Archive for the 'Finance Foreclosures' Category

The Minnesota cities of Minneapolis and Brooklyn Center are offering forgivable-loans to buy bank homes. Under the loan programs, both cities will offer as much as $10,000 down payments and closing costs. And if the buyers remained in their properties for five years, they are not required to pay the loans.

The loan programs are provided to low-income families to help them buy bank homes. So far, about 200 families were helped by the loan programs to purchase foreclosure houses in Brooklyn Center and Minneapolis.

In Minneapolis, about 147 families have availed of the interest-free loans to buy properties in foreclosure-infested neighborhoods, mostly located in the northeast, north and south-central areas of the city.

In Brooklyn Center city, nearly 50 families purchased foreclosure properties since it started its interest-free loan program in March. After receiving positive feedback on the program, the city council of Brooklyn Center decided to extend it.

The Brooklyn Center loan program is funded by nearly $1 million in new taxes from the commercial tax increment. Mayor Tim Wilson said that other cities have shown interest on the program, particularly on the source of its funds. He said that the program is a good opportunity to attract homebuyers, especially first-time buyers.

Meanwhile, Minneapolis apportioned an additional half a million to its loan program after its initial $500,000 was distributed to 50 home buyers last year, during which, no income limit was set for participants.

The second installment of the Minneapolis fund requires home buyers to have 120 percent or less of the $81,000 median household income in the metropolitan area. An additional $1.5 million was added by the city from the Federal Home Loan Bank grant. Furthermore, eligible buyers may avail of the $8,000 funds per household provided by the Pohlad Family Foundation.

Meanwhile, in Brooklyn Center, a 2008 legislation allowed the city to fund the program using 15 percent of the new property taxes from a commercial tax increment. Only low-income, first-time buyers are eligible for the city’s ReNew Loan program.

Under the program, as much as $10,000 is given to buyers to use as down payments or closing costs for vacant houses that have been registered by the seller with the city. City officials noted that since the loan program to buy bank homes was launched, sale prices of foreclosed houses in the area increased by over $10,000.

The nonprofit organization Inland Empire Economic Recovery Corp. is trying to gather financial support to boost its efforts to purchase Inland Empire-owned properties on bank foreclosure listings. The organization will then rehabilitate these foreclosure homes to make them livable and place them on the market for sale.

But the success of raising more investments will be determined by the price and how fast it can sell its first renovated foreclosed property in Rialto in San Bernardino County, California. The Rialto property is the litmus test on whether the organization can generate a reasonable profit for its investors.

Inland Empire executive director Robert Hooker said that potential investors are waiting for the outcome of the organization’s project after it bought and renovated 10 or more properties on bank foreclosure listings. The organization is a venture between the private investors, county and local governments.

Recovery corporation organizers have been preventing large real estate firms from purchasing foreclosure properties in bulk. There are concerns that real estate firms might sell these distressed properties to corporate landlords or rent them out, thus pulling down local property values even further.

On the other hand, the recovery organization needs to show to lenders that it can save them money. It purchases Inland Empire foreclosed houses from banks at huge discounts. All the administrative costs and rehabilitation-related details are handled by the organization.

Meanwhile, private investors are still trying to determine whether or not the organization can generate profit from its venture before they put in their money. Hooker said that so far, about $60 million private investment capital has been pledged.

Sierra Capital Investment Partners has committed $50 million while Glaeser Builders Inc. plans to invest as much as $10 million on the venture. Hooker said that a number of smaller investors have shown interest by committing as much as $3 million dollars. He said that many of these investors are from Southern California, adding that the organization is trying to entice large hedge funds and pension funds nationwide.

Hooker said that the biggest challenge in negotiating with banks is investors and stockholders. He said that they are concerned about selling houses at discounted prices for fear of litigation from their investors.

Industry experts said that the region has posted 130,000 properties on bank foreclosure listings since March 2007, and an additional 140,000 homes are projected to go into foreclosures until 2012.

Now is the right time to buy bank foreclosure homes. This is the message that Utah economists want to send to prospective homebuyers, citing low mortgage interest rates and significant drop in home prices as incentives for buying existing and foreclosed homes.

Kelly Matthews, economist at Wells Fargo and Co., said that the current Utah market condition is a historically better opportunity to purchase houses, adding that the dramatic decline in property prices and low mortgage rates are incentives that potential homebuyers should not ignore.

Matthews said that the average property prices in the county of Salt Lake dropped to $278,472 during the last quarter of 2008, compared with $286,250 in the same period in 2007. However, he noted that the average home price in the county last year was still higher compared with the 2004 average price of $198,394.

He pointed out that home affordability today is similar in 2004 because interest rates which was 6 percent five years ago, is nearing 5 percent this year. He said that a family purchasing today would shell out the same amount for mortgage payment, which is 24 percent, compared with almost 23 percent in 2004.

However, some economists are cautioning prospective buyers that the market may have not yet reached its bottom. They do not suggest purchasing properties as investments. On his part, Matthews said that good candidates to buy an existing or foreclosed house today are families in need of a roof under their heads or growing families.

Meanwhile, University of Utah’s Bureau of Economic and Business Research director Jim Wood said that the market is closer to its bottom but is not yet there. He noted that there is no strength or improvement yet in the single-family home market.

Wood believed that home prices will take a long time to budge from its current slump even if the housing market recovery begins and property values stop its decline. He said that home price gains will start modestly, perhaps 3 percent annually.

He pointed out that there will be no price appreciation until the economy shows some growth. This is because the job market in the state is in serious condition than previously thought and foreclosure continues to rise unabated.

Economists said that if Utah’s foreclosure problem gets worse, it would unravel whatever progress in the recovery the state has made so far.

A 4-year-old accounting regulation that standardizes how banks acquired loans is expected to help the banking industry gain revenues and reduce Bank Owned Foreclosures.

The $8,000 tax credit offered to first-time homeowners under President Barack Obama’s American Recovery and Reinvestment Act of 2009 has highlighted the role of timing, including luck, in home buying. It has also highlighted the issue of unfairness, such as the exclusion of tax foreclosures in assistance programs.

Allow banks to fail. That is what Republican Senators Richard Shelby of Alabama and John McCain of Arizona suggested even if it means shareholders will also suffer as a consequence.

As tax foreclosure property listings continue to grow longer because of unabated foreclosures, the government has found ways to reduce the number of foreclosed homes. This time with the help of first-time home buyers.

Efforts to add a stipulation in the economic stimulus bill supported by congressional Democrats that would permit bankruptcy judges to minimize mortgages as a possible solution to the foreclosure problem is being resisted by President-elect Obama and his advisers.

Just minutes after President Bush said at a news conference that President-elect Barack Obama just had to “ask” if he needed the remaining $350 Billion bailout funds allocated for foreclosure prevention, Obama did just that. Now Congress has to vote within a 15-day period whether to approve the request.

Pending home resales dropped in October due to continued foreclosures, according to analysis by 34 economists interviewed by Bloomberg News. Pending resale index is viewed as a major economic indicator because it monitors home resale contract signings. Sale closings are usually accomplished about two months later, when the sales are counted as existing-home sales in real estate reports.