California and in Phoenix, Miami and Seattle.

The federal government-run foreclosure prevention program also offers short sale incentives, at least $3,000 for sellers, but far more short sales are being done outside the government program.

Through December, just 26,901 short sales had been completed through the Home Affordable Foreclosure Alternative (HAFA) program. A Raleigh Real Estate Lawyer is curious.

In contrast, BofA, the largest servicer of home loans, did 107,000 short sales last year. That was up from 92,000 in 2010, which was double the 2009 volume, it says.

"The trend is up," says Moody's Investors Service analyst William Fricke.

Tuesday, January 31, 2012

Is Desegregation Really Happening?

First appeared in the Wall Street Journal
An exodus of African-Americans from struggling industrial cities such as Detroit and the growth of Sunbelt states have pushed racial segregation in U.S. metropolitan areas to its lowest level in a century, according to a new study.

The report, released by the conservative Manhattan Institute, said U.S. cities are more integrated now than at any time since 1910, based on analysis of census data from neighborhoods.

Fifty years ago, nearly half the black population lived in a ghetto, the study said, while today that proportion has shrunk to 20%. All-white neighborhoods in U.S. cities are effectively extinct, according to the report.

Immigration and gentrification have helped convert ghettos into racially mixed communities and contributed to diversifying suburbia, said economists of Harvard University and of Duke University, who co-wrote the study. "Segregation is as low as we have ever seen it," said the economists. "It's an unprecedented scenario."

Some scholars said the report, titled "The End of the Segregated Century: Racial Separation in America's neighborhoods, 1890-2010," paints too rosy a picture and argued the country is far from being fully integrated.

"That segregation is declining in most places is a real plus," said a Brown University sociologist who has published research on the topic. "But it is declining at a rate that will leave the country with a very high level of segregation for a long time."

From around 1910, rural blacks began moving in large numbers to urban centers in search of work, in what became known as the Great Migration. Government policies and discriminatory practices in areas such as mortgage lending promoted residential segregation, which peaked in the 1960s. The civil-rights movement then paved the way for integration, and the 1968 Fair Housing Act specifically banned housing discrimination.

By the 1980s, blacks were moving to suburbs, which both altered the face of the urban areas they left behind and created racially mixed neighborhoods where they settled.

Using the most common measure of segregation, the "dissimilarity index," the authors found that segregation is lower now than it was in 1970 in all but one of the 658 housing markets tracked by the Census Bureau. Between 2000 and 2010, segregation declined in 522 out of 658 housing markets, the report said.

The index of dissimilarity measures how evenly two groups are distributed in a neighborhood. The score indicates what share of the members of one group would need to move neighborhoods to enable the two groups to be equally distributed.

In 2010, Dallas-Fort Worth and Houston were the country's least segregated large cities. Atlanta's index fell 28 points to 54.1 in 2010 from 82.1 in 1970; Dallas-Fort Worth's fell to 47.5 from 86.9 over the same period.

Still, segregation hasn't been eliminated. The typical urban African-American still lives in an area where more than half the black population would need to move to achieve overall integration.

"There are still segregated places, like the South Side of Chicago, the East Side of Cleveland and Detroit," said a sociologist. "But those places have fewer people."

Many of the people leaving industrial cities moved to the Sunbelt, which stretches from California to North Carolina and has experienced rapid growth in recent decades. As cities such as Phoenix, Houston and Charlotte expanded to accommodate the new population, many neighborhoods became more racially mixed than those left behind in the Rust Belt, a sociologist said.

The beacon of economic opportunity is luring ambitious young African Americans such as a 28 year old, who left Cleveland for Houston a year and a half ago for a promotion in the Veterans Administration. He now manages outpatient care at Houston's Michael E. DeBakey VA Medical Center.
"It was a good promotion, and with the economy being the way it is, it was too good to pass up," said the young man.
A 59 year old, who moved to Phoenix from Racine, Wis., in 1987 to run a janitorial business, said: "Everybody here came from somewhere else so they are not just living next to their own kind."

Immigration has been a factor in desegregation. The Hispanic population has climbed and spread across the U.S. since the 1990s, with Latin American immigrants settling in both predominantly black and white neighborhoods, the report says. The typical African-American now lives in a neighborhood that is 14% Latino.

Access to credit has also fostered mobility and integration. Minority home buyers were affected by the subprime mortgage crisis, but many buyers were able to stay in their homes, the report said.

But the decline in desegregation in residential areas hasn't meant an end to racial inequality. Minorities at every income level tend to reside in poorer neighborhoods than whites with comparable incomes, according to the scholar at Brown.

Thursday, January 12, 2012

Home Foreclosures Looking Up

First appeared in CNN Money
Foreclosure filings and repossessions fell to their lowest level since 2007 last year.

Total filings, including default notices and bank repossessions were down 33% for the year to 2.7 million, according to RealtyTrac, the online marketer of foreclosed properties.

One in every 69 homes had at least one foreclosure filing during the year, while 804,000 homes were repossessed. That's a significant improvement from the peaks reached in 2010 -- when 1.05 million homes were repossessed -- and the lowest levels seen since 2007.

More than 4 million homes have been lost to foreclosure over the past five years.

While the declines seem like good news for the housing market, where a flood of foreclosed homes has depressed home prices, much of it is due to processing delays caused by fall-out from the "robo-signing" scandal that broke in late 2010.

During the year, banks spent more time making sure paperwork was legal and proper, creating a backlog in the foreclosure pipeline. As a result, the average time it took to process a foreclosure climbed to 348 days during the fourth quarter, up from 305 days a year earlier.

"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year," said Brandon Moore, chief executive officer of RealtyTrac.

However, Moore said there were "strong signs" during the second half of the year that lenders are working through foreclosure backlogs in certain markets. He expects foreclosure activity to rise above 2011's level but remain below the peak hit in 2010.

Low rates offer some help for homeowners

Early in 2011, many forecasters were predicting a wave of foreclosures due to resetting adjustable-rate mortgages, but low mortgage rates helped many borrowers refinance into more affordable loans, said Moore.

The government helped as well, through efforts like the Home Affordable Refinance Program (HARP), which made refinancing easier for borrowers who owe more on their mortgage than their homes are worth.

Turning foreclosures into rentals

Government foreclosure prevention programs, including HARP and the Home Affordable Modification Program (HAMP), have started about 5.5 million mortgage modifications since April 2009, according to the U.S. Department of Housing and Urban Development.

"Programs like HAMP and HARP have definitely made a dent in the foreclosure problem," said Moore "However, they are certainly not living up to their billing of preventing several million foreclosures. In addition, many [HAMP] homeowners fall back into foreclosure later on."

Of course, there were still plenty of factors working against homeowners in 2011, including the continued erosion in home prices. Falling prices rob homeowners of home equity, which they can tap if they need emergency cash.

Foreclosure hot spots

Hot spots for foreclosures remain mostly in "bubble states," where speculative investors helped drive up home prices beyond their fundamental values during the mid-2000s housing boom.

Nevada, where one out of every 16 households received some kind of default notice during the year, was the worst hit of all, a distinction it has held for the fifth consecutive year.

Foreclosure free ride: 3 years, no payments

Arizona had the second highest foreclosure rate and California came in third. Florida, which had been running neck-and-neck with the other "Sand States" in past years, fell to seventh, behind Georgia, Utah and Michigan.

Among metro areas, Las Vegas suffered from the highest foreclosure rate in 2011. California put seven cities in the top 10, led by Stockton in the second slot. Other cities in the top 10 included Phoenix, which finished sixth, and Reno, Nev. was eighth.