The Foreclosure Report

Luxury Home Short Sales In Missouri

The Suburban Journals reports from Missouri. "Increasingly, doors are being slammed shut on homeowners across the county as they face foreclosure. St. Charles County in March posted the state's highest rate of foreclosures. One household out of every 26 in the county faced a foreclosure that month, a number 37 times the state average and almost 30 times the national average."

"The failure to meet mortgage payments is a problem affecting all segments of the market, from those buying their first home to the luxury-home buyer."

"'It's primarily people getting into a house that they could have waited a year or so to get into,' said Don Rogers, president of the St. Charles County Association of Realtors. 'Others get into a house, have a good job and get blindsided. I had two incidences last year, roughly half a month apart, one person lost their job and they no longer had the income (to meet mortgage payments).'"

"In the luxury market, some lenders are settling for a less orthodox resolution to unpaid mortgages. 'We've seen more short sales,' says Cort Schneider of Schneider Real Estate. Schneider says such sales have not been widely used in St. Charles County before."

"What makes the upswing of foreclosures so excruciating is its damage across a wide swath of home prices. 'The upper-end price range homes are the first ones to take a hit,' Schneider says, though foreclosures hit homeowners 'across the board.'"

"Pat Sivels, St. Louis office director of Acorn Housing, says the organization has seen considerably more people facing foreclosures in the last three to four months."
Homebuyers' reasons for foreclosure vary

"Why are so many county residents finding themselves in jeopardy with their mortgage lender? 'I think it's really education (that is necessary),' Rogers says. 'In the case of first-time homebuyers or those moving to their next level, maybe they can wait a year.'"

"Rogers says that while area real estate agents work to get buyers pre-approved for loans, for some buyers, patience is the best policy. 'Sometimes I see a pretty flower and I want to buy that pretty flower, and next thing I know I need to pay for the thing,' he says of some buyers' anxiety to get into a home fast. 'Impulse buying is really a monster.'"

"On June 29, regulators with the Federal Reserve Bank issued a policy statement saying that lenders shouldn't dole out adjustable-rate mortgages at deep discounts, but rather at the full index rate, which is determined by the average yield of U.S. Treasury securities. Adjustable mortgage rates reset every 12 months to adjust to the average yield of the treasury securities."

"Even when adjustable-rate mortgages may not be involved, Sivels sees more than lost jobs or prolonged illness as culprits in foreclosures. 'My only concern is that most mortgage companies want to wait until a person is three months behind before working with them," Sivels said. 'We have made calls to mortgage companies and they tell us that (the client) is only one month or two months behind.'"

"Sivels says such policies lead to unnecessary foreclosures. 'By three months, clients owe more money, they then need to come up with more money,' she says. 'They may get a workout plan, but why not start when they (already) know there is going to be a problem?'"

"In the Dardenne Landing subdivision in Dardenne Prairie, there were three active foreclosure properties and two more pending foreclosures the week of July 1. Subdivision residents have varying views on the prevalence of foreclosures in the neighborhood."

"'I think two years ago when it was a seller's market, people who were upgrading bit off more than they could handle,' says Ignacio Gomez, who lives in the subdivision. 'I think some of it is jealousy and an attitude of 'I can do it if you can.'"

"Some sellers in the subdivision were not aware of the number of properties up for foreclosure. 'There was only one home on the opposite side of the subdivision that I know of,' says Adam Mills, who is selling his house because of a job relocation. 'There was one other house that I thought possibly was a foreclosure because of the price it was selling for.'"

"Mills says he was largely unaware of the foreclosure rate and that the topic was never breached in discussions with his real estate agent."

posted by Ben Jones @ 3:07 PM