Archive for the 'Foreclosure Crisis' Category

The increase in the number of bank forclosure is looming as commercial properties registered a drastic decline in values. Real estate experts are concerned that the almost 30 percent dropped in commercial property values will leave landlords with mortgages more than the worth of their properties.

Most of these commercial properties that saw a drastic drop in values were purchased at the peak of the real estate market. According to real estate experts, some of the commercial properties that went into bank forclosure are just a fraction of the upcoming foreclosures.

Jones Land LaSalle Senior Vice President James Koury explained that the second onslaught of foreclosure will not take place until after several years. He said that majority of mortgage loans taken out from 2005 to 2007 are scheduled to mature in six or seven years.

Most owners of commercial properties who have loans that are bigger than the values of their properties have been trying to negotiate with lending institutions to extend terms to allow them to find ways to avoid bank forclosure.

Sherin and Lodgen LLP partner Gary Markoff said that most property owners regard foreclosure as a last resort. He added that those who are severely affected by the drastic drop in commercial property values are developers who purchased condominium projects and are having difficulty selling the units.

This is what happened with Biscayne Bay Lofts’ Onyx on the Bay condominium tower in Miami, Florida. Lender Corus Bank filed foreclosure on 41 unsold units of Onyx. Since 2007, Onyx was only able to sell about two-thirds of its units.

Markoff observed that the real estate market is under anticipation of the second attack of foreclosures and commercial property sale.

Last March, the John Hancock Tower was put on bank forclosure auction block for $660 million, less than half of the total amount paid by its owners in 2006. Also, the Back Bay 11-story building in Boston, Massachusetts was put on auction but was repurchased by Corus Bank for $17 million.

On the other hand, Richards Barry Joyce and Partners LLC executive vice president Frank Petz believed that banks will terminate mortgage loans before it expire or reach their maturation dates. This is because property owners default on their mortgage payments before the maturity of their loans.

Last week, the number of new unemployment claims dropped to its lowest level in a period of 14 weeks, according to a Labor Department report released on Thursday. This is a good sign for a country reeling from the downswing effects of foreclosure listings overloaded with properties. Some are even interpreting the decline as a sign that the pace of mass layoffs has slowed down.

Even so, the overall number of jobless Americans receiving unemployment benefits increased to another record level. The rising number of jobless Americans increased the number of homes added to foreclosure listings.

In the Labor Department report, the number of new applications for unemployment benefits last week decreased to 601,000, a big drop from the 635,000 claims analysts expected. But the overall number of people getting jobless claims increased to 6.35 million, a record level in a 14-week period.

The economic downturn, largely caused by large numbers of properties being thrown into foreclosure listings, forced companies to lay off their workers to cut costs.

Meanwhile, the four-week shifting average of new jobless claims decreased to 623,500 last week, dropping by over 30,000 from the peak in the first week of April. Economists at Goldman Sachs said that a decrease of about 30,000 to 40,000 is required to indicate a peak level.

In a related report, federal officials said that productivity increased by an adjusted yearly rate of 0.8 percent in the first quarter, higher than the 0.6 percent expected by economists.

Wage pressures, estimated from labor costs, climbed at a 3.3 percent rate, a drop from the 5.7 percent rate in the last quarter of 2008.

As companies cut labor costs by laying off workers, more homes were added to foreclosure listings.

In a report released by the Federal Reserve, consumer credit dropped in March to $2.55 trillion at a 5.2 percent adjusted yearly rate, the steepest decline since 1990. The decline rate represented $11.1 billion of consumer credit decrease.

In addition to the declining pace of new unemployment claims, consumer spending also increased in the first quarter at an adjusted yearly rate of 2.2 percent, a record high since 2007. Economists expect consumer spending to increase further as banks apply growth strategies following their stress tests and as some indications of improvement from the downturn effects of foreclosure listings begin to appear.

The Federal Reserve’s report on the decline in credit card debts and auto loans in March is a reflection of strategies by consumers to control their debts as they struggle against the harsh effects of foreclosure listings.

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Despite the continued downturn and falling home values in Silicon Valley, the supply of foreclosed houses for sale during the spring selling season, including homes in foreclosed listings, has declined.

Realtors in the area said the supply of houses for sale has been declining for 6 weeks. They contended there are two reasons for the continued decline: low-priced pre-owned houses including homes in foreclosure listings are purchased quickly, and higher-priced properties are being held by owners as long as they can, hoping for a recovery in home prices.

This week, there are around 5,110 homes and condos in the Santa Clara County market, including houses in foreclosure listings, a decrease from the 5,890 units available for sale on March 20. In the spring of 2008, there were around 7,340 houses for sale, including homes in foreclosure listings, an increase from the 6,900 available for sale 6 weeks earlier.

The declining supply of houses for sale and falling number of properties in foreclosure listings have led to rising competition among buyers. The decline could also signal the start of housing market recovery in the area, and a signal for owners of high-priced properties to list their homes in foreclosure listings.

James Nichols, a manager of a Keller Williams brokerage in San Jose, said he and other realtors are getting multiple offers for homes within days of adding homes to foreclosure listings. Houses priced at more or less 500,000 are being purchased immediately after they are added to foreclosure listings.

Especially for homes in foreclosure listings that are not bank-owned, houses in the $550,000 price range are being bought quickly. Buyers prefer those not owned by banks because banks oftentimes take a long time in approving short sales or closing sales of bank owned home foreclosures.

However, Creekside Realty owner Richard Calhoun said there have been many home sales transactions that are not being completed because some buyers are unable to get loans while the others are discouraged by the complexities of short sales.

Sean O’Toole, founder of California foreclosure tracking service ForeclosureRadar, said there are around 50,000 properties across the state that have received foreclosure filings but have not been repossessed and added to foreclosure listings. O’Toole estimates that there are 300,000 homes currently available for sale across the state, including California foreclosures.

Search Homes in Foreclosure Listings by California Top City:

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The jobless rate in April probably soared to its highest level in 25 years due to the continuing effects of bank foreclosed properties, according to a survey by Bloomberg News.

The bankers won the day as the U.S. Senate voted on Thursday 51 to 45 to reject a measure that would have provided President Obama’s government foreclosures program an additional tool to enforce its schemes to help distressed American homeowners.

The glut of foreclosed homes has clobbered not only homeowners and communities, but also home builders, mortgage insurers and mortgage lenders.

From available data, the progress of President Obama’s efforts to fight repo homes can be roughly assessed.

Until lately, the average American homeowner has never heard about MERS. But as hundreds of thousands of houses become repo homes, homeowners are now coming into contact with MERS.

The uncertainty surrounding the health of the banking industry has continued to depress bank lending and overall confidence, according to Treasury Secretary Timothy Geithner, who testified for the Troubled Asset Relief Program, including government foreclosures program, before members of the Congressional Oversight Panel.

About one third of all foreclosed homes across the nation are too damaged to be saved by various government bank foreclosures programs, according to Thomas Popik, a real estate analyst and partner at Washington-based Campbell Communications, a service that provides real estate data to mortgage industry consultants.