Archive for the 'Foreclosure Rates' Category

Many industry experts agree that the market is ripe for homebuyers and investors who want to buy properties on bank foreclosure list. First time homebuyers or investors are taking advantage of the low housing prices, reduced interest rates and tax incentives, according to experts.

The current housing market is heavily laden with short sales and foreclosures that help drive down prices. About two-thirds of houses for sale are owned by lenders while short sales and foreclosures accounted for majority of properties on bank foreclosure list. Short sales are properties that are priced less than the total mortgage that homeowners owe to their lenders.

According to industry experts, the great number of foreclosure properties and short sales on bank foreclosure list creates an unpredictable climate for homebuyers.

They suggest that potential homebuyers should be prepared to make a closing when a buying a property by arranging their finances first before making an offer. In the current market, the success of buying short sales and foreclosure houses is contingent on the buyer’s ability to close a deal immediately.

Industry experts observed that potential buyers who have cash and a combination of patience and aggressiveness are the ones who get to have the best deals. They said that banks may require potential buyers to submit a loan application and they may offer reduced closing sale costs if buyers get mortgage loans through them.

Meanwhile, experts warn potential buyers about the intense competition for deeply discounted short sale and lender-owned properties. Earnest money, or the sum potential buyers pay to show their eagerness and sincerity in pursuing the deal, will give buyers leverage on the deal.

However, in the case of properties owned by banks, earnest money are usually non-refundable, meaning buyers could not recover their down payment if they back out of the deal.

On the other hand, prospective homebuyers may find financial help with the U.S. Federal Housing Administration’s (FHA) 203k loan program. The mortgage loan program includes funds for home refurbishment.

First-time homebuyers find the 3.5 percent initial payment and loan cap of $346,250 quite a bit appealing. But the loan amount requires the inclusion of repair costs and the property needs to be appraised for the total amount.

Real estate expert R.L. Brown agrees that now is the right time to buy properties on bank foreclosure list because even if housing prices decline, low interest rates indicate a return on investments.

The Washington Region should expect another flood of bank foreclosure homes this year until 2011. This is what real estate brokers concluded based on current trends, including rising unemployment rates, declining home market values and resetting of adjustable-rate mortgages.

Housing Predictor editor Mike Colpitts said that Washington D.C. area should expect about 300,000 additional bank foreclosure homes this year until 2011. Housing Predictor looks at trends in local and state real estate markets.

According to Colpitts, many homeowners are in trouble of going into foreclosures but the process was delayed due to repossession moratoriums that mortgage companies, Federal Home Loan Mortgage Corp. and Federal National Mortgage Association put in place last fall and expired the end of March.

He said that the temporary foreclosure moratorium created an artificial lull and backlogs of troubled mortgages waiting to be processed.

Deputy director at the Center for Regional Analysis at George Mason University, John McClain said that recent data showed that foreclosure rate in the D.C. area has leveled off. However, the foreclosure problem is fast spreading beyond subprime mortgages, the category real estate experts deemed to be the most risky.

Jill Landsman of the Northern Virginia Association of Realtors said that the next wave of bank foreclosure homes will come from alt-A or alternative A-paper loans. Adjustable rate loans were taken out by marginal homeowners who had insufficient financial data. An adjustable rate mortgage usually resets every three years.

Colpitts said that many homeowners who took out adjustable rate loans may not be able to refinance their mortgages when it is time to reset because the values of their properties are less than the total mortgage they owed. He added that some areas in the region, such as Prince William County in Virginia, are experiencing a decline of almost 50 percent in home values.

Meanwhile, Landsman noted that loans that are not usually high risk such as 30-year fixed-rate and conventional adjustable rate mortgages are also expected to be in trouble, affected by the rising unemployment rate and declining home prices.

Colpitts predicted that home values in the Washington metro area will drop by another 11 to 15 percent. He believed that the coming flood of bank foreclosure homes in the region will also include a number of expensive houses, a category that is expected to experience the steepest value declines.

Data from the Nevada Realtors Association’s study showed that majority of Bank Foreclosure Properties are primary residences. According to the study, the over 87 percent primary residences in the foreclosure listings does not coincide to popular opinion that majority of foreclosures are investment properties, which accounted for 3.6 percent, and 8.1 percent rental homes.

Nevada Association of Realtors President Devin Reiss said that to understand the state’ foreclosure crisis, there is a need to distinguish between an unhealthy and healthy homebuyer. He believes that Nevada homeowners can help stabilize the housing market by avoiding circumstances that may result in Bank Foreclosure Properties.

The survey, conducted by NV Data Mine and SGS, also showed that over 60 percent of foreclosure properties within Nevada were owned by married couples, while 24 percent of distressed homeowners were earning below $15,000 annually.

Market data showed that in April, Nevada had the highest foreclosure numbers nationwide, with one out of 68 homeowners receiving a filing for foreclosure which was five times more than the national average. Nevada’s total Bank Foreclosure Properties rate in May was up by 111 percent compared with year ago period, but declined by 18 percent from April’s total.

Real-estate owned properties accounted for 80 percent of the state’s housing market, putting pressure on the home prices to go down.

Meanwhile, over 90 percent of foreclosures were single-detached family houses and 32 percent were between 1,500 to 2,000 square feet. Results of the Nevada Realtors’ study also showed that about 34 percent of respondents were paying more than 50 percent of their income monthly on their mortgage loans.
Homeowners who were paying 56 percent from their income to loans accounted for the largest portion in foreclosures. On the other hand, about 24 percent of respondents were paying 40 percent or less of their monthly income on mortgage loans. Additionally, 24 percent of respondents either refused to answer or were unsure about the percentage of their income that was used to pay their mortgage loans.

Furthermore, over 68 percent of respondents lost their jobs a year before their foreclosures. Meanwhile, 11.7 percent of respondents had unexpected bills to pay and 7.8 percent claimed that they had additions to their families.

Finally, 61 percent of respondents believed that the type of mortgage loan is a primary reason why their homes were turned into Bank Foreclosure Properties.

A report released by the IHS Global Insight, a forecasting firm, showed that property values in Southern California have sunk to a record low. And ongoing increase in bank foreclosure property and worsening economic situation are expected to pull down further home values in the area.

The Center for Responsible Learning (CRL) has estimated that properties added to bank foreclosure listings reached 1 million so far in 2009. This data do not bode well to the Obama Administration and the real estate industry’s efforts to fight foreclosures to stabilize and strengthen the housing market.

As the number of notices of default increased in the Bay Area and in other areas in California, housing analysts are not so sure about how the government foreclosures program can solve the foreclosure crisis in the state.

Last month, about 80,775 homes were added on tax foreclosure property listings in California, a 5 percent increase from January and a 51 percent jump from a year ago. Tax foreclosure property listings auctions rose to almost 179 percent in the state.

Florida foreclosures accounted for around 17 percent of the country’s 2,330,483 foreclosure filings in 2008, according to California-based foreclosure tracking firm RealtyTrac. There were around 385,309 Florida foreclosures last year, an increase of 412 percent from 2006 and a 133 percent increase from 2007. In December 2008, there were 50,808 Florida foreclosures, a 3 percent increase from November 2008 and an increase of 63 percent from December 2007.

The administration of President Barack Obama is considering using taxpayers’ money to lower monthly mortgage payments of homeowners who are in danger of losing their homes to foreclosures.

As one of the largest states in the United States but with the lowest population, Wyoming registered a low foreclosure rate while surrounding states vary in impact from foreclosures. Nearby states like Montana and South Dakota registered some of the lowest foreclosure rates in the country, while Colorado and Utah absorbed the brunt of the foreclosures crisis and was included in the top ten highest states.