Foreclosure News Update
Government agencies started selling foreclosure homes in bulk
September 15, 2011 - Obama Administration sent, in August 2011, request for information (ROI) to Freddie Mac, Fannie Mae and Federal Housing Administration (FHA) how fast they can sell their inventories of foreclosed homes.
Only Freddie Mac alone had 60,569 REO (Real Estate Owned) properties waiting for sale. NAR (National Association of Realtors®) and some other real estate-related organizations expressed their concerns about bulk selling of foreclosure homes that such action may mean large losses for tax-payers and depress home prices further.
Freddie Mac, for instance, does not plan to sell foreclosure properties at half price but at market value by asking real estate investors to submit a letter of intent with a filled out questionnaire. Investors interested in buying foreclosure homes will receive weekly inventories from government agencies for their future investments.
Act fast if you wish to benefit from HAMP
March 30, 2011 - Yesterday, the House of Representatives voted to terminate Home Affordable Modification Program (HAMP) introduced by Obama Administration to help homeowners who might lose their homes as a result of worsened economic conditions. Especially those who have obtained Adjustable Rate Mortgage (ARM) loans had to pay higher interest rates after the first few years per their loan agreements with their lenders. This Program intended to reduce the interest rates on higher interest loans with the help of new mortgage loan agreements.
It is not yet clear whether the Senate will reject the amendment. It is clear that President Obama will veto it. You need to act fast if you want to take advantage of HAMP before it is terminated one way or another.
Government-supported programs help homeowners
Obama Administration Making Home Affordable covers two programs to assist homeowners facing foreclosure.
First, you need to check if you have been subject to a foreclosure rescue scam. If not, then find out if one of the following two programs can help you:
- Home Affordable Modification Program (HAMP):Can you make your home mortgage installments affordable? See if you are eligible home affordable refinance or home affordable modifications.
- Home Affordable Foreclosure Alternatives Program (HAFA): If you still experience problems under HAMP, then you may consider HAFA. This program is a HAFA preforeclosure short sale program which is a version of deed in-lieu-of-foreclosure process.
Most recent news and trends in foreclosures homes market.
7.3 milion homeowners are expected to default on their mortgages between 2008 and 2010, with 4.3 million of those losing their homes according to Moody's.
Foreclosure procedures make big difference in California and Florida
November 11, 2010 -Foreclosure procedures make big difference:
California has less procedure in foreclosure as compared to Florida. It is easier for banks to take the ownership of the foreclosed properties and resell them faster. On the other hand, Florida foreclosure law requires approval of courts to provide more protection for homeowners.
As a result, foreclosure process takes months in Florida. Florida is one of the 23 states that have court procedures to sell foreclosure homes. It takes about two years for Florida homeowners to lose their home after failing to make their mortgage payment on time, that is, default on mortgage payments.
Non-judicial foreclosure process is very efficient and completed faster in California. As a result, the housing market is more stable. There is less pressure in real estate market. Foreclosure home selling prices hit the bottom faster and not home prices are recovering from their bottom levels. Home prices in Florida where judicial foreclosure procedure is in force did not even hit the bottom yet.
Stand of President's Office on foreclosures
The main goals of the President's Office are:
- to encourage loan modifications to relieve mortgage burden on existing home owners who face difficulties in making their monthly mortage payment;
- help distressed home owners refinance their mortgage loans easily; and
- make home buying easier for first time home owners.
The base for this policy is in the Helping Families Save Their Homes Act that the President signed in May 2009 by President Barack Obama is the main basis for the policy.
The second legislation, the Hope for Homeowners Act intended to help home owners who owed more than what their home prices.
How will $700 billion rescue package affect foreclosure home prices?
No quick fix for foreclosures: U.S. Department of Treasury's rescue plan will not prevent falling home prices, according to Wall Street Journal. This package will not directly help homeowners facing foreclosure. Many economists say that additional measures are needed to mortgage delinquencies as current plan doesn't do anything to stop the spiral in home prices.
Impact on foreclosures:
- Treasury is buying $125 billion preferred stocks from 9 major banks, including Bank of America, J.P. Morgan, Citibank, and Wells Fargo, and other banks.
- Treasury will buy bad loans from banks and other mortgage lenders. Mortgage loans unpaid by homeowners facing foreclosures will be purchased by U.S. government.
Too many unknowns in foreclosure market: “We are in uncharted territory” say Bank of America CEO. You need to keep yourself updated on financial news to time your foreclosure investment.
Are bank foreclosed homes prices high?
Yes. Many foreclosure home investors believe that banks are overpricing their foreclosed homes (Real Estate Owned - REO). In 2008, 46 percent of homes (748,381 homes) auctioned by the banks stayed with the banks as real estate investors did not bid over their minimum prices.
While the REO inventory of the banks is piling up, then the prices of foreclosed homes are expected to go down.
Is the number of foreclosure properties going up or down in 2009?
More foreclosures expected: There were 2.2 million homes in foreclosure status by the end of 2007, up 75 percent from 2006. U.S. foreclosures rose 45 percent in January 2008 as compared to January 2007, according to RealtyTrack. These figures indicate that home prices will fall further.
Home prices keep falling: Home prices are expected to fall an additional 10% to 15% between now and mid-2009, says Mark Zandi, chief economist at Moody's.
Foreclosures are rising to new record levels
Foreclosures in California increased 25 percent from July to August, according to a report released by RealtyTrac.
Five states, namely California, Florida, Texas, Ohio, and Illinois accounted for half of the total foreclosures in the United States in August 2006. The national average for the last three months is one foreclosure for every 1,003 homes.
Adjustable Rate Mortgage Loans: Getting More Popular?
Did you know that 49.9 percent of buyers put less than 10 percent down payment? This is an increase of 44.8 percent since 2000. During the same six-year period, the share of Adjustable Rate Mortgage (ARM) loans increased from about 20 percent to 30 percent. If you add the interest-only loans extended to millions of homebuyers, then you understand the reasons why there are record level of foreclosures now.
When will the tsunami of foreclosures hit?
This fall the adjustable-rate mortgages (ARMs) that millions of Americans took out during the recent housing boom will be reset, and many homeowners will see their monthly mortgage payments shoot up by as much as 20%. According to the Mortgage Bankers Association, of all mortgages financed in 2005, 36% were ARMs -- the highest ever.
Business Week reports: "For many Americans, this is scary news, if hardly unexpected. Everyone who took out an ARM or another equally appealing low-rate mortgage over the past few years to buy a house, at times beyond their means, knew that someday their payments could balloon. Those home buyers may have thought they would be able to flip their houses quickly and avoid the rise in their mortgage payments. But now, many of them are finding themselves stuck in a house they may soon no longer be able to afford, and, as the real estate market peters out, there's little they can do about it."
Foreclosure auctions become popular again!
Desperate home sellers turning to auctions nationally, residential real estate auctions are the fastest-growing segment of the U.S. auction business, according to the National Auctioneers Association. Last year, auctioneers sold $14.2 billion worth of homes in 2005, up 8.4 percent from a year earlier, the group reports. Full-year 2006 sales will show another strong increase.
"With the current state of the real estate market, sellers see the attractiveness of knowing they will sell it on a given day versus keeping it on the market for months and sometimes years and incurring costs such as taxes, insurance on the home, upkeep and marketing," said Erica Brown, a spokeswoman for the auctioneers' association as reported by The Online Ledger, The New York Times Syndicate.
Homeowners are shifting to high-cost loans
According to a recent report by the Association of Community Organizations for Reform Now, or ACORN... Homebuyers and homeowners often turn to "subprime" loans when their credit precludes them from getting a standard bank-rate loan. The number of such loans that come with adjustable rates has increased 20 percent to 30 percent over the past six years, according to the ACORN report.
Detroit was ranked No. 1 because nearly half the home loans obtained there last year were high-cost. Birmingham was ranked No. 10. At the other end of the spectrum was San Francisco, where only 7.5 percent of home loans were high-cost" as reported by Montgomery Advertiser.
Homebuilders are offering incentives on new homes
Three-quarters of the 369 homebuilders recently surveyed by the National Association of Home Builders said that they are now including once-expensive extras at no additional cost to help sell their homes. One-third reported that they are now also absorbing such costs as financing points on mortgages to help move unsold properties. Several even admitted to offering free vacations.
Selling new homes are more difficult as market is flooded with historically high number of bank and government foreclosures.
Rutherland Herald reports: Tom Stevens, president of the National Association of Realtors, says home builders started offering incentives in cooling markets such as certain parts of Florida, Las Vegas, California and the Northeast. "Home builders were among the first to react with various incentive programs and promotions to help keep their properties moving and to reduce unsold inventories," he says.
High-end kitchen cabinets and counters, upgraded bathrooms, generous hardwood flooring packages, finished basements and professional landscaping are just a few of the common gratis offers Stevens has heard of. "And good old-fashioned discounts and cash incentives ranging between $25,000 and $50,000 are out there, too."
This means that you need to shop around if you are planning to buy a new home and see the options offered by homebuilders.
Remember that buying a foreclosure home in poor condition may be your best bet if you or your team can repair and upgrade it for more profits.