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

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