Archive for the 'Foreclosure Crisis' Category

Foreclosure causes undue stress to everyone, even to housing counselors. In Chicago, Illinois, where the number of Bank Owned Foreclosures continues to soar, homeownership consultants, as they are known professionally, even worked during Saturdays to cope with the growing number of distressed homeowners who need help to remain in their properties.

One housing consultant handles as many as 67 cases in a week and all of them involved helping distressed homeowners avoid putting their homes on Bank Owned Foreclosures.

Results of a research showed that despite the hard work and individual successes of housing counselors, their effort has barely made a dent in providing assistance to troubled homeowners to get through the foreclosure problem.

Report from the Woodstock Institute and Housing Action Illinois indicated that an average of 7.3 distressed homeowners in Chicago received government-approved home foreclosure counseling and assistance out of 100 area repossession filings in 2008.

The report also showed gaps in counseling activity in northwest Will County, Lake County, suburban Cook County and McHenry County. And even in areas where counseling services are usually offered, an average of 80 percent homeowners are still facing the possibility of Bank Owned Foreclosures without the free counseling provided by agencies certified by the U.S. Department of Housing and Urban Development (HUD).

Woodstock Vice President Geoff Smith said that there were troubled homeowners who could be helped if only assistance was provided to them in time and they were represented appropriately.

Currently, the state of Illinois has a total of 94 HUD-approved counseling agencies. The report pointed out that the problem is the lack of awareness of homeowners and limited resources of agencies.

DuPage Homeownership Center executive director Dru Bergman said that many housing counselors complained that they have not signed up for a job that involves preparing distressed homeowners for a life-altering event and the possible loss of their properties.

Bergman said that to help ease stress, the center provides chocolates to counselors. In other agencies, counselors said that they discuss their frustrations with their fellow workers or on online bulletin boards where they share stories, caseloads and strategies on how to negotiate with lenders.

But many counselors claimed that they have learned a lot by talking with distressed homeowners.

And with every client they helped to avoid Bank Owned Foreclosures, counselors find themselves changing their own spending habits and saving more as they realize that a change in circumstances could result in them ending up on the other side of the table.

It used to be that many neighborhoods in Mesa, Arizona are inundated by abandoned and vacant foreclosed properties, an everyday reminder of the housing market collapse and economic downturn.

But now, many properties on bank foreclosure list are starting to show some life as homebuyers take advantage of cheap houses. Industry experts have noticed a dramatic rise in foreclosed homes purchases and attributed the development on the federal tax credit given by the Obama Administration to first-time homebuyers.

Experts said that the tax credit helps shave off the bank foreclosure list with bank owned properties and short sales. They added that demand for bargain foreclosure houses helped boost home prices.

They pointed out that a foreclosed property that used to fetch $115,000 on the market could now be sold for $140,000. Home prices in some areas in Mesa have inched up by almost 10 percent.

In the East Valley, there are some significant improvements in the existing home market with homes on bank foreclosure list selling and the inventory declining. But industry analysts are expecting a second wave of foreclosure this year.

January 1 inventories of existing homes declined slightly, particularly in Mesa, Gilbert, Chandler and Queen Creek/San Tan Valley. Cromford Associates LLC owner Mike Orr pointed out that homebuying competition is notably intense for foreclosed properties under $350,000. Meanwhile, prices continue to fall for properties above $500,000 because of the abundance of supply.

In outlying areas of Arizona, prices for homes on bank foreclosure list continue to drop significantly.

But on a positive note, prices for properties located at South East Valley are stabilizing, according to Arizona State University’s Realty Studies Department director Jay Butler. However, he warns that a true housing market recovery is still not feasible in the near future.

Butler pointed out the flatness of the traditional segment of the housing market, which involves owners selling and buying their distressed properties. He believes that there is real recovery if the traditional process of owners dominating the housing market instead of investors and foreclosures occurs.

May data showed that bank owned houses represented almost 44 percent of home sales in Chandler, 61 percentage in Queen Creek/San Tan Valley and 57 percentage in Mesa and 51 units in Gilbert.

Industry experts noted that competition among bank foreclosure list buyers is intense and many make multiple offers.

The sales pace of foreclosed houses for sale and other residential properties is being influenced by the loan limits imposed by the U.S. Federal Housing Administration, based on a study of residential real estate sales nationwide.

Housing units, including foreclosed houses for sale, priced below $417,000 are selling much faster than homes priced above $417,000 – the price limit set by FHA for home loans that it buys in most areas across the U.S.

Because more than half of all home buyers who purchased pre-owned homes and foreclosed houses for sale in recent months were first-time home buyers, most of the properties bought were priced below $417,000 – the FHA loan limit.

Unlike during the housing boom in 2006 and 2007 when even first-time home buyers were buying higher-priced homes, first-time home buyers now are very conscious about their ability to sustain monthly payments.

Also, they are now considering and using FHA loans, unlike before when many prospective home buyers were ignoring FHA loans because of the loan limits.

Lawmakers increased FHA loan limits to address the needs of home buyers in high-cost areas, but still, many homebuyers in recent months preferred foreclosed houses for sale and other properties priced below the FHA loan limit of $417,000.

In 76 high-cost counties across the country, lawmakers allowed Fannie Mae and Freddie Mac to increase the loan limit of $417,000 to $729,750. But the higher loan limit is set to drop to $625,000 in January next year.

In 600 other areas of the country, lawmakers have increased the $417,000 loan limit to amounts ranging from $417,001 to the higher limit of $729,750.

However, despite the increase in FHA loan limits, mortgage lenders are still wary about providing jumbo loans because investors in mortgage-backed securities have not returned to the market.

Economist Lawrence Yun said the jumbo housing market is not moving because even people who have the needed income level to buy higher-priced homes have not been buying because of the higher mortgage rates for jumbo loans.

According to recent real estate sales data, home loans higher than $417,000 comprised only ten percent of the home mortgage market in eleven states and Washington, D.C. This figure shows that foreclosed houses for sale and other homes priced below $417,000 comprised the bigger portion of recent housing sales.

A panel of consumer advocates and government officials told participants at the National Association of Real Estate Editors conference not to expect an end to bank forclosure listings anytime soon.

Florida neighborhoods severely affected by the foreclosure crisis may find revitalization soon with an initiative funded under the Neighborhood Stabilization Program.

Properties on bank foreclosure list still have a significant share in home sales, with one out of three houses sold last month was a repossessed home.

Luxury homes are starting to sell in San Francisco Bay Area, California. The area’s real estate market, which was once dominated by bank owned homes sales, is seeing its median price increased by 12.3 percent last month from the previous month.

For the first five months of this year, the office of Arizona Attorney General Terry Goddard has seen an almost 35 percent increase in the number of distressed homeowners who complained against fraudulent bank owned foreclosures prevention schemes.

City commissioners of Fort Lauderdale in South Florida will vote on a law to require owners of bank foreclosure property to maintain it to reasonable standards.

If the economy will not improve soon, the number of homes on bank foreclosure list will increase three times its current level by the end of this year. This is the dire forecast that the Mortgage Loan Delinquency Rate report provided.