Tag Archives: foreclosures


Best Places to Buy Foreclosures

In some parts of the country, it’s much easier to land a good foreclosure deal than in others.

In the Palm Bay, Fla. metro area, for example, buyers have plenty of foreclosed homes to choose from and pay an average of 28% less for repossessed homes than in conventional sales, according to RealtyTrac, an online marketer of foreclosed homes. Last year, nearly 24% of all sales were foreclosures.

As a result, it landed at the top of RealtyTrac’s best places to buy a foreclosure in 2013 list. Other metro areas where home buyers will have better luck include Rochester and Albany, N.Y., the New York City metro area, and Lakeland, Fla.

Those shopping around in McAllen, Texas though, shouldn’t hold their breath. The supply of foreclosed homes there are limited, according to RealtyTrac, and only made up 7% of all home sales last year. Other markets where it’s tough to find a deal on a foreclosed home include Ogden, Utah, Little Rock, Ark., Las Vegas, and Salt Lake City.

“The challenge of the 2013 market, for many cities, is a lack of [foreclosure] inventory,” said Daren Blomquist, RealtyTrac’s vice president. “The best places to buy are where a lot of homes will become available.”

Many foreclosures have been in limbo since fall 2010 following the so-called robo-signing scandal, when banks allowed employees to sign off on thousands of foreclosure documents a month with little verification.

The backlog in foreclosures had become particularly bad in judicial states like Florida and Illinois, where judges must approve the paperwork. But after a massive foreclosure abuse settlement was reached between the state attorneys general and the nation’s five biggest lenders, foreclosure processing has picked up again in those states.

The rebound in housing markets — gains in existing home sales, new home sales and home prices — has added strength to the case for buying foreclosures. Now that home prices are starting to stabilize, buying a foreclosed home isn’t as risky as it was a few years ago.

“The underlying fundamentals in many of those [top] markets are slowly improving, making it an opportune time to absorb additional foreclosure inventory this year,” Blomquist said.

Yet, not every bargain basement foreclosure is a good deal. Many are sold as-is and come with issues. Get the home inspected and have the heating, air conditioning, electrical and plumbing, as well as the structural integrity checked out before you sign a contract.

Also, analyze the neighborhood carefully and check out local crime rates. When there are a lot of foreclosures in one place they can drag down the home values around them. 

10 best places to buy foreclosures:

These markets have plenty of foreclosures to choose from and steep price discounts.

 
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Source: RealtyTrac and Les Christie, CNNMoney

HAMP Mortgage Modification Program Still No Help

The Obama administration announced more disappointing numbers for its signature anti-foreclosure initiative and said Thursday that it would continue to withhold payments from two banks running the program.

Just 14,000 homeowners received trial modifications under the Home Affordable Modification Program in July, the fewest of any month since shortly after the program’s launch early in 2009. The previous low came in June. (The Treasury Department, which oversees HAMP, said 22,079 modifications in total have been reported since the June numbers came out, but some of those modifications happened in previous months.) The administration also released its second quarterly review of homeowner treatment by banks and companies that service mortgages, finding that Bank of America and JPMorgan Chase have continued to do such a bad job that incentive payments for completed modifications would be withheld.

“While tens of thousands of additional homeowners benefit from the administration’s programs each month, we need to keep the pressure on servicers to effectively assist those homeowners who are still struggling and eligible for assistance,” said Treasury official Tim Massad in a statement. “These assessments provide an unprecedented level of information about servicer performance and are designed to help more eligible homeowners walk away from this process with better results.”

Article is from AOL Real Estate.


Short Sales: What You Need to Know

 

 

 

 

 

 

 

Perhaps you’ve been hearing a lot about short sales these days. It’s no wonder — the number of short sales on the market has exploded in recent months, as more and more homeowners turn to short sales as a means of avoiding foreclosure.

Some homebuyers seek out short sales in hopes of snagging a good deal. But such sales are not without complications. If you’re considering buying a home in a short sale, here’s what you need to know.

The 411 on Short Sales

When you see a house listed as a short sale, that means the homeowner is trying to sell his property for less than he owes on his mortgage. A bank may agree to this when the homeowner is underwater on his loan and might otherwise go into foreclosure.

Unfortunately, the marketplace is such that the amount the homeowner could sell the property for isn’t always enough to cover the existing mortgage balance, explains Neil Garfinkel, a real estate attorney based in New York City. In these cases, a seller would contact the lender and see if it would be willing to take less than the outstanding balance of the home loan.

What’s in it for the bank?

“Lenders aren’t in the business of owning properties,” says Garfinkel. “In a foreclosure situation, the lender would have to obtain the property back through a foreclosure action. They would then have to maintain the property and ultimately find someone to sell the property to.”

A short sale situation is often compelling for a lender, since the seller has already found someone who is willing to take the property. The lender then just has to make the decision whether it thinks the proceeds from the sale are enough to cover at least a portion of the mortgage, says Garfinkel.

Making a Bid for a Short Sale

Short sales aren’t for everyone. They require a great deal of research from the buyer. At the very least, you would need to view the property, identify all the liens and mortgages and get preapproved for a loan before making a bid.

You also should put together a team of professionals who have experience with the short sale process. Garfinkel recommends a real estate broker, a mortgage professional and perhaps an attorney who all specialize in this type of transaction.

Once you find a home you like and the seller agrees to your offer, you need a contract that’s tailored to a short sale. You’ll want your lawyer, for example, to make sure you have the necessary contingencies in the contract, including one that allows you to walk away from the deal if the process takes too long and your mortgage commitment expires, says Garfinkel.

The Risks of Buying a Short Sale

What are the risks for a buyer? The biggest one is the loss of time. Lenders control the transaction, and it’s entirely possible that a deal could take six months or more to close. It’s also not uncommon for a lender to reject a deal after sitting on the paperwork for many months.

And finally, there’s the money. A buyer may spend a fair bit of cash on out-of-pocket expenses, including attorney’s fees and a mortgage application, trying to buy a short sale only to find out later that the bank doesn’t like the terms of the transaction, says Garfinkel.

Now that you know what a short sale is, you can weigh the pros and cons and decide whether a short sale could be right for you.

This a video transcript go to AOL Real Estate to view the video.


Why Real Estate May Be The Buying Opportunity of the Decade

No one knows what the economy or the stock market will do over the next six months. But when your time horizon is 20 years, the outlook is actually a lot clearer. And right now, all the trends are lining up to make real estate a fantastic long-term buy.

Of course, if you look at recent real estate statistics, the picture is a total catastrophe. Home prices are down by a third, and the decline recently exceeded that of the Great Depression. Across the country, 2 million homes are in foreclosure and another 2 million are more than 90 days behind in their payments. The backlog of foreclosures could last two or three years.

Falling home prices plus the foreclosure backlog probably mean a flat-to-down market over the next couple of years. But beyond the current desolation, the outlook is exactly the opposite. In fact, three different trends are aligning that figure to produce a major home-price boom over the next 20 years.

1. The Economic Cycle. Admittedly, the current recession is far worse than a typical cyclical downturn. Nonetheless, the economy has grown for seven straight quarters. It is possible that there could be a double-dip recession – triggered perhaps by the default of Greece or Portugal. But the worst damage to the U.S. economy appears to be behind us. Home prices are largely driven by demand, which depends on the number of people working, their prospects for salary increases and the availability of credit for mortgages. All three of those things are bad right now, but they typically lag the economic cycle for GDP. Once the economy finally recovers, the factors that drive housing demand will follow.

2. The Real Estate Bust. The collapse in housing prices has destroyed confidence among home buyers and left perhaps a quarter of all properties worth less than the mortgages they carry. But the experts see prices within 5% to 10% of a bottom. Once the process is done, prices will have been knocked all the way down. As a general rule, the worse the crash in a market, the longer the subsequent recovery can last, because there is nowhere to go but up.

3. The Inflation Outlook. The combination of a cyclical economic recovery and the end of the housing bust is by itself reason enough to buy real estate. But in my view, there is an even more compelling long-term argument – the near-inevitability of higher inflation, as I have argued before. Basically, if the U.S. continued building up debt at its present rate, the country would eventually end up where Greece is today. The reason that won’t happen is that while Greece’s debt is in euros, a currency it can’t control, U.S. debt is in dollars. The U.S. will always be able to pay its debts because the Federal Reserve and the Treasury can simply work together to create more dollars (what people used to call “printing money” in the days before electronic funds).

The catch is that creating money that way would eventually lead to inflation and the devaluation of the U.S. dollar. In such an environment, any kind of tangible property appreciates rapidly. The last time such a pattern occurred was in the 1970s as inflation soared into double digits. Of course, ’70s-style inflation might not recur if federal spending is slashed, taxes are raised and oil prices fall. But that’s not how I would bet.

The real estate market may not quite have bottomed out yet. And the boom I’m talking about will probably take more than a decade to unfold. It also may not apply as directly to real estate stocks. Home builders have more complex problems and real estate investment trusts often depend on commercial properties that are sensitive to business conditions. But the next two or three years should offer exceptional opportunities for buying actual real estate – primary residences and vacation homes – preferably somewhere that’s green.

This article is from Time Moneyland.