Foreclosures

Foreclosure Filings Fall To 49-Month Low

Foreclosure filings are fewer these days, according to foreclosure-tracking firm RealtyTrac.

In December 2011, the number of foreclosure filings nationwide fell 9 percent from the month prior. Not since November 2007 has foreclosure activity been this sparse across the country.

The drop does not appear to be seasonal, either. 

Last month’s foreclosure filings were down 20 percent from December 2010 with “foreclosure filing” defined to include any one of the following foreclosure-related events: (1) The serving of a default notice, (2) A scheduled home auction, or (3) A bank repossession. As a result of a unexpectedly strong year-end, 2011′s annual foreclosure rate was the lowest in 4 years.

One reason why the year may have closed so strongly is that Nevada, California, Michigan and Arizona — four states typically associated with high rates of foreclosures — each posted big drops in foreclosure filings between November and December, plus double-digit drops between December 2010 and December 2011.  

In fact, among the country’s top 10 states for foreclosure activity, nine showed an annual foreclosure filing reduction. Only Delaware worsened.

It’s also noteworthy that just 4 states accounted for half of last month’s total foreclosure filings.

• California:  25.8 percent of all foreclosure filings
• Florida:  12.0 percent of all foreclosure filings
• Michigan:  6.4 percent of all foreclosure filings
• Illinois:  6.2 percent of all foreclosure filings

Foreclosures are heavily concentrated, in other words. By contrast, the last 1% of activity is spread across 14 states.

As a Crown Point Indiana home buyer — first-timer or investor — foreclosures can be a great way to find value.

According to the National Association of REALTORS®, distressed homes typically sell at “deep discounts“ as compared to like, non-distressed homes. However, when you buy a foreclosure home from a bank, it’s different from buying a home from a “person”. Purchase contract negotiations are different and months may pass before your closing is approved.

If you’re buying foreclosure, therefore, seek the help of a professional real estate agent. Real estate agents have experience working in the process-heavy world of foreclosures and can help you come out ahead.

Bargain Hunting Real Estate In Porter County Indiana

Do you know the difference between Foreclosure, REO and Short Sale? Bargain hunting prospectors seeking the diamonds-in-the-rough sometimes use these words interchangeably, so let’s review the basic terminology so we can be more precise when discussing any plans to invest in a Porter County Indiana distressed property. Pictured here are two Portage Indiana distressed homes which are priced below market value. Both are located in top quality neighborhoods. They seem like bargains on the surface. But without lengthy research on the property, and negotiation with the lender, will a buyer find out how much of a “bargain” she will actually be purchasing.

Foreclosure

Foreclosure is the process that occurs when a homeowner stops paying the mortgage and eventually surrenders the home to their lender. This process has several steps. It starts with overdue notices, kindly asking the borrower to catch up. There will be a series of workout people who will try to help get things back on track. Under the Federal HUD Home Affordable Foreclosure Alternative program they may reduce the interest rate or modify the mortgage.

If it all fails the lender will issue a default notice, and eventually a legal suit through county court and eventually an eviction from the property if the borrower has not already vacated. This is a lengthy process and you can imagine that the property is likely to be poorly maintained during this time period of “distress”. Sometimes owners or renters will strip the home of appliances and cause damage, as things turn from bad to worse.

Finally, the lender will salvage whatever residual value, by listing the home on the real estate market. In most cases these homes are sold in as-is condition without the disclosures and clean chain-of-title that a conventional seller will offer the buyer. The entire time period can often a run a year or more while the various steps in the process run their course.

Bank Owned or REO

Real Estate Owned is what happens at the end of the foreclosure process, and it is the worst outcome. The property ends up being vacant, neglected, often vandalized. Banks and lenders don’t really want to own and maintain empty dilapidated homes, but due to the recession they have many on their list of “assets”. The word asset being somewhat euphemistic since the house is probably worth only a fraction of what it once was,  by this point.

So now that lender, often being out of state, and having a list of many of these so-called assets, now goes through another process of selling these homes to bargain-hunters, rehab contractors, and handy homeowners who are willing to buy them and invest in turning them around. After trying to determine it’s salvage value, they will list it with a broker and hope for the best.

In short, REO properties are bank-owned.  And they likely are in need of some restoration and maintenance work, may to need fixtures or appliances.

Short Sale

The short sale is another type of work-out that can take place during the early phase of the foreclosure process, if the homeowner and the lender can’t work out a modification. This is about the only scenario where a Realtor can help out a trapped and struggling owner. Once the homeowner realizes they are in pre-foreclosure trouble they ask their lender permission to conduct a short sale. They write a letter explaining their hardship, such as loss of job, medical issue, or other reason. And th lender will provide a list of supporting documents and questions they will want answered. An experienced agent can assist through this process.

When accepted, the homeowner can then hire the Realtor to market and sell the home at a discounted price to a new buyer. The home, sold in good condition, maintains much of of it’s value. The bank recovers a decent portion of it’s equity. And most important, the home seller walks away from the deal with his credit intact.

There are several advantages for doing the short sale versus the full foreclosure.  Compared to a court ordered foreclosure, where all a defendant’s asset are liquidated to pay the mortgage debt, in the short sale . If the assets don’t completely pay off the debts & fees, the court will issue a “deficiency judgment” for the balance. This will leave the convicted debtor responsible for the remaining debt which will cloud their credit rating for for years thereafter.

By settling with the lender and selling the house to a new and more solvent buyer, the deficiency judgments are usually released making it a win-win for both lender and debtor. And since the homes are often still occupied until the end of the process, the buyer gets a better maintained property.

Buyer Beware

Bargain hunters must always be extra careful with their diligence when choosing a distressed home. Such factors as

• the home’s condition
• whether the home can be financed at all or will requires cash
• the selling bank’s  deal
• the chain of title

are some of the main considerations to closely examine. Like anything that seems too good to be true, buying a “scratched and dented” home is like anything else–you need to do your homework. It takes extra diligence on the part of the agent and the buyer to make sure that one of the many possible “gotcha’s” doesn’t sneak up on the unaware. If you need help navigating the short sale or foreclosure real estate market in Portage Indiana, or the other Porter County communities, allow me help you select that diamond-in-the-rough. Send me a text message with your question.

An Update, The Reality and Impact of Home Foreclosures

Lately, very few things have been in the news more than the topic of home foreclosures. Depending on the source, it is estimated there have been over 4 million homes entering foreclosure over the past four years and about 300,000 are entering the first stage monthly.

Recently the attention has turned from the sheer volume of foreclosures to the procedural flaws in foreclosing that are threatening lenders’ rights to foreclose because legal “ownership” of the mortgage may not be readily determined or because paperwork related to foreclosing was improperly executed.

The net result is that several major lenders have announced a moratorium on their foreclosure process to allow them time to review their documentation and to determine that they can legitimately move forward.

This means that the natural flow of homes through the pipeline is interrupted. Instead of having a predictable timeline, buyers must sit in limbo with respect to the actual availability of a particular home for purchase.

Except for the national attention and anxiety caused by the media saturation of this issue, the real economic effect will likely be very localized and concentrated. In communities with a large number of foreclosures where the mortgages on those homes are owned by lenders who are temporarily halting the process, it means those homes can’t go on the market. So in turn, the decline in the amount of inventory being offered for sale could result in an increase on home prices in that area, until the foreclosure freeze is thawed out.

However as a national economic issue, the overall impact will probably not have a measureable or lasting effect on the housing market. That assumes, of course, that lenders move expeditiously to determine their ownership and identify steps necessary to deal with the process and documentation problem – such as, resuming the foreclosure process or indentifying loan modifications and workouts.

We will continue to monitor this situation very closely, and would encourage you to contact us so we can discuss what this might mean to you as a homeowner or even a home buyer in Northwest Indiana.

Foreclosure Clash of the Titans: Banks, Lawyers and Investors

The banking industry, distressed homeowners and investors are taking their issues to the courts for a colossal legal smack-down over real estate foreclosures.

On one side we have the banks claiming to be victims of those thousands of dead-beat homeowners squatting in homes they have stopped making payments on. Instead of receiving regular monthly payments–the liquid assets that enable a bank to function–their  money is tied up in empty and distressed properties.

On the other side are the real estate attorneys hired by those homeowners.  As the number of cases has grown, delinquent and defaulted homeowners are growing more rebellious against their lenders. Frustrated by what they see as poor loan service, the major corporate banks are easy targets for growing consumer backlash. Rather than taking an eviction as unfortunate destiny, borrowers are using legal tactics to delay the procedures, force bank administrators to validate every aspect of the foreclosure, and forestall the day of reckoning with their own accounting of unsettled grievances:

• difficulty getting modifications and short sales processed
• inability to work-out satisfactory terms
• lost paperwork, missing documents, mismanagement of case files
• an unresponsive bureaucracy with an agenda to dump people rather than find solutions

As horror stories spread, such the family evicted in a sheriff sale while their bank was simultaneously giving the homeowner a green light on their loan modification, the unfavorable public sentiment toward banks is swelling toward a political movement. Borrowers are starting to fight back, challenging the “robo-signers” and picking apart the documents used to prosecute their judgments. Sorting out the charges and counter-charges a new field of legal practice, “foreclosure defense” is being born. Due to the scale of the problem, sensation and drama will be protracted and profound.

A third lead character in this three-act monster movie are thousands of bond-holding institutional investors and their millions of clients. These investors–the nation’s big institutions, are made up mostly of pension funds, mutual funds and insurance companies who purchase mortgage backed securities for safe, secure, investment. Allegations that these bonds were deceptively manipulated; good mortgages diluted with junk-quality loans, strikes to the heart of how these traditional relationships are supposed to be played. If Wall Street banks intentionally robbed “widows and orphans” of their nest eggs it is a fundamental systemic malfunction which rocks trust in the US economy. The major banks will suffer more embarrassment and be at even greater financial risk if they are forced by court order to pay back the bondholders.

As the real estate meltdown evolves into the foreclosure showdown, we now enter the time of cleanup, the finger-pointing phase. The courts have plenty of work to do as each of these cases are unraveled, each bit of mortgage and security paperwork examined for shortcuts taken and best-practices violated.  Experts are predicting class action lawsuits will be required to settle blame and damages. Let the cage-match begin.

Steady Pace Of Foreclosures Slow Down Again In June 2010

313,841 foreclosure filings were made in June, according to foreclosure-tracking firm RealtyTrac. The figure represents a 3 percent drop from May and 7 percent drop from June of last year. However, foreclosure filings remain relatively high nationwide.

June marks the 16th straight month the filings topped 300,000. 1 in every 411 U.S. homes received some form of notice last month with foreclosure density varying wildly from state-to-state.

Like everything else in real estate, it seems, foreclosures are a local phenomenon.

The states with the highest foreclosures per capita were:

• Nevada : 1 foreclosure filing per 88 homes
• Florida : 1 foreclosure filing per 171 homes
• Arizona : 1 foreclosure filing per 189 homes

The states with the lowest foreclosures per capita were:

• Vermont : 1 foreclosure filing per 26,051 homes
• West Virgina : 1 foreclosure filing per 8,058 homes
• South Dakota : 1 foreclosure filing per 6,528 homes

Overall, 40 states beat the national Foreclosure Per Capita average and 10 states fell below. The sheer volume of REO, though, is creating interesting buying opportunities for first-time home buyers, move-up home buyers, and real estate investors in Crown Point Indiana.

Homes bought from banks are usually less expensive than non-foreclosure homes. This is one of the major reasons why distressed sales account for roughly 30 percent of all home resales. Less expensive, though, doesn’t always mean “cheaper”. Foreclosed homes are often sold as-is and may be defective or otherwise uninhabitable.

Making repairs to get these homes into “living condition” can be costly.

Therefore, if you’re buying a foreclosed home, make sure you know what you’re buying before you make your bid. Have a certified professional inspect the home to check for damage, and consider enlisting the help of a real estate agent to assist with negotiations and management of the contract.

The process of buying a foreclosed home is different from buying a typical resale. Make sure you do your homework. Otherwise, contact me for a referral to a great local real estate agent who can guide you through to a successful real estate transaction.

Complexities of Short Sale Transactions by Samantha Taylor

Short sale is often the best choice for the distressed homeowners (the mortgage borrowers) to avoid foreclosure on the property. It is a process by which the lender agrees to accept less than the outstanding mortgage balance. Apart from benefiting the homeowners, a short sale is advantageous for the lenders, too. A foreclosure is often time-consuming and expensive for a lender. However, there are often complexities and difficulties associated with a short sale. 

One of the major complications of a short sale is its long waiting time. Often banks take several months to respond to a short sale offer. Moreover, a short sale involves dealing with several parties because of which the process may take about 2-6 months to get completed, as compared to about only a month in case of a normal sale.

The situation worsens more when the homeowner has to deal with more then one lender. It happens when there are two or more liens on the property. The success of a short sale also gets reduced in such situations. This is because the second and other lien holders must agree for a short sale to happen. All the lien holders need to agree on accepting an amount less than the balance owed.

The lenders become more hesitant to agree on a short sale especially when it is a non-recourse mortgage loan. In case of such home loans, the lenders cannot go after the homeowner to recover the deficit amount. In case of a recourse mortgage loan, the lender usually can file a lawsuit and if the court issues a judgment order, the mortgage borrower has no other alternative than to pay back the deficit amount or else he/she has to face legal issues.

Moreover, the real estate agents need to follow various guidelines that are incorporated by the mortgage companies and the investors on the mortgage notes. The operating rules vary from one mortgage company to the other. This makes the process even more complex and difficult. It may happen that several investors situated at different parts of the world own a specific mortgage note. In such a circumstance, multiple negotiations are required so as to come to a conclusion regarding a loan payoff amount.

However, the homeowners can opt for a short sale under the HAFA (Home Affordable Foreclosure Alternatives) program. It helps minimize certain complexities as well as the homeowners can avoid foreclosure on the property that has damaging effects on their credit record. The program is beneficial for the lenders and investors as they receive financial incentives to participate. However, not many lenders allow the homeowners to opt for HAFA. This is because the lenders have to calculate the minimum net proceeds (eligible for HAFA) before allowing the homeowners to take help of the HAFA program.

Bank Repossessions Reach Record Levels Again

According to foreclosure-tracking firm RealtyTrac.com, bank repossessions reached record levels for the second straight month in May, topping 93,000 properties nationwide.

As compared to May 2009, all 50 states now show an increase in annual REO activity.

Data like that won’t surprise today’s active home buyers in Valparaiso Indiana.  Foreclosed homes are prevalent, available and accounted for one-third of all home resales made in April. 

Furthermore, total foreclosure actions — the sum of REO, default notices, and foreclosure auctions in May — topped 300,000 for the 15th straight month.

Foreclosures remain a huge influence on the housing market.

However, two interesting trends emerged in the data:

1. 9 of the top 10 metro areas for foreclosure posted annual activity decreases
2. Each of the top 4 states for Foreclosures per Household posted annual activity decreases

We can infer, therefore, that foreclosure activity may be in permanent decline in the areas hardest hit through 2007, 2008, and 2009.  In 2010, the data shows, foreclosures are waning.

This is reason for optimism — especially as FHA delinquencies slow nationwide. As fewer homeowners go delinquent, the pace of foreclosures will slow further and that should help boost home values on every block in the country.

If you’ve been considered bank-owned homes for your own purchase, give a look at the RealtyTrac foreclosure report.  It’s provides insight on a state-by-state level, and in the nation’s largest metropolitan areas. 

Then, to complement your research, talk to your real estate professional about the foreclosure market and what opportunities may exist.   Competition for bank-owned homes can be fierce at times, but there’s plenty of “deals” out there.

You just have to know where to look. Need a referral to a great Realtor? Just ask.

Foreclosure Activity Slows For The First Time In Years

The national foreclosure rate is finally falling.

According to foreclosure-tracking firm RealtyTrac.com, the number of foreclosure notices dropped 2 percent between April 2009 and April 2010.

2 percent may not seem like much, but it’s the first time in the history of the RealtyTrac report that the annual foreclosure rate has dropped.

To be sure, foreclosure rates remain elevated — more than 300,000 were reported last month, but default notices appear to be approaching a plateau.

The RealtyTrac report shows some other interesting statistics, too:

• 6 states accounted for more than half of April’s bank repossessions nationwide
• For the 40th month in a row, Nevada topped the nation’s foreclosure rate
• Foreclosure rates dropped in both California and Arizona, 2 foreclosure hot-spots through 2009

The good news for housing doesn’t stop there.  9 of the top 10 leading metropolitan areas for foreclosure-related activity showed a drop in annual activity.  Only Reno, Nevada showed an increase.

Buying distressed homes is big business, according to the National Association of Realtors®, accounting for 35 percent of all home resales with a typical discount ranging near 15 percent on value.

But with the discount comes some caution. You need to know how buying a foreclosed can be different from buying a non-foreclosed home.

For example, distressed properties are often sold as-is and may have defects that render them “un-lendable”.  Secondly, “quick closings” aren’t usually possible with bank-owned homes — you’re often at the bank’s schedule and mercy.

And, lastly, not all foreclosed homes are searchable online. You’ll usually find more stock if you work with a real estate agent versus searching online.

The RealtyTrac foreclosure report is thorough and can help you gauge what’s happening on a state-by-state level, and in the nation’s largest metropolitan areas.  Once you’ve done your research, talk to your real estate agent about what to do next.

There’s still good deals in the foreclosure market — you just have to know where to find them.