RealtyStore Real Estate Blog

Q3 2008 Nevada Foreclosure Report Released by RealtyStore.com

Santa Barbara, Nov 28, 2008 – RealtyStore (www.realtystore.com), the nation’s leading provider of foreclosure listings, released its quarterly Nevada Foreclosure Report.

RealtyStore.com recorded 20,190 notices of default (NODs) and 14,361 auction notices statewide for Q3 2008. This was a 109% and 187% increase respectively from those recorded in Q3 2007. An NOD is filed by the lending institution, when a homeowner falls behind on mortgage payments. NODs provide important information about which homeowners have home loans they cannot afford. An auction notice, also known as a Notice of Trustee Sale (NTS), is filed by the lending institution when a homeowner fails to cure their default. This is the second stage of foreclosure where the lender formally records its intent to sell the property through a public auction.

“Speculative investments, subprime lending and years of rapid price appreciation have led to a crisis in the Nevada real estate market,” said Tim Chin, CEO of RealtyStore. “Mortgage borrowers in Nevada on average have borrowed 89% of their home value and 48% currently have negative equity. With home prices expected to fall another 10% nationwide by late next year, coupled with adjustable-rate mortgages continuing to reset, the already high foreclosure rate in Nevada will continue to mount.”

Nevada has been hard-hit by loose lending practices and the resulting real estate bubble. According to First American Core Logic, approximately 18 percent, or 7.63 million properties nationwide, have negative equity. As the economy further weakens and housing prices continue to fall, it is predicted that one in four U.S. mortgage borrowers will soon have negative equity in their homes. Couple this scenario with the current recession and the financial market upheaval, real estate owners nationwide are in for a rocky road.

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.

The following article explains that 20% of all U.S. homeowners with mortgages are paying back loans that are worth more than the homes they purchased.

The numbers seem skewed by seven states. Hardly more than 1/3 of all mortgages with negative equity are held by homeowners living in the remaining 86% of the country.

The upside to having so many underwater loans in specific areas? The supply of homes being sold could increase exponentially in those states, driving prices down even further.

A few years ago, most people could only dream about homeownership in the cut-throat markets of Atlanta, southern California, and Orlando (etc.). With the current state of affairs, homeownership in these areas is a real possibility… and nothing satisfies an investor’s sweet tooth quite like profit.

Here are the details:

NEW YORK (Reuters) - Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.

About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic.

The data, covering 43 states and Washington, D.C., includes borrowers nationwide, even those who took out mortgages before housing prices began to soar early this decade.

Seven hard-hit states — Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio — had 64 percent of all “underwater” borrowers, but just 41 percent of U.S. mortgages.

“This is very much a regional problem, and people tend to forget that,” said David Wyss, chief economist at Standard & Poor’s, who expects home prices nationwide to fall another 10 percent before bottoming late next year.

“Most of the country is not in bad shape,” he continued. “Things seem to be stabilizing in Michigan, but the big bubble states — Florida, California, Arizona and Nevada — are still very overpriced.”

About 68 percent of U.S. adults own their own homes, and about two-thirds of them have mortgages.

JPMorgan Chase & Co, one of the biggest mortgage lenders, on Friday offered to modify $70 billion of mortgages to keep a potential 400,000 homeowners out of foreclosure. Bank of America Corp, which bought Countrywide Financial Corp in July, also has a large loan modification program.

Continue…

Source: Stempel, Jonathan. One in five homeowners with mortgages underwater. Copyright 2008 Reuters.com

Foreclosure auctions are hot right now. Recognizing that deals are to be made on foreclosures, more and more first-time home buyers are attending auctions and buying their dream homes in today’s real estate market.

Why, you might ask? The answer is very simple: homes in foreclosure are far more affordable than homes being sold by owner.

Part of this stems from the overabundance of foreclosure properties created from the bad lending practices of the early 2000’s. Currently, a desperate mortgage company is more likely to cut a deal with you than a private homeowner looking to upgrade to a larger home, whereas two years ago, the case would have been exactly the reverse.

Take the following article about foreclosure auctions occurring in Dallas, TX:

DALLAS - More than 500 bargain hunters hit the Dallas Convention Center Saturday to bid on the American Dream that has ended up in foreclosure.

The misfortune of others is now an opportunity for those trying to buy into the housing market.

In this tough housing market, more first-time home buyers are attending these auctions, to see if they can get their dream home for less.

Today, two families gave the auction a shot and walked out of the convention center saving thousands of dollars.

This intense, fast-paced event at the Dallas Convention Center featured more than 200 foreclosures in North Texas, an opportunity that’s now drawing more than just investors.

It was an overwhelming experience for the rookies.

More first-time home buyers are heading to auctions during this housing crisis, trying to find a bargain.

Christy Bond and her soon to be father-in-law came looking to score a deal on a foreclosure in Rockwall valued at $149,000.

“It went around once, the property that we were bidding on and it went higher than what we were willing to pay for it, so we waited and waited,” she said.

The first contract fell apart so they got another shot to bid on the home. They got it and saved nearly $20,000.

“We decided let’s make a gamble and go to the auction and it turned out to be a good decision,” she said.

Banks and lenders are turning to auctions to get rid of their foreclosure inventory - an inventory that’s growing because of the mortgage meltdown.

For one immigrant family, their dream of homeownership has finally come true.
They will soon call a house in Corsicana home.

“We have a big family and most of us don’t fit, most of the time,” said Isabel Cruz.

Source: Diaz, Monika. Foreclosure auction makes house ownership possible for some. Copyright 2008 WFAA.com

Veros, a “proven leader in enterprise risk management and collateral valuation services” for more than five years, released their Market percentage data from December 1, 2007 to December 1, 2008.

If you are interested in metropolitan investing, their latest data shows you some of the best cities to explore, as well as some of the worst.

Based on 180+ markets for Single Family Residences in Metro areas with populations of 500,000+

FIVE STRONGEST MARKETS
#1 - Wichita, KS: +4%
#2 - Raleigh/Cary, NC: +3%
#3 - Sioux Falls, SD: +3%
#4 - Fargo, ND: +3%
#5 - Tulsa, OK: +3%+2.8%

FIVE WEAKEST MARKETS
#1 - Modesto, CA: -15%
#2 - Riverside/San Bernardino, CA: -15%
#3 - Palm Bay/Melbourne/Titusville, FL: - 14%
#4 - Cape Coral/Ft. Myers, FL: -13%
#5 - Sacramento/Roseville, CA: -12%

Source: VerosFORECAST. Copyright 2008 Veros.com

5,000 people knew where the deals could be had last weekend.  So many people showed up to bid on 35 Uniondale homes that room capacity was met and exceeded, prompting security to ask individuals not bidding on the first batch of homes to leave until those they were bidding on were at the podium.

According to the article, more mass auctions like this one are likely to occur in other major cities across the Nation.  Lenders are teaming up to get rid of their foreclosure inventory en masse, which spells
o p p o r t u n i t y for you.

Newsday has the story:

“Auctioneer John Lynch, his voice racing and urgent, furiously ticked off bids on a five-bedroom Colonial in Hempstead, guiding the offers from $250,000 into the low 300s.

“‘How about $317, $317?’ Lynch pleaded, as his assistants stalked the room looking for a raised paddle. A paddle shot up. “$317,000!”

“As the first home sold Sunday at the New York Foreclosure Showcase, the final price of the Warner Avenue house — near the epicenter of Nassau’s mortgage crisis — represented the kind of bargain available these days. Four years ago, the two-story woodframe house had sold for $358,000, financed by a loan that apparently didn’t work out and led to foreclosure two years later.

“In search of such deals, nearly 5,000 people flooded the foreclosure showcase, held at the Marriott Hotel and Conference Center in Uniondale Sunday to sort through the wreckage of the area’s mortgage meltdown.

“It’s a different market today,” said Todd Yovino, the lead organizer of the showcase and the owner of Island Advantage Realty in Huntington, which has dealt in foreclosed properties for 20 years.

“With the economy doing what it is doing, more people are struggling to keep their properties,” Yovino said. “There are opportunities to buy that didn’t exist before.”

“Organized during the past three months, the foreclosure showcase featured seminars on pre-qualifying for loans and the compressed closing schedules of properties owned by banks that want quick sales.

“There were information booths for Realtors specializing in foreclosed properties, attorneys advising of the risks (and, of course, the opportunities), and renovators with estimates for fixing up a fixer-upper.

“And, drawing the most attention, 35 recently foreclosed homes were auctioned to the highest bidders — who had to show up with a $10,000 certified check and be pre-qualified for a mortgage.

“Benjie Acunis, 28, a Legal Aid attorney from Valley Stream, signed up for the auction “to learn about the process,” though she did not bid.

“She was concerned about the risk of buying a home “as-is,” meaning the owner — usually a bank — will make no repairs.

“Even if you get it cheap, with all the repairs, it could still bust your budget,” Acunis said.

As foreclosed homes have become a larger share of the housing market, events like Sunday’s have been arranged across the country, including bus tours of the properties in Boston, Fort Lauderdale, Detroit and Phoenix.

“For Sal Albanese and Karen Garvey, who are engaged to be married, the hunt for their first home got a little bit easier Sunday, as they learned about federal loans, tax credits and “203k mortgages” — financing that includes the cost of renovations.

“‘I learned I really have to take my time and do my homework,’ said Albanese, 52, of Port Jefferson.”

Source: Amon, Michael. 5,000 show up at foreclosure showcase. October 12, 2008. Copyright 2008 NewsDay.com

More and more potential homeowners are choosing renting over ownership in the current market. Given the high number of foreclosures that have been plaguing the Nation and plummets in consumer and business confidence, this makes sense.

Particularly interesting are the implications for American foreclosure (and property) investors globally. If you plan to pay off multiple real estate investments by establishing rental income properties, this is great news - there will be plenty of people looking for rental housing and even preferring it, which means you can be picky about the people you rent to and competition for blow-out deals will be lower!

“Chicago–An increasing number of housing foreclosures seen across the nation have turned more and more homeowners into renters, according to a national survey conducted by Apartments.com.

“The survey, which questioned nearly 2,000 people, revealed that a majority of U.S. renters are families who consciously choose renting over ownership, as it is more affordable and allows for a lifestyle they prefer. Of the surveyed, 11 percent have been renters less than one year, and 41 percent have been renters less than five years.

“Half of all survey respondents said they rent because it is a more affordable living option compared to the expenses associated with home ownership including mortgage interest, taxes and repairs.

“Nearly 30 percent of renters also said they enjoy the many benefits apartment living affords them including flexibility and a maintenance-free lifestyle, convenient access to apartment amenities and a variety of more affordable living options in superior locations and neighborhoods. Taking into account the current climate of the national economy, flexibility is key.

“This summer, more than half of renters surveyed by Apartments.com listed relocating for jobs and moving closer to work as the top two reasons for moving. Unlike renting an apartment, financial advisors recommend owning a home for at least a five year period prior to selling. More than 80 percent of a monthly mortgage payment is interest that goes directly to the bank for the first five years before being able to build any real equity.

“While 35 percent of renters surveyed live alone, more than half live with loved ones and family defined as significant others, single-parent homes and immediate family members limited to spouse and children.

Source: Kher, Anuradha. Online News Editor. Survey Finds More Homeowners Turning to Renting. October 09, 2008. Copyright 2008 Multi-Housing News

The rate of foreclosures spiraled out of control when the real estate market collapsed, opening the door of opportunity for foreclosure scams and defrauders claiming they could help distressed homeowners save their homes and their credit scores.

Thankfully, some of these defrauders have been seized by the police and brought to justice. Maurice MdDowall was one such individual, committing foreclosure fraud in New York; he was sentenced last weekend.

The North Country Gazette brings you the story:

“NEW YORK—A New York man has been sentenced to 10 years in prison for his participation in a wide-ranging home foreclosure rescue scheme, which defrauded homeowners who were facing foreclosure and banks and other lenders who made mortgage and home equity loans.

“According to the indictment to which Maurice MdDowall, 50, pleaded guilty in June, from November 2003 through April 2005, he engaged in a fraud scheme targeting homeowners whose homes, primarily in Brooklyn and Bronx, were in foreclosure or facing foreclosure, by offering them a plan to “save” their homes.

“The plan included the refinancing of the homeowners’ debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to “sell” their homes to third parties, or “straw buyers,” who would apply for loans to be used to “save” the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to payoff the homeowners’ old debt and make one year’s worth of payments on the new loans.

“The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit.

“Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to “save” their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners’ signatures on various documents that transferred the homes to straw buyers without the homeowners’ knowledge.

“In furtherance of the scheme, McDowall submitted loan applications to various banks and lending institutions on thestraw buyer’s behalf. In submitting these applications, the defendants regularly used documents containing false or misleading information, including information concerning the straw buyer’s income, assets, and existing debt, to improve the straw buyer’s credit-worthiness. In addition to false statements concerning the straw buyers’ financial profile, the defendants misrepresented to lenders that the straw buyers intended toreside in the property that would secure each mortgage or loan, when, in fact, the properties were already occupied by the distressed homeowners.

“McDowall, who directed the daily operations of the scheme, obtained more than 80 home mortgages and/or equity loans valued at over $20 million. In some instances, the defendants failed to make even one payment on the loans, causing the loans to default immediately; in nearly every other case, they eventually failed to make the payments and defaulted on the loans, thereby “cashing out” on the properties. As a result, the distressed homeowners lost the titles to their homes and faced eviction, the straw buyers owed the lenders hundreds of thousands of dollars that they were unable to repay, and the lenders suffered losses from the defaulted loans.

“The defendants’ profit consisted of the difference between the value of the new and old loans; they also earned at least $1.4 million in fees.

“McDowall was sentenced to 120 months in prison and three years of supervised release, with 100 hours of community service to be performed in the first year after release.

“In addition, McDowall was ordered to forfeit $2.5million and indicated that restitution would be determined at alater date.

“Of the five other defendants charged in United States

“v. Maurice McDowall, et al.: Aleksander Lipkin, Marina Dubin, and Kerri Clarke have pleaded guilty and await sentencing; and Andrea Moore and Michael Irving await trial, which is scheduled for Oct. 20. 10-5-08″

Source: Leader Of Foreclosure Rescue Scheme Sentenced. Copyright © 2008, North Country Gazette.

Default notices in Illinois up 26% from July 2008 and 37% from August 2007

Santa Barbara, September 15, 2008 – RealtyStore (www.realtystore.com), the nation’s leading provider of foreclosure listings, released its monthly Illinois Foreclosure Report.

RealtyStore.com recorded 7,075 notices of default (NODs) statewide for August 2008. This was a 26% increase from those recorded in July 2008 and 37% rise from August 2007. An NOD is filed by the lending institution, when a homeowner falls behind on mortgage payments. NODs provide important information about which homeowners have home loans they cannot afford. Over the past year, Illinois has had the 12th highest foreclosure rate in the nation. For August 2008, 1 out of every 735 households in Illinois received a default notice, which is more than 3 times the national average.

“Mounting inventory in the Chicago real estate market has lenders slashing prices by as much as 60% on foreclosed properties,” said Tim Chin, CEO of RealtyStore. “Such attractive pricing has investors clamoring for bargains.”

Approximately, 70% of foreclosures in Illinois are occurring in Cook County. Cook County, home to the Chicago Bears and the second most populous county in the nation after Los Angeles, had 4,881 defaults in August 2008. This was a 31% increase from the previous month of 3,720 defaults and 42% rise from August of last year. Although foreclosure activity in Chicago may seem moderate when compared to counties in California such as Los Angeles which has twice the number of defaults at 9,985 for August 2008, it is still considered high by historic standards. As such, lenders are eagerly offloading property to Chicago bargain hunters.

Illinois has long been viewed as a microcosm of the United States due to its demographics. Peoria, Illinois, in particular, has the legendary test market status of the average American city. Major TV networks would visit Peoria during Presidential campaigns to ‘take the pulse’ of everyday Americans on candidates and national issues. If the saying “Will it play in Peoria?”, meaning will something appeal to mainstream America, still holds water, perhaps the foreclosure crisis will be tempered by eager investors hunting for deals.

Written by: Eng, Jaymie. Market Analyst for RealtyStore.com
Copyright © 2008, RealtyStore.com

In an interview with “Merrill Ottwein, a broker and past president of the National Association of Exclusive Buyer Agents,” the Chicago Tribune learned of five useful tips for buyers considering the purchase of a home that has been vacant.

As foreclosures rise, banks inventories rise and a larger quantity of properties available are vacant than ever before. A vacant home can spell trouble, however.

Depending on the neighborhood, the previous tenants and their reason for leaving, weather, the length of time the home has been vacant, and a number of other factors that should be considered.

In particular, the article emphasizes the importance of having a professional inspect the home. The best time to have an inspection conducted on a property seems to be between the time you make a serious commitment to buying it and submitting an offer.

“Here are pointers for buyers considering a home that’s vacant:

“Seek out information on a home’s former occupants. It’s tough to gain details on a house that’s been vacant for months. It’s still harder if the empty property has fallen into the ownership of a bank through foreclosure.

“‘The folks at the bank—or the real estate agent they’ve hired—probably won’t know much about the people who lived there,’ Ottwein says, adding that your best sources are often neighbors.

“Consider a “pre-inspection” of a vacant place. Perhaps the property you like has gone unsold for so long that you’re nervous about hidden defects. In fact, you don’t even want to make an offer until you know more. In such cases, Ottwein advises you to consider hiring a home inspector to take a preliminary look.

“One of his clients, an Air Force colonel who wanted to learn more about a handsome rambler that had gone vacant nine months before he spotted it.

“On his agent’s advice, the colonel spent $200 for a brief home inspection. This revealed that the house had a serious crack in its foundation. Consequently, he walked away from the property and bought a two-story place in the same neighborhood that proved a better choice, even though it was marked $30,000 higher.

“‘If you decide to go through with the purchase, a pre-inspection will let you set your bid based on findings from the inspection. If you decide to back out of the deal, you can walk away without complications,’ Ottwein says.

“Make sure the utilities are on when the inspection is done. As Helfant points out, cost-conscious banks that own foreclosed property often shut off utility service to the vacant homes they own—including gas, electric and water.

“‘It’s useless to do an inspection when the utilities are off. You can’t tell if the cooling, heating and plumbing are functioning correctly,’ she says.

“And even if you have to pay to get utility service restored, she says it’s worth the expense.

“Double-check your bid before making a final offer on a vacant home. “Before you shape your offer, you and your agent should take a careful look at the recent sales history in your neighborhood. These days you have to be extra vigilant to avoid overpaying,” Ottwein says.

“Ideally, you’ll want to examine at least three similar properties that have sold in the immediate area in the past three to six months—adjusting for differences, such as a larger garage or a second fireplace.

“Although you’ll want to take a home’s condition into account when judging its market value, Ottwein cautions against seeking out-of-proportion discounts to compensate for superficial shortcomings.

“Be on the lookout for sizeable savings. In the past, many banks insisted on unrealistically high prices for their properties. Yet recently, as inventories have swelled, Helfant says more are slashing prices.

“She urges homebuyers and their agents to stay alert to the possibility that bank-owned homes could appear on the Multiple Listing Service at rock bottom prices.”

Source: Tips for buying a vacant home, Universal Press Syndicate. Copyright © 2008, Chicago Tribune.

The U.S. Government is actively moving to help individuals currently facing foreclosure. This is great news for the distressed homeowner and individuals who support the Government’s efforts, but it may be bad news for those who seek to purchase distressed real estate, particularly in the pre-foreclosure phase. The effect on the economy also remains to be seen.

The recent bill signed into law by President Bush will help an estimated .5 million home owners roll their loans into more affordable ones. Large banking institutions such as Bank of America and Wells Fargo are following the Government’s lead, putting holds on existing foreclosures for customers who may qualify for loan revisions under the new law.

The FDIC, who took over IndyMac Bank last summer, has been actively sending out offers to homeowners offering new loan terms and better APRs. The FDIC is also involved in an effort to help the troubled WAMU (Washington Mutual) receive a purchase offer from other large lenders. If history repeats itself, the take-over of Freddie Mac and Fannie Mae could mean an opportunity for other home owners in foreclosure to obtain new mortgages and rates.

An Associated Press writer provides the details behind the FDIC’s current focus:

“WASHINGTON - The government’s takeover of mortgage finance companies Fannie Mae and Freddie Mac should provide an opportunity to modify more home loans for troubled borrowers, a top government official said Wednesday.

“The takeover, announced earlier this month, will allow regulators to “take a look at the loans and see what can be modified,” said Sheila Bair, chairman of the Federal Deposit Insurance Corp., in testimony before a House committee.

“With 1.5 million foreclosures last year and 1.2 million already in the first six months of this year, the foreclosure crisis is accelerating, she said.

“‘There are still a lot of mortgages out there that need to be restructured and families that can still be helped,’ Bair told the House Financial Services Committee.

“Under her stewardship, the FDIC has rolled out a plan to help refinance delinquent homeowners into 30-year mortgages with interest rates currently capped at 5.9 percent. The FDIC introduced the program about a month ago after it seized IndyMac Bank.”

Read More…

Source: Fannie, Freddie takeover may help homeowners, Associated Press. Copyright 2008 MSNBC.com.