Foreclosures are falling across the country, but they still make up a big chunk of some markets’ housing stock. Find out which ones.
A federal judge granted final approval to a landmark settlement over foreclosure processing errors, clearing the way for the nation’s five largest lenders to start aiding home owners.
Foreclosures in our area are continuing to rise, and short sales now out number foreclosures by two to one.
- – 50 plus percent from the employees at present danger falling behind on the mortgages once they miss just one paycheck.
- – Over 40 % of households can’t conserve a three month emergency fund, and simply about 50 % get access to lots far more than $5000 in liquid assets in the course of an urgent scenario.
- – The most standard reason behind foreclosure is job loss, health crisis and debt.
- – Statistics indicate that every four out of 5 persons knowledge no less than 6 months or even more of unemployment throughout their lives due to some form of illness or disability.
- – A minimum of a single child from every single classroom in the US reaches opportunity of becoming homeless, simply simply because their parents may well be facing foreclosure sooner or later of one’s time.
- – Most of lenders lose money on foreclosures, with regular losses ranging amongst 20 cents to six cents on every dollar. A lender or maybe a mortgage holder prefer to gladly use the present homeowner whenever we are able to.
The escalating quantity of foreclosures and short sales in our great nation is an unavoidable reason to become concerned. However, purchasing, rehabbing, renting or re-selling foreclosures or short sales is a viable means of stimulating and boosting our local economy. Request your FREE foreclosure list today!
A short sale in real estate is not always a pleasant transaction.
There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a “short sale.”
More than half of my sales in Sacramento over the past few years are short sales. That’s how prominent short sales have become.
When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.
If you are considering buying a short sale, there could be drawbacks. For your protection, I suggest that all borrowers:
- Obtain legal advice from a competent real estate lawyer
- Call an accountant to discuss short sale tax ramifications
An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. You see, most foreclosure auctions do not even result in bids. After all, if there was enough equity in the property to satisfy the loan, the owner would have probably sold the property and paid off the bank. That is why the property ends up at a foreclosure or trustee sale.
Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney’s fees and any costs association with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier’s check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in “as is” condition, which may include someone still living in the property. There may also be other liens against the property.
Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property “reverts” to the bank. It becomes an REO, or “real estate owned” property.
At best, an increase in foreclosures takes a double-edged sword to the housing market. On the one hand, it means we may be inching toward stabilization, as shadow inventory begins to move through the pipeline. On the other, it spells more stress for beleaguered homeowners and puts downward pressure on home prices.
Housing economists predict that the next wave of foreclosures is about to hit, following the recent settlement between government and lenders in the “robo-signing” scandal. No doubt it will still cause pain to hard-pressed borrowers. But in a break from the past, it may avoid depressing home prices.
“There are countervailing strengths,” said Mark Fleming, chief economist at CoreLogic, an analytics firm. “We could very well see increasing prices in some markets this year, even though they have significant shadow inventories.” The “shadow inventory” is the overhang of homes expected to move through foreclosure that are not yet listed on the market.
A report from CoreLogic released today said that completed foreclosures edged down from 71,000 in January to 65,000 in February, and that the number of homes in a state of foreclosure has shrunk by 115,000 homes from February 2011 to 1.4 million homes in February 2012.
Despite the slight month-over-month drop, foreclosure activity has remained relatively steady recently, but economists predict that it will rise in the coming months because of the resolution of an investigation into illegal foreclosures between the government and major mortgage servicers.
Fleming told AOL Real Estate that the housing market may feel the impact of the robo-signing settlement during the summer, after the five banks involved in the settlement implement government-approved foreclosure practices.
“All of this will result in more foreclosure pain in the short term as some of the foreclosures that should have happened last year instead happen this year,” Daren Blomquist, vice president of online foreclosure marketplace RealtyTrac, said in February. The economist predicts that completed foreclosures will jump by 25 percent in 2012, totaling 1 million.
But since the market must eventually absorb the excess supply of foreclosed homes, breaking the foreclosure logjam isn’t necessarily a bad thing. “I would like to see the pace increase, because that means we’ll be able to work off the inventory faster,” Fleming said. And the downward pressure on prices that’s caused by an increase in foreclosures may be mitigated by improvements observed lately in other sectors of the market, as well as the economy as a whole, he says.
Home sales have risen by 13 percent in the previous six months, according to Capital Economics, while the delinquency rate saw a year-over-year 14 percent drop as of February, according to Lender Processing Services. Homebuilder optimism is measured at a five-year high, and real estate agents’ optimism reportedly more than doubled in the first quarter of 2012, against the backdrop of positive market indicators.
If the positive trends continue, Fleming said, the market could begin to stabilize as early as this year.
A recent report provided one of the most hopeful signs of recovery for the housing market yet. John Burns Real Estate Consulting found that home prices actually have risen marginally since January. The company says that its gauge of the market, the Burns Home Value Index, eliminates a three-month lag time that distorts other indices by recording contract signings of home purchases, not closings.
Its finding conflicts with most other indices, though, such as the Standard & Poor’s/Case-Shiller home-price index, which showed a drop in home prices in January.