Archive for the 'Foreclosure Crisis' Category

The housing market in Quad cities located in the Mid-Mississippi Valley region in Iowa and Illinois are experiencing a sharp increase in the number of foreclosure properties in the first six months of this year, compared with the last half of the previous year.

Industry experts are blaming the current worsening economic downturn more than predatory mortgages on the growth of bank foreclosed home listings in the region.

According to market data, foreclosures from January to June jumped by 40 percent compared with figures in the last half of the previous year. Thousands of homeowners in the region have filed for foreclosures, representing six out of 100 homes in the area.

And foreclosure home auctions are common events in the region. For the first six months of this year, 281 auctions of foreclosure houses were posted in the Scott County Courthouse, an increase from the 238 foreclosed homes auctioned off last year.

Cheryl Sosnowski, a foreclosure clerk, said that the housing market situation in the area is not getting better, adding that the current banking situation is not helping matters get better. Weekly auctions in Scott County are booked until the first week of October.

Meanwhile, in Davenport, Iowa, foreclosed houses are common sights in neighborhoods in the area. United Neighbors director of housing Dawn Mutum-Plies said that unemployment rate in the area is increasing, leaving homeowners with no means to pay their monthly mortgages.

United Neighbors has recorded a sharp increase in the number of homeowner participants in its foreclosure rescue program. Participation jumped to 155, almost four times compared with 40 of the previous year. And United Neighbors can only save about 50 percent of those distressed properties.

Industry experts said that unemployment is the major reason why a great number of homeowners are going into defaults right now. And until the employment market showed some improvements, foreclosures would continue to haunt the area.

Furthermore, the escalating number of foreclosed homes in the area are not just affecting homeowners but also other houses in the neighborhood by pulling down property values.

Industry experts are hoping that the Obama Administration’s Making Home Affordable program would be able to help distressed homeowners and the housing market by financing home loans. They said that the program should show some progress immediately to avert the spread of foreclosed properties, the number of which are climbing daily.

Foreclosure has started to ease in some cities across the country where the large volume of bank foreclosed houses caused devastation on their housing markets and economies. However, industry experts are quick to point out that the current development could be just a lull before the next wave of foreclosure which they expected to hit some unlikely cities.

In the first half of 2009, the bulk of bank foreclosed houses were located in the cities of Arizona, California, Florida and Nevada. Twenty-nine cities from the four states were among the top 30 in the list of places with highest foreclosure rates. The Colorado city of Greeley was the odd place on the list dominated by cities from the four states.

But recent market data showed that some of the cities hardest hit by foreclosures, such as California’s Central Valley cities, showed some improvement by posting declining foreclosure rates.

However, industry experts said that a third wave of bank foreclosed houses is looming in cities with over one million populations. The first wave of foreclosures was due to the subprime mortgage collapse. The second wave of the foreclosure crisis was triggered by massive layoffs and the economic consequences of the subprime collapse.

Experts said that the anticipated resetting of the option-adjustable rate mortgage (ARM) will trigger the third wave of foreclosures.

One of the cities that was not pummeled by foreclosures the past year is Seattle, Washington. The city posted the highest rate increase in foreclosure filings in the first half of this year. Data showed that one out of 107 homeowners in Seattle received notices of foreclosure, representing a 72 percent increase compared with the same period the previous year.

Seattle is followed by Minneapolis, Minnesota where 1 out of 90 households received foreclosure filing, a jump of 58.6 percent. Phoenix, Arizona is third on the list with filings on one out of 22 houses, representing an increase of 51.7 percent.

Some cities that showed significant declines in foreclosure filings are New York by 23.5 percent, Boston, Massachusetts by 40.7 percent and Houston, Texas by 31.3 percent.

Leading the highest foreclosure filing list is Las Vegas, Nevada with 56 percent increase. The city took the lead from Stockton, California by posting foreclosure filing on one out of 13 properties from January to June.

Six California cities are among the top 10 places with the highest filings for bank foreclosed houses.

Renters are the latest unsuspecting victims of the foreclosure crisis that have been sweeping across the country for several years now. Most often, renters of foreclosed condos would just find themselves being evicted in a moment’s notice despite paying their rents diligently.

Most owners of foreclosed condos never warned renters about the foreclosure and continue to collect rents until such time that eviction is inevitable.

And adding to the woes of renters of foreclosed condos is the refusal of owners to return their security deposit. Tenants Together, a renter’s rights group, said that last year, over 225,000 renters in California lived in foreclosed properties.

Housing lawyer Christina Skaf Hathaway said that President Barak Obama’s Helping Families Save Their Homes Act gives tenants more rights. Under the law, lenders are required to give renters at least 90 days to remain in the property or until the lease expires. It also requires that an eviction notice should be written.

On a separate note, some apartment owners in New York are finding ways to survive the current economic downturn. Buildings that have started out as condominiums were converted into rentals. Many condominium developers, who cannot sell, have come into agreement with their lenders, to rent the units to get cash flow.

However, the trend is a potential turn off to most buyers who often shy away from buildings that are rented. According to industry experts, apartments that have been rented could not be placed on the market as new units. This would force developers to reduce the prices of apartments that have been rented.

Adding to the problem is the lack of motivation on the part of renters to take care of the apartments. According to experts, renting out apartments has less impact on values than having a vacant building with no tenants.

Developers who want to rent their unsold apartments must do so under the original condominium plan filed with the attorney general’s office in New York. This document is reviewed by potential buyers before closing an apartment sale.

Developers have the option to amend the condominium plan to adjust for rentals, provided that no units have been sold. It is the standard practice of developers to include rental provisions in the plan.

Developers said that they need to have the right to rent their units in all their condominium projects in order not to turn them into foreclosed condos.

The number of government repo homes is expected to increase further following the significant rise in the percentage of loans insured by the Federal Housing Administration in June, based on data released by the Mortgage Bankers Association.

A growing number of banks and lenders are delaying bank forclosures activity and this troubled industry experts who claimed that the trend will not benefit cities with weak housing markets.

Six jurisdictions in the Washington region and the Metropolitan Council of Governments are applying for federal funds that will help stem the tide of bank owned homes sale in the area. The funds are under the Obama Administration’s Neighborhood Stabilization Program aimed at helping neighborhoods across the country severely affected by the foreclosure crisis.

The Senate Banking Committee recently held the hearing, titled “Preserving homeownership: Progress needed to prevent foreclosures.” One of the highlights of the hearing was Chairman Chris Dodd of the Senate Banking Committee’s venting of his frustration over what to him is a lack of progress on bank owned foreclosures prevention efforts.

Last month’s 4,702 existing home sales in Las Vegas, Nevada topped the June 2004 record of 4,414. This development created some excitement within the residential real estate market which is hoping for some signs that may point to a housing market recovery. But industry experts pointed out that bank foreclosure property is a major threat to the housing recovery market.

A growing number of condominium developers are trying to stave off the effect of the growing number of discounted properties on bank foreclosure listings by auctioning off and offering discounts on properties.

A growing number of American families who lost their homes to bank owned foreclosures are placed in motels or homeless shelters. Most homeless people are crowding out shelters which forced some states and cities across the United States to find alternative housing.