RealtyStore Foreclosure Blog

That age-old question is coming up again: rent versus buy? The foreclosure market has been growing considerably in recent years, as the rate of default and supply has increased, causing housing prices to fall. If you have good credit and a reasonable down payment saved up, you might be asking yourself if you should buy. The American Bankers Association offers a few tips to help.

Money and Business
June 18, 2008

The American Bankers Association suggests that consumers ask themselves the following five questions when deciding whether to buy or rent property:

1. What will monthly costs be, and can I afford the payments? Keeping mortgage payments under 30 percent of your gross monthly income is a good rule of thumb. If you can’t keep mortgage payments to less than that percentage, you may be better off renting for awhile.

2. What other debt do I have? Total rent or mortgage payments plus credit obligations should not exceed 35 to 40 percent of gross monthly income.

Read the full article, “To Buy or Rent? 5 Questions to Ask Yourself,” on the USN website.
Copyright 2008, U.S. News and World Report

Consumers are apparently optimistic about the future of the national real estate economy, according to a new survey conducted by Housing Predictor. Nearly 1 out of 2 polled say they believe the national real estate economy will improve within the next two years.

The online survey serves to show that despite the turmoil in the nation’s real estate markets, triggered by the credit crisis most believe conditions will improve in a short time span. Only 28% of all respondents said they believe it will take five years or longer for credit market conditions to improve the housing market.

An unprecedented epidemic of foreclosures has led to lower home prices in the over-whelming majority of the country. As many as 1 out of 3 homes in some especially hard hit areas listed for sale are foreclosures, damaging communities and housing values.

A majority of economists recently surveyed say the nation is either in a recession or at least close to experiencing one. Rising gasoline prices have triggered the highest food inflation the country has experienced since 1992, which was during the last major real estate recession.

Congress is dealing with a series of proposals to assist some homeowners threatened with foreclosure. But more than 3-million homeowners are now behind on their mortgage payments and are threatened with foreclosure. A Housing Predictor survey in March found that the over-whelming majority of respondents believe Congress will fail in its attempts to solve the national real estate crisis. Foreclosures are forecast to increase to total more than 5.6-million units through 2011.

Some 25% polled said they believe things would improve in a year or less. Housing Predictor regularly surveys consumers on real estate related issues, and provides more than 250 local housing market forecasts in all 50 U.S. states. The data on which forecasts are issued are independently gathered by researchers from thousands of sources throughout the nation. Markets are constantly monitored by researchers to keep visitors up to date on changing market conditions.

Find out more about the latest Housing Predictor poll, check market forecasts and search real estate listings at http://www.housingpredictor.com

A new foreclosure Bill is expected to pass this week, granting home owners more rights and making it harder for banks to reclaim their assets when owners default on their mortgages. This is great news for homeowners in distress, but not necessarily for savvy buyers and investors looking for golden opportunities in a troubled housing market.

But the bigger issue is whether legislation is really the right move.

Given that most Americans have more debt than they can ever expect to repay, why wouldn’t the Government step in there too? Most importantly, how might this legislation affect our economy?

Keep these important questions in mind as you learn more about the foreclosure Bill discussed in the following New York Times article, including the points that have been highlighted below.

By MANNY FERNANDEZ
Published: June 22, 2008

“The bill that Gov. David A. Paterson and leaders of the State Legislature announced last week to address the subprime lending and foreclosure crisis was, for Albany, that rarest of things — an effective compromise.

“The legislation will change how subprime loans are made and regulated, and will alter the way many foreclosures are handled by the courts, establishing protections for homeowners that had not been in place.

“For housing advocates and some Assembly Democrats, the bill could have been stronger. Their push for a statewide one-year moratorium on foreclosures ultimately failed. For the state’s banking and mortgage broker industries, it could have been weaker. They argued that New York has seen fewer foreclosure filings than other states largely because of regulations already in place.

“But the end product — a bill expected to pass on Monday, the last day of the legislative session — appears to have struck a balance that satisfies nearly all sides, though housing advocates question the extent to which it will help thousands of homeowners most in need: Those going through foreclosures right now.”

Read the Full Article:
In Confronting the Foreclosure Crisis, a Bill Strikes a Balance
Copyright 2008 New York Times

Santa Barbara, CA June 23, 2008 — RealtyStore (www.realtystore.com) recorded nearly 16,500 Notices of Default (NOD’s) in northern Illinois counties for Q1 in 2008. An NOD is filed by the lending institution, when a homeowner falls behind on mortgage payments. NOD’s provide important information about which home owners have home loans they cannot afford.

A sample of 10 northern counties (Champaign, Cook, DeKalb, DuPage, Kane, Kendall, Lake, McHenry, Rock Island, and Winnebago) shows a 45% increase in NOD’s since January 1, 2007. DuPage County, spanning approximately 352,000 homes and housing nearly 0.31% of the U.S. population, saw a 77% increase in NOD’s. Lake County also saw a drastic foreclosure hike of 78%. Between the two counties, Lake County was impacted most drastically, as more than half of its NOD’s occurred during the last six months (October 2007 through March 2008). Cook County, the second most populous county in the United States (over 5.2 million people), fared far better, with a 37% increase from Q1 2007 and an 11% increase in six months.

Two northern counties experienced a decrease in NOD’s during the past six months, though the decrease was minor. Champaign County saw a 4% drop in foreclosure filings. The other, small County of DeKalb has few NOD’s compared to other northern counties, so a 5% decrease in foreclosure in that area can be a difference of one home owner clearing the default. At a glance from Q1 2007 to Q1 2008, both counties continue to experience a rise in pre-foreclosure property.

Overall, northern Illinois has seen its NOD rate almost double in the last 15 months. “As the U.S. economy continues to deteriorate, the latest wave of ARM’s (adjustable rate mortgages) combined with rising unemployment, inflated oil prices, and the falling value of the U.S. Dollar, it is plausible that the foreclosure problem will continue to get worse,” stated Tim Chin, RealtyStore CEO. “If you are thinking about buying foreclosure property, I always recommend working with an experienced real estate professional for advice on whether to buy now or wait on the sidelines a little longer.”

About RealtyStore.com: Founded in 2005, RealtyStore.com is the fastest growing, most trusted provider of foreclosure listings and information in the nation with over 1 million pre-foreclosure, foreclosure auction, bank-owned, and tax sale property listings. Collected from hundreds of public and private sources, RealtyStore’s proprietary database includes extensive property characteristics (including pictures and maps), default and tax information, comparable home values, and neighborhood demographics information. For more information, visit http://www.realtystore.com

An alliance of mortgagors known as “Hope Now” presents new lender guidelines aimed at helping consumers with their foreclosure problems by making it easier for borrowers to communicate with their lenders, urging negotiation between banks and borrowers, encouraging short sales, strengthening documenting methods, and even going as far as to suggest that banks simply “forgive” secondary lines of credit.

“Hope Now members agree to more streamlined, uniform approach to foreclosure prevention. But community advocates say it isn’t enough.”

By Les Christie
June 17, 2008

“NEW YORK (CNNMoney.com) — Life may get a little bit easier for troubled borrowers.

“Hope Now, the alliance of lenders, mortgage servicers, investors and community advocacy groups put together to fight the foreclosure epidemic, announced new guidelines Tuesday that should help speed up the process of helping borrowers who are trying to hang onto their homes.

“‘It may not be a panacea, but it will help a lot of people and lay a strong foundation for recovery,’ said Jonathan Kempner, president and CEO of the Mortgage Bankers Association.”

Read More of this article, “Housing Rescue Group Steps up Efforts,” at CNNMoney.com.
Copyright 2008 CNN

Home owners and real estate professionals are not the only ones hurting while the real estate market plummets to new lows and foreclosure rates skyrocket. Renters are also feeling the brunt of the problem. Many of them, such as Las Vegas’ Marketa Johnson, are being evicted as property changes hands, whether they have a history of good tenancy or not.

One of the best ways for a seller to make money investing in real estate is to rent out the acquired property for an amount that equals or surpasses the monthly mortgage, property taxes, and other related expenses. Unfortunately for renters, inflating ARM’s (adjustable rate mortgages) are making it hard for investors who took the property management route to make monthly payments without raising rents, ultimately sending them into foreclosure.

By Patrick Rucke:
Edited by John O’Callaghan
June 15, 2008

“LAS VEGAS (Reuters) - The day before her husband was deployed to the Middle East by the U.S. Air Force, Marketa Johnson got word that her family would be evicted from their rented home.

“It did not matter that the Johnsons had never missed a rent payment and had signed a two-year lease. The property owner was facing foreclosure and so Johnson simply packed her bags.

“Almost one in five recent foreclosures have been against mortgage borrowers who did not live in the home, according to a snapshot from the Mortgage Bankers Association.”

Full story, “Renters, Soldiers Feeling Foreclosure Pain.”
Copyright 2008, Reuters

Weakened by the worst credit crisis in the nation’s history, the Top 25 Housing Predictor real estate markets in 2008 are showing signs of erosion. The once top rated market is beginning to run out of gas and has fallen from its #1 position and many of the other markets have changed.

Housing Predictor annually issues its Top 25 markets forecast the beginning of the year, and updates the forecast at midyear. But the update is being made earlier than usual this year as a result of a national housing market climate that has seen sales slow even more than forecasters expected. The ripple effect of tighter mortgage standards and increasing inventories of homes and condos on the market for sale are to blame.

Record high levels of foreclosures also account for drastic changes in many housing markets. Many markets have already deflated more than 50% in value from the boom’s peak. The Top 25 markets have the highest likelihood of hitting their forecast appreciation by year’s end, despite a growing belief that the economy is in recession and the majority of housing markets throughout the country are suffering from real estate depressions.

Housing Predictor forecasts more than 250 local housing market futures in all 50 U.S. states and provides independent unbiased analysis on market conditions. The top markets are scattered all over the U.S. Only four states have placed three markets on the list. Utah, Mississippi, Texas, New York, Oklahoma, Idaho and North Dakota placed markets on the leading list among other states.

Conservative North Dakota with one of the strongest statewide economies nationally, and the least subprime mortgage activity in the country, placed three cities on the list. However, neighboring South Dakota, damaged more substantially by the subprime mess failed to place any markets in the top.

Housing Predictor also provides breaking real estate news. Find your market forecast, search new listings and foreclosures at http://www.housingpredictor.com

You might never have considered who owns the skyscrapers in New York City, but a report by the AFP issued this morning would indicate that many of them are owned by big businesses. Just like the rest of the Nation, entrepreneurial companies invested in real estate during the real estate boom. Not surprisingly, some of those investors are finding themselves having trouble hanging on to the city giants. The end result is that Big Apple skyscrapers are being resold to local and foreign investors to alleviate ever-increasing debts as the real estate market plummets and the American economy continues to struggle.

“NEW YORK (AFP) — The iconic Chrysler and Flatiron skycrapers may soon join New York’s GM Building as landmarks sold in part to Arab or European investors as the weak dollar spurs property grabs in the Big Apple, reports said Friday.

“The 50-story General Motors Building, constructed in 1968 and which includes the Apple Store on Fifth Avenue, has already been sold — for a record-breaking 2.8 billion dollars — to US real estate firm Boston Properties, backed by investors from Dubai, Kuwait and Qatar.

“The deal, concluded on Tuesday, makes the GM Building the most expensive skyscraper in the United States, according to several reports.

“The seller, Macklowe Properties, had been mired in debt after acquiring seven major New York properties last year for seven billion dollars near the height of the real estate boom, before the subsequent real estate and credit crises.”

“It goes to show just how deeply American real estate is being impacted by falling property prices,” said Tim Chin, RealtyStore CEO.

Full Story, “Treasured New York Skyscrapers may be Sold to Foreign Funds”
Copyright 2008 AFP

The current economic downturn is causing many individuals who were once secure in their investments to take a second look at where, when, and how they invest their money, sending stock market prices down hill and adding fuel to the fire. In a recent video interview released by CBS News, SmartMoney.com Editor Stephanie AuWerter suggests a few tips to help steer those citizens in a direction oriented towards success.

June 9, 2008

“As oil prices continue to rise and people continue to foreclose on their homes, many are wondering just how bad the economy can get. However, ‘For long term investors, it really is worth noting that this too shall pass,’ says AuWerter. Try to keep market changes in perspective. While the market may be down right now, in the long run, the stock market goes up.

“To minimize your losses, use dollar cost averaging. While many people rush to sell when the market is falling, AuWerter suggests that this isn’t the best idea. ‘You’re really locking in your losses,’ she says. Your best bet is to make regular investments over time, which forces you to buy more shares when the market is down and less when it’s rising. The best way to do this? Invest in your company’s 401k.”

View the Video and Full Story Here

Copyright 2008 MMVIII, CBS Interactive Inc. All Rights Reserved.

RealtyStore’s vision has always centered around educating the public about foreclosures and teaching consumers how to save money by purchasing foreclosure property. In the wake of the “foreclosure crisis,” as it is now widely becoming known, becoming knowledgeable on the subject is becoming ever more popular. Ralph Roberts, author of certain real estate related texts in the “… for Dummies” series is scheduled to release his latest text, “Foreclosure Myths: 77 Secrets to Saving You Thousands on Distressed Properties,” this fall. Publishers say it will not be the last.

June 9, 2008
Joanne Kaufman reports:

“Last week, when Mr. McMahon told his tale of woe on “Larry King Live,” it may have been a boon to publishers that aim at the foreclosure market. Among them is Wiley, which puts out the “for Dummies” series and introduced “Home Staging for Dummies” in April.

“‘We brought that book to market in eight months, and our usual time period is a year,’ said Diane Steele, a vice president at Wiley. Also on the fast track is a new edition of “Property Management for Dummies,” which will come out in August.

“But the pendulum has not swung entirely in one direction, since Wiley and other publishers also seek to serve people who have been sitting on the real estate sidelines.

“‘There will be new landlords,’ Ms. Steele said, ‘because when people get over the fear curve and recognize that properties are affordable, we think that more and more of them will be going into real estate investing.’”

Understanding the home owner in default’s mind set and potential denial is key to helping them through a difficult time and to getting yourself a reasonably good deal.

“In 1979, Mr. Roberts said, he could not keep up with the payments on his three-bedroom ranch in Troy, Mich., a Detroit suburb, and lost his home.

“‘I did all the wrong stuff,’ he said. ‘I didn’t tell my family. I didn’t go to a rich uncle. I didn’t get help. I just let the process happen.’”

For more information about buying a property in pre-foreclosure, please take a look at our online Foreclosure Tutorial.

Full Story, “A Shift in Real Estate Books”.
Copyright 2008 New York Times