Foreclosure Rates Highest in 5 years
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MATT’S TAKE ON THE NEWS
May 13, 2010
Foreclosure Rates Highest in 5 years
Alex Veiga from the Associated Press reports on a record number of foreclosures during the first 3 months of 2010. RealtyTrac Inc. reported that the number of foreclosures increased by 35% during the first quarter of 2010. Houses that were in pre-foreclosure jumped by 16% as compared to the same period in 2009.
A quote from the article reads, “We’re finally seeing the banks start to process the inventory that has been in foreclosure, but delayed in processing,” Sharga said. “We expect the pace to accelerate as the year goes on.” What they are referring to is the “shadow inventory” that the banks have been sitting on. The article is also quoted, ”The Obama administration’s $75 billion foreclosure prevention program has only been able to help a small fraction of troubled homeowners.”
So, unfortunately, it appears that the bloodbath is going to continue. Stay close to those that are, or will be, in need.
NEWS ARTICLE - Foreclosure Rates Highest in 5 Years
ALEX VEIGA
AP Real Estate Writer
Published: Friday, April 16, 2010 9:46 AM MST
LOS ANGELES — A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.
RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.
More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.
“We’re right now on pace to see more than 1 million bank repossessions this year,” said Rick Sharga, a RealtyTrac senior vice president.
Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.
These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.
“We’re finally seeing the banks start to process the inventory that has been in foreclosure, but delayed in processing,” Sharga said. “We expect the pace to accelerate as the year goes on.”
In all, more than 900,000 households, or one in every 138 homes, received a foreclosure-related notice, RealtyTrac said. The firm based in Irvine, Calif., tracks notices for defaults, scheduled home auctions and home repossessions.
Homeowners continue to fall behind on payments because they’ve lost their job or seen their mortgage payment rise due to an interest-rate reset. Many are unable to refinance because they now owe more on their loan than their home is worth.
The Obama administration’s $75 billion foreclosure prevention program has only been able to help a small fraction of troubled homeowners.
About 231,000 homeowners have completed loan modifications as part of the Obama administration’s flagship foreclosure prevention program through March. That’s about 21 percent of the 1.2 million borrowers who began the program over the past year.
But another 158,000 homeowners who signed up have dropped out — either because they didn’t make payments or failed to return the necessary documents. That’s up from about 90,000 just a month earlier.
Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.
The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida and California, with Nevada leading the pack, RealtyTrac said.
Rising home prices and speculation fueled a wave of home construction there during the housing boom. But now the state, particularly around the Las Vegas metropolitan area, is saddled with a glut of unsold homes.
Still, the number of homes in Nevada that received a foreclosure filing dropped 16 percent from the first quarter last year.
All told, one in every 33 homes in Nevada was facing foreclosure, more than four times the national average, RealtyTrac said.
Foreclosure filings rose on an annual and quarterly basis in Arizona, however.
One in every 49 homes there received a foreclosure-related notice during the quarter.
Florida, meanwhile, posted the third-highest foreclosure rate with one out of every 57 properties receiving a foreclosure filing.
California accounted for the biggest slice overall of homes facing foreclosure — roughly 23 percent of the nation’s total. One in every 62 properties received a foreclosure filing in the first quarter.
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I’m very hesitant about purchasing a foreclosed house. On one hand it seems like a great deal, but on the other hand, I feel hesitant – like I probably ought to wait for awhile to see how the market pans out. I am seeking some expert opinions on the topic
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Do you feel the housing crisis is over and we have entered a new real estate market? I consider the economy wants to fully recover prior to we have enough folks confident enought to buy new homes. In this marketplace its difficult to make a long term investment and burden oneself with more debt with as a lot uncertainty is in the air.
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Thanks to all for the comments regarding my blog! I always aim to be straightforward and to the point. I post articles to the web every Tuesday and Thursday. My team uploads them a bit quicker though! I will answer the questions from above here:
From Dorothy Kozub, “I’m very hesitant about purchasing a foreclosed house. On one hand it seems like a great deal, but on the other hand, I feel hesitant – like I probably ought to wait for awhile to see how the market pans out. I am seeking some expert opinions on the topic”
DOrothy..while we specialize in buying and selling homes that are in pre foreclosure (ie short sales go to http://www.LuxuryShortSales.com and http://www.DistinctPropertySolutions.com) I know a bit about foreclosures. A few things to consider are valuations, condition and title work. Just because its a bank owned property doesn’t mean that its a great deal. You should look to buy a bank owned property under market value (there are a tom out there). Make sure that you have the property professionally inspected. Many bank owned properties hve been left in a site of disrepair. I have heard horror stories about people NOT being able to get clean title on a bank owned property. Much of this has to do with the shoddy work that the lenders and their servicing companies do when taking the property back. Have title reviewed by a real estate attorney to assure that you are getting clear title.
Question from BettyAnn
“Do you feel the housing crisis is over and we have entered a new real estate market? I consider the economy wants to fully recover prior to we have enough folks confident enought to buy new homes. In this marketplace its difficult to make a long term investment and burden oneself with more debt with as a lot uncertainty is in the air.”
It’s my opinion that we have a long way to go with both the residential and commercial markets. It’s not just crazy mortgages that are pulling the market down (dont get me wrong they still exist and are still resetting) but we are also dealing with rampant unemployment and a shadow inventory of bank owned houses. The shadow inventory consists of properties that have been foreclosed upon by the banks but not released to the market.
THAT said, because of these facts, there still are deals to be had with real estate. It’s understanding values and also understanding your exit strategy. Are you looking to buy and resell? Are you looking to buy and rent? Are you looking to buy and live in the property?
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