Where to Find Foreclosures

When the housing bubble burst in 2007 and more than six million families lost their homes, the pain was greatest in markets where lax lending standards (which have since been outlawed) were the most widespread. Florida, Nevada, Arizona, and California—the so-called “sand states”—led the nation in foreclosures.

What has changed since then?

Today, the foreclosure picture has changed dramatically. Last year’s number of 1.1 million foreclosure filings was the lowest annual total since 2006, the year the housing bubble began to burst.[1] The number of completed foreclosures in January 2016 was down 67.6 percent from the peak of 117,743 in September 2010.[2]

The geography of foreclosures also has changed. Today, Florida and California remain in the top five states for foreclosures. The five states with the highest number of completed foreclosures for the 12 months ending in January 2016 were:

1. Florida (74,000)
2. Michigan (49,000)
3. Texas (29,000)
4. California (25,000)
5. Ohio (24,000)
6.  

These five states accounted for almost half of all completed foreclosures nationally.

“In 2015 we saw a return to normal, healthy foreclosure activity in many markets even as banks continued to clean up some of the last vestiges of distress left over from the last housing crisis,” said Daren Blomquist, vice president at RealtyTrac. “The increase in bank repossessions that we saw for the year was evidence of this cleanup phase, which largely involves completing foreclosure on highly distressed, low-value properties.[3]

“Meanwhile, local economic problems became a larger driver of foreclosure activity in 2015,” Blomquist said. “Examples of this are Atlantic City, New Jersey, which posted the nation’s highest metro foreclosure rate for the year, along with several heavy oil-producing markets in Texas and Oklahoma where foreclosure activity increased in 2015, counter to the national trend.”

Foreclosure rates are on the rise in other areas

In 24 states and the District of Columbia—many of which missed the massive defaults seven years ago—there was an increase in foreclosure activity in 2015 compared to 2014. These included Northeastern states like Massachusetts (up 55 percent) and New York (up 24 percent), where home price increases have lagged and states suffering from the downturn in oil prices like Oklahoma (up 36 percent),) and Texas (up 16 percent). States with the highest foreclosure rates in 2015 were New Jersey (1.91 percent of housing units with a foreclosure filing), Florida (1.77 percent), Maryland (1.60 percent), Nevada (1.40 percent), and Illinois (1.26 percent). 

 

Among the nation’s 20 largest metro areas, six posted year-over-year increases in foreclosure activity in 2015: Boston (up 44 percent, St. Louis (up 38 percent), Dallas (up 25 percent), Detroit (up 22 percent), New York (up 9 percent), and Houston (up less than 1 percent).[4]

Metro areas with the highest foreclosure rates in 2015 were Atlantic City, New Jersey (3.43 percent of housing units with a foreclosure filing); Trenton, New Jersey (2.14 percent); Tampa Bay-St. Petersburg-Clearwater, Florida (2.03 percent); Jacksonville, Florida (2.02 percent); and Miami (1.98 percent).

What does this mean for you?

If you’re considering an investment in a foreclosure, you may no longer be limited to searching in areas that were hardest hit by the housing crisis. That may mean that you find a greater variety of foreclosures in more popular neighborhoods.

It may also, however, mean more competition. And when the process of buying a foreclosure is already so complex, more competition isn’t exactly welcome.

source: totalmortgage.com

Secrets to Buying a Home that Will Appreciate Over Time

No one buys a home hoping its value will stay exactly the same for the next 30 years. In a healthy real estate market, most people just assume that their property will appreciate over time, even if only slightly. But, as many real estate investors already know, there are ways to pick out the most promising house.


 While you and your family’s needs should always come first when it comes to choosing a place to live, keeping some of these factors in mind can help you pick a home that will appreciate over time.

“Location, location, location”

This is one cliché that’s actually spot on. Of all the things that factor into a property’s potential to appreciate, where it’s located and what surrounds it are easily the most important.

Though it’s impossible to how the area around your potential home will change over the years, you can make an educated guess based on factors like the quality of the school system. Is the house 30 minutes from the nearest grocery store? Not great—unless a new grocery store has just broken ground two miles down the road, in which case, the neighborhood may soon be more desirable.

And this happens all the time. Whereas Brooklyn was once just a scruffy, working-class borough, a recent influx of young workers and artists fleeing skyrocketing Manhattan rent have upped demand, spiking property values.

Appearances matter…

Location doesn’t just matter for convenience’s sake. A rundown neighborhood with unkempt yards can bring down the value of your property, no matter how nice it is. Also be wary if there are any foreclosures in the area. Though this doesn’t necessarily spell out doom for the whole neighborhood, foreclosures do tend to look rougher due to lack of upkeep. It’s possible for the situation to snowball if those living near the foreclosure start to feel too apathetic.

…but not when it comes to your potential house

While it’s important that the property you buy has some potential, it’s okay if it isn’t in the best shape. In fact, you should be aiming to buy the worst house in a great neighborhood.

The logic here is pretty simple. If your aim is to buy low and someday sell high, you have much less room for improvement in a house that’s move-in ready. Also, you can’t change the location, but you can change the house.

Avoid a house that’s highly customized

For maximum appreciation, you want a property that will appeal to as many people as possible later down the line. So if a house you’re considering has a lot of customization or a very unique design, it may not make for a great investment, unless you’re planning to make significant changes.

Pools are a great example, as they have a tendency to be divisive. While some people seek them out specifically, to others, they’re hazards and eyesores that require all kinds of upkeep.

source: totalmortgage.com

What is the Fannie Mae HomePath?

Fannie Mae takes many precautions to decrease the chance of properties with their mortgages foreclosing. However, it isn’t possible to stop all foreclosures.

So when it inevitably does happen, the best thing is to sell that home quickly.

That’s the goal of the Fannie Mae HomePath program—to resell foreclosed homes in a timely manner so as to minimize the negative impact on communities.


How foreclosures negatively affect communities

1. Lower housing values

It’s been demonstrated that foreclosures bring down property levels of nearby homes. It’s different in every area, but the most common reasons for this are “distress sales” of foreclosed properties, the eyesore abandoned homes can create, vandalism, and increases in crime.

2. Harm the broader economy
 
Falling home values kicks off a domino effect that ultimately impacts the whole economy. Consumer spending and new construction both take hits, which spurs jobs loss and unemployment. The snowball gets bigger as more homes are then foreclosed, leading to less spending and investment all around.

3. Decrease revenue for local governments

Property tax is a major source of revenue for local governments. So when foreclosed homes bring down the value of surrounding properties, the local government can see significant losses. In addition, local governments will often have to pay for the upkeep of foreclosed homes until they’re sold.

Clearly, foreclosed homes create many far-reaching problems.


How the Fannie Mae HomePath helps


1. Online directory

With thousands of homes in an online directory, the HomePath program allows buyers to easily browse available foreclosed homes. All of the filters a buyer would want, such as price, number of beds/baths, property type are available under advanced search. There are also pictures with every listing, making it easy for buyers to quickly get a feel for the property.


2. Upkeep

Maintenance standards are another important aspect of the HomePath program. All properties are kept in line with local codes, and requirements and are maintained so as to be ready for sale at a moment’s notice.

Fannie Mae works with maintenance workers on the local, state, and national level to make sure all properties get the care they need, from removing trash, to securing the property, and seasonal care like winterization.

To ensure the upkeep is done in line with quality standards, Fannie Mae has their own agents and quality control specialists inspect the properties, as well as third party inspectors. Not only does this upkeep help homes sell faster, but it also supports neighborhood stabilization.

In the past, real estate owned (REO) properties—such as foreclosures—have had a stigma attached to them that can dissuade buyers from purchasing. The Fannie Mae HomePath program, with its focus on upkeep and selling homes quickly, has done much to reverse that image and make foreclosures a serious consideration among homebuyers.

source: totalmortgage.com

Are Single Family Rentals Still a Good Investment?

With discount-priced foreclosures drying up, are single family rentals still such a good investment?

The foreclosure floods over past four years created unprecedented opportunities for investors to buy homes for a song, rehab them, and either resell or rent them out. Some four million homes switched from owner-occupancy to rentals during that period—that’s nearly homes as many as total sold in America each year.


The market is changing

Those days are clearly over. The flow of foreclosures and short sales has dried up, accounting for only 10 percent of the market. Today investors are buying only about 14 percent of residential sales, down from 25 percent in 2009. Yet new investors are still entering the single family rental market and about 14 million homes are now rentals.

The reason can be summed up in two words, “cash flow.” Few investments deliver two ways to profit, but the attraction of single family rentals is that they deliver monthly rent while they appreciate in value like other residential properties.

Today’s market dynamics are a good example of why millions of investors are sticking with their rentals despite the changing market. Though the days of quick profits from flipping are over, the appreciation side of the equation is still strong. Those investors who bought in during the housing crash have done very well, realizing 20 to 30 percent appreciation. Their profits are being augmented by the nationwide shortage of affordable starter homes, which is pushing prices in lower tiers up faster than any other segment of the market. Most rentals are two bedrooms or smaller.

The best news for investors is on the rental side

Rents are soaring and vacancy rates declining, making it easy for landlords to keep their properties rented, and their rental income is even outpacing inflation. In the nation’s hottest real estate markets—Denver, Dallas, San Francisco, San Jose—rents are rising fastest, keeping pace with home price appreciation. Thus, there’s little incentive for renters to buy. Even in moderate markets, Millennials are creating extraordinary demand for rentals.

It’s easier than ever for investors to add a rental property to their portfolio. Companies like Memphis Invest and HomeUnion provide turn-key service to investors, locating and buying properties, arranging financing, and managing.

“There are an increasing number of renters in the U.S. We believe this increasing demand for residential rental space will enable SFR investments to continue producing high yields,” says HomeUnion CEO Don Ganguly.

What does the future hold?

The rental boom’s days may be numbered, though. A corresponding boom in apartment construction is underway, adding 300,000 to 400,000 new units to the rental inventory each year, most in markets popular with Millennials. The flood of new apartments is expected to slow rent growth to 2 or 3 percent per annum in the next two years, but as long as occupancy rates remain favorable, investors in single family rentals should continue to do well.

source: totalmortgage.com

5 Things to Consider When Buying a Foreclosure

Buying a home in foreclosure may seem like a good way to get in on some cheap real-estate, but with all the possible headaches, is it worth it? Ultimately, that’s for you to decide, but if you do choose to give it a go, keep these five thoughts in mind.

1. Find a real estate broker who specializes in foreclosed homes

Having an expert on hand is always a good thing. They’ll provide useful insight, and a lot of times, they’ll be aware of homes that haven’t even reached the market yet.

2. Get a pre-approval from a lender

Most buyers want to shop around, find their perfect home, and then work out the financing. However, with foreclosed homes, the deals move quickly, and if you aren’t pre-approved, that extra time could cost you your desired home.

3. Prices can change

Just because it’s a foreclosed home doesn’t mean the price is set in stone; there can still be multiple offers that drive the price up. Do your research, and find out the recent prices of comparable properties (comps) to make sure your offer is on point.

4. Plan for the long-run

If you’re only goal is to make a quick flip, you could end up with regrets if your plan falls through. To avoid such a tragedy, have a back-up plan that accounts for you holding onto the property for at least five years.

5. It’s going to need work

Foreclosed homes are sold as they stand, and this almost always means you’ll be doing some renovating. If you aren’t friends with a skilled tradesman, or don’t like DIY projects, foreclosed homes may not be for you.

source: totalmortgage.com

New Bill Would Fix Mortgage Victims’ Credit Reports, Shorten Time Period Foreclosures Are Reported

A new bill introduced today by Congresswoman Maxine Waters (D-CA) aims to make sweeping changes to the Fair Credit Reporting Act (FCRA).

In a news release, she noted that credit reports have become far too important to contain widespread errors and inaccuracies, given the fact that they’re used to extend mortgages and homeowners insurance, and even determine whether someone is hired or not.

The proposal, known as the “Fair Credit Reporting Improvement Act of 2014,” could have major implications for former and prospective homeowners alike.

Restoring Credit for Mortgage Victims

For one, it would require the credit reporting agencies to remove any adverse information related to mortgage loans that were later found to be deceptive, abusive, fraudulent, illegal, or unfair.

That’s a pretty broad definition, but I’m assuming there are plenty of borrowers out there with checkered credit histories thanks to bad loans they probably should have never wound up with.

So if a borrower had their property foreclosed on thanks to a predatory lender, they could get that nasty foreclosure mark off their credit report. And ideally the late payments leading up to the foreclosure (or short sale) as well.

This would greatly improve the credit scores of countless borrowers and make them eligible for a subsequent mortgage a whole lot sooner.

Sure, some borrowers might have been granted relief from lenders, but if their credit report is still full of delinquencies, their chances of getting another mortgage are low to nil.

The same goes for those who received assistance through programs like HAMP, only to find that lenders continued to report their payments as delinquent or “incomplete.”


Foreclosure Falls Off a Credit Report After Just Four Years?


Waters’ bill would also shorten the amount of time negative information remains on credit reports by reducing such periods by three years.

She noted that the predictive value of most negative information on credit reports diminishes after just two years, yet remains for as long as seven or 10 years.

In places like Sweden and Germany, max reporting periods are three and four years, respectively.

As it stands now, foreclosures remain on credit reports for seven years. So if I’m interpreting her new bill correctly, a foreclosure will drop off a credit report after just four years.

The waiting period to buy a home after foreclosure also happens to be seven years, so it’s unclear what effect this legislation would have if foreclosure information couldn’t be accessed after four years.

Additionally, lenders may not be comfortable extending new home loans to previously foreclosed borrowers so soon, which could create a bit of headwind for this legislation.

Her bill would also remove adverse information related to fully paid or settled debt, including medical collections, which is consistent with the latest FICO and VantageScore models.

That could potentially make it easier to qualify for a mortgage seeing that applicants’ credit scores would likely be higher.

Asks FHFA to Consider Alternatives to FICO Score

Speaking of scoring models, Waters also wants the FHFA to consider alternative credit score products that determine eligibility for Fannie Mae and Freddie Mac loans.

At the moment, it’s all about FICO. Perhaps VantageScore could eventually be used in the mortgage industry as well.

There’s a lot more to the bill, which is basically a complete overhaul of the antiquated FCRA that can be read here.

Among other things, it prohibits the use of disputed information in credit reports and scores, lengthens the mortgage shopping window to 120 days (for it to count as just a single credit inquiry), and restricts the practice of using credit reports to screen job applicants.

Additionally, it would limit the cost of a credit score to $10, indexed for inflation, and require the credit reporting agencies to provide free annual credit scores, not just free credit reports.

Obviously it sounds super ambitious, so the chances of it passing might be slim. But a pared down version could potentially pass. Stay tuned.
  
source: thetruthaboutmortgage.com

Fewer U.S. Homes Entered Foreclosure Track in 3Q

LOS ANGELES -- The number of U.S. homes set on the path to foreclosure slid to a seven-year low in the third quarter, reflecting a gradually improving housing market and fewer homeowners falling behind on mortgage payments.

Lenders initiated foreclosure action on 174,366 homes in the July-September period, the lowest level since the second quarter of 2006, foreclosure listing firm RealtyTrac Inc. said Thursday.

Foreclosure starts declined 13 percent from the previous quarter and were down 39 percent from the third quarter last year, the firm said.

The national slowdown in foreclosure starts comes as the U.S. housing market continues to recover from a deep slump, a rebound driven by rising home prices, steady job growth and fewer troubled loans dating back to the housing bubble days. Fewer homes entering the foreclosure pipeline should translate into fewer properties that eventually end up lost to foreclosure.

"It's looking really good that there are not more coming into the pipeline," said Daren Blomquist, a vice president at RealtyTrac. "Barring any other economic shock to the system, we expect that to bode well going forward."



Foreclosure starts fell on an annual basis in the third quarter in 38 states, including Colorado, Arizona, California and Illinois. They increased from a year earlier in 11 states, including Maryland, Oregon, New Jersey and Connecticut.

While fewer homes are entering the foreclosure process, lenders stepped up home repossessions, which led to a quarterly increase in homes lost to foreclosure.

Completed foreclosures rose 7 percent in the third quarter versus the April-June period, the firm said. Completed foreclosures were down 24 percent from the third quarter last year, however.

All told, 119,485 homes were taken back by lenders in the July-September quarter. That puts the nation on pace to end this year with roughly 507,497 completed foreclosures, or down about 24 percent from 2012's total.

Foreclosures peaked in 2010 at 1.05 million and have been declining ever since.

The number of homes taken back by banks in the third quarter climbed from the previous quarter in 26 states, including New York, New Jersey, Illinois and Virginia, RealtyTrac said.

Much of the quarterly increase in foreclosures came about in states where courts oversee the foreclosure process. Those courts were backed up with cases two years ago, but have been making progress working through their backlog.

Even so, it's taking longer for homes in many states to complete the foreclosure process.

In the third quarter, it took an average of 551 days, or 1.5 years, for a U.S. home to move from initial default status to ultimately being repossessed by the lender, the firm said.

That's up from an average of 526 days in the second quarter and an increase from 382 days in the third quarter of last year.

"It's a sign that we're still dealing with the wreckage of the last housing bust," Blomquist said.

In New York, it took an average of 1,037 days, or nearly three years, for the foreclosure process to run its course in the third quarter, the longest of any state. Maine clocked the shortest average time to foreclose at 160 days.

The impact of foreclosures remains sharply elevated in some states. Florida topped the nation with a foreclosure rate of more than twice the national average in the third quarter.

Rounding out the top 10 states with the highest foreclosure rates in the July-September period were: Nevada, Maryland, Illinois, Ohio, Connecticut, Delaware, New Jersey, Indiana and South Carolina.

source: dailyfinance.com

Nevada back in the hole of foreclosures

LAS VEGAS - Signs of "foreclosure" and "owned by bank" are still common throughout Sin City, and some parts of Nevada, as the silver state is once again taking the lead as the nation's highest in foreclosures.

Realtytrac.com, a website of foreclosure listings, reports that the state of Nevada has an average foreclosure rate of 28 percent that is higher than the national average of 1 percent. The unemployment rate is at 9.9 percent.

The website added, "the national median sales price in August was $175,000, up 3 percent from the previous month and up 6 percent from a year ago — the 17th consecutive month where median home prices have increased annually nationwide".

Las Vegas ranked the third highest in foreclosure rates among metropolitan areas with one filing for every 323 units.

Now, the Nevada housing market credits the new law, SB-321, that will take effect this coming October, for becoming the doorway that leads to dry land for homeowners who have been underwater.

A Filipino, who did not want to be identified, said that the new law should have taken effect at the time they were facing foreclosure three years ago as they too became a victim of the mortgage meltdown.

"I wish they have all these laws during the time I was facing foreclosure. I could've saved my house. During that time, I tried to refinance but they won't let me," the kababayan said.

Realty experts said that this new law will further constraint the current low home inventory while putting more pressure on prices.

"In a nutshell, the banks are basically required to offer the homeowners, our kababayan na having trouble, alternative than foreclosures. SB-321 is basically a carbon copy of the Homeowners Bill of Rights that took effect in California," said Ernest "Che" Bendicion, a realty estate broker.

Bendicion added that kababayans who are facing foreclosures must face their lenders for alternative solutions.

"Another thing that is important on this bill is what they call dual tracking. The banks and the lenders will have to act in good faith and deal with you. If you are doing a loan modification, they cannot foreclose on you until the loan modification process is done. If you are doing a short sale they cannot foreclose on you. They need to work with you in short selling your home. Many times kasi, ang nangyayari, while you are doing your short sale, your loan modification, the banks foreclosure department are still trying to foreclose on you. This is really a big relief in this law," he said.

While many homeowners are anticipating for this week's announcement of the introduction of SB-321, everyone who is under pressure can now weigh in on exploring their options in saving their home.

source: www.abs-cbnnews.com

Home Foreclosures Fall to Lowest Level in Nearly 8 Years

LOS ANGELES -- Fewer U.S. homes entered the foreclosure process or were repossessed by banks in June, the latest sign that the nation is shaking off its housing bust hangover.

Lenders initiated the foreclosure process on 57,286 homes last month, the lowest level for any month in 7½ years, foreclosure listing firm RealtyTrac Inc. said Thursday.

Foreclosure starts are on pace to reach roughly 800,000 this year, down from 1.1 million last year, the firm said.

Completed foreclosures, when the lender repossesses a home, are on track to hit a half-million, or about a quarter below last year's total.

The trend comes as the U.S. housing recovery continues to gain strength, propelled by steady job gains, low interest rates, improving consumer confidence and growing demand for homes at a time when there's a thin supply of available homes for sale in many markets.

That's helped boost home prices, which jumped 12.2 percent in May from a year earlier -- the biggest gain in seven years, according to data provider CoreLogic.

Even so, foreclosures remain a potential drag on housing in many states, including Florida, Nevada, Illinois and Ohio.

"Halfway through 2013, it is becoming increasingly evident that while foreclosures are no longer a national problem, they continue to be a state and local market problem," said Daren Blomquist, a vice president at RealtyTrac.

Homes scheduled for auction in states like Florida, where the courts play a role in the foreclosure process, were up 34 percent in June from a year earlier, the firm said.

Scheduled home auctions doubled last month in New Jersey and Florida, which also posted the highest foreclosure rate of any state -- nearly three times the national average -- in the first six months of the year, the firm said.

Most homes lined up for public auction typically end up going back to lenders, which opens the door for the properties to be placed on the market as sharply discounted foreclosed homes later this year or in 2013.

Nationally, the inventory of previously occupied homes on the market was 10 percent below prior-year levels in May, according to the National Association of Realtors. So the potential for more foreclosures going on sale will likely be welcome news to would-be homebuyers in markets where there is a tight supply of available homes.

The number of homes that entered the foreclosure process in June was down 21 percent from May and about 45 percent below June 2012's total.

Lenders repossessed 35,507 homes last month, down nearly 9 percent from May and a drop of 35 percent from a year earlier. That's still short of the 25,000 or so a month that Blomquist considers the benchmark for foreclosures in a "normal" housing market.

At the height of the housing boom in 2006, completed foreclosures averaged 22,000 a month. They peaked in September 2010 at 102,000. Tighter lending standards for home loans since the housing bubble burst have helped slow the pace of foreclosures.

About 75 percent of the 824,292 U.S. homes in the foreclosure process as of June are tied to loans that were originated between 2004 and 2008.

"That's a good sign that the lending has much improved and we're not seeing high foreclosure rates on mortgages that have been taken out since 2008," Blomquist said.

source: dailyfinance.com