Saturday, September 30, 2006

Post Katrina Prices Falling

The Voice of St Tammany reports from Louisiana. "Larry Haik Jr. often watches the real estate market in Slidell unfold from the doorstep of his suburban home. 'Homeowners are looking across the street and saying, 'Well if they got that much for their house, I'm going to sell mine too,' said Haik, a real estate agent in Slidell. 'But what they don't realize is that there are so many houses on the market that it's turning into a buyers’ market. Housing prices are coming down, but the average Joe doesn't know about it.'"

"The housing market in Slidell stalled in the past several months. Across the city, For Sale signs are sprouting like crab grass. Real estate agents predict the bloated market will soon force prices down, swinging the pendulum in favor of buyers for the first time since Hurricane Katrina sent tidal waves into the southeastern areas of the city more than a year ago."

"Today, nearly 900 homes are currently listed for sale throughout the city, more than double the number at any point in recent years. Haik said a lot of people were under-insured or not insured, and they can't afford to repair their homes, so they've put them up for sale. He attributes other sales to what he calls 'Storm Chasers,' investors who rushed to buy storm-damaged homes, fixed them up and now hope to make a profit. He refers to the last group of home sellers as 'people still trying to capitalize on the homeless.'"

"'It's getting scary,' he said about the real estate market in Slidell. 'There's a nationwide slump in home sales, but it's worse here.'"

"In Slidell, foreclosures on storm-ravaged homes could soon swell, dumping hundreds of additional houses on the market and further crippling single-family home sales and prices. 'We anticipate seeing a large number of foreclosures starting in December or January,' said Virginia McCoy, a corporate inventory manager with 20 years experience handling foreclosures in Slidell and the Mississippi Gulf Coast area. 'We're talking big numbers, and it's not just a Slidell thing. It's going to hit everywhere in the area.'"

"Although Slidell has only seen about a dozen homes foreclosed since the storm, McCoy expects the number will spike into the mid hundreds or even reach a thousand over the next two to three years. She predicts numbers will surpass the last time the city's housing market bloated with more than 300 foreclosures during the Savings & Loan scandal in the mid 80s."

"The only reason McCoy isn't busy now, she said, is that a lot of people filed for bankruptcy after the storm. Banks can't foreclose on a property if the owner has filed for bankruptcy. There was also a state-wide moratorium on foreclosures post Katrina. It was lifted Aug. 31."

"Senior citizens are expected to lose their homes more than any other demographic group, she said. 'The elderly just can't cope with what's happened,' she said. ''Most of them probably never had flood insurance, and they can't afford to rebuild."

"'In some areas, the prices are inflated,' said Carole Woodward, a real estate agent in Slidell and a board member of the Northshore Area Board of Louisiana Realtors. 'But other areas are becoming reasonable. It's hard to say what will happen (to housing prices) in the long term because Slidell isn't like the rest of the country.'"

"Based on current list prices for the nearly 900 homes for sale in Slidell, home prices have yet to drop. At the end of September, only 91 homes were priced between $180,000, the average sale price before the storm, and $220,000, the average price now, Woodward said."

"By comparison, approximately 100 homes are priced between $400,000 and $1.5 million, and more than half of the listed homes are priced between $221,000 and $399,000. The remaining 225 homes, many of which sustained substantial damages, are priced between $20,000 and $179,000."

"'It was pretty disgusting what happened after Katrina,' Haik said. 'A lot of people were raising prices after the storm. And it wasn't just the prices for homes that went up; contractors and subcontractors were charging more. Roofers and drywall hangers were making a lot more too. Anybody who was in a position to take advantage did. But nobody discusses this because it's politically incorrect because everybody knows somebody who's making a lot of money.'"

"Real estate prices are only one factor contributing to the slowdown of home sales throughout Slidell. Since the storm, homeowner insurance rates have increased by 40 percent across the city, said Jackie Muller, an agent in Slidell."

"'The insurance rates are taking a lot of people out of the market or they're buying less house than they're accustomed to,' Haik said. 'It's amazing how many sales have fallen through because of this. Agents are losing sales every day because the increase in insurance blew the (price) off the board.'"

"For luxury homes listed at $500,000 or more 'insurance is especially horrible right now,' Woodward said. It's so high that agents are signing more lease-to-purchase contracts than direct sales contracts for homes in the $400,000-plus price range. 'People want to get in, save some money, and see what happens with insurance before they buy,' Woodward said."

Thursday, September 28, 2006

Feeling The Sting Of ARM's In North Carolina

A foreclosure report from North Carolina. "A growing number of people are defaulting on their home mortgages in Guilford County, a symptom of a deeper problem with the local economy. Slow sales and falling home prices in this market are the key reason for defaults that lead to foreclosures, says one economist."

"The rising foreclosure rate is a sign that the county's economy still hasn't fully recovered from the deep recession that began five years ago. 'In a weak economy, people lose their jobs and can't make their mortgage payments,' said Don Jud, a UNCG professor emeritus who studies the economy and the housing market. 'In a rising market, that's not a problem because they just sell their houses and go somewhere else. In a weak market they can't sell their house.'"

"In some cases where prices are falling, people are not getting enough for their homes to cover the remaining amount owed. 'But if you don't have a house and you've got a job it's a great time to buy a house,' he said. 'It's really a buyer's market here.'"

"For people on the financial edge, though, these are bad times. One problem many are facing is rising interest rates on their adjustable rate mortgages, also known as ARMs. Many are betting that they'll make more money, refinance to fixed-rate mortgages or sell the house within a few years."

"An overly optimistic buyer can get into a lot of trouble fast, especially if a monthly payment rises by hundreds or thousands of dollars, said Jerry L. Wass, president of First Community Mortgage in Greensboro. Even he felt the sting of his family's adjustable rate, which rose from 3.75 percent to 8.25 percent, until he was able to refinance."

"'It was difficult for us,' he said. 'For some people, that would be enough to ruin them. That would be the tipping point.'"

"Banks, which are also facing slow business as home sales lag, are more aggressively pushing for payment, said local attorney Charles E. Neill III. 'I'm seeing more foreclosures with folks that aren't really that far behind,' he said. 'Used to be you'd see someone coming in and they're 12 months behind in their payments. More and more, we're seeing people going into foreclosure three and four months behind.'"

"Some borrowers are still their own worst enemies. Some, for example, don't really bother to do the math about how a loan would affect their spending habits. All they consider is the amount they'll qualify for, and get stuck with burdensome bills."

Wednesday, September 27, 2006

Bankers: 'It's A Different World Now'

The Associated Press reports on personal debt. "Late payments on credit card bills edged up this past spring, when high energy prices were squeezing the finances of some people and making it hard to pay bills on time. The American Bankers Association reported Wednesday that the percentage of credit card payments 30 or more days past due increased to 4.41 percent in the April-to-June quarter, up slightly from 4.40 percent during the January-March period."

"'High gas prices and Federal Reserve interest-rate hikes have left consumers with less money in their pockets. As a consequence, consumers have less money leftover to meet all their expenses, including paying back their loans,' said James Chessen, the association's chief economist, in explaining the increase in late payments in the second quarter.

"The cooling of the once-hot housing market, meanwhile, has important implications on consumers and the overall economy, Chessen said. Consumers who watched their homes rise rapidly in value over the last several years were inclined to spend and borrow against their homes, treating them like ATMs, to support their spending ways. But home prices have since lost altitude."

"The National Association of Realtors reported Monday that the annual price of existing homes declined in August for the first time in more than a decade. 'Up until now, rising home values have increased wealth, been a source of liquidity for borrowers and allowed consumers to spend out of savings,' Chessen observed. 'It's a different world now, and consumers will need to be more careful in managing their finances.'"

Monday, September 25, 2006

An Auction In Tucson

The Arizona Daily Star reports from Tucson. "Mortgage experts and real estate watchers are concerned that a wave of foreclosure proceedings is building as consumers battle rising energy costs and interest rates. Some may need to refinance as adjustable-rate mortgages and other forms of creative financing mature."

"In Arizona, 2.4 percent of the approximately 1.1 million mortgages were in some stage of delinquency during the second quarter of this year. Less than half of 1 percent of all loans had actually entered foreclosure proceedings."

"Barbara Sherrick and her husband, Bruce, live in the house east of D-M that was auctioned off Wednesday. She said she and her husband had found themselves in financial trouble more than a year ago when Bruce felt obligated to quit his job because of an ethical concern."

"Sherrick and her lender, Countrywide Home Loans, worked out a repayment plan to get caught up on payments. The plan didn't hold. 'It was just too hard to keep,' Sherrick said. Perhaps too late, Sherrick said she and her husband considered selling the house and pocketing the equity, but that seemed too difficult."

"She said she did get some offers from 'vultures' who wanted to buy her house at a reduced price. She turned them away. She didn't know her house was going to be auctioned on Wednesday. She heard about it only the day before because a private lender came to her front door and informed her of the pending auction."

"'They don't tell you. They just let it happen,' Sherrick said. 'That's really sad.'"

"Auctioneer Francis opens the bidding at $70,289.16. There's no yelling or holding up signs. Some bidders hold up a hand and seem to grunt. Bidders sort of step in and out of the bidding. Helen Meadors, an associate broker, bids $73,500. Bidders bump up the price by just $100 or $200. The pace picks up as Jeff Katz, a lawyer with a private practice in Tucson, bids $76,000."

"There's more volley back and forth, and Meadors ups the price to $79,000. Katz ups the price to $81,000. There are pauses in the bidding, and a couple of 'last calls,' when it appears the sale will be finalized, then the bidding catches fire again.
About 30 minutes in, Ali Jiha of G&G Financial bids $117,600."

"Soon after, Jiha says he paid too much for the property. Says Jiha: 'Sometimes we get emotional. We get into the bidding thing.'"

"Jiha needn't worry, after winning the auction, he lost the property after all.
The private lender who came to Sherrick's door offered to buy the house. Sherrick will now pay rent on her home for a year, when she will have the option of buying it back."

"Jiha said the auction was scuttled because the trustee gave the wrong instructions to the auctioneer. All that bidding resulted in an invalid sale."

"In Pima County, 2,978 properties have been at some stage of foreclosure proceedings in the first eight months of the year, according to a private data company. That's a 9.2 percent increase over the 2,726 homes entering foreclosure in the first eight months of 2005."

Friday, September 22, 2006

Putting People In 'Houses They Can't Afford'

The Memphis Daily News reports from Tennesee. "There's a laundry list of reasons why the struggling Frayser community, found in Memphis' 38127 ZIP code, is propelling home foreclosures in Shelby County to four times the national rate. Or why foreclosures abound in Frayser more so than anywhere else in Memphis."

"The Frayser Community Development Corporation report indicates that certainly isn't the case in Frayser, and that even Memphis proper has cause to worry. First, even though home sales prices rose 11.5 percent per square foot in Frayser last year, equity levels there remain dangerously low, according to the report."

"Frayser leads the Memphis area in rates of subprime loans, which are loans that charge borrowers high interest and other fees. 'There's just a limited source of funding for low- to moderate-income folks right now, so a lot of times people in that range will go someplace they shouldn't go,' said Fran Warner, sales manager at First Tennessee Home Loans. 'They don't know what they're getting, they just know they're getting into a house right now, no money down, and the payments will be this.'"

"'We are, for various reasons, just a center for subprime and predatory lending, and that is a phenomenon that could and should change,' Steve Lockwood, executive director of the FCDC said. 'That's partly just a public education thing. There is also credit available even to folks with some pretty poor credit scores.'"

"'If you talk to the prime lenders, they are dipping down into some pretty low scores to loan really decent mortgage rates to folks. But that sure beats them taking out high-risk, high-interest loans with balloon payments after five years and prepayments and lots of other things that make it riskier,' he said."

"Especially in Frayser, many homeowners have gotten 'upside down' on their loans, meaning they owe more than their homes are worth. In 2005, Frayser's 38127 ZIP Code had 477 actual foreclosures, up from 267 in 2004, according to the report. With a total of 9,868 owner-occupied homes in the community, last year's figure put Frayser's foreclosure rate at 4.8 percent."

"By comparison, the MBA's first quarter 2006 National Delinquency Survey showed the percentage of loans in the foreclosure process was 0.98 percent."

"Over the last five years, one in four households in the city of Memphis has experienced some kind of foreclosure notice,' said Beanie Self, a longtime civic leader in the area. 'The American Dream is home ownership, and one of the things that concerns me is - while the dream is wonderful - we are not really prepared for it.'"

"'People don't realize you have a real estate industry, an appraisal industry, a mortgage industry now that can really push to put people into houses that a lot of times they really can't afford,' Self said."

Monday, September 18, 2006

Atlanta Defaults 'On Track To Double' In 2006

The Atlanta Journal Constitution reports from Georgia. "The number of property foreclosures in metro Atlanta this year is on track to double 2005 foreclosures. Real estate database Equity Depot, recorded more foreclosures in a 13-county metro area through the end of July than were reported in all of 2005."

"'We're just touching the surface of this whole adjustable-rate mortgage problem,' said David Cook, president of Alpharetta-based Equity Depot."

"Georgia laws make non-judicial foreclosures fast and easy and have long helped keep the state high in national rankings. Now, years of easy mortgage credit, including adjustable-rate mortgages, and low interest rates have created a stratum of homeowners vulnerable to a softening housing market or any economic setback."

"Equity Depot's figures show foreclosures in 13 metro counties rose to 25,276 through the end of July 2006, compared with 21,030 for 2005 and 10,956 in 2001. 'Yes, we're seeing what I would say is a substantial increase in the number of homeowners who are struggling to make their mortgage payments due to increased interest payments on their loan,' said Sue Hunt, CCCS housing counseling manager."

"In six months, Hunt said, CCCS has tripled its housing counseling staff, and the agency plans to add more staff to cope with increased demand."

"Those increases are similar to foreclosure jumps being reported nationwide as rising interest rates strain homeowners with adjustable-rate loans and slower housing sales make it harder for troubled households to sell or downsize. But Doug Duncan, chief economist for the national Mortgage Bankers Association, doesn't think the numbers show the whole picture. 'We use the word 'normalizing' to describe what is happening in the housing marketplace today,' Duncan said."

"He said the bulk of conventional, fixed-rate loans are showing no signs of added distress. 'Part of what we're hearing is a result of the fact that there is a huge number of loans out there,' Duncan said. About 25 percent of current mortgage loans nationwide are adjustable, Duncan said."

"Hunt said local consumers are often confused about the potential risk adjustable-rate loans can pose. 'The first explanation we hear from our clients is that they didn't realize or fully understand the terms of the [loan] contract,' Hunt said. 'They knew it would escalate, but they didn't realize how much [more payment] a small increase in the interest rate would generate.'"

"Georgia is a particularly difficult state for homeowners facing foreclosure, Hunt said. State laws allow banks to seize delinquent properties within a matter of months after skipped payments, and the process doesn't require going to court. 'In Georgia, you can go into default and lose your house really, really fast,' Equity Depot's Cook said."

"Hunt, of CCCS, said lenders are aware of a looming problem with delinquencies and foreclosures. She predicts a range of new solutions designed to help troubled consumers will soon hit the mortgage market. 'I think the lenders are going to have some creative ideas to help people get out of this situation,' Hunt said."

Thursday, September 14, 2006

Loan Payments Greater Than Incomes: CA

The Central Valley Business Times. "A softening home market is not by itself to blame for the jump in California home foreclosures says a San Diego attorney who specializes in helping those faced with losing their homes. 'I’ve had a number of people in this last month – this is completely unbelievable and so foreign – their mortgage payments are more than their income,' Mr. Brady says."

"He says in some cases it appears that mortgage brokers faked income for the applicants so they would qualify for mortgages. 'The homeowner should never have gotten the loan. Somebody’s made fees off of this thing and I think some of these lenders are so anxious to get their money loaned out that they do what they call ‘stated income,' he says."

"'The lenders don’t care. You’ve got janitors that are out there with $450,000 loans,' he says. 'The lenders should know that janitors don’t make enough to support that kind of loan.'"

"One of his clients who is in foreclosure makes about $5,000 a month but on the loan documents someone wrote in that his income was $11,000 a month, Mr. Brady says. 'So the lender goes ahead and grants the loan and now the guy can’t pay it,' Mr. Brady says.'"

"He says a number of his clients are choosing to lose their homes through foreclosure because they cannot refinance or sell in a market where sales are slowing and mortgage rates are rising. 'I’ve had a number of clients that have refinanced their property in the last year or two. They’ve pulled all their equity out of it and they’ve used their house kind of like a credit card. Now there’s nothing left. Some of those are choosing just to let it get foreclosed on,' Mr. Brady says."

Wednesday, September 13, 2006

Homes Entering Foreclosure 'Surging'

From CNN Money. "With real estate markets slowing and mortgage rates well above levels of recent years, times are getting tougher for homeowners, the number of homes entering into some stage of foreclosure is surging."

"In August, 115,292 properties entered into foreclosure, according to RealtyTrac. That was 24 percent above the level in July and 53 percent higher than a year earlier. Florida, had more than 16,533 properties in foreclosure in August. That led all states and was 50 percent higher than in July and 62 percent higher than in August 2005."

"California foreclosures are increasing at an even faster annual rate, up 160 percent since last year to 12,506. And the formerly red-hot Nevada market recorded a spike of 24 percent compared with July and a whopping 255 percent increase from August 2005."

"RealtyTrac's Rick Sharga says the rising foreclosure numbers are in part the result of rising monthly payments on adjustable-rate mortgages, which have a low introductory interest rate that heads higher after an initial period. 'Usually, foreclosures are a lagging [market] indicator,' he says. 'But we've never had a situation like this with adjustable-rate mortgages amounting to $400 billion to $500 billion coming up for adjustment over the rest of the year.'"

"'The real wild card is the nature of the loans themselves. Historically, ARMs were underwritten pretty conservatively. There has been a loosening of standards with lower credit worthiness and smaller down payments,' Sharga says"

"Georgia had the highest number of new foreclosures in August, according to a new report. Data shows Georgia had 7,176 foreclosed properties and 2,478 new foreclosures in August, putting it in first place for the fourth time in the past five months."

"Metro Detroit homeowners are skidding into foreclosure at nearly three times the rate as they were last year as a slumping economy, falling home values and risky mortgages leave more household budgets in the red."

"Foreclosures shot up 137 percent, from 14,789 to 35,041, in Wayne, Oakland, Macomb and Livingston counties from January through August, compared to the same period last year. Increasingly 'creative' lending practices are also contributing to the spike, say Realtors, financial experts and bankruptcy attorneys."

"With falling home values and the housing supply far outweighing demand, people are finding it hard to sell for what they owe on the property. 'It is tougher for the average person to sell their house and recoup their money if they owe 100 percent of the value of their home or even if they got 90 percent mortgage or 80 percent mortgage. Houses aren't selling,' said Dorothy Guzek, a financial counselor with in Troy."

"On Tuesday morning at an Oakland County foreclosure auction, Matthew Chodak of the Oakland County Sheriff's Department read off 103 properties on the auction block, including a $2.5 million home in Oakland Township, an $84,000 home in Hazel Park and many more in between."

"Those foreclosures hit the local market hard, said Joel Root, a real estate consultant in Clinton Township. 'You're going to put more lower-priced homes on the market, so that's going to hurt the whole market,' Root said. 'It's a depressed area already and now we're adding homes to the market that people otherwise would not have wanted to sell.'"

"That doesn't help lenders who also are trying to unload homes as they lose $30,000 or more in the foreclosure process. 'People don't realize it but the average investor loses $40 a day' from the day a homeowner defaults, said David Trott, whose law firm represents banks and mortgage brokers."

"'It's an economic nightmare for them and investors are looking at Michigan with a great deal of concern because not only are they getting a lot of foreclosures, but they're having a hard time reselling,' he said. 'To say that our clients are concerned is probably an understatement.'"

"More than 100 residents of Sarasota County sent a clear message to their elected officials during Monday night's public hearing to consider the county's proposed $1.14 billion budget: The 'Save Our Homes' legislation is killing Florida."

"'Foreclosures are happening everywhere,' Wiley said. 'There were 25,701 foreclosures in the state of Florida for January, February and March of 2006. Enough is enough.'"

Tuesday, September 12, 2006

Mass Auction In 'Auto-Wreck' State

CNN reports on auctions in Michigan. "More than 250 bank-owned single-family homes, condos and duplexes in Michigan are going to hit the auction block en masse in late September, according to the company handling the auction."

"The state's housing markets have been crushed by lay-offs in the auto industry. On Monday, Ford was reported to be eyeing another round of cuts in its workforce. It has left many homeowners unable to keep up their house payments and lenders have built a big inventory of repossessed properties."

"Dave Webb reports that the majority of the 250 Michigan properties primed for auction, about 150 in all, lie within 60 miles of Detroit. The rest are scattered throughout the state The estimated prices run the gamut, from $15,000 to $450,000."

"According to the Office of Federal Housing Enterprise Oversight, of the bottom performing 20 metropolitan area housing markets in the United States, eight are in Michigan, and 17 are in the Midwest in other so-called 'auto-wreck states.'"

Monday, September 11, 2006

Here Comes The Bank: Colorado

The Longmont FYI reports from Colorado. "Colorado leads the nation in foreclosure rates, and Weld County leads Colorado. Weld housing officials blame the phenomenon mostly on gullible buyers who accept risky home loan packages including adjustable-rate, no-money-down and interest-only mortgages. Whatever the reasons leading to the spike, home values have dropped."

"In the second quarter of 2006, one of every 66 households in the county was in some stage of foreclosure. 'Wages did not keep up with the appreciation of homes,' said Matt Revitte, a housing broker in Greeley. 'So many buyers bought into a multitude of loan products thinking the party wasn’t going to end. But it happened. It always happens.'"

"According to Rick Sharga, a spokesman for RealtyTrac, a typical scenario in high foreclosure areas runs something like this: Three years ago, a couple wanted a $300,000 house and took out a $240,000, three-year, adjustable-rate mortgage to buy it. Monthly payments were $1,500. When home values slumped, the house’s worth dropped to $270,000. Now, the ARM has expired, and new interest rates have jacked the mortgage payments to $2,250 a month."

"They can’t pay it because they haven’t received the promotions or raises they were counting on at work. They can’t sell their house because too many similarly desperate people have also put their houses on the market, and at super-low prices in their rush to unload. 'Now panic starts to set in,' Sharga said. And with missed mortgage payments, here comes the bank."

"Some say the county is overbuilt and that local governments should issue fewer building permits. Others argue developers wouldn’t still be building unless they believed their homes would sell soon. The market will take care of itself, they say. In any case, Weld County residents need to start buying homes within their means, said Tom Teixeira, director of the Greeley/Weld Housing Authorities."

Friday, September 08, 2006

Foreclosures Up In Maine

From WCSH in Portland, Maine. "Times are so tight for many Mainers. They are losing the money battle and their homes with it. Len Morley, an attorney who specializes in foreclosures, says cases are up 400% from this time last year. 'What I'm seeing mostly are relatively young loans,' says Morley. 'Loans that were closed in the past couple years. Either refinance transitions or acquisition transactions but loans that were closed in 2003, 4 or 5 are the ones going into default.'"

"Morley cites a variety of factors for the sharp increase: people overextending in the last few go-go years of the real estate market, rising fuel costs, medical bills and general inflation at a time when most people's income is steady or falling. Another big culprit: Adjustable Rate Mortgages, or ARMs. 'If you're living with not much of a margin, then a couple hundred here a couple hundred dollars there a month is a lot of money,' Morley says."

"Leah Pyy of Bath knows the harsh new reality all too well. She and her husband saved 15 years before they were able to buy their home in Bath in 1995. They almost lost it in the space of 6 months. In 1997, they refinanced with heavy fees, adding thousands to their mortgage. Then, in 2003 Leah lost her job. She soon wracked up $31,000 in credit card bills."

"So in 2004, the family took out a second mortgage on their home, at 13.9% interest. 6 months later, Leah says, 'Got a foreclosure notice. We owed them like 4,000 dollars.' The Pyy's avoided having their house taken by mere hours, thanks to a long awaited disability check and some intervention by the office of Senator Olympia Snowe."

"Morley warns people to beware of overextending their finances in this market. Pyy wholeheartedly aggrees. 'It flipped my thinking around..that this isn't gonna happen again. No more credit cards. I refuse to refinance.'"

Wednesday, September 06, 2006

'Reminiscent Of The 80's': San Antonio

From My San Antonio. "Nearly 850 Bexar County residents lost their homes to foreclosure Tuesday, the third-highest monthly total in more than a decade. The slew of foreclosures is reminiscent of the late 1980s when oil busted and the San Antonio real estate market crashed."

"'Lenders are making riskier loans,' said Jim Gaines, research economist with the Texas A&M Real Estate Center. 'Some of that risk is coming home to roost.'"

"People who buy a home with no down payment and who roll closing costs into their mortgage loan seem especially vulnerable to foreclosure. These 'upside-down' loans make up only about 1 percent of all mortgage loans in San Antonio, according to a mortgage research firm."

"But in the first half of 2006, they made up 16 percent of the Bexar County foreclosure market. George Roddy, president of Foreclosure Listing Service, said interest rates on adjustable-rate mortgages, known as ARMs, are resetting at higher levels now, sometimes doubling monthly mortgage payments. And consumers have had a harder time getting bankruptcy protection."

"In 1996, 3,894 Bexar County homes were sold at the foreclosure auction. So far this year, 6,510 homes have sold at auction."

"Gregg Stanley, owner of a San Antonio-based foreclosure listing service, said the rise in local property values has helped many families avoid foreclosure. 'They can sell and be OK if they do it quickly enough,' he said."

"Without the rise in property values, Stanley said, foreclosures would be double or triple the current levels."

"In the late 1980s and early 1990s, people typically lost their homes to foreclosure because of an economic downturn that led to layoffs. 'This isn't the '80s,' Gaines said. 'In the state of Texas we've had a lot of people buying homes in the last two or three years on easy credit terms. Lenders are pushing mortgages out the door.'"

"Gaines said people who never thought they could become homeowners have been able to get into the market and, for the most part, hang onto their homes. 'Was it a good thing or a bad thing? I don't know where you draw the line,' Gaines said. 'These were people who were giving it a shot who were never able to give it a shot before.'"

Tuesday, September 05, 2006

'No Precedent' For Exotic Loan Mess

MSN Real Estate reports on foreclosures. "Those easy-mortgage chickens are coming home to roost. This fall the adjustable-rate mortgages that millions of Americans took out during the recent housing boom will be reset, and many homeowners will see their monthly mortgage payments shoot up by as much as 20%. According to the Mortgage Bankers Association, of all mortgages financed in 2005, 36% were ARMs, the highest ever."

"For many Americans, this is scary news, if hardly unexpected. Those home buyers may have thought they would be able to flip their houses quickly and avoid the rise in their mortgage payments. But now, many of them are finding themselves stuck in a house they may soon no longer be able to afford, and, as the real estate market peters out, there's little they can do about it."

"Unable to pay their mortgage, and hit by the double whammy of higher gas prices and higher credit-card rates, many Americans in nearly every income bracket may be forced into foreclosure."

"In a survey of foreclosure rates in the 100 largest metropolitan statistical areas (MSAs) in the U.S., Indianapolis found itself at the head of the list. It performed worse than any other metro area in the country, with nearly 0.987% of all its homes in foreclosure, or one foreclosure for every 101 households. The next worst performer was Atlanta, with 0.904% of all homes in foreclosure, or one home in every 111 households."

"Indianapolis, for example, has a weak job market and a weak real estate market. On average, homes there take twice as long to sell, and then often for a fraction of the market value. Atlanta, on the other hand, has suffered because of both an exceptionally high number of bad mortgages that were being written as well as the fact that many of the industries there are retrenching, which leads to job loss or salary reductions."

"'We know that ARMs default at a higher rate than fixed, and subprimes default at higher rates than primes,' says Realtytracs Rick Sharga. 'Never have so many ARMs reset at the same time. There is no precedent for it.'"

Friday, September 01, 2006

Mansions, Condos In Default: Dallas

The Dallas News reports on foreclosures in that city. "Kemisha Jones doesn't want to leave her 2-year-old southeast Dallas home. But the single mother may not have a choice. She's one of more than 28,000 North Texans whose homes have been posted for foreclosure this year."

"Her troubles began with thousands of dollars in family medical expenses. A surge in property tax bills added to her finance woes. 'My house payments went from $871 to $1,385 a month,' said Ms. Jones, whose house is valued at about $106,000. 'For a while I was making it – I was rocking and rolling,' she said. 'But now I realize that I can't afford this house.'"

"The number of mortgage defaults in the Dallas-Fort Worth area is up 30 percent this year. In North Texas, rising property taxes and increasing mortgage rates on adjustable loans are also taking a toll. 'In two-thirds of the cases, unemployment or curtailment of income or some kind of illness or death in the family have been the trigger events that led to defaults,' said Freddie Mac chief economist Frank Nothaft."

"For Eric Fenton, who gave up his house in June, the loss of overtime income in his telecommunications job came at the same time his mortgage payments ratcheted up. 'Since I had to get an adjustable rate loan, I watched my payments grow from $700 to $900,' Mr. Fenton said. 'And then utilities, they went from $200 to $400.'"
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"Mr. Fenton tried to sell his Dallas house but had no luck. 'My house was listed for over two years at its tax-appraised value, $113,000, with no lookers,' he said."

"North Texas' low home appreciation rates make it difficult for many homeowners to get out of their house when they wind up in financial trouble. That adds to the foreclosure bubble, said George Roddy, president of Addison-based Foreclosure Listing Service. 'Especially if they are financing 110 percent of the property to begin with,' Mr. Roddy said. 'They finance all the closing costs and end up owing the mortgage company if they decide to sell.'"

"Foreclosure Listing Service has found that about 44 percent of homes posted for foreclosure each month actually sell at auction. Through the first six months of 2006, lenders had taken back 8,452 D-FW area homes. The average mortgage on the houses foreclosed on was $148,418."

"And a look at the monthly foreclosure postings proves that hard times hit in all communities. Everything from million-dollar mansions in exclusive Plano neighborhoods to $32,000 condos in East Dallas are in foreclosure, county records show."

"'Customers have gotten themselves into loans they probably didn't understand,' said Bob Caruso, a mortgage servicing executive with Bank of America. 'Loans with adjustable rates do actually adjust upward.'"

"Gordon Griffith and his family are leaving their Garland home at the end of the month. 'We agreed to an adjustable rate mortgage when we refinanced the house, and now it is killing us,' Mr. Griffith said. 'The rate is going up every six months. We have been juggling so many bills trying to keep the house, our credit is terrible and refinancing with another company is not possible either,' he said."

"Fort Worth mortgage originator Vernetta Wills blames some homebuilders for not correctly estimating taxes on the houses they sell. Sometimes property tax estimates are just for the lot and don't include the new home being built. 'If the builders in the area would stop putting people in houses that they cannot afford and qualify them with the correct taxes, this would not happen,' she said."

"Most troubling for North Texas homeowners, the flood of foreclosures could affect the overall housing market, industry analysts say. In the late 1980s and early 1990s, a frenzy of home foreclosures caused by the regional economic collapse contributed to more than a 25 percent decline in overall residential values."

"'We know that most of the foreclosures are going back to the lenders and then being offered for resale,' economist James Gaines said. 'We also know that historically, the lenders are generally forced to offer the properties at discounts in order to move them.'"

"Connie Zetterlund, a Dallas real estate agent who specializes in foreclosed-home resales, said the number of such listings is ballooning. So far, lenders have been unwilling to slash their prices, she said. 'I don't think they have gotten the news that the market is slowing and there is a glut of foreclosures,' Ms. Zetterlund said."

"The timing is bad for these distressed properties to land on the market. Overall home resales have been dropping in recent months. 'Everyone of us needs to be heads-up about what this is saying about the stability of our economy,' Ms. Cunningham said. 'Housing has held up our economy for so long.'"