Saturday, January 14, 2006

'Nobody Showed Up'

The Boston Globe has this report on the fall-out from the housing bubble. "Foreclosure filings last year in Massachusetts were up 34 percent through November, compared to the prior year. Experts say the trend is a fallout from the housing boom of the past decade, in which people took out high-risk mortgages, such as interest-only and no-down-payment loans, in order to get into expensive homes."

"'You could lose a job, go through a divorce, a medical emergency in the family, or the market could dip,' said Jeremy Shapiro. The total number of foreclosure filings through November was nearly 10,500, Shapiro said. Essex County had a 49 percent increase over the same period in 2004. Suffolk, Plymouth, Bristol, and Barnstable counties all had increases of more than 42 percent."

"Lenders in recent years have become more willing to give loans without down payments, and to borrowers with damaged credit. 'People are getting loans based not on their ability to pay,' said Virginia Pratt, a financial adviser who works for a Boston nonprofit. 'Lenders and brokers are making money. There are a lot of fees built into the loan.'"

"Mary Nunziato peeked out the window to see who arrived to take her house away from her family. The auctioneer placed folders full of papers on the hood of his car and waited for bidders. 'I was nervous. I was upset,' said Nunziato, who quit her job as a school custodian more than a year ago after being diagnosed with leukemia and diabetes."

"Turns out the auctioneer wouldn't need to shout over the dogs barking inside or the planes overhead approaching Logan Airport. 'Nobody showed up,' Nunziato said."

"That was last month. Another auction is scheduled Jan. 31. The Nunziatos say they owe about $30,000 in back payments and late fees after they stopped making their $2,170 monthly payment in June."

"Despite her predicament, Nunziato said she's hoping to get another home loan to buy a cheaper house in Fitchburg. She said she's been given a preliminary OK for a loan at 8 percent, a subprime rate."


At 2:03 PM, Blogger MarknearSeattle said...

I have a question. I attended a trustee forclosure auction yesterday just north of seattle. It was interesting with some houses getting bid on and others not. Has anyone here successfully purchased a house at a forclosure auction. If yes, how did you find any liens or judgements against the property? What were the pros and cons of this approach? Thanks for any insight.

At 4:26 PM, Blogger MazNJ said...

She's in foreclosure and someone is offering her a loan on another house?!?!?!?!

At 9:27 PM, Blogger Out at the peak said...

I wish the article stated what the minimum bid was (and what the "fair market value" was).

Mark: was each auction for a house or some for parcels? Usually parcels are overlooked as they are harder to flip.

Usually with the auctions, you need to come up with the cash immediately. Plus there is no title insurance so you have to investigate the title yourself (or hire someone) prior to auction. But if you can get past those barriers, you can get a deal.

At 10:13 PM, Blogger MarknearSeattle said...

Out at the Peak,

They auctioned about 5 houses. Some of the auctions were going on at the same time. About 60 people attended in the rain and gusty wind (outside of the courthouse) for over an hour. Each bidder had to qualify by showing the person running the action a certified check for the full amount. It seemed most people knew each other. Some were real estate agents. Some were trying to sell their forclosure service and some looked like the owners trying to protect their property. On one auction, one person qualified but did not bid. Therefore the property went back to lender. I suspect he was protecting the lender's interest but this is just a guess. I went in to the courthouse and checked out the online services to research liens, judgements and the forclosure notice, which shows the amount owed. It is very interesting but somewhat risky. You can obtain a preliminary committment title policy for about $700 (based on $300,000 valued property). Just something I am looking into to pay a more reasonable price for a house. No real estate agent fees. I think the price includes the trustee company fees. My concern is missing a lien or judgement and having a rude surprise after purchase. Two drawbacks, you can not see inside the house and you may need to evict the occupent. Just some thoughts. Needing the full price may limit some of the competition. This is probably not for people with low stress levels but at a minimum, is entertaining.

At 9:57 PM, Blogger MrIncomeStream said...

This is the wrong time for a newbie to be buying on the steps to save a realtor fee that the seller is paying for. The market is far from correcting if you don't have to buy now and your unemotional about what you buy I would say wait a year. But even then if your a newbie you will never outbid the real sharks unless the property is a dog that you don't want. You don't have the resources time or guts. It's in your best interest to wait untill the banker gets it and contactthe banker direct. That's where the real deals are going to come buying at the steps you pay more than bubble prices. Your worried about a realtor fee but on the steps your willing to pay bubble price, back payments, lawyer fee's. I'm sure that adds up to more than a 6% commission the seller is paying for.


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