Archive
Foreclosures Are “Pigs With Lipstick”
This is a very interesting post about the shadow inventory that is out there, meaning the foreclosures that have yet to have been foreclosed upon and listed on the market.
Ivy Zelman, a Credit Suisse Analyst, who apparently called the housing crisis before the boom peaked notes “The average number of days from when a borrower stops paying on his/her mortgage to when the bank sends out the first foreclosure notice is 417 and the final foreclosure can take up to a year more.”
I knew the time period was long but didn’t know the average was 417 days. Think about it, that’s the average meaning there are some much longer and I am sure that is a trend that may continue which would increase the average number of days.
Fannie’s Guidelines On Preforeclosure Events
Fannie Mae has adjusted their underwriting criteria for borrowers who have experienced a “preforeclosure event.” This is for preforeclosure sales, short sales, or deeds-in-lieu of foreclosure. Starting in July, Fannie Mae has changed the waiting period after the event and based it on the loan to value for the transaction and any extenuating circumstances. In addition, Fannie is updating the requirements for determining that borrowers have re-established their credit after a significant credit event. To summarize it, the more money you put down the less time you have to wait.
Buying Foreclosed Homes Online
Hopefully you caught my post on the foreclosure auctions online in South Florida but if not be sure to check it out under the category of “Foreclosures.”
Well, here are more ways to buy foreclosed homes online. “For daring investors who are itching to get in on the foreclosure action, a Web site due to be launched this week offers what it says is an easy way to buy homes from banks–with the click of a mouse. Rebuildus.com , operated by RebuildUS LLC of Woodland Hills, Calif., is designed to sell some of the low-end homes bought in bulk from banks by a legendary foreclosure investor, James Odell Barnes of Leesville, S.C.”
There are fees associated with doing this and the minimum purchase is 5 homes. The homes are bought “as is.”
http://blogs.wsj.com/developments/2010/03/02/buying-foreclosed-homes-with-a-mouse-click/
Paying Your Credit Cards Before Your Mortgage
It’s scary but true and it makes sense. The bailouts are in the housing industry and just like the article states if you have a cash shortfall you want to be able to have access to your credit cards for your everyday essentials. It used to be that a homeowner would do whatever they could to pay their mortgage and save their home, not anymore.
The data reflects a “fundamental paradigm shift” in the way consumers prioritize payment of debt obligations, says Ezra Becker, of TransUnion. “This is dramatically different,” he says. “It is a clear manifestation of the dynamics that lead up to the recession and the recession itself.”
http://finance.yahoo.com/news/Forget-the-Mortgage-Im-Paying-usnews-816222158.html?x=0&.v=2
Banks Are Going After Deficiency Judgments
Even in short sale situations. I am copying and pasting what I feel is important because I am not an attorney.
“Once they have a judgment, they can pursue you anywhere,” said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. “They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.”
“What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.”
I think you are going to see people buying these judgments for pennies on the dollar and going after everyone just to try to get something. I believe this is already starting to happen.
Florida Foreclosure Disputes Require Mediation
This sounds like a great idea to me especially since a lot of banks lose paperwork and just can’t get their act together when it comes to loan modifications and short sales. Time ends up running out on a lot of people who are trying to get help and the property ends up in foreclosure.
I don’t know why everything that really makes sense to improve our current housing crisis takes so long to implement when so many of us have been talking about this for the past year. The worst in my opinion is for those who bought a property in 2008 and got the $7,500 that has to be repaid. How is that fair? I guess it’s not, and I guess we have to realize that life just sometimes is unfair.
“It guarantees homeowners will have an audience with their lender to discuss whether a loan modification or short sale is an option instead of foreclosure. It also means lenders will be doing more work on the front end of the foreclosure process, and paying for it. Judges say they often hear homeowners complain that they couldn’t reach their lender or that their paperwork was repeatedly lost.”
http://www.sun-sentinel.com/business/fl-mediation-stp-20091229,0,6841063.story
Should You Buy A Distressed Home?
You certainly can but you need to be very careful. Always consult a real estate agent who is an expert with foreclosures and short sales. One of the most important thing to have done is a thorough inspection. There can be a lot of hidden costs involved when it comes to repairs and damage and you need to make sure the inspector checks EVERYTHING.
The other very important thing is whether there are any title issues. Many will use the title company that the bank recommends because they will pay for your title insurance. I am a big believer in “you get what you pay for.” The title companies that these banks use are sweat shops. They have so many transactions going on that they cannot keep up. I highly recommend using an attorney to do the whole transaction. At the very least if you are going to use the banks title company, higher an attorney to represent you because the title company the banks suggest certainly isn’t looking out for your best interest.
In South Florida and especially Fort Lauderdale, you will see 2 title companies on a lot of deals. I will not name names but be careful.
The property can also be vandalized in the process of the loan or while you are waiting for the bank to approve the short sale. I have seen air conditioning units stolen and many other items. There is only so much you can do about this. It’s almost out of your control.
http://online.wsj.com/article/SB10001424052970203803904574430860271702396.html?mod=rss_PJ_Main
Tips On Buying A Foreclosure
I am not a real estate agent nor do I pretend to be one so make sure to always consult one and make sure they are an expert when it comes to foreclosures.
The article below has some neat websites you can check out to search for foreclosures but my personal opinion is to have a real estate agent do it for you. As a buyer it doesn’t cost you any money other than maybe a $300 realtor processing fee.
The most important thing to do is to get an inspection by an expert. I would personally use a contractor I know to find out the real costs involved in the home.
“Sometimes, people set their sights on bank-owned properties “like the word ‘foreclosure’ equals ‘good deal,’ ” says Mark Goldman, a mortgage broker with Cobalt Financial and a real-estate lecturer at San Diego State University. But that’s not always true.”
http://online.wsj.com/article/SB125399707660143695.html?mod=rss_PJ_Main
More Help On The Way For Homeowners
So they say. The big problem here is that the government does their part but the banks don’t do theirs. I understand it to some extent because many end up back in default but at the same time they aren’t modifying the loans enough.
What happened to the Hope for Homeowners product? I think this was their best approach. Give the borrower a new loan based on 90% of the current appraised value and then there is a shared appreciation agreement.
I can’t figure out from the article what exactly they plan on doing but they know there are still problems with foreclosures and they need to stabilize the housing market which could include extending the $8,000 tax credit and keeping rates low.
What Are Banks Doing With Foreclosures?
I know I have mentioned many times that they are holding off on listing them so they don’t flood the market with supply. Fannie Mae and Freddie Mac were said to have not listed 50% of their foreclosures just for that reason.
The article below state’s that is not true and gives some good reasons as to why they aren’t listed yet. I agree with the article but I also agree with what I have mentioned before. It is a combination but I am glad the article brought these to my attention along with just trying to keep up with the volume.
“Then I spoke with Ted Jadlos of LPS Applied Analytics. He says there is no clear evidence of purposeful accumulation by the banks of these foreclosed properties. They are, he believes, working through the huge onslaught of new defaults as fast as possible, but it takes time. He says they are selling REOs at a fast clip as well, within about three months of taking them as REO.”
MillerOnMortgages
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Miller on Mortgages 