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Posts Tagged ‘RealtyTrac’

America’s foreclosure crisis got especially ugly last month.

According to RealtyTrac, lenders repossessed more homes in August 2010 than in any other month since the housing meltdown and recession began back in December 2007.

All told, banks took back 95,364 properties in August, a 3% rise over July figures, and a 25% increase over year-ago levels.

Unfortunately, we’re on track to see more than four million homeowners get a foreclosure notice in 2010. Of those, an estimated one million property owners will actually lose their homes.

All this stepped up foreclosure activity suggests that banks are accelerating their foreclosure proceedings and getting more aggressive about evicting past-due homeowners.

One possible reason for this is that no bank wants to look like a scrooge by putting individuals and families on the street during the November and December holiday season. So I expect that lenders will likely try to get a lot more foreclosures done this fall, especially in September and October.

Facing foreclosure? Read these tips to see if you can save your home.

A subscriber wants to know if there is an upside to the current foreclosure crisis.  I appeared on MSNBC to discuss this topic. Click here to watch the video.

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As of early 2010, I don’t know of a single mortgage lender who will approve a home equity loan on investment or rental property. They may exist, of course. But I’m simply not aware of any. Before the market downturn, banks would readily extend loans and lines of credit on rental real estate. Lenders typically stipulated that those properties could have no more than an 80% loan-to-value ratio. In the current market and amid the credit crunch, however, it’s very difficult (if not impossible) to find such a lender for three reasons:

• declining property values in many parts of the United States

According to the Case/Schiller housing index, home prices have fallen 30% since their peak in April 2006. And in many regions of the country, the declines continue.

• increasing foreclosures throughout America

There were more than 9 million foreclosure filings in the U.S. between 2007 and 2009. Moreover, experts at RealtyTrac predict we’ll see another 3 million foreclosure filings in 2010.

• more rental properties falling into default

It’s not just mom and pop rental property owners who are getting into trouble as landlords. In New York, the owners of the biggest apartment complexes in Manhattan even recently defaulted on their loan. Those apartment complexes, known as Stuyvesant Town and Peter Cooper Village, were bought in 2006 by real estate investors/property managers Tishman Speyer and BlackRock for a record $5.4 billion. Less than four years later, the property is now valued at less than $2 billion. The rental income never covered the mortgage/monthly debt service. But the investors had bet that New York’s normally solid rental market would help them attract tenants willing to pay higher rents, as the owners intended to convert the units from rent-regulated apartments into pricier apartments. Unfortunately, they bet wrong. Plans to convert apartments were thwarted. Plus, average rents are down in New York – just like property values.

Easier to Get an Equity Loan On Your Primary Residence

Lenders know that in a tough economy and a rough housing market, most owners of investment property will walk away from those properties, or go late with their payments, before those owners will sacrifice their own homes. Thus, if you need a home equity loan, you’ll get better interest rates, more available financing, and find more willingness on the part of lenders to get a deal done by taking a home equity loan on your primary residence – as opposed to the rental property you own.

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The foreclosure crisis is wreaking havoc on millions of Americans. Between 2007 and 2009, there were more than 9 million foreclosure filings in the United States, according to Irvine-Calif.-based RealtyTrac, an online marketer of foreclosed homes. RealtyTrac’s foreclosure statistics count all types of foreclosure letters, including default notices, auction notices and bank repossessions. Unfortunately the problem isn’t going away. A record 2.9 million U.S. properties received foreclosure filings in 2010, and RealtyTrac predicts that foreclosure filings will peak in 2011, surging by another 20%.  Simply put: too many folks out there can’t afford their homes, and many don’t know what to do about it.

The Mindset of the Homeowner on the Brink of Foreclosure

Once you live in a home for any amount of time – whether it’s a year or a decade – you naturally start to develop some emotional attachments to your house. You can probably recall family celebrations there, major life changes that occurred while you lived in the home, or even just things you did to personalize the house and make it your own. For all these reasons and more, it can be devastating to come to terms with losing the house you love and worked so hard to obtain. Nevertheless, sometimes a big mortgage payment, in combination with all the rest of the bills and curve balls that life throws at you, can simply become too much to bear financially.

What To Know If You Think You Might Go Into Foreclosure

When you miss multiple mortgage payments, you become subject to foreclosure proceedings. There are two primary forms of foreclosure in America: judicial foreclosure and non-judicial foreclosure. Judicial foreclosure – which is normally used in states where a mortgage is used as the security instrument on a home – is a lengthy process, involving a court lawsuit. Non-judicial foreclosures typically occur in states that use a deed of trust as the security instrument. Non-judicial foreclosure allows a trust to initiate foreclosure without having to go to court. Other types of foreclosure methods exist, but they are far less common. For instance, strict foreclosure allows a lender to foreclose on a house simply by declaring that a borrower has defaulted. Strict foreclosure is legally permitted in only a few states, including Connecticut, New Hampshire, and Vermont.

Foreclosure Varies From State to State

The foreclosure process can vary widely from state to state, but the following is a synopsis of what usually occurs in a judicial foreclosure, where a lender sues you in order to get a judgment to seize your home and auction it off. After you fall anywhere from three to six months behind on your mortgage, your lender will file a court complaint and also a “Notice of Lis Pendens” with your county recorder’s office. (Some lenders are more aggressive and want to file official notices as soon as legally permissible in order to cut their losses. Others will first try to do everything possible to avoid commencing foreclosure.) The Lis Pendens is your official notice that you face foreclosure and that the clock is now ticking in order for you to bring your past-due payments current.

The lender will seek an entry of judgment or summary judgment from the court. The judgment spells out the entire amount due and establishes a sale date for the property. If your defaulted mortgage isn’t brought current, usually another three months will pass before most lenders send you a “Notice of Sale,” indicating that a foreclosure date has been set. This notice will be posted on your property and also recorded at the County Recorder’s Office. Depending on your lender and the state in which you live, foreclosure proceedings can vary – especially with regard to the speed with which your bank acts.

Don’t Wait for a Last-Minute Solution

No matter what happens: if you face foreclosure, deal with the issue head on. Don’t hide from your lender or keep your fingers crossed in the hopes that an 11^th hour solution will magically appear. The closer you get to a foreclosure deadline, the fewer options you have available.

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