Archive for the 'Repo Homes' Category

Government repo homes have been rising in number at the U.S. Department of Agriculture largely because of the department’s provision of home loans with zero down payment and 100-percent financing, according to housing analysts.

In Port St. Lucie, one of coastal towns in Florida littered with abandoned subdivisions and foreclosed houses, about one in five home loans was provided by the USDA, according to local real estate professionals.

In Menifee, California, where many mortgages were taken out through the USDA housing program, record foreclosures have been posted because distressed borrowers could not sell their homes to avoid foreclosure.

The program that has driven the sharp increase in USDA home loans is the USDA guaranteed housing loan program launched in 1949 and rejuvenated by the Obama administration with $10.5 billion this year, a substantial increase from the $6 billion provided by the Bush administration last year.

Because of the sharp increase in funding, builders and lenders took advantage of the easy requirements of the program, resulting into almost 120,000 home loans in the first 9 months of 2009, a staggering increase from only around 35,000 in 2007.

According to interviews with borrowers, they are attracted to the program because they do not need to shell out down payment. This easy requirement however has resulted into more government repo homes at USDA.

Analysts such as Daniel Oppenheimer of Credit Suisse said the relaxed lending standards are the same standards that led to the current housing meltdown and added that the USDA no-down loans should be called USDA subprime loans.

Among the builders helped by the program is D.R. Horton. About 64 percent of its total home sales were sold through federal loan programs, including loans guaranteed by USDA. Jim Belfiore, head of Phoenix-based Belfiore Real Estate Consulting, said every builder is trying everything to survive the downturn, so the USDA home loan program is a great opportunity for them to make sales.

The builders and lenders, just like during the boom, have been filling their advertisements with enticing words such as absolutely zero-down and 100-percent financing.

In response to critics, builders and the USDA explained that they apply strict underwriting requirements and evaluate borrowers’ income, cash flow and credit thoroughly.

Joaquin Tremlos, acting head of the USDA home loan program, said the department’s loan portfolio has a low delinquency rate. He reiterated that the department has not relaxed its guidelines leading to more government repo homes as reported in the media.

The growing foreclosure crisis in the country has spread to the Alabama county of Tuscaloosa where repo homes for sale dominate the housing market, according to a study conducted by sociologist Bronwen Lichtenstein, associated professors at the University of Alabama’s criminal justice department.

Lichtenstein, who studied the foreclosure trend in the county and statewide since February 2008, said that foreclosure appears to be worsening. Data compiled showed that local foreclosure activity continues to increase and affected modestly priced houses.

She said that she was surprised to learn that the foreclosure problem has disproportionately affected poor and middle-income homeowners. What is happening in the Tuscaloosa county is in contrast with other parts of the country where foreclosure spared wealthy homeowners.

Data showed that over 1,000 houses went into foreclosure in Tuscaloosa since February 2008 and the highest assessed value on repo homes for sale was about $300,000.

Most properties located in higher-end communities have been spared from foreclosures, with the problem occurring mostly in Alberta, Holt and outlying parts of Tuscaloosa. Many homeowners in middle-class subdivisions such as Lake View’s Million Dollar Lakes lost their homes to foreclosures.

According to industry experts, the assessed value of foreclosure houses in the county were between $58,000 and $300,000, and the median price was about $124,923. Experts explained that the median price indicates that 50 percent of the houses were assessed for more and the other 50 percent were assessed for less.

Lichtenstein said that she started to study the foreclosure trend in the county in 2008 after she learned from a neighbor about some foreclosures in the NorthRiver Yacht Club community. The information was not true but she started compiling foreclosure data and analyzing it with the help of Brian McKean, University of Alabama School of Social Work grant administrator.

According to data analysis, 58 percent of people whose properties were repossessed were married couples. And the average time that they stayed in their foreclosure houses was only about four years. Data also showed that the amount of time they stayed and owned their houses when they were foreclosed ranged from a year to almost 31 years.

The study also showed that foreclosure continues to spread across the county. Since February 2008, about 55 houses have been repossessed every month in Tuscaloosa. The highest number of repo homes for sale was reported last June with 93 foreclosed homes.

Circuit Judge John Doyle of West Volusia, Florida has decided to step down from a foreclosure case when some lawyers complained about his alleged bias comments. Doyle has been handling an increasing number of cases involving repossessed houses in West Volusia since early this year.

Some lawyers involved in the lawsuit filed by Deutsche Bank National Trust Co, against Deltona homeowner, Vincent Virgilio have asked Doyle to remove himself from the case. According to reports, Doyle told Farzard Milani, one of the bank’s lawyers, that he would not perform his job if Milani will just sit in his Fort Lauderdale office, smoke Cohiba cigars and drink lattes.

Doyle reportedly told Milani that he will do everything to have him disbarred. Milani’s lawyers claimed that Doyle made ethnic or racial bias inferences against Milani.

Doyle explained that an estimated 20 percent of homeowners who are at risk of foreclosures were making an appearance in court while some lawyers representing the banks were not. Non-appearance of lawyers resulted to delayed or canceled hearings.

He said that distressed homeowners were angry because they were losing their properties to foreclosures and they leave their work early to attend a hearing that often was canceled or delayed.

Doyle has allowed lawyers representing lenders from across Florida the option to make their argument by telephone. However, in some cases, lawyers would not answer his calls. He explained that many law firms representing the banks hire neophyte lawyers who will handle the foreclosure cases for a fixed, flat fee.

He added that these neophyte lawyers are trained not to give importance to foreclosure hearings and missing one is not such a big deal. He explained that missing just one hearing would mean granting of relief against their clients.

After the controversy with Milani, Doyle decided to stop holding hearings by telephone, affecting the almost 3,000 pending cases of foreclosures on his docket. Milani’s lawyers filed a request for Doyle’s removal from the foreclosure case before the Fifth District Court of Appeal. They claim that they have the evidence showing that Doyle dislikes Milani, adding that the judge’s comments caused the lawyer to be concerned that he will not get a fair judgment.

In the case, Deutsche Bank is seeking about $177,700 for the mortgage owed by Virgilio on his Deltona house. According to court records, Virgilio claimed that he is a person with good credit standing but was forced to miss payments because he lost his job.

The media’s description of the glut of foreclosed homes evokes images of thousands of cheap repo homes available for picking by homebuyers looking for their dream investments or homes. But to the surprise of Southern California homebuyers, there are not many bargain-priced repo homes available and there are too many buyers competing for a few attractively-priced repo homes.

The significant drop in numbers for pre-foreclosure filings and foreclosed homes last October is a good indicator that the real estate industry is slowly getting back on its feet. Levels dropped to its lowest since February. Credit this to the efforts posted by banks, lenders, non-profit organizations and government agencies who worked restlessly these previous months to help beleaguered homeowners avoid foreclosures.

The real estate market for repossessed homes is growing rapidly. In 2006, most of the top metropolitans saw an increase in the number of foreclosure homes. Repossessed homes are basically those homes where the lender has taken possession of the home from the homeowner. This kind of a situation arises when the homeowner is unable to make payments on his mortgage. You will find a huge number and variety of repossessed homes in different parts of the United States. Some of the homes are in perfect condition while others need small repairs. Either ways investing in repossessed homes makes a lot of sense because you get to save approx. 10%-15% on the market price of the property.

Every now and then, there are major and even small banks in your locality that conduct or hold foreclosure auctions for repossessed homes. There are more and more people going through and shopping homes through these auctions because there is a prevailing public perception that repossessed homes sold by banks are at cheaper prices.