MostlyForeclosures Articles: Online Foreclosure Homes Database

A new program by the US government is underway to tackle the two main root causes of the current financial crisis, which are basically a historical level of delinquencies in mortgage payments and millions of impending foreclosure homes. Officials are saying that this new mortgage program can achieve better results than the current Hope for Homeowners program that Congress had initiated last October 1, 2008 through the Federal Housing Administration.

According to government spokespersons, several proposals have been given to the administration for review but no definite decisions have been made. However, this new program may well be on its way to implementation as it has the potential to help 3 million homeowners facing foreclosures.

In this new program, participating lenders would need to restructure the delinquent borrower’s mortgage scheme down to affordable levels. As an assurance to lenders participating in this new program, the government will act as a guarantor to certain percentages of the loans of these borrowers facing foreclosures. In this case, the government will have to pay the lender these loan percentages should borrowers once again falls short in their mortgage payments.

The current Hope for Homeowners program requires lenders to issue a strict writedown on mortgages, which the FHA has set to 90% of the appraised value for these foreclosed homes. Aside from the automatic 10% loss that lenders will acquire in this program, losses incurred by lenders may be compounded with the current devaluation of housing prices. These declines in prices have resulted to a staggering increase of underwater homeowners, or those who owes a bigger mortgage balance that what the house is currently worth.

Lenders may be more attracted to this new mortgage plan since no writedowns are required. With these less imposing requirements, lenders can restructure these mortgages for foreclosure homes by offering a reduced interest rate for a pre-determined length of time. Another option would be to offer extensions on loan terms. Either way, hope is on the rise for beleaguered homeowners.

According to Washington sources, US Treasury Secretary Henry Paulson has officially scratched out his plan to buy assets from distressed financial institutions owning foreclosure properties. The government will continue to invest in these firms but would first like to focus on struggling consumers and borrowers.

Paulson disclosed that the Treasury will look for ways to aid strapped consumers. In the next phase of the Troubled Asset Relief Program, Paulson said that the government will still flood financial firms with money but will also try to improvise a plan to prevent foreclosures and improve the availability of loans such as:

• student loans
• auto loans
• credit cards

The new rescue move of the Treasury signals an awkward start especially if the new administration will take its place soon. The Treasury would still design new programs even if it would take billions of dollars and weeks to implement. The government has made available a budget of $350 billion. As of the moment, the Treasury has only $ 60 billion available in the TARP fund.

The Congress is not very happy that the Treasury is not forcing banks to create loans with funds they got from the government. Paulson remains steadfast in this issue because he believes that no one should be pushed to get a loan that they do not want. Paulson has even resisted the pressure to provide bailout to troubled automakers in Detroit. He said that the auto industry is important but believes that TARP is not the right vehicle for a bail-out

Paulson, however, have said that the Treasury has not yet figured out how to allow the Congress’ request to use TARP to aid distressed homeowners to prevent foreclosures. It could be recalled that the original plan of the Treasury is to take the lead once it has granted mortgage-backed securities and residential loans. The agency plans to persuade lenders to help homeowners avoid having foreclosed homes.

According to Paulson, using the TARP money to decrease foreclosures was not only thought about but was, in fact, the focal point of the plan. Treasury only hopes to get a clear answer on what the Bush administration can do to help stop the increasing numbers of foreclosure homes.

In view of the crisis in the housing industry, Senator Dodd, Chairman of the Senate Banking Committee, announced that he would spearhead legislation that would allow homeowners nearing foreclosures to file for bankruptcy in court. The said legal move would sop lenders from acquiring mortgaged properties.

The Senator is not really new with the program. It could be recalled that Dodd also put the same initiative last year. Despite the earlier failure, the Senator is still positive. He cited that the political environment has already shifted. He thinks that more and more lawmakers are now concerned, if not alarmed, by the growing number of foreclosure properties across the country.

As of press time, the number of foreclosure homes has grew to 936, 439. California-based firm RealtyTrac said that the month of October alone has recorded nearly 85,000 foreclosure properties. The company also said that, compared to the rates of September, the October figures showed a 5% increase.

The alarming numbers of foreclosures have gained prominence since last year. Government offices and lending companies have already made moves to solve the situation. However, Dodd and members of the Senate Banking Committee believe that the efforts were just not enough.

Dodd also said that he supports Federal Deposit Insurance Corp’s Chairman Sheila Bair in her proposal to make use of the $700 billion bailout funds to help delinquent borrowers lower their monthly mortgage payments. The Senator also said that he was “confounded” when he learned that Treasury Secretary Hank Paulson opposed Bair’s proposal.

In his opinion, the worsening foreclosure crisis is the main cause of the bigger problem in the financial industry. He said that the government might not be able to solve the alarming economic situation if it does not get to the root of the problem.

Dodd made no assurance that he will help institutionalize the proposal made by the FDIC Chair. He believes that jawboning would work to convince Secretary Paulson.

The current crisis is still continuing its massive wave of economic unrest across the nation causing more foreclosures to occur. Private homes are not the only ones affected but include rental units and apartments as well. This caused trouble to renters who are being evicted from their rented homes due to foreclosures, particularly for those who had no idea that their homes are being foreclosed.

In Illinois, Cook County Sheriff Tom Dart got tired of walking into homes to carry out eviction orders only to face families who have no idea on what was going on. These renters did not know that the units they are renting have become foreclosure homes.

Faced with this predicament, Sheriff Dart closed a deal with County courts that he will not carry out eviction orders until judges had ruled that renters were provided with prior knowledge regarding notice of foreclosures given to their landlords. With this new deal, Sheriff Dart only carried out 3 evictions in October when foreclosure rates where at a high.

Congress has been dealing with the foreclosures crisis and only faced frustration as the administration rejected bids for a bail-out plan for borrowers. The Treasury Department opted to use the $700 billion bailout fund to salvage banks and financial institutions and left troubled homeowners on their own.

Hearing about the Robin Hood tales from Cook County, Capitol Hill invited Sheriff Dart for a discussion to get some inspiration in finding short term solutions for this foreclosures crisis while long term programs are still being debated on top.

Democratic legislators are putting their hopes on President-elect Barack Obama when he takes office in January. While still senator, Obama co-sponsored the bail-out bill for borrowers but was rejected by the current administration. With him in the White House, the Democrats in the House are banking on the borrower’s bill to finally see passage.

Tom Schauwecker, an assessor in Boone County for almost 20 years, and Greg Harmon, a long-time property agent, both stated that this year is the first time they have encountered a surprisingly large number of foreclosures.

According to Schauwecker, his personnel compiled a complete foreclosure property list in Boone County. It is probable that around 300 homes will be filed as foreclosed in 2008.

About 27,000 foreclosure properties in Missouri were recorded in the Secretary of State office. Boone County Recorder listed 253 repossessed houses in October and 231 last year. Over 10 foreclosure homes have been filed during the 1st week of November.

This year’s foreclosure has been surprising for Schauwecker. The banks do not lend that often anymore and property owners are obviously facing the risk of losing their homes.

Gaslight Properties broker and developer Harmon stated that there was indeed a very big change in the house market. In addition, he is currently having a hard time updating his website due to continuous foreclosure filings.

Banks in Missouri are making arrangements with the borrowers who are having difficulty paying their mortgage obligations. Marketing Director Mary Wilkerson of Boone County National Bank stated that having to go to the courthouse is not a very good experience that is why they are doing their best to avoid that kind of situation.

Eric McClure, Commissioner of Missouri Bank, said that it is necessary for the borrowers and lenders to always communicate in order to avoid this unfortunate situation.

Loan adjustments in some cases are not considered, so what banks do is accept Deed-in-lieu wherein a borrower transfers all interests in Property Law to the lender to fulfil a default loan and avoid the process of foreclosure.

Columbia’s top 5 banks reported a huge increase in the number of properties they took back from default borrowers in September this year.

Schauwecker thinks and hopes that the housing market and economy will eventually recover.

Real estate agent Darhlen Zeanwick said that nearly 38 percent of houses put on sale in Orlando area are in some form of foreclosure proceedings, such as bank repossession and short sales.

Residential property sales in Orlando increased between September and October 2008 compared with sales for same months a year ago.

Peter Murphy, a real estate consultant at Home Encounter LLC, said that distressed sales, which include those that are bank-owned and foreclosed, account for over 30 percent of Central Florida’s existing-home sales.

He explains that distressed properties, on average, are valued 20 to 30 percent below those homes that are not on forfeiture.

The low market value of these properties has attracted an influx of buyers into the resale market, despite the risks and difficulties involved in purchasing a repossessed property.

Real estate investor Fred Allen sees a good opportunity in the foreclosure market. However, he claims that each of the 12 bank-owned houses he acquired in seven counties in Central Florida required a lot of money to repair and make it habitable again.

Allen advises investors to look for bargain houses if they want to charge competitive rents that are high enough to offset the costs of getting the property in shape.

Data from Orlando Regional Realtor Association showed that the median market price of properties resold in the area was $178,000 in October, a decline of over 24 percent from the same period last year.

RealtyTrac Inc., a research firm that monitors foreclosures in the United States, said that Florida has the third worst foreclosure rate in the country as of October.

On the other hand, Orlando is ranked 10th among biggest metropolitan areas with high foreclosure rate. RealtyTrac estimates that nearly 22 percent of single-family houses on the market are foreclosed or short sales.

The current housing market crisis that caused an increased in foreclosure activity has attracted new real estate investors.

These real estate investors venture into property foreclosure hoping for easy and quick profits. However, using only simple approaches, they are bound to commit mistakes when buying foreclosure homes.

Some common mistakes that real estate investors should avoid are:

• Lack of knowledge of the foreclosure process – real estate investors should not rely on pitches given to them. In making an informed decision, it is important for them to do their own research. They could invest in resources which they think will give them information that will help them in making informed decision. Knowing what they are dealing with will help real estate investors profit from their investments.
• Making decisions by not understanding home values first – Real estate investors should understand home values to keep their market evaluations accurate. If the market is showing an increasing number of homes, it could indicate a decreasing number of buyers.
• Not knowing that foreclosed homes need maintenance – Majority of homeowners who knew that they have to let go of their homes do not waste anymore their time and resources to maintain their properties. Hence, most of these homes are in need of maintenance when they are put on the market.
• Hesitating when making purchase decision – Finding the right property to invest into is difficult enough, so when the right opportunity comes, real estate investors should be quick enough to make a purchase decision.
• Failing to recognize the importance of expert assistance - New real estate investors need professionals who can assist them in finding and evaluating properties and explore financial options.

Real estate investors must keep in mind that the key to investing in foreclosed homes is to purchase low and sell high.

Hamilton County, which has a median household income of more than $82,000, is considered to be the most affluent county in Indiana. In June 2008, Forbes.com honored Hamilton County as America’s Best Place to Raise a Family due to its top ranked schools and affordable living.

However, the county has seen about 1,400 homes in under some form of foreclosure proceedings in 2008, an increase from 971 in the previous year. Indiana foreclosures have been unabated this year. In October alone, 200 filings were made in Hamilton County. The worst hit was Marion County with 1,890 filings.

According to Neighborhood Christian Legal Clinic staff attorney Stephanie Fairfield, one in every 478 households in the county is undergoing some form of foreclosure.

She claimed that it is impossible to estimate the number of homeowners who are delinquent on their mortgage payments, which led her to predict that foreclosures are going to increase.

The highest filing rates are in the neighborhoods of Fishers, Carmel and Noblesville.

Fairfield indicated that some of these homeowners who are facing the threat of losing their homes have borrowed beyond their means to pay. And some, she adds, could have fallen prey on mortgage brokers or builders’ predatory lending practices.

She explained that distressed homeowners may be uninformed of their mortgage rights and were taken advantage of by brokers or lenders who just want to have a deal where they can earn more money.

The federal government has awarded $2.3 million grant to assist Hamilton County stop the surge of foreclosures in the area. However, most homeowners who are facing the threat of losing their homes are not eligible for the federal financial rescue program.

Majority of the federal funds are allocated for down payments and cost of minor rehabilitation for low and median-income families who want to acquire a foreclosed home.

Low and median-income households represent 120 percent of Hamilton County’s total families.

Borrowers in Florida possibly will experience a moratorium on their mortgaged properties. After a meeting with a high-ranking bank officer last Tuesday, Gov. Charlie Crist, governor of Florida, announced that he is negotiating an agreement with lending companies for a suspension on mortgaged foreclosure homes. This is to give way to the holiday season.

Crist later on met with Florida Bankers Association president Alex Sanchez and after the meeting, he is hopeful to get favorable results by next week. The bank is one of the largest and most powerful in Florida.

Borrowers are advised to get in touch with their banks as soon as possible. They could be of great help to borrowers who are lagging in payments.

Next to Nevada and Arizona, Florida ranks third in foreclosures. One in every 157 homes in the state is confiscated by creditors.

The moratorium, of course, is not without deadline. The least that the state can do is push for the suspension of foreclosures during the holiday season. After expiration, the rest is upon the discretion of lending companies.

Fannie Mae and Freddie Mac have already been applying the moratorium for a week now. A number of Florida homeowners have already benefited from the deferment on foreclosures, and more residents will be enjoying the moratorium until January 9.

Uncertainty rests, however, on whether the moratorium on foreclosures would be adopted by lenders voluntarily or legislation would still be needed for their compliance. Nevertheless, Crist is exerting all efforts to help Florida homeowners keep their properties in the meantime.

Unfortunately for speculators, they are not covered by the moratorium as they have not been of much help to the housing situation in Florida. Only homesteads (or owners of primary homes) can rest assured that they are spared from foreclosures over the holiday season.

The increasing foreclosure cases, the weak economy and uncontrollable job losses contributed to taking home prices as it was in 2004.

The 15.1 percent drop in home price during the second quarter is currently topped by the 16.6 percent continued decline according to the S&P Case-Shiller Home Price national index. 10 main cities are down by 18.6 percent and 20 other cities fell by 17.4 percent. Thanks to foreclosure’s contribution.

Foreclosure depressed the 10-city index by 23.4 percent from its top price in June 2006. It has been falling for 26 months. The 20-city index is also 21.8 percent weak from the July 2006 high. Then, the national index has crashed by 21 percent since 2006.

The worst market is in Phoenix where loss reached 31.9 percent. Las Vegas and San Francisco lost 31.3 percent and 29.5 percent respectively. The best markets Dallas and Charlotte still showed decline of 2.7 percent and 3.5 percent.

The others in the 10-city index downed (in percent) by foreclosure are:

In cities like Las Vegas and Cleveland, sales mainly involved repossessed properties, owned by banks and were re-sold at cheaper prices.

Standard & Poor’s spokesman David Blitzer says that index prices are moderate because they cover exurban and rural areas. Karl Case, an economics professor is unsure on how much more prices can falter, but was definite that rampant lay-offs can worsen the problem.

Economist with Global Insight Pat Newport said that the economy suffered toward the end of the 3rd quarter. Starting there housing permits were infrequent, the National Association of Home Builders have few activities and purchase loan applications fell by 15 percent, foreclosure as a contributor.