www.g-sig.com
The federal government is realizing that diminished home values have a growing correlation to the amount of foreclosures a particular neighborhood may incur additionally; vacant and abandoned properties reduce the attractiveness as well as the value of the neighborhood as a whole.
The Neighborhood Stabilization Program has been implemented nationwide to prevent this from happening. Under the new program $3.92 Billion in grants have been allocated for all 50 states, territories and nonprofit organizations with one common goal – to stabilize our neighborhoods.
Under this new program state and local authorities are given the funds to purchase homes that are foreclosed and/or abandoned with the intent to resell, rehabilitate or redevelop these properties with the goal of stabilizing neighborhoods, and reduce the decline of home values for neighboring properties.
In 2008 the government asked each state, county, city and nonprofit organization to submit their action plan. Based on this action plan funds were allocated. Each state receives a minimum of $19.6 Million, approximately ½ % of the total fund.
The action planed detailed exactly how each body would go about buying, selling or rehabilitating local areas in distress. The funds that are allocated can be used for any of the following:
Establishing a financing mechanism for buying and redevelopment of foreclosed properties, that can be attained by those borrowers who have low and/or moderate income.
Purchasing foreclosed properties to either live or rehabilitate, particularly those properties that have been abandoned for a while in order to increase the overall value of a neighborhood.
Funds can also be used to demolish and/or redevelop vacant properties that they feel have been an unlivable or an eye sore.
There are a few requirements when receiving these funds for example, at least 25% of total funds received must be used to purchase and redevelop abandoned property or foreclosed property OR properties that will be used to house families whose income is substantially less than the average income of the area.
Lastly, funds must be disbursed in order of need the fund gives priority to those area’s with the greatest need and is calculated by the following:
1. Areas with the greatest foreclosure percentage.
2. Areas with the greatest number of homes financed by sub-prime mortgages
3. Areas predicted to face the greatest rise in foreclosure rates.
For the South Florida Foreclosures, particularly West Palm Beach, Broward, and Miami-Dade you can take a look at their action plan here:
West Palm Beach - http://www.cityofwpb.com/housing/NSP%20amend%20Exhibit%20A.pdf
Broward County - http://www.broward.org/housing/actionplan_fy08.pdf
Miami –Dade County - http://www.miamidade.gov/eap/library/08-10-18-NSP_Status_Report.pdf
Tuesday, June 30, 2009
Friday, June 26, 2009
Helping Families Save Their Homes Act of 2009
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Last month in May of 2009 President Obama signed into law the “Helping Families Save Their Homes Act of 2009”. Not a moment too soon for troubled borrowers facing foreclosure. This new Act allows home owners to save themselves from falling into foreclosure, protects renter’s rights, and encourages lenders to pursue other avenues of resolution.
This new act expands the eligibility for Bankruptcy – Chapter 13. It allows for the exclusion of mortgage debt from the debt limitations. This does not mean that you can walk away clean from the mortgage obligation however. This new Act allows bankruptcy judges to alter the mortgage terms for an individual filing for bankruptcy in one of two ways:
For those properties that are FHA financed this new Act empowers the Secretary of the Housing and Urban Development (HUD) to pay off all or some of the balance owed on any FHA insured loans that are re-modified under this new Act.
As far as lenders and banks are concerned, the government realizes that by enforcing these institutions to take these measures that they might lose money. So in order to counter act this negative loss and stabilize all markets – the Act provides a “safe harbor” from the liability they may incur. Additionally, in some cases lenders and banks may receive a $1,000.00 for every loan that is successfully re-modified.
As far as renters are concerned – the new Act provides security for renters whose landlords fall into foreclosure. There are two forms of protection a renter may fall into:
There are however a few details and qualifications. For instance there MUST be a written contract to rent or lease the property, and the rent amount must not be substantially less than the current fair market value in the area.
Finally under this new act, the FDIC has raised the insured amount on bank deposits. Traditionally $100,000 – the new amount to be insured by the FDIC has increased to $250,000. This should bring more security into the banking industry and promote more people to trust the banks again and keep their money with them. This new increase is due to expire December 31, 2009 – and will revert to $100K thereafter.
Last month in May of 2009 President Obama signed into law the “Helping Families Save Their Homes Act of 2009”. Not a moment too soon for troubled borrowers facing foreclosure. This new Act allows home owners to save themselves from falling into foreclosure, protects renter’s rights, and encourages lenders to pursue other avenues of resolution.
This new act expands the eligibility for Bankruptcy – Chapter 13. It allows for the exclusion of mortgage debt from the debt limitations. This does not mean that you can walk away clean from the mortgage obligation however. This new Act allows bankruptcy judges to alter the mortgage terms for an individual filing for bankruptcy in one of two ways:
1. The judge can reduce the interest rate on the mortgage loan that the borrower has taken.
2. The judge can even extend the term of the mortgage loan for up to 40 years so that the monthly payment can be reduced as well.
For those properties that are FHA financed this new Act empowers the Secretary of the Housing and Urban Development (HUD) to pay off all or some of the balance owed on any FHA insured loans that are re-modified under this new Act.
As far as lenders and banks are concerned, the government realizes that by enforcing these institutions to take these measures that they might lose money. So in order to counter act this negative loss and stabilize all markets – the Act provides a “safe harbor” from the liability they may incur. Additionally, in some cases lenders and banks may receive a $1,000.00 for every loan that is successfully re-modified.
As far as renters are concerned – the new Act provides security for renters whose landlords fall into foreclosure. There are two forms of protection a renter may fall into:
1. If the renter has a lease, the new owner must honor that lease and allow them to fulfill the lease till it is set to expire given that payments are up to date and remain in good standing.
2. Secondly, if a renter is renting month-to-month without a long term lease they must be given 90 days (3months!) notice to leave the property.
There are however a few details and qualifications. For instance there MUST be a written contract to rent or lease the property, and the rent amount must not be substantially less than the current fair market value in the area.
Finally under this new act, the FDIC has raised the insured amount on bank deposits. Traditionally $100,000 – the new amount to be insured by the FDIC has increased to $250,000. This should bring more security into the banking industry and promote more people to trust the banks again and keep their money with them. This new increase is due to expire December 31, 2009 – and will revert to $100K thereafter.
Tuesday, June 23, 2009
Home Affordable Modification Plan
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The Home Affordable Modification Plan is being implemented by the Treasury Department under President Obama’s new bill. The cries of homeowners have finally been heard and finally a viable option presents itself. There is a caveat though, you must first qualify and after qualifying you must go through a trial period. Here are a few more details about the program.
Who can qualify: You must be occupying the residence and have it be considered as your primary residence. Additionally, you must be facing financial hardship and prove that you are or are about to face difficulty paying your mortgage. If you are about to face foreclosure, the process will stop when qualifying for this program.
What are the guidelines?: In order to qualify under this plan your current mortgage payment must be greater than 31% of your income (before tax). Your loan must also have been originated before January 1, 2009.
What does the plan call for?: Under this new plan, your mortgage rate will be reduced to achieve a mortgage payment 31% or less of your current income (before tax). After your interest rate and monthly payment has been reduced you must demonstrate that you are able to make your new payment on time for a trial period of 3months. After these three months if all payments are made on time, you will be locked into the newly reduced rate and payment for a period of 5 years!
Is it free?: Yes, it is 100% free for the borrower. Your current lender will even pay for your credit report!
What’s in it for the lender?: The lender now does not have to foreclose on the property. Secondly, for every borrower who successfully qualifies and stays in the program they will receive a $1000.00 a year for 5 years from the government program.
How long will this last?: This program will be accepting applicants up until December 31, 2012.
Please be aware that lenders are NOT required to join or implement this program however, with the incentives being offered to them by the government and the increased amount of foreclosures and delinquencies a large amount of lending companies have started to implement this process.
For more information on programs like these and other South Florida Foreclosure news check back with us again next week or visit www.g-sig.com for another blog installment.
The Home Affordable Modification Plan is being implemented by the Treasury Department under President Obama’s new bill. The cries of homeowners have finally been heard and finally a viable option presents itself. There is a caveat though, you must first qualify and after qualifying you must go through a trial period. Here are a few more details about the program.
Who can qualify: You must be occupying the residence and have it be considered as your primary residence. Additionally, you must be facing financial hardship and prove that you are or are about to face difficulty paying your mortgage. If you are about to face foreclosure, the process will stop when qualifying for this program.
What are the guidelines?: In order to qualify under this plan your current mortgage payment must be greater than 31% of your income (before tax). Your loan must also have been originated before January 1, 2009.
What does the plan call for?: Under this new plan, your mortgage rate will be reduced to achieve a mortgage payment 31% or less of your current income (before tax). After your interest rate and monthly payment has been reduced you must demonstrate that you are able to make your new payment on time for a trial period of 3months. After these three months if all payments are made on time, you will be locked into the newly reduced rate and payment for a period of 5 years!
Is it free?: Yes, it is 100% free for the borrower. Your current lender will even pay for your credit report!
What’s in it for the lender?: The lender now does not have to foreclose on the property. Secondly, for every borrower who successfully qualifies and stays in the program they will receive a $1000.00 a year for 5 years from the government program.
How long will this last?: This program will be accepting applicants up until December 31, 2012.
Please be aware that lenders are NOT required to join or implement this program however, with the incentives being offered to them by the government and the increased amount of foreclosures and delinquencies a large amount of lending companies have started to implement this process.
For more information on programs like these and other South Florida Foreclosure news check back with us again next week or visit www.g-sig.com for another blog installment.
Friday, June 19, 2009
Foreclosures Rise – And Expected To Increase More In South Florida Market
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Lenders have finally begun to catch up on the backlog of foreclosures they have piled up, after waiting for the Federal Government to give some indication as to the current real estate market (via moratoriums, loan re-modifications, and bail out assistance), it seems to be too little too late.
The market is changing and with the increase of REO’s (Foreclosures) we are now facing a buyer’s market. One in every 78 homes was foreclosed upon in Broward County, FL with similar numbers realized in Palm Beach & Miami – Dade counties.
Foreclosures that were previously put on hold while waiting for judgment from the government have started back up again – at a rapid pace. The Federal Government issued new guidelines on March 4, 2009 in regards to loan re-modification. Under these new guidelines many home owners do not qualify for any assistance at all and are left helpless. To make matters worse, the remaining home owners who do qualify for re-modification assistance do not even live in the property any longer and have decided to walk away, only leaving foreclosure as an option.
Help maybe on the way. According to the Florida Supreme Court, they are in the beginning stages of possibly implementing a state wide mediation program that will require all lenders and banks to work one-on-one with borrowers on their loan before moving ahead with the foreclosure process. This is already being tested in Miami-Dade County.
Test area’s throughout South Florida particularly Miami-Dade are being carefully looked at by government officials both on the State and Federal levels. If South Florida show’s signs that this new program is in fact doing its job we can soon expect it to be implemented throughout the State and soon the Nation.
With counties such as Palm Beach, Broward and Miami Dade leading the state in foreclosures some signs have showed that this program is in fact working. As mentioned in last week’s blog post, foreclosure filings are begging to show a very slight drop. If this is in direct correlation with the programs being put in place is too hard to tell after just one month. Experts say that if this trend continues for the upcoming months throughout the end of the 2nd quarter of the year, we may level out the upside down market.
Check back with us next week for another blog installment on the latest South Florida Foreclosure trends and market opinions at http://gsigllc.blogspot.com
Posted by: Omar Salam
Lenders have finally begun to catch up on the backlog of foreclosures they have piled up, after waiting for the Federal Government to give some indication as to the current real estate market (via moratoriums, loan re-modifications, and bail out assistance), it seems to be too little too late.
The market is changing and with the increase of REO’s (Foreclosures) we are now facing a buyer’s market. One in every 78 homes was foreclosed upon in Broward County, FL with similar numbers realized in Palm Beach & Miami – Dade counties.
Foreclosures that were previously put on hold while waiting for judgment from the government have started back up again – at a rapid pace. The Federal Government issued new guidelines on March 4, 2009 in regards to loan re-modification. Under these new guidelines many home owners do not qualify for any assistance at all and are left helpless. To make matters worse, the remaining home owners who do qualify for re-modification assistance do not even live in the property any longer and have decided to walk away, only leaving foreclosure as an option.
Help maybe on the way. According to the Florida Supreme Court, they are in the beginning stages of possibly implementing a state wide mediation program that will require all lenders and banks to work one-on-one with borrowers on their loan before moving ahead with the foreclosure process. This is already being tested in Miami-Dade County.
Test area’s throughout South Florida particularly Miami-Dade are being carefully looked at by government officials both on the State and Federal levels. If South Florida show’s signs that this new program is in fact doing its job we can soon expect it to be implemented throughout the State and soon the Nation.
With counties such as Palm Beach, Broward and Miami Dade leading the state in foreclosures some signs have showed that this program is in fact working. As mentioned in last week’s blog post, foreclosure filings are begging to show a very slight drop. If this is in direct correlation with the programs being put in place is too hard to tell after just one month. Experts say that if this trend continues for the upcoming months throughout the end of the 2nd quarter of the year, we may level out the upside down market.
Check back with us next week for another blog installment on the latest South Florida Foreclosure trends and market opinions at http://gsigllc.blogspot.com
Posted by: Omar Salam
Tuesday, June 16, 2009
Increase of Federal Tax Credits for housing? – The Business Roundtable submits their recommendations.
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On April 1st, 2009 the Business Roundtable Housing Working Group was formed. It is comprised of CEO’s of top companies such as Whirlpool, Honeywell and Owens Corning. Its main objective is to make recommendations to Congress and the current Administration, on how to stabilize markets – In particular the housing and financial markets. One June 11th, 2009 The Housing Working Group made a series of recommendations that will be outlined in this blog that they recommend that would stabilize these two deteriorating markets.
Tax Credits – The Business Roundtable’s primary recommendation is to increase the Federal tax credit that home buyers are eligible for. Currently, only “first time” home buyers are eligible for the $8,000.00 Federal tax credit. This recommendation calls for the tax credit to be increased to $15,000.00, not only will it be increased, but it will also reach out to all home buyers regardless of their status as long as it is for a purchase of their primary residence, regardless of their income.
Interest Rates – In addition to a higher Federal tax credit, The Housing Working Group also calls for the Federal Reserve to keep mortgage interest rates below 5% as much as possible for the next 1 year. The theory behind this is that manipulating the interest rate and keeping them low will spawn more spending in the housing markets as well as for lending institutions to be able to lend money at a relatively low interest rate.
Default Foreclosure Rates – Due to the increasing number of borrowers falling into foreclosure the Business Roundtable has also made a suggestion to Congress to “conduct a thorough review of current foreclosure mitigation and loan modification programs”. Congress has laid out a new mathematical formula for lenders to use to determine whether or not a borrower can qualify for a loan re-modification program. Currently, a borrower who may qualify for this program has already vacated their house leaving no other option for foreclosure due to the back-log of foreclosures needed to be processed.
Other recommendations fall in line with what many other activists and congressional members have been pushing for, such as reformed lending practices that provide transparency and accountability throughout.
For more information about the Business Roundtable Housing Working Group please visit their website at: www.businessroundtable.org
Check back with us next week for another blog installment about South Florida foreclosures as well as local and national real estate news.
On April 1st, 2009 the Business Roundtable Housing Working Group was formed. It is comprised of CEO’s of top companies such as Whirlpool, Honeywell and Owens Corning. Its main objective is to make recommendations to Congress and the current Administration, on how to stabilize markets – In particular the housing and financial markets. One June 11th, 2009 The Housing Working Group made a series of recommendations that will be outlined in this blog that they recommend that would stabilize these two deteriorating markets.
Tax Credits – The Business Roundtable’s primary recommendation is to increase the Federal tax credit that home buyers are eligible for. Currently, only “first time” home buyers are eligible for the $8,000.00 Federal tax credit. This recommendation calls for the tax credit to be increased to $15,000.00, not only will it be increased, but it will also reach out to all home buyers regardless of their status as long as it is for a purchase of their primary residence, regardless of their income.
Interest Rates – In addition to a higher Federal tax credit, The Housing Working Group also calls for the Federal Reserve to keep mortgage interest rates below 5% as much as possible for the next 1 year. The theory behind this is that manipulating the interest rate and keeping them low will spawn more spending in the housing markets as well as for lending institutions to be able to lend money at a relatively low interest rate.
Default Foreclosure Rates – Due to the increasing number of borrowers falling into foreclosure the Business Roundtable has also made a suggestion to Congress to “conduct a thorough review of current foreclosure mitigation and loan modification programs”. Congress has laid out a new mathematical formula for lenders to use to determine whether or not a borrower can qualify for a loan re-modification program. Currently, a borrower who may qualify for this program has already vacated their house leaving no other option for foreclosure due to the back-log of foreclosures needed to be processed.
Other recommendations fall in line with what many other activists and congressional members have been pushing for, such as reformed lending practices that provide transparency and accountability throughout.
For more information about the Business Roundtable Housing Working Group please visit their website at: www.businessroundtable.org
Check back with us next week for another blog installment about South Florida foreclosures as well as local and national real estate news.
Friday, June 12, 2009
Has The Housing Crisis Reached Rock Bottom? – New Signs Of Hope Arise.
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Florida still ranks #3 in the country with the 3rd most foreclosed state. Broward County finishes 1st in the tri-county area with the most amount of foreclosures followed by Miami-Dade & Palm Beach Countries rounding out 2nd and 3rd.
The good news here is mixed with the bad. Even though foreclosures still remain high, the amount of properties that have foreclosure judgments are declining. This does not necessarily mean that we have leveled out, but signs show the end is near.
Nationally speaking prices of homes have declined with the top 15 cities in the U.S. noticing a 15% decline in prices. This is great news for you potential buyers in the market. The resulting price decline shows that slowly prices are leveling out, which means that valuations for properties will for the first time be as close to real value as they have been in the past.
The government is urging people to spend, to buy and to refinance to help our weakened banking and financial systems. First time home buyers are now able to purchase homes easier than ever before. With lowered interest rates and federal tax credits, owning a home is now becoming a possible reality.
Home sales have fell 3% it may seem like a lot, but compared to previous months reports its lower than the past. This may mean that home prices are finally leveling out. It’s important to note that this does not mean the foreclosure process is over. Banks have been backlogged due to the ever increasing amount of past due mortgages and loss of job and incomes. Experts predict that the current crisis will finally meet its end come 2010 – in most likely the 3rd quarter of that year, according to RealyTrac.
Foreclosure properties have flooded the market and for many buyers this is great news. In some cases banks are cutting sales prices by 4% to attract more buyers to purchase. Good credit ratings as well as a good realtor will help you find these homes. The “great” deals are still out there especially in Boca, Broward and Miami – Dade. It takes a little time; a lot of patience and a knowledgeable realtor to make that dream of owning a house come true.
Want more information on the current South Florida foreclosure/ real estate market and opinions? Visit our website at http://www.g-sig.com/ and check back with us every Friday for a new blog about the latest trends and advice.
Florida still ranks #3 in the country with the 3rd most foreclosed state. Broward County finishes 1st in the tri-county area with the most amount of foreclosures followed by Miami-Dade & Palm Beach Countries rounding out 2nd and 3rd.
The good news here is mixed with the bad. Even though foreclosures still remain high, the amount of properties that have foreclosure judgments are declining. This does not necessarily mean that we have leveled out, but signs show the end is near.
Nationally speaking prices of homes have declined with the top 15 cities in the U.S. noticing a 15% decline in prices. This is great news for you potential buyers in the market. The resulting price decline shows that slowly prices are leveling out, which means that valuations for properties will for the first time be as close to real value as they have been in the past.
The government is urging people to spend, to buy and to refinance to help our weakened banking and financial systems. First time home buyers are now able to purchase homes easier than ever before. With lowered interest rates and federal tax credits, owning a home is now becoming a possible reality.
Home sales have fell 3% it may seem like a lot, but compared to previous months reports its lower than the past. This may mean that home prices are finally leveling out. It’s important to note that this does not mean the foreclosure process is over. Banks have been backlogged due to the ever increasing amount of past due mortgages and loss of job and incomes. Experts predict that the current crisis will finally meet its end come 2010 – in most likely the 3rd quarter of that year, according to RealyTrac.
Foreclosure properties have flooded the market and for many buyers this is great news. In some cases banks are cutting sales prices by 4% to attract more buyers to purchase. Good credit ratings as well as a good realtor will help you find these homes. The “great” deals are still out there especially in Boca, Broward and Miami – Dade. It takes a little time; a lot of patience and a knowledgeable realtor to make that dream of owning a house come true.
Want more information on the current South Florida foreclosure/ real estate market and opinions? Visit our website at http://www.g-sig.com/ and check back with us every Friday for a new blog about the latest trends and advice.
Friday, June 5, 2009
Foreclosures Rise In South Florida – Leaving Buyers To Have Their Way.
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South Florida ranks 2nd in the nation in foreclosures having increased 111% from last month alone, according to RealtyTrac – and we can expect a flood of new foreclosures in the coming months.
The market is changing and with the increase of REO’s (Foreclosures) we are now facing a buyer’s market. One in every 78 homes was foreclosed upon in Broward County, FL with similar numbers realized in Palm Beach & Miami – Dade counties.
All is not lost – for those with good credit ratings and available funds this is YOUR time. South Florida has quickly turned itself around into a buyer’s market and current market prices are to be taken advantage of. Banks do not want to hold any one property for too long of a time - they have to write it down as a loss after a certain holding period.
For those who haven’t been hit by the current foreclosure flood, I give you this piece of advice – BUY! Our financial market has taken a severe hit, it’s struggling and the government is doing everything it can to promote spending.
The lowering of interest rates – the lower the interest rate; the more inclined consumers are to spend. That’s what the government and economist thinks. Take advantage of this and pair it with a weakened real estate market and you will come out on top.
The process of buying a home hasn’t changed much, the game is the same but the rules have changed a little. Stricter underwriting and screening process have taken effect – the banks can’t afford to take another hit due to “oversight” and “unethical behavior”.
Take advantage of the low home prices on REO (Foreclosure) properties, before you buy remember these 2 simple rules:
1) Get pre approved from a legitimate lender – banks do not want to see a pre approval from “The Mortgage Man” down the street. If you have a good credit rating and some money saved institutional lenders are waiting for you to walk through their doors.
2) Get in touch with a professional REO Broker. They are experienced in REO Foreclosures and can foresee potential complications that may arise with REO’s that other real estate agents can’t see. Not to mention that they will make the process smooth and easy for you, the buyer.
Posted By: Omar Salam
South Florida ranks 2nd in the nation in foreclosures having increased 111% from last month alone, according to RealtyTrac – and we can expect a flood of new foreclosures in the coming months.
The market is changing and with the increase of REO’s (Foreclosures) we are now facing a buyer’s market. One in every 78 homes was foreclosed upon in Broward County, FL with similar numbers realized in Palm Beach & Miami – Dade counties.
All is not lost – for those with good credit ratings and available funds this is YOUR time. South Florida has quickly turned itself around into a buyer’s market and current market prices are to be taken advantage of. Banks do not want to hold any one property for too long of a time - they have to write it down as a loss after a certain holding period.
For those who haven’t been hit by the current foreclosure flood, I give you this piece of advice – BUY! Our financial market has taken a severe hit, it’s struggling and the government is doing everything it can to promote spending.
The lowering of interest rates – the lower the interest rate; the more inclined consumers are to spend. That’s what the government and economist thinks. Take advantage of this and pair it with a weakened real estate market and you will come out on top.
The process of buying a home hasn’t changed much, the game is the same but the rules have changed a little. Stricter underwriting and screening process have taken effect – the banks can’t afford to take another hit due to “oversight” and “unethical behavior”.
Take advantage of the low home prices on REO (Foreclosure) properties, before you buy remember these 2 simple rules:
1) Get pre approved from a legitimate lender – banks do not want to see a pre approval from “The Mortgage Man” down the street. If you have a good credit rating and some money saved institutional lenders are waiting for you to walk through their doors.
2) Get in touch with a professional REO Broker. They are experienced in REO Foreclosures and can foresee potential complications that may arise with REO’s that other real estate agents can’t see. Not to mention that they will make the process smooth and easy for you, the buyer.
Posted By: Omar Salam
Wednesday, June 3, 2009
More Bank Foreclosures to Come - Learn How to Take Advantage of the New Market
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According to RealtyTrac, an online marketer of foreclosed homes, More than 800,000 properties received foreclosure filings in the first quarter of 2009. After four years of record keeping done by RealtyTrac, the only quarter with more foreclosures was the 4th quarter in 2008. These statistics show that the market may be bottoming out; however, do not be fooled. This is due to a moratorium Fannie Mae placed on evictions starting in October 2008 with nearly every other lender following suit. The first quarter of 2009 has passed, and now most moratoriums have been lifted, leaving a large increase of evictions and foreclosure auctions.
An article from the New York Times stated, in the end of 2008, 11.93 percent of all mortgages were delinquent or in foreclosure. In the first three months of 2009 the nation has seen about 12.07 percent of all mortgages delinquent or in foreclosure.
There is plenty of discussion about state and federal assistance to those who are underwater with their mortgage payments. This will make very little difference in 2009. Ron Quintero, the CEO of Debt Advisory Alliance, said that after the first quarter of 2009, we are going to see a large amount of foreclosures starting to adjust. He also went on to say that President Obama’s recently released housing plan does not allow close to seventy-five percent of borrowers with adjustable rate mortgages (ARMS) to qualify for the loan modification.
With the moratoriums ending, unemployment rates rising, property values decreasing, and an increase in foreclosure filings, the housing market is already seeing another wave of bank owned homes. Morris Davis, a real estate expert at the University of Wisconsin quoted in a New York Times story, “Foreclosures were bad last year? It’s going to get worse.” People defaulting on their mortgages will likely jump 60 percent because of unemployment in 2009, while last year showed about a 30% increase.
What does all this mean for housing prices and knowing the right time to buy? There are signs that the housing market is bottoming out, but it will not bottom out as one would expect. The “bottom” could refer to the moment housing prices start to decrease at a slower rate. We’ve already seen this happen with the first quarter of 2009. Property values will begin to decrease at a lower rate as the surplus of available homes begins to get smaller. Once this happens, there will be greater competition for each home – especially the low-priced, bank foreclosures.
RealtyTrac and Trulia.com conducted a survey where they found that in November of 2008 47% of buyers were inclined to buy a foreclosure. In May of 2009, this number increased to 55%. Another statistic from RealtyTrac estimated that foreclosed homes sell for 30% less than privately owned homes.
Nearly half of the buyers today are still wary of buying foreclosures for a few reasons, while 85% state there are negative aspects of buying a foreclosure. The top concerns, in order from greatest to least, are Hidden Costs, believe the process is risky, and concerns that the home will lose value.
With an increase in interest with foreclosures and with inventory beginning to dry up, real estate markets will begin to see less of a price gap between foreclosed homes and privately owned homes. If you’re looking to get the best value for your home purchase now may be the time.
When buying a foreclosure, here are a few steps to help you in your journey.
First, trust only in agents who specialize, or are familiar with working with foreclosed properties. If your agent is submitting an offer, request for plenty of time - at least 45 days. This is especially important for FHA buyers who need time to get their loan commitment.
Conditions of foreclosures can sometimes appear excellent but there could be damages unseen by the naked eye. Don’t let this dissuade you on submitting an offer. You have 48-72 hours from the time your offer is accepted before you have to sign and return “seller addendums,” in other words, the seller’s contract. Within that period always get an inspection. It may cost you some money, but it gives you a much larger picture as to the condition of the home you’re buying.
Make all requests up front. If you’re obtaining a loan to purchase a home, ask your agent and mortgage broker what repairs, if any, are necessary to complete to obtain financing. For example, if there is no running water and no range (which could cause a lender not to approve you for financing), state in the contract that water must be turned on prior to the sale and a working range must be installed. Requesting these items after going under contract could potentially kill the deal. Banks, asset management companies, and outsourcers have a lot of files and upper management to deal with to make decisions. A small request or change to the terms of a property under contract for a traditional sale can normally be worked out fine but could potentially kill a deal for a bank owned sale.
Posted by: Jared Cohen
According to RealtyTrac, an online marketer of foreclosed homes, More than 800,000 properties received foreclosure filings in the first quarter of 2009. After four years of record keeping done by RealtyTrac, the only quarter with more foreclosures was the 4th quarter in 2008. These statistics show that the market may be bottoming out; however, do not be fooled. This is due to a moratorium Fannie Mae placed on evictions starting in October 2008 with nearly every other lender following suit. The first quarter of 2009 has passed, and now most moratoriums have been lifted, leaving a large increase of evictions and foreclosure auctions.
An article from the New York Times stated, in the end of 2008, 11.93 percent of all mortgages were delinquent or in foreclosure. In the first three months of 2009 the nation has seen about 12.07 percent of all mortgages delinquent or in foreclosure.
There is plenty of discussion about state and federal assistance to those who are underwater with their mortgage payments. This will make very little difference in 2009. Ron Quintero, the CEO of Debt Advisory Alliance, said that after the first quarter of 2009, we are going to see a large amount of foreclosures starting to adjust. He also went on to say that President Obama’s recently released housing plan does not allow close to seventy-five percent of borrowers with adjustable rate mortgages (ARMS) to qualify for the loan modification.
With the moratoriums ending, unemployment rates rising, property values decreasing, and an increase in foreclosure filings, the housing market is already seeing another wave of bank owned homes. Morris Davis, a real estate expert at the University of Wisconsin quoted in a New York Times story, “Foreclosures were bad last year? It’s going to get worse.” People defaulting on their mortgages will likely jump 60 percent because of unemployment in 2009, while last year showed about a 30% increase.
What does all this mean for housing prices and knowing the right time to buy? There are signs that the housing market is bottoming out, but it will not bottom out as one would expect. The “bottom” could refer to the moment housing prices start to decrease at a slower rate. We’ve already seen this happen with the first quarter of 2009. Property values will begin to decrease at a lower rate as the surplus of available homes begins to get smaller. Once this happens, there will be greater competition for each home – especially the low-priced, bank foreclosures.
RealtyTrac and Trulia.com conducted a survey where they found that in November of 2008 47% of buyers were inclined to buy a foreclosure. In May of 2009, this number increased to 55%. Another statistic from RealtyTrac estimated that foreclosed homes sell for 30% less than privately owned homes.
Nearly half of the buyers today are still wary of buying foreclosures for a few reasons, while 85% state there are negative aspects of buying a foreclosure. The top concerns, in order from greatest to least, are Hidden Costs, believe the process is risky, and concerns that the home will lose value.
With an increase in interest with foreclosures and with inventory beginning to dry up, real estate markets will begin to see less of a price gap between foreclosed homes and privately owned homes. If you’re looking to get the best value for your home purchase now may be the time.
When buying a foreclosure, here are a few steps to help you in your journey.
First, trust only in agents who specialize, or are familiar with working with foreclosed properties. If your agent is submitting an offer, request for plenty of time - at least 45 days. This is especially important for FHA buyers who need time to get their loan commitment.
Conditions of foreclosures can sometimes appear excellent but there could be damages unseen by the naked eye. Don’t let this dissuade you on submitting an offer. You have 48-72 hours from the time your offer is accepted before you have to sign and return “seller addendums,” in other words, the seller’s contract. Within that period always get an inspection. It may cost you some money, but it gives you a much larger picture as to the condition of the home you’re buying.
Make all requests up front. If you’re obtaining a loan to purchase a home, ask your agent and mortgage broker what repairs, if any, are necessary to complete to obtain financing. For example, if there is no running water and no range (which could cause a lender not to approve you for financing), state in the contract that water must be turned on prior to the sale and a working range must be installed. Requesting these items after going under contract could potentially kill the deal. Banks, asset management companies, and outsourcers have a lot of files and upper management to deal with to make decisions. A small request or change to the terms of a property under contract for a traditional sale can normally be worked out fine but could potentially kill a deal for a bank owned sale.
Posted by: Jared Cohen
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