Monday, July 31, 2006

'Banks View Foreclosures As Potential Assets'

The Long Beach Telegram has this report on buying foreclosures. "If you're looking for cheap properties, don't start counting those eggs just yet. A foreclosure search engine this week reported a 25 percent year-over-year increase in foreclosure activity from the second quarter of 2005. 272,109 properties nationwide entered some stage of foreclosure, that amounts to one new foreclosure for every 425 households, higher than any quarter of last year. Opportunistic buyers aren't finding an abundance of quick deals out there right now, Realtors say."

"Among the nation's top 10 states with the highest foreclosure rates in the second quarter were: Utah, Indiana, Nevada, Illinois, Michigan, Florida and Ohio. Colorado's second-quarter foreclosure rate ranked as the nation's highest, with one new foreclosure filing for every 158 households."

"California and Florida followed Texas to round out the top three states with the highest total foreclosure filings. California reported 27,606 properties entering some stage of foreclosure, more than twice the reported number in the second quarter of 2005. There were more than 18,000 homes in some stage of foreclosure in Los Angeles County."

"But the sellers' market over the last five years has changed the way banks and investors are viewing foreclosures, said Richard Daskam, realtor in Los Alamitos. 'Foreclosures sound good in theory, but now the banks have really gotten smart and they have realized they can get market value for their homes,' Daskam said."

"'Instead of selling it at a loss or a break-even, they actually made money off of the deal,' Daskam said. 'They realize now that they don't have to lose money on these foreclosures.'"

"Not only are banks viewing foreclosure properties as potential assets, but large groups of real estate investors continue to snatch foreclosures quickly off the market despite the slowdown. 'In the past you could go out there and walk in with 50 percent equity if you bought a foreclosure, immediately it was double what you paid for it,' Daskam said."

"But if the market continues to slow in the next year, look for some deals. However, Daskam warned, 'buyers should do their homework and make sure it's priced right.'"

Friday, July 28, 2006

'Repo Man May Be Coming' To A Market Near You

Three reports on foreclosures around the US. "Southeastern North Carolina is bucking a nationwide increase in foreclosures, at least for now. But others report signs the repo man may be coming this way as conditions cool. 'Folks who are in foreclosure don't really have the time to wait like everybody else,' said Hugh Stewart, an investor (who) buys distressed properties. Stewart said he had seen a recent upswing in calls from people trying to escape foreclosure."

"Pam Wooddell, one of the area's most active Realtors in foreclosed properties, said she had a spike in requests for 'broker price opinions' this winter, often a precursor to foreclosures months later."

"BPOs, as they are known, are a sort of curbside assessment of a property's sale price, which lenders often request for a property in arrears. Typically the ball doesn't get rolling on a foreclosure until months of missed payments, but lenders want to know sooner than that the value of property they might end up acquiring, Wooddell said."

"The BPO buildup began last summer, peaking in the winter. In February, she had 217 BPOs, more than double the number she had during the same time last year, she said."

The Denver Post. "While new construction of rental properties has tapered off, experts said the decrease in the vacancy rate can also be attributed to trouble in the for-sale housing market. 'Due to increases in foreclosures and interest rates, for-sale housing is becoming less attractive to some people,' said Ryan McMaken, community-relations coordinator for the Colorado Division of Housing."

"Colorado notched the highest home-foreclosure rate in the country in the second quarter, according to a provider of foreclosure listings. People displaced from their homes often turn to rental properties."

The Traccy Press in California. "Nearly 350 homeowners in Tracy are on the verge of losing their homes because they’ve fallen behind on their repayments, and auction dates have been set for 63 of the properties, according to a foreclosure monitoring company."

"San Joaquin’s foreclosure rate was the highest in the state between April and June, with one out of every 154 homeowners behind on repayments at some point during the three-month period. That’s more than double San Joaquin’s foreclosure rate at the same time last year, and three times the California average."

"Karl Enzman, a director at the Central Valley Association of Realtors, said many homebuyers bought their properties 'with too rosy an outlook of the market.' He said many of these buyers couldn’t afford to make their repayments when bond-market pegged variable interest rates rose, forcing them into foreclosure."

"Countrywide Home Loans consultant Lynda Mendoza said that some homeowners lose their homes after becoming unemployed but that many foreclosures are the result of poor financial planning. 'They’re talked into buying a house that they can’t afford,' said the loan agent, who claimed none of her clients have gone into foreclosure."

Thursday, July 27, 2006

California Foreclosure Activity Up 104%

The LA Daily News has this from California. "Foreclosure activity in California soared an annual 104.4 percent in the second quarter as the housing market slump deepened. In the April through June period, 27,606 property owners entered some stage of the foreclosure process across the state, the second most in the nation, said RealtyTrac."

"A key factor to track now is the extent to which some of the higher-risk, adjustable-rate mortgages go into default, Realtytrac's Rick Sharga said. RealtyTrack estimates that hundreds of millions of dollars of these types of loans are due to re-set during the rest of this year and if they default at a higher rate than more traditional mortgage loans, it could significantly accelerate filings."

"'It's a worrisome trend,' said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. Not only are higher mortgage payments possible, many homeowners with adjustable rates are also facing higher gas and electricity costs, he said. 'There are some people who could fall off the edge. We've got to watch this trend very carefully.'"

The Daily Bulletin. "Sharga said the situation everyone in the industry is watching is the 'tidal wave' of 3/1 and 5/1 adjustable rate mortgages that will be coming due beginning in the second half of this year. 'I saw one report that said 44 percent of the mortgages in California the last few years have been ARMs,' he said. 'I believe the Mortgage Bankers Association had the national number at 36 percent.'"

"Regional economist John Husing said recently that he thought buyers who took the mortgages out in 2003 and 2004 would be fine. 'They'll have some equity in their homes,' he said. 'It's the ones who bought in 2005, since there hasn't been much appreciation since then, who could be in trouble.'"

Tuesday, July 25, 2006

A 'Self-Correcting Process' In Arizona

The Sierra Vista Herald has this report from Arizona. "Home foreclosures are on the rise in Arizona, including in Sierra Vista. In the last couple of years the city has enjoyed a boom in home prices and sales, but those days are now over, said Melissa Clayton, president-elect of the Southeast Arizona Association of Realtors."

"The agent, who specializes in foreclosures, said she has seen a recent increase in the number of people defaulting on their mortgage, and she expects that trend to continue. 'In the past two years a lot of home owners bought at high prices and borrowed against that,' Clayton said. 'But they have taken on more than their home is really worth.'"

"The situation has been exacerbated by the recent turnaround in the market, which now sees more homes than there are current buyers. This has stabilized the market, bringing it back down to a more normal level, Clayton said. But it has left some owners with a property that is overpriced."

"There is also an estimated 350 homes currently for sale within the city, around double what was available 12 months ago, Clayton added. 'We have a lot of sellers now who need to be more realistic about their expectations,' she said. 'There’s an awful lot of homes on the market, some of which have been on for a long time and were overpriced to begin with. I think if people are more realistic then there will be a home for everyone who wants one.'"

"Robert Carreira, at Cochise College, said the rise in property prices last year had inevitably led to more homes coming onto the market as owners try and cash in. 'If people bought their house a few years ago for, say, $100,000, then they might be looking to downsize or move to a more remote area outside the city limits where the prices are lower,' he said. 'That means you are going to get this flood of housing on the market, which is something we started to see last year."

"'But it’s the normal supply-and-demand relationship and what we are seeing is a self-correcting process,' he said."

Monday, July 24, 2006

Banks 'Uninterested' In Avoiding Defaults: CO

From the Denver Post. "Homeowner Eric Elkins is struggling to avoid the real estate world's dreaded F-word. Foreclosure may be his only way out. Elkins says he can no longer afford his payments. He owes $285,000 on his Highlands Ranch house. But it's worth less than $250,000. 'I just want to get out of the house and not be too screwed,' he said."

"He and his then-wife bought it for $252,000 in 2002. Last year, Elkins put the house on the market for $299,000. At that price, the home attracted only three showings. Increasingly unable to afford his payment, he contacted his lender, U.S. Bank. At first, the bank told him he couldn't refinance again because he owed more on the house than it was worth, he said."

"He inquired about selling, but to sell a house for less than it's worth requires lender approval. Eventually, Elkins' lender came up with a better idea. 'He put me into two home-equity lines of credit,' Elkins said. 'It was all very creative.'"

"These new loans replaced his mortgages. One was interest-only, meaning Elkins wasn't required to pay the principal during the term of the loan, keeping payments low. Both loans had adjustable interest rates. As for the value of the house versus the size of the loans needed to refinance it, equity, no problem. 'He got an appraisal for $285,000,' said Elkins of his lender. 'I don't know how he did it. It was exactly the amount I needed.'"

"Unfortunately, Elkins' financial situation is still disintegrating and his payments keep rising. He put his home up for sale again in May. In June, he got an offer for less than $250,000. His broker submitted it to U.S. Bank for approval. The bank had to decide what to do about the deficiency. One option would be to grant Elkins an unsecured loan for the balance. Another would be for the bank to take the loss. The loss on a short sale is typically smaller than the loss on a foreclosure."

"Unfortunately, the bank did not respond and Elkins' bidder moved on. 'This property will end up foreclosed on because the bank cannot respond quickly enough,' said Elkins' real estate broker, Gretchen Faber. 'U.S. Bank is completely uninterested in cooperating with me or with the buyer's agents. It isn't just U.S. Bank,' she said. 'All banks do this.'"

Wednesday, July 19, 2006

'Call It The Bust After The Boom'

A trio of reports on foreclosures, starting with Arizona. "Home foreclosures are on the rise in Arizona as the housing market continues to cool down and interest rates rise. The 8,321 Arizona filings in the first two quarters of 2006 represent an increase compared to the last six months of 2005, the number is down by about 800 from the first six months of 2005."

"Maricopa County accounted for the bulk of foreclosure activity, 5,215 actions, for the first six months of the year. Alexis McGee also said home prices will not crash like they did in the early 1990s. 'Back then, overbuilding by developers led to excess inventory and what we call competitive liquidation of unsold new homes,' she said. 'This time, the inventory just isn't there.'"

From Colorado. "Weld County has the highest concentration of homes in foreclosure, overtaking the Denver metro-area county of Adams. Realty Trac of Irvine, California, recently reported that one of every 66 homes in Weld County entered some stage of foreclosure in the second quarter, compared with one of every 71 homes in Adams County."

"'It is not a fact we are real proud of,' said Donna Schmidt, chief deputy public trustee for Weld County. 'We are extremely busy.'"

"Schmidt blames poor lending practices for the jump in foreclosures in her county, including adjustable-rate and zero-down mortgages. 'We are seeing the tail end of the bad loans that were given out,' she said."

From Florida. "Call it the bust after the boom. Losing a home for failing to keep up with the mortgage is a growing trend, a trend Pasco County is trying to slow with its foreclosure prevention program. 'Right now at least 50 percent of the people we're seeing are coming in saying I can't afford my homeowners insurance,' said Joanne Whittlesey of Consumer Credit Counseling Service."

"Real estate attorneys said in addition to increased insurance rates, higher property values leading to higher property taxes and increasing interest rates all contribute to the increasing number of foreclosures."

Monday, July 17, 2006

Loan Resets Spur Defaults

Some foreclosure reports on regions around the US. "Nearly 30,000 Florida properties are currently in some stage of foreclosure, said Alexis McGee, president of McGee also reports that around a third of those properties are in south Florida."

"In Georgia, the foreclosure pace is almost double what it was in May 2005. Since home sales are slowing, homeowners are not able to quickly unload adjustable rate mortgages they can no longer afford, which leads to more foreclosures."

"'In Atlanta, for example, the inventory of unsold homes had grown by 28.2% to 43,862 over the last six months,' McGee said. 'People bought homes they really couldn't afford, and now they're losing them as these loans reset to market rates and they can't find affordable refinancing options.'"

"Some cities in the midwest are also a hotbed of foreclosure activity, according to, which is reporting that Chicago's foreclosure activity is more than twice the national average. More than half of the 27,000 properties in foreclosure in Illinois are in Cook County, which includes Chicago."

"Defaults continue to surge in Massachusetts. 3,074 Massachusetts properties went into foreclosure in the last 60 days, as of July 11. Home prices in Massachusetts are off about 4 percent from their 2005 peak, the company said."

"The drop in property values 'makes it harder for folks being squeezed by rising mortgage payments to sell their way out of foreclosure in an orderly way,' said McGee."

Sunday, July 16, 2006

'Appraisers On Streroids' In Colorado

A pair of reports from Colorado. "Frank Finn Jr. thought his family was getting a great deal. He borrowed $102,500, the cost of the land, home and installation. The appraisal showed his home in West Valley Estates, a community of factory-made homes, would be worth $130,000. 'We were so happy,' he said. 'I was like, 'Right on; geez, I'm really making out on this. I've already got $28,000 in equity.'"

"Six years later, Finn is a foreclosed homeowner with ruined credit and monthly rent bills. So are his old neighbors."

"Of 65 homes in West Valley Estates, 28 were foreclosed from 2002 to 2006. Nine others were deeded to lenders without a foreclosure. The appraiser of Finn's home and others in the development lost his license. The sale price of Finn's home after his foreclosure: $57,700."

"Finn and many of his former neighbors believe they were victims of appraisal fraud. In Colorado, mortgage fraud is 'a significant factor' in the rising number of foreclosures, and 'bogus appraisals are a big, big part of it,' said Colorado Attorney General John Suthers."

"Lenders estimate 'as much as 15 percent of all appraisals are overvalued' though not necessarily fraudulent, said David Berenbaum, a board member of the national Center for Responsible Appraisals and Valuations. 'We're questioning a large volume of the loans today.'"

"An appraiser may boost the value of a house to benefit the seller, mortgage broker and real estate agent, who all gain from the higher sales price."

"Nationally, appraisers are feeling so much pressure to justify questionable home loans that nearly 10,000 have signed a petition calling on Congress to protect their independence. In a recent poll, they were asked how often they felt their peers succumbed to pressure. The leading response: 41 percent to 50 percent of the time."

"Some appraisers say corrupt mortgage brokers and loan officers have compromised the appraisal industry, which has long been considered the primary check against fraud. 'I am battling against appraisers who are on steroids; guys who are saying, 'What number do you want?'' said Matt George, a Littleton appraiser."

The pueblo Chieftain. "Colorado has been a holdout in regulating the mortgage industry. Local real estate appraiser Ivor J. Hill said mortgage fraud is so prevalent here that the federally established Fannie Mae, which oversees the flow of mortgage monies nationwide, red-flags all loan applications from Pueblo County."

Friday, July 14, 2006

Dallas Area Defaults: 'No Sign Of Abating'

The Dallas News reports on defaults in the metroplex. "The surge in North Texas home foreclosures shows no sign of abating. Next month, 2,961 homes are scheduled for foreclosure. That's a 26 percent jump from the number of foreclosure postings for August 2005, Foreclosure Listing Service Inc. reported Thursday."

"Through the first eight months of 2006, more than 24,000 Dallas-Fort Worth area homes have landed on the foreclosure list. That's an increase of 15 percent from the same period last year."

"Dallas County had the largest number of homes facing foreclosure in the latest survey. More than 1,400 residences are scheduled for sale at next month's foreclosure auction. That's 30 percent more than in August 2005."

"'Many households that were barely squeaking by last year will be pushed off the edge by these extra costs,' George Roddy said. 'With both the cost of living expenses and interest rates expected to continue rising, I anticipate that foreclosure postings will remain high for some time and may even reach a higher level than we have seen thus far this year,' Mr. Roddy said."

"The biggest jump in August foreclosures was in Collin County, which saw postings rise by 34 percent. Foreclosure postings in Denton County were up by 30 percent."

"Texas has one of the highest home foreclosure rates in the country. Because the state has lagged behind the rest of the nation in home appreciation, homeowners who get in financial trouble sometimes find they don't have enough equity built up in a house for a quick and profitable sale."

Thursday, July 13, 2006

Foreclosure 'Backlog' In Mississippi

From the Clarion Ledger. "Mississippi is not in the Top 10 states for foreclosures for the time period. Mortgage consultant Ralph Hays in Flowood, said Mississippi did not make the Top 10 because many mortgage companies in the state didn't push consumers toward interest-only, adjustable-rate mortgages in which payments rise as interest rates rise."

"'In the larger metro areas in the Northeast and Midwest they have pushed those,' he said. 'The way they advertised it was more affordability for your house payment. They failed to educate people about what would happen as interest rates moved up.'"

"Jim Adams, managing member of Brown Dog Properties, said mortgage lenders have been hesitant to foreclose in Mississippi since Hurricane Katrina. Adams speculates this time next year Mississippi could lead the nation in foreclosures because of a backlog of foreclosures waiting to be processed."

"Adams said his company works with mitigation lenders to buy homes that need repairs and are about to be foreclosed upon. 'We worked with someone in south Jackson who owed $69,000 on his home, and we bought it for $39,000,' he said."

"The homeowner keeps a foreclosure from happening, and the mortgage lender mitigates its losses, he said. The mortgage lender can hold the homeowner responsible for the difference in what is owed and what a house sells for, but 'most of the time they don't,' he said."

Countrywide Subprime Lending Continues

A report on on subprime lending. "Countrywide’s June financial data, released today, shows that delinquencies have essentially remained unchanged from May’s reported 3.91 percent. While steady, foreclosure and delinquency rates remain well above last year’s record low levels. Delinquencies are up 11.7 percent and foreclosures are up 20.5 percent from June 2005."

Countrywide’s servicing portfolio continues to grow, reaching nearly $1.2 trillion during June, a 24 percent increase from last year. Much of this growth is being supported by continuing strength in the nonprime credit sector, an area many had forecast would wane during 2006."

"Countrywide reported that nonprime loan fundings in June were $4.1 billion, compared with $4.2 billion for the year-ago period. Nonprime activity for the second quarter of 2006 reached $11 billion, up 7 percent from the same year-ago period."

Wednesday, July 12, 2006

Foreclosures Sell Faster Than Resales

A press release on defaults. "The collective surge of foreclosures across the nation is a driving force in an otherwise sluggish real estate market, according to a six-month data analysis released today by The analysis, in fact, reveals that foreclosure properties are exchanging hands at almost twice the rate of existing home sales as a growing number of loan defaults convert to foreclosures."

"Currently, 30 percent of foreclosure inventory is being sold each month. In contrast, analysis of data from the National Association of Realtors indicates that only 17.7 percent of existing home inventory was sold in May 2006. NAR data also shows that the national inventory of existing homes for sale has risen in the first five months of 2006 from 2,883,000 homes in January to 3,604,000 in May."

"'In recent years, buyers had the ability to buy more property than perhaps they could afford thanks to low-interest loans,' CEO Brad Geisen said. 'That's changing. While just a year ago sellers were in the driver's seat, foreclosure rates over the last six-months suggest buyers now have the upper hand.'"

"Georgia ranks highest among states in foreclosure rates to date in 2006, followed in order by Indiana, Colorado, Michigan, Texas, Ohio, Tennessee, South Carolina, North Carolina and Utah."

Don't miss the tables at the bottom of the link for state by state details.

Tuesday, July 11, 2006

'A Lot Of People Got In Over Their Heads'

The Rocky Mountain News has this update from Denver. "More than 9,500 real estate foreclosures have been filed in the Denver area in the first half of the year, about 34 percent more than in the first six months of 2005. It's on pace to be the worst year ever in terms of the number of foreclosures, topping 17,122 in 1988, though the area's population growth since then means the total percentage of homes in foreclosure is smaller."

"'I do believe there is a crisis,' said Peter Lansing, president of Universal Lending, who served on a foreclosure task force during the late 1980s. 'We do need to do something about it. It is all of our responsibility.'"

"Experts said foreclosures are being driven by several factors: adjustable rate mortgages that are rising with interest rates; interest-only loans; houses sold to people with less than stellar credit ratings who in previous years wouldn't have qualified for loans; programs allowing homes to be purchased with no down payment; overbuilding; the lack of new, high-paying jobs; and predatory lending and fraud."

"Soaring foreclosures are a puzzle because the rest of the economy is doing so well, said Tom Clark, executive VP of the Metro Denver Economic Development Corp. 'We thought the foreclosures would wash out by the end of the summer, but now with rising rates it looks like that is not going to happen until the first quarter of 2007,' Clark said."

"Economist Tucker Hart Adams said she has no doubt it will get worse before it gets better. 'I'm trying to figure out how much worse.'"

"She said many homeowners, already stretched by other consumer debt, can't afford to pay hundreds of dollars more per month as their adjustable rate mortgages move upward. 'I think in the '90s, when we had this unprecedented improving economy, we convinced ourselves the good times would never stop,' Adams said. 'A lot of people in Colorado just got in over their heads.'"

"Real estate broker David Binkowski in Denver, said most of the foreclosures he sees are in homes priced below the $300,000s and the owners often have refinanced out all of their equity."

"Lansing said..'we did have a woman come in our office who wanted a reverse mortgage, and we looked at her history, and her previous lender just had her refinance, and refinance, and refinance, just to generate fees.'"

"Lansing said consumers need to educate themselves. A lot of it is common sense, he said. 'You don't really believe there are 1 percent mortgages, do you? But just the other day I heard an ad on the radio talking about getting a 1 percent mortgage.'"

Friday, July 07, 2006

'Foreclosures Are Back' In Florida

The Herald Tribune has this on Florida defaults. "After three years of happy times and quick sales, real estate foreclosure is back. The U.S. real estate market has cooled, and foreclosure rates are notching upward and are almost certain to head higher. The distress isn't limited to Joe Six-Pack. Many pros and semi-pros are starting to wish they owned fewer homes than they do, especially if they bought recently."

"In May, there were 1,441 homes listed in North Port, but only 80, or 5.5 percent, sold, says Dave Hofer, who keeps statistics on the area. In Port Charlotte things were worse: 1,543 listings and 72 sales, or 4.6 percent."

"Down in Venice, George Huhn, a commercial real estate broker with an investor following, helped a couple of banks by taking over problem loans in 2001-02. Now, banks are starting to call him again, asking him to relieve them of problem first mortgages they held onto, before they become foreclosure actions."

"Banks do it for two reasons. 'No.1, for reasons of negative publicity and image, the banks don't want to be involved in foreclosure actions,' he said. Secondly, during the boom years, some lenders all but disbanded the departments performing the difficult work of foreclosure. 'Now they are looking at some hard choices, and what they are electing to do is outsource, and that is where we come in,' Huhn said."

"Even the pros and semi-pros in the Sarasota Real Estate Investors Association are feeling some distress these days. At one recent meeting, investor Peter Magnuson acknowledged the issue in a pep talk to the 75 or so members present. 'There's a little bit of blood in the streets,' Magnuson said. 'I think that is the people who overcommitted themselves and are looking for a way to unwind what they got into.'"

"'People who bought these pre-construction deals hoping to make big money on them and now they're stuck with them and it is eating them out of house and home,' he said."

From the South Florida Business Journal. "With interest rates and insurance premiums rising sharply while housing prices level off, some local real estate industry experts expect a surge of foreclosures, perhaps beginning as soon as this summer."

"'I expect we will see minimum increases [foreclosure filings] of 25 percent year-over-year, starting the second half of this year and it would last for several years,' said Rhonda Light, who monitors foreclosure filings at courthouses in South Florida's counties."

"Daniel Herz, a Plantation-based adviser to borrowers and lenders offers an additional warning: 'Until last year, with the rising home prices, if you got in trouble you could bail out by selling your house. Now, there is a glut of homes on the market.'"

"The pace of restructurings is rising rapidly this year for so-called 'hard money' or equity-based borrowers in South Florida, Herz said. Those borrowers either don't qualify for bank loans or want loans more quickly than banks can provide them."

"If they can put significant equity into a home or commercial property, usually at least 35 percent, Herz helps them get loans from individuals. 'I am getting more calls from borrowers who are behind in payments and their brokers, asking for help in finding a refinancing,' Herz said, adding that, because of the large amounts of equity involved, he is finding some new lenders in some cases."

"Many homeowners who made low down payments, often under 5 percent, and are facing their first big ARM increases will not be able to restructure loans, he said, and might have no alternative to foreclosure."

Thursday, July 06, 2006

Foreclosure Website Problems Noted

The Wall Street Journal has this report on foreclosure opportunities. "Rising interest rates and a cooling housing market are whetting the appetite of real-estate bargain hunters and fueling interest in Web sites that list homes in, or near, foreclosure. A variety of Web sites have sprung up to cater to home buyers and investors looking to purchase properties in or nearing foreclosure. You can browse the Web sites at no charge, but getting complete access requires a weekly or monthly fee, typically $40 to $50 a month."

"The federal government operates its own site,, that is free and provides information about foreclosed properties being sold by the Federal Housing Administration, the Veterans Administration and the U.S. Department of Agriculture.'

"To see how these Web sites work, we checked the government site and three for-profit alternatives. We also looked at the information each Web site provides and talked to real-estate brokers who specialize in foreclosed properties."

"We learned that novices should approach the foreclosure process, and the Web sites that sell foreclosure listings, with care. Finding a good buy on a foreclosed house requires hard work and can carry significant risks. Critics say that Web sites selling foreclosure listings often contain outdated information or listings on houses that aren't ready for sale; some try to direct would-be buyers to partners with whom they have a financial relationship or to seminars and other products."

"'We run into a lot of problems with foreclosure Web sites because a lot of the houses can't be sold' because various legal requirements haven't yet been met or the lender hasn't readied the property for sale, says David Benham, who sells foreclosed homes on behalf of lenders."

"The for-profit Web sites all talk about the large number of properties they feature. But even some companies acknowledge that some of the information they offer is out of date. 'The most common complaint is either the property is not on the market yet or the property is already gone,' says Rick Sharga, a vice president of RealtyTrac Inc."

"'If there are 1,000 properties in an area you are interested in, there are probably 100 that represent something of a buying opportunity. You might be able to get in touch with 10 of the homeowners and maybe make an offer on one or two,' he said."

"Figuring out which site has the most accurate information would require checking out hundreds of thousands of listings. But our spot check easily turned up information that was outdated. On and, for instance, we found a three-bedroom, one-bath home priced at $101,900. Ms. Simpson, the Atlanta broker, told us the house had been under contract for 30 to 45 days."

Prime Loan Defaults Surge In Chicago

The Chicago Business site has this report on foreclosures. "Home foreclosures rose last year in middle-class and gentrifying Chicago neighborhoods, as the combination of rising interest rates and adjustable-rate loans drove a citywide increase in problem mortgages. The highest jumps came in areas like the Near North Side (65% increase in foreclosures), Jefferson Park on the Northwest Side (89% increase), Rogers Park on the Far North Side (49% increase) and Bridgeport on the South Side (113% increase), according to a new study."

"The numbers lead Jack Markowski, commissioner of the Chicago Department of Housing, to believe that adjustable-rate mortgages (ARMs) with initially low pricing are playing a big role in the foreclosure surge. 'We're very concerned about teaser rates and artificially low payments,' he says. 'I think there has to be a waking-up among the lenders, and borrowers as well.'"

"In Chicago, foreclosures on prime-rate mortgages, home loans for borrowers who qualify for market interest rates rather than the higher rates paid by those with spotty credit, increased 43% in 2005, the survey shows. More alarmingly, the analysis found a 93% increase in foreclosures on prime-rate mortgages that had been issued less than two years before. Some 82% of those problem mortgages were ARMs or loans with scheduled payment increases, known as balloons."

"'This suggests to me that people are getting into loans they don't understand and can't afford,' says David Rose, author of the report on foreclosures in Chicago. 'As housing prices increase, incomes haven't necessarily kept up. I think more and more people are making that stretch.'"

"The big jump in prime-rate mortgage foreclosures contrasts with a 6% decline in foreclosures on subprime loans, mortgages with higher-than-market interest rates. Mr. Rose credits the third consecutive decrease in foreclosures on such loans to state 'predatory-lending' restrictions that took effect more than two years ago."

"Mortgage lenders say more borrowers are struggling to cover rising monthly payments as interest rates have increased and made ARMs more costly. Many of these homeowners used option ARMs, mortgages that give borrowers a very low minimum payment in the first year and then increase annually or even monthly as rates rise."

"'We have several clients (seeking refinancing) who didn't quite understand or didn't think the market would increase so fast,' says Jo Ann Grayson, chief operating officer of a Chicago-based mortgage banker."

Monday, July 03, 2006

Nashville Foreclosures Up 60%

The Nashville Business Journal has this from Tennessee. "Foreclosure rates for May are the lowest they've been all year. But even if the numbers plateau, the Nashville area is on track to have nearly twice as many this year as in 2005."

"In the first five months of 2006, the eight-county Nashville Metropolitan Statistical Area had 2,640 foreclosures, according to RealtyTrac. For the same period last year, there were only 1,654, representing a 60 percent hike."

"Rick Sharga says typically in markets with rising foreclosure rates, there's also a slow in home sales. He says demand is dropping nationally and houses are staying on the market longer. But home sales aren't slowing in the Nashville area. Sales were up 4.2 percent in May and have steadily topped monthly results for 2005, a record year, according to the Greater Nashville Association of Realtors."

"However steep the recent rise in foreclosures has been in the Nashville area, it may only be the beginning of the wave's swell. Sharga says the market still isn't feeling the impact of higher interest rates on the mass amount of interest-only loans that were made in the past decade. 'There's a huge balloon of three-one and five-one loans coming due (nationally) in the next 18 to 24 months,' he says. 'Depending on whose numbers you believe, that's $2 or $3 trillion in loans.'"