The Foreclosure Report

Luxury Home Short Sales In Missouri

2007-07-18T15:07:00.000-07:00

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."

700 Short Sales Under Way In Phoenix Area

2007-07-15T04:39:00.000-07:00

A report from the Arizona Republic. "Deals that help struggling homeowners avoid foreclosures are on the rise in metro Phoenix. 'Short sales' are similar to regular home sales except a deal is worked out in which the lender accepts what the house is appraised for or what it will currently sell for instead of what is owed on it."

"The deals are recorded as a regular sale and can be tough to track. But Travis Olsen, president of the National Short Sale Center, is tracking the market and said there are more than 700 short sales under way in the Phoenix area."

"Real estate agents say that two years ago, there were almost no short-sale properties on the market or deals closing."

Tips From An Expert

2007-07-06T14:45:00.000-07:00

A report from the Washington Post. "The Post's Mary Ellen Slayter recently spoke with Ralph R. Roberts, co-author of 'Foreclosure Investing for Dummies' and a longtime real estate agent and investor in Michigan. An edited transcript of the conversation follows."

"Q: Who is a good candidate for investing in foreclosures? A: It's right for someone with a secure job, solid cash flow and lots of cash on hand, someone who wants to make some money on the side. If you're married, your spouse needs to be on board, too. I like for people to use their own money. But if you don't have enough cash but you're willing to do the work, find a partner. My first 'bank' was my grandmother. I didn't pay her interest, but every time I made a deal, I took her out to lunch. If you really want to do it, you can always find sources of investment capital."

"And who's not a good candidate? A: Anyone who thinks this is easy money. It's a myth, perpetuated by all these late-night TV gurus, that you can get rich quick doing this."

"Q:How does it work in declining markets, which are the ones that are most likely to have lots of foreclosures?"

"A: You account for this in the price you pay for the property. You make your profit when you buy, after all; you realize it when you sell. There's a formula in the book that helps you adjust for a soft or flat market. My wife once pointed out to me that no matter what the economy looks like, people are still going to buy and sell houses. They're still going to get married and start families. Even if 10 percent of workers are laid off, the other 90 percent are still working. They will still need housing."

"Q: Describe the perfect property for the foreclosure investor. A: It should be in a good neighborhood. And you should be able to see clearly what you need to do to fix it up and sell it."

"Q: What types of properties should investors avoid? A: Don't buy if there are a lot of distressed properties on a block. Don't invest in foreclosures long distance. You need to be able to see what you're buying. And don't touch pre-construction projects. Also, avoid any deal in which somebody promises you cash back at closing. This is never legal. Stay away from that."

"Q: What are some other things that potential investors should keep in mind? A: Always have a Plan B. Not every house on the market sells right away. You may need to rent the place out for a year or two after you fix it up. This isn't necessarily a bad thing. It can lower the tax rate on your capital gains. And be prepared to lose money sometimes. Even I don't hit home runs every time."

Massachusetts Foreclosures Up 74%

2007-07-02T14:00:00.000-07:00

A press release from Massachusetts. "ForeclosuresMass.com released its June 2007 Massachusetts Market Analysis Report today, with data revealing that foreclosure filings continued in record numbers with May being the eighth consecutive month posting over 2,000 foreclosures. The report shows that 2,136 foreclosures were initiated statewide during the month of May 2007, 32.34% higher than the number recorded in May 2006."

"Over the past 12 months, lenders initiated foreclosure proceedings against 23,638 homeowners, representing a 74.14% increase over the same period a year earlier. 'May continues to be a record month for foreclosures affecting Massachusetts homeowners and the trends suggest that we may continue experiencing these historical numbers throughout 2007,' said company president Jeremy Shapiro. 'The fact that the housing market has remained relatively flat means it’s still difficult for homeowners to refinance or sell their property contributing to the high number of foreclosures.'"

"Highlights of the ForeclosuresMass.com June 2007 Market Analysis Report include:
2,136 foreclosures were initiated in Massachusetts in May 2007: Foreclosures increased statewide by 32.34% in May 2007 compared to May 2006 (2,136 vs. 1,614). On average, there were 107 foreclosure filings every business day in May. The jump in foreclosures from April to May was the biggest month-to-month increase this year."

"23,638 new foreclosures were initiated in the past 12 months (June 1, 2006 through May 31, 2007): Foreclosures increased statewide by 74.14% over 2006 levels (13,574 v. 23,638. Filings during Q1 of 2007 were 73% above Q1 of 2006 (2,755)."

"Other 2007 statistics of note include: Suffolk, Worcester and Barnstable experienced the largest increases. Suffolk County saw an 83% increase (1,435 vs. 2,628), Worcester County levels were 80% higher (2,028 vs. 3,646) and Barnstable County had a 79% increase (647 vs. 1,158)."

"In communities with 10 to 49 foreclosures over the past 12 months, the biggest increases were in Adams (517%, 6 v. 37), Boxborough (500%, 2 v. 12), Hardwick (467%, 3 v. 17) Sutton (210%, 10 v. 31), and Millville (200%, 6 v. 18)."

"In communities with 50 or more foreclosures over the past 12 months, the biggest increases were in East Bridgewater (233%, 15 v. 50), Everett (184%, 67 v 190), Walpole (152%, 21 v. 53), Lawrence (152%, 232 v. 585), and Clinton (146%, 24 v. 59)."

Tough Times Mean Booming Business

2007-07-01T12:12:00.000-07:00

The Orange County Register reports from California. "Tough times in the real estate industry mean booming business for Michael S. Buescher, a Trabuco construction contractor who specializes in cleaning and fixing up repossessed homes. As more property owners fail to refinance or repay their subprime loans, Buescher's pay days are getting bigger and bigger."

"In Orange County, the number of foreclosures through May hit 1,031 – seven-fold the number a year ago. Default notices soared 121 percent, to 4,520 homes, during the first five months of the year. 'We get more every day,' Buescher said. 'We've been waiting eight years for this to start happening again.'"

"So far this year, business has taken Buescher to dozens of trash-outs and fix-ups in Orange, Riverside and San Bernardino counties, to gated communities and rat-infested crack dens, all united under the title 'real estate owned' or 'bank repo.'"

"'This is more fun than building houses,' he said as he admired his crew's handiwork at a foreclosed four-bedroom, three-bath split-level home in an unincorporated area near Tustin. 'I can make more doing this than on homebuilding. This is quick turnover. You don't have to wait eight months to get a permit. The cash flow keeps coming.'"

"Buescher is far from the only person profiting from a real estate market troubled by slack sales, sagging prices and soaring defaults. The Tri-Star Group, a Fullerton development company, hired Joseph Baleto as a 'foreclosure adviser' in January. It was a new line of work for Baleto, a Realtor since 2004, a period when the market has known only good times. His assignment: Buy properties at auction to renovate, 'bring out the original luster' and resell."

"'Inventory is up, which is great on the one hand because there's a lot of property to pick from,' Baleto said. 'On the other hand...you really have to have a product that stands out, and you have to have it priced correctly in order for it to sell.'"

"Mike Roberts, a real estate agent and radio host, has revived his Laguna Niguel company Trust Solutions Inc., which offers homeowners who are upside-down on their loans a legal method for selling their property without having to go through lender approval. The process, Roberts said, has the advantage of getting the seller out of an unaffordable loan without the penalties of a foreclosure or short sale. For buyers, it can mean acquiring homes at a lower property tax rate."

'So far this year, Roberts said Trust Solutions has negotiated one or two deals a month. But he expects business to pick up as more homeowners find themselves underwater."

"'I suspect by late summer we'll be doing one a day,' he said. 'That's what we were doing the last time the market was in trouble in '94, '95, '96 and early '97.'"

"Patti Donovan, president of Stearns Asset Services, a Santa Ana firm that manages and markets real-estate owned properties, said she got back in the business last year after a four-year hiatus when the market was hot. Donovan, who started in the foreclosure business in 1984, said she expects the down market to last three to five years."

"'The difference this cycle is it's not the economy that's causing this to go upside down,' she said. 'It's more the types of loans – 100 percent financing, adjustable rate mortgages. Before, it was people losing jobs. Now it's just people borrowing too much.'"

"As banks accumulate more property, they hire managers to coordinate contractors, maintenance crews and payment schemes for insurers and tax bills. They also seek out home sellers who specialize in distressed property, like Staci Treloggen, who heads the real-estate owned group at Prudential California Realty in Laguna Niguel."

"'Banks outsource to people like me,' Treloggen said. 'I need people like Mike (Buescher) to staff up.'"

"Treloggen assigned Buescher and his five-man crew to an abandoned home at 17571 Rainier Drive in an unincorporated triangle between Orange, Tustin and Santa Ana. Public records show Wachovia Bank foreclosed on the property in May. The asking price is $762,500."

"When Buescher and his crew arrived, the swimming pool was a mosquito breeding ground; bird cages and bales of hay littered the yard; the garage closeted a mountain of papers, clothing, toys and other trash. After two days' work, the four-bedroom, three-bath 1959 split-level home looked neatly trimmed and vacuumed."

"Buescher typically proposes a cleanup plan in several stages. He charges $500 for a barebones job to rekey locks, install smoke detectors and secure a house from intruders. He can tell if a house has been broken into if there's a rush of air when he opens the front door, because it means there's an opening somewhere else."

"After securing a property, his job escalates to the 'trash out,' filling dumpsters with yard waste, clothing, toys, appliances and furniture abandoned by tenants. Items worth more than $300 must be stored for 19 days for the owners to claim. Few people come back, Buescher said."

"For some reason, he said, tenants almost always walk off with shower heads. Many rip out counters, air compressors and other fixtures that belong to the bank. Sometimes neighbors join the looting. 'If the air compressor is gone, the first place I look is over the fence,' he said."

"It's not Buescher's business to understand why people lost their home. To encourage renters to leave, he'll offer a few hundred dollars. If he finds a squatter, he'll ask the cops to arrest them for trespassing. If the bank agrees to pay for it, Buescher will repaint the walls and replace the carpets. He recommends neutral, vanilla colors to avoid turning off potential buyers."

"As the repairs get more complex, Buescher's fees escalate. Granite counters, a reshingled roof, new wiring, they all make his cash register ring. 'My job is to convince the client to spend more money to sell the house,' he said. 'But at this point, the banks aren't willing, because the market hasn't hit bottom.'"

A Distressed Property Update: Las Vegas

2007-06-29T03:37:00.000-07:00

A report from NARREIA. "Since the implosion of the sub-prime mortgage market at the beginning of 2007, the distressed property market has really gained momentum. This is especially true of markets like Las Vegas, where the extreme appreciation of 2003-2005 has been met with a year long cool down and the start of a slide in property value."

"When looking to invest in a market like Las Vegas, you need to consider which investment vehicles or strategies might actually be profitable. Rent is definitely too low for properties to cash flow positively with a down payment of 20% or less. This leads most local investors to the distressed property vehicles, but not all of these vehicles work well in down and depreciating market."

"Therefore, before you invest too much time in learning about a specific vehicle you need to determine if it will actually result in a profit. The most well known distressed property investment vehicles are the Notice of Default List, Short Sales, Foreclosures ('on the court house steps'), and Bank Owned REOs (Real Estate Owned)."

"There are a total of 25,659 available properties on the Las Vegas MLS with only 2,995 additional properties under contract. Of the available properties, 2,048 (7.9%) are flagged as short sales."

"Working short sales is very different than working the other pre-foreclosure investment strategy, the Notice of Default (NOD) list. When working with the NOD list, you are dealing with the owner and you are looking for properties that have a high equity, low Loan-to-Value (LTV) ratio. You need the low LTV because your profit is the difference between what the value of the home is and the amount the banks need to pay off the loan."

"While negotiating with the owners over the equity in their house might sound challenging, it is usually cut and dried. They either understand the situation they are in and are willing to negotiate or they don’t fully comprehend that they are about to lose their house and will shut you out entirely, and this can be determined quite quickly. If they stonewall you, you move on to the next property. If they are willing to negotiate, the process is relatively simple."

"In a short sale, however, you will be dealing directly with the bank and you’ll be looking at properties where the LTV will likely exceed 100%. The problem for the investor is two fold. First, where is the profit in this deal with the bank? Logically, the bank will want to get the most they can for the property, minimizing their losses. Seldom are banks willing to let a property go for anything considerably below today’s current market value, so this makes it very hard for the investor to work in their profit."

"The other hurdle that you will face is that the banks are notoriously slow in dealing with short sales. Banks regularly take 4-8 weeks just to respond to an offer, and if a property is already in the foreclosure process, that time could easily extend past the Notice of Foreclosure Sale date. Additionally, the owner will have to be very cooperative in coming up with the required financial statements and writing the hardship letter, and owners who are in these situations are not typically quick to respond."

"True foreclosures, what people sometimes refer to as 'buying on the court house steps,' is a cash-intensive process that is very competitive in the Las Vegas market. This makes this vehicle very challenging for most individual investors. Clark County requires you to pay the full amount of the offer immediately before the next property is auctioned, which means you need to have cash for the entire purchase price with you right there."

"While there are a few bargains to be had, it is not the fire sale that you might think as the banks would still rather hold on to the property than give them away."

"The banks’ current stance on valuing the properties on the high side leads to a growing REO market. REO stands for Real Estate Owned, and it is the term for a property the bank has foreclosed upon and did not sell at the county auction. What is amazing is that the banks will deny a short sale on a property only to drag it several months through the entire foreclosure process and then list it for less than the denied short sale price. While it is not yet a 'fish in a barrel market,' some banks are starting to deal on a few of their properties."

"Where is this all going? Either the banks will start dealing with the current owners utilizing workouts and short sales, or the REO market will explode."

"At the beginning of June, 2007, the banks were still playing hard ball, unwilling to negotiate in most short sale situations even in very reasonable scenarios. The only positive sign that we’ve seen recently is their willingness to arrange for workout programs for the current owners. These programs allow the owners to miss a few payments to try to get back on their feet, but this is truly a band-aid approach."

"Owners that are not able to make their payments today will more than likely not be able to make their payments at the end of summer, and we will still see the need for either a short sale or foreclosure."

"Until the banks face the situation squarely and start accepting more short sales, the properties will flow to the REO market and that is a good place to be looking for some bargains."

"As the supply in that market swells, look for even further discounts to come. The local market tends to slow down in the fall and stagnate in the winter, so the distressed property market should be in its prime at that time."

Sean Brown
Las Vegas, NV
NARREIA Advisor

A Lot Worse Before It Gets Better

2007-06-21T15:11:00.000-07:00

A press release from Bruce Norris. "California's real estate downturn will be deep and long lasting, with home prices falling 15 to 30% during the next 36 to 42 months, according to a real estate expert. Bruce Norris, who correctly forecast both the real estate boom that began in 1997 and the subsequent doubling of home prices, said the downturn will reflect a perfect storm that includes record numbers of foreclosures, a sharp decline in migration to California, substantial increases in unsold inventory, and, of course, falling prices."

"'We are in for a very rough ride in California's real estate market, which is likely to be far more severe than analysts, state officials and real estate industry associations have acknowledged,' Norris said, adding, 'Foreclosures alone are likely to be more numerous than anything we've ever experienced, with bank repossessions ultimately accounting for as high or as many as 25-30 percent of all homes sold during the next three years.'"

"Norris said prudent investors need to arm themselves with the facts and come to terms with the fact that analysts, state officials and the California Association of Realtors are either not being frank about the severity of the coming crisis or they simply aren't looking at the right categories of statistics."

"But while Norris' outlook is gloomier than most observers for the short term, he expects California real estate prices to again rebound in 2011 as foreclosures decrease, the number of homes for sale declines to a manageable level and as California again experiences a net increase in population migration from other states."

"'There is light at the end of the tunnel,' Norris said, 'but we have to be very careful in this market environment. Investors need to know that marginal deals are no longer acceptable. The market will no longer cover their investment mistakes. If they don't know what they're doing, they need to stay out of the market until conditions change.'"

"The trouble with the analysis given by most real estate observers is that it's based on flawed assumptions, including the widespread belief that interest rate adjustments can somehow hold back the looming real estate crisis."

"'Interest rates alone do not determine the direction of prices,' Norris said. 'Look what happened the last time we had a real estate downturn in California. Interest rates were actually lower in lower in 1997 than they were in 1990. Yet prices declined by as much as 35 percent in some areas.'"

"The most reliable indicator of a downturn in California is low affordability. Historic affordability lows signaled the previous two real estate recessions and prevented inventory from selling quickly."

"'We still have strong employment and historically low interest rates,' Norris said, 'yet we continue to see the inventory of homes soar, even as builders lower prices and give huge sales incentives. This change in the market caught economists off guard because they said that without an increase in unemployment, you can't have a real estate downturn. That wasn't true!'"

"Centex Corp., Hovnanian Enterprises, Pulte Homes, Lennar and D.R. Horton together have written off more than a half-billion dollars worth of land option agreements during the past year, Norris said, citing published reports. 'If prices were heading upward and if demand for housing was strong, they wouldn't be walking away from these land option agreements,' he said."

"'Many economists and real estate observers and even government officials continue to offer rosy assessments because they are under political pressure to say nothing or because they are simply looking at the wrong statistics. Trouble is, there are many investors, including builders, who have been misled by their commentary,' said Norris."

"Various organizations are deliberately misleading investors and the general public, Norris said, adding that the National Association of Realtors (NAR) launched a $40 million ad camping in January of this year in which they told buyers that now is the perfect time to buy a home."

"Even more recently, Jeff Davi, commissioner of the California Department of Real Estate, is quoted in this month's issue of California Real Estate Magazine saying that California continues to need another 250,000 single and multifamily housing units to be built each year."

"'If this was truly the case,' Norris asked, 'why are we seeing vacant properties, increasing housing inventory and builders walking away from millions of dollars in land options? The reality is that the real estate market in California is going to get a lot worse before it gets better.'"

"The good news is that the market should turn upward again in 2011. By then, Norris said, prices will be low enough to lure many people back into California again, lenders will have again adjusted their lending guidelines and investors will again re-enter the market, sensing bargains and opportunities for additional profits and equity growth in the years ahead."

Defaults "Nearly Triple" In Massachusetts

2007-06-19T15:32:00.000-07:00

The Boston Globe report from Massachusetts. "Foreclosure auction announcements in Massachusetts nearly tripled in May when compared with year-ago numbers, according to a new report from the Warren Group. May also marked the eighth straight month in which more than 2,000 petitions to foreclose were filed, said the Warren Group, the Boston publisher of Banker & Tradesman and a provider of real estate data."

"There were 1,589 announcements of foreclosure auctions in May, compared with 654 in May 2006, the group said."

"'As we can see from May's numbers, foreclosures are still affecting homeowners across Massachusetts,' Timothy Warren, CEO of the Warren Group, said in a statement. 'And the Bay State has not yet seen this problem peak.'"

"Warren noted in his statement, 'As we see a higher number of homes make it farther through the foreclosure process, it becomes evident that homeowners are finding it difficult to refinance their mortgage or sell their homes before they reach auction.'"

"One factor driving the increase in foreclosure auction announcements, regulators believe, was the rising popularity of so-called subprime loans in recent years; in general, subprime loans are marketed to home buyers with poor credit ratings."

The Business Journal. "May also marked the eighth consecutive month in which more than 2,000 petitions to foreclose were filed, the Warren Group reported. There were 1,589 announcements of foreclosure auctions in Massachusetts last month compared with 654 in May 2006, an increase of 143 percent. Petitions to foreclose rose 39.3 percent compared to May 2006, with 2,164 filed this year and 1,553 filed last year."

"Petitions rose slightly from April, when 2,005 were filed in Massachusetts Land Court compared with 1,589 in May. Auction announcements, however, fell from April to May. There were 1,712 announcements in newspapers in April."

Buying A HUD Home

2007-06-15T04:55:00.000-07:00

The Denver Post reports from Colorado. "Buying a home continues to be an iffy proposition for many Coloradans. The state is on track to log more than 37,000 foreclosures this year, a 30 percent increase over last year, according to the Colorado Division of Housing. While so many people have been forced to surrender their piece of the American Dream, others have unearthed diamonds in the rough."

"HUD houses, once thought of as dilapidated properties reserved for low-income families, have been redefined as one of this decade's most accessible solutions to homeownership."

"A HUD home is a Department of Housing and Urban Development residential foreclosure property. The caveat with these homes that has changed the landscape for so many of today's first-time buyers is the caliber of HUD homes now available. 'The market is being flooded with houses that...people can now afford,' says Rachel Basye, spokeswoman for the Colorado Housing and Finance Authority."

"HUD homes, whether single family, townhouses or condominiums, are usually cheaper than comparable homes in the same neighborhood. The buying process is often less cumbersome, and many HUD homebuyers are able to cash in immediately on thousands of dollars of built-in equity."

"Many of the properties listed on the CHFA's website, Coloradohousingsearch.com, are such federally insured homes. But there is a catch: HUD homes are sold 'as-is.' That means the new owner must incur the expense of any necessary repairs, and those can be numerous and expensive."

"Some argue it's a fair trade, as HUD home prices are adjusted down
When Shannon DeLoach bought a HUD house two years ago its interior was comparable condition to this current HUD sale home nearby to account for expected improvements. HUD also goes through the trouble of pinpointing potential remodeling needs."

"Last week, for instance, HUD was offering a three-bedroom, 2 1/2-bathroom property in east Denver for $154,500. In ads for the property, HUD estimated that about $400 would be needed to replace a missing vent cover, a kitchen sink and address other plumbing issues. An initial inspection report also was included with the listing."

"Buyers should be realistic about how much repairs might cost, says Capital Brokers real estate agent Anthony Davis, who specializes in selling HUD properties. The $400 fix-up estimate for that east Denver property may have been low."

"Davis says any visual inspection of the home might reveal only inexpensive wear-and-tear issues. A subsequent investigation by a certified housing inspector could reveal a financial burden waiting to happen."

"Housing experts such as this advise that it is paramount to have these properties inspected before the closing so that buyers know exactly what they are getting into. A foreclosed house left vacant for months can develop unforeseen plumbing problems, for instance. It's also common to uncover damage to the roof, foundation, electrical wiring, water heater or furnace, expenses that could easily cost $20,000 to $30,000."

"Plus, previous owners often take out their anger and disappointment over the foreclosure on their property. One HUD home Davis sold had holes in the basement drywall where someone had repeatedly thrown a billiard ball against the wall."

"Jerry Chesser owns the Broomfield-based Win Home Inspection franchise and has investigated numerous HUD homes. 'There are some real gems out there,' Chesser says. 'Other times, conditions are such that buyers have to honestly ask themselves if they have enough cash...to bring the home up to livable standards.'"

"He has seen the previous owners of foreclosed homes drill holes in plumbing, kick in doors, throw bleach on carpeting and destroy garbage disposals. Another frequent problem: missing fixtures and appliances."

'Chesser says the best case scenario with a HUD house is severe cosmetic damage. The house may need new landscaping, caulking and waterproofing in the bathrooms, a few leaks plugged or a furnace replaced. The worst case scenario is a roof collapsing from water damage, mold creeping 4 feet up the walls, or that the property once housed a meth lab."

"HUD house investor Stephanie Williams suggests having enough money on hand to make mortgage payments should a refurbished foreclosure fail to sell quickly. Williams purchased a HUD home last November in Aurora for $151,000 and sold it for $172,000. But she had to carry the mortgage for three months before it sold."

"Loire Warren has fixed and flipped three HUD condos in Aurora since May 2006. Warren warns buyers to pull any criminal records associated with the house or the previous homeowner. One of her previous owners saddled Warren with more than $600 in unpaid homeowner's association fees."

"'It's very common that HUD will have liens against a property,' says Warren, who worked with HUD and the title company to pay off the liens."

Below The "Upset Price"

2007-06-11T11:03:00.000-07:00

A report from MSNBC. "Brett Golden, 31, was one of the few bidders at a recent foreclosure auction to walk out with a purchase: a 2.5-story, 1,352-square-foot house in Queens, N.Y., that he got for $365,000. The previous owner had bought it in June 2005 for $415,000. Once Golden and his father, who together run a 50-year-old family business of buying and flipping foreclosed properties, are done fixing this place, they hope to sell it for about $480,000, netting up to $80,000 after expenses."

"Buying the house wouldn't have made sense but for a small detail: The mortgage lender, HSBC, put it up for auction for $90,000 less than it was owed. In other words, it went below the 'upset price' of the property. The upset price, also called the judgment amount, is what the bank is owed on the property, usually the sum of the outstanding mortgage and any interest and fees accumulated since the start of the foreclosure process. Normally, lenders put up houses for auction with bids starting at the upset price in order to recoup their costs."

"But as foreclosures increase, some banks are beginning to reconsider their required bids. 'In the past few months, I'm starting to see banks come down on upset prices,' Golden says."

"For many real estate investors or simply folks looking for a cheaper home to live in, finding a deal in foreclosures has become increasingly difficult. A lot of the homeowners now in foreclosure have drained the equities in their homes with multiple refinancings, have mortgages for more than 100% of the property value or simply bought at the height of the market."

"The banks, after all, know how much these houses are worth. Before a house is put up for foreclosure auction, it's usually appraised. And though banks weren't as diligent with appraisals when the market was booming, that's starting to change, says Brian Tracz, a New York real estate attorney specializing in foreclosures."

"'For the last five years, the banks blindly bid their judgment amount to recoup their loss,' Tracz says. 'Now I think you're going to start seeing banks bidding less if the appraised values don't justify the judgment amount.'"

"To be sure, this trend is in an early stage and has yet to be seen in many parts of the country. In Florida's Miami-Dade County, for example, where almost 25,000 properties went into foreclosure in 2006, banks haven't gone below their upset prices, according to Richard Housey, a real estate investor who specializes in pre-foreclosures and attends the county's twice-weekly auctions. 'That's been a real problem for investors,' he says."

"In the Chicago area, lenders are not only starting to go below the upset prices on properties, but they're also becoming more flexible with so-called short sales, says Jane Garvey, the president of the Chicago Creative Investors Association, a local network of real estate investors."

"In all, whether a lender will sell below a property's upset price largely depends on where the property is located, says Jay Brinkmann, the vice president of research and economics at the Mortgage Bankers Association, an industry group. If lenders expect real estate prices to go down in a particular area, they might decide to put properties on the market now to cut their potential losses. If they expect prices to remain steady, they may hold on to the properties for better prices later on."

"Take the Los Angeles area. Lenders are beginning to sell below the upset prices on properties in Los Angeles County. But that's not happening in nearby Orange and Ventura counties, where prices are steadier, says Larry Loik, the founder of the Real Estate Investor Network in California."

"Needless to say, the concept of selling below upset prices isn't new. It was particularly common in the housing crash of the early 1990s, when lenders faced a glut of hard-to-move properties, says Jonathan Miller, the president of Miller Samuel Real Estate Appraisers in New York. But now, Miller doesn't expect such discounts to become nearly as widespread."

"'Lenders have become much more sophisticated in terms of avoiding foreclosures,' he says. 'One thing they learned in the last housing downturn is it's extremely expensive in terms of managing properties.' Instead, banks will now focus on helping homeowners prevent foreclosure, he says."

But that may be more difficult if the lender that originated the mortgage sold it to investors in the form of mortgage securities, a particularly likely scenario in the subprime market, where foreclosures are now most common."

"When a bank sells a loan to investors, it has less flexibility to negotiate a settlement with the borrower, such as refinancing at better terms or repackaging the loan so that any delinquent payments are tacked on to the remaining loan balance, says the Mortgage Bankers Association's Brinkmann. Once the property is in foreclosure, on the other hand, the lender might have fewer such limitations, he says."

Back To The Basics In FLorida

2007-06-04T15:25:00.000-07:00

The Orlando Sentinel reports from Florida. " Joseph Peri is hunting for homely houses in Orange County. As a new franchise owner in Winter Garden for HomeVestors of America, Peri is ready to buy properties that need some work. HomeVestors is the company known for its 'We Buy Ugly Houses' signs, though the homes are not always ugly and other companies sometimes rip off the slogan."

"Florida has been one of Home- Vestors' best markets, with 42 franchises, second only to the company's home state of Texas. And there's no shortage of houses for sale, a virtual smorgasbord."

"'I'm looking at some from $50,000 to $550,000. It's pretty spread out,' said Peri, one of two HomeVestors franchisees in the Orlando area. But these days, many of the homes for sale in markets such as Central Florida can't be bought, rehabilitated and sold for a profit."

"'We've enjoyed tremendous growth in Florida historically, and we still have pockets of franchises doing well,' said John Hayes, CEO of Dallas-based HomeVestors. But the sharp run-up in home prices in recent years, the lack of equity that owners have in many of the properties now for sale, slack demand among home buyers and other factors have made the business more challenging."

"'I don't know how some [owners] are able to pay the taxes and insurance,' Hayes said. 'But this is temporary. We're just riding through this transition with Florida.'"

"Hayes said he expects Florida lawmakers will find ways to bring down both property taxes and hurricane-related property insurance, and help boost existing-home sales. 'They are not going to allow an exodus from the state,' he said."

"Ron Smith, an independent housing-rehab specialist in Apopka, said he gave up his sideline business a few months ago after 20 years of working the Orlando area."

"'It just got a lot tougher. I went to work full time with a roofing company,' said Smith, who used to buy and fix up homes to sell, or to rent until he could find a buyer, as many as four or five times a year."

"Smith said his best years were the late 1990s through 2004, when 'it just went crazy.' So many buyers were bidding up prices, it got harder to compete, he said. Then, earlier this year, sales went flat as thousands of homes flooded the market at inflated prices."

"'I didn't believe the market here would go 180 degrees, but it did,' Smith said."

"The median resale price of an Orlando-area home was appreciating as much as 36 percent on an annualized basis by mid-2005, before settling back to single digits by mid-2006 and turning negative in April for the first time in five years."

"Ed Rogner, who has been a HomeVestors operator in Orlando for the past six years and in real-estate sales locally since 1978, said the once-thriving market's sharp turn has surprised many veterans. 'I've never seen it like this,' said Rogner. 'There are just so many sub-prime loans out there. People will call us and want us to buy their home, but there's almost no equity. We can't do that.'"

"And when the company does close on a sale and puts the property back on the market, 'you're competing against all these other houses.'"

"The Orlando area's median sales price as reported by Realtors leveled off at about $250,000 beginning in April 2006 and recently dipped to about $240,000 as the inventory of listed homes jumped 50 percent in that period to a record 24,435 in April."

"Andrea Tolbert of Sanford, who has been buying, rehabilitating and selling homes in the Orlando area since 1999, said the market is more challenging but still workable for savvy investors. 'It's tougher to sell but easier to buy,'" Tolbert said, because of the record inventory of existing homes for sale by Realtors. 'Of course, you've got to be careful,' she said. 'We're going back to the core basics,' with much slower price appreciation."

"Tolbert, president of a real-estate networking and education association in Winter Park, said she still is able to make a profit buying and selling homes by focusing on those worth $100,000 to $200,000. 'There are always buyers in that range,' she said."

Now Come The Banks

2007-05-31T13:46:00.000-07:00

The Sacramento Bee reports from California. "First it was individual homeowners who turned to the auction block to sell fast at a discounted price. Then home builders. Now come the banks. Home loan lenders, stuck with rising numbers of repossessed homes, will auction 242 houses next month to bidders in Sacramento, Modesto and San Mateo."

"It's the biggest home auction in Northern California in the wake of a five-year housing boom. The auction especially signals a new sales rival to home builders, investors and individual sellers: the banks."

"Robert Friedman, chairman of REDC, said buyers typically get a 10 percent to 20 percent discount from asking prices, while banks get quick results. 'It's just a business decision. You sell them quickly and take your hit,' Friedman said. 'In the long run they do it better by taking this route.'"

"Keith McLane, who runs a separate Carmichael-based home auction firm, said the sheer number of houses being auctioned next month "illustrates the quantity of foreclosures that are out there."

Foreclosures.com reports that banks owned 661 homes in April in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That's up from 92 in April 2006."

"Statewide, banks owned nearly 5,500 homes in April, according to the Web site. The same month in 2006 it was 1,111. Many of those still haven't reached the market, said Foreclosures.com's Alexis McGee."

"Demand is high when they do, said Luann Richardson, a Fair Oaks-based real estate (agent). 'Everybody wants a deal right now. There's very strong demand for a deal,' she said."

From Flipping To Renting

2007-05-23T09:50:00.000-07:00

The Detroit Free Press reports from Michigan. "In real estate, timing is everything. That's what David Elosegui discovered when he made an offer on the Lake Orion house he fell in love with in February for himself and his daughter. 'I went to make an offer and the bank said the house had just gone to auction,' said Elosegui, who wanted to offer Wells Fargo Bank, the home's owner, $214,000. The house had been listed by a Realtor for $220,000 but had gone into foreclosure."

"The following weekend, he walked away with his dream home from an auction of foreclosed properties conducted by the Texas company Hudson & Marshall. He had made the highest bid, $179,000."

"'It was surprisingly easy,' said Elosegui, who had been living in an apartment since June 2005. 'I knew I would be willing to bid a little higher than an investor.'"

"Elosegui is one of thousands of Michigan residents who are benefiting from a surge in foreclosures. With the 10th-highest rate of foreclosure in the country and thousands of homes to choose from, Michigan's foreclosed housing market is no longer the exclusive playground of real estate investors and buyers with marginal credit."

"Fueled by defaults on subprime loans and job losses, Michigan reported 29,467 foreclosures for the first quarter of the year. Detroit reported the highest number of foreclosures, 16,351, among the nation's top metro areas for the first quarter of this year, according to Realtytrac."

"The three-bedroom, 2 1/2 -bath, 1 1/2 -story, 1,800-square-foot home that Elosegui bought had been vacant for two years. Wells Fargo Bank took possession of it and then put it up for auction shortly before Elosegui made his offer."

"'I did quite a bit of reading before I went down there,' Elosegui said, adding that he familiarized himself with the terms and conditions of buying a house at auction. For example, he wasn't aware until after he began studying that the auction house adds a 5% nonrefundable fee to the price of each house it sells."

"Bret Logan of Dearborn has been investing in real estate on a small scale since 1991 when he and a friend bought a foreclosed house in Detroit, fixed it up and sold it for double what they paid for it. Logan bought a second property in 1997, a four-unit house in Hamtramck for which he paid $60,000. He currently has tenants in it."

"He then paid $46,000 for another foreclosed house in 1999 on Fielding, on Detroit's west side, that he fixed up and lived in. While living in it, Logan revamped the 1,100-square-foot brick bungalow. He added a new roof, updated the kitchen, and put in copper plumbing, new windows and crown molding."

"Last year, as more houses in Detroit went into foreclosure, he decided to bid on another house, this time in Dearborn. He bid $102,000 and won it. That's when he decided to put the house on Fielding up for sale for $86,000. The house was appraised at $106,000. That was eight months ago."

"Logan says the glut in houses has made it hard to get people to view the Fielding house and now he is considering renting it."

"'It's much more challenging to flip houses here than anywhere else in the U.S.,' Logan said. 'Even in the outlying suburbs, you have to be very careful about the direction your neighborhood is going. If you're trying to flip, you have to be really conservative about what you're paying and all the related costs. Costs are going up while property values are going down. It makes your return and your margins much more slim.'"

"Steven Morris of Fair Haven has been flipping houses since 2003. But when the market began to tank, he changed his approach. Two years ago, he switched from flipping properties to fixing them up and renting them."

"'What most people do when they do rentals is put in as little money as possible and try to put someone in them,' he said. 'I try to make it something I would love to live in. My goal is for my tenants to want to stay in my house as long as they can.'"

"Morris has 10 properties in metro Detroit and a waiting list of tenants to get in. His latest purchase is a house in Warren, which he is currently renovating. He bought it for $40,500 and is putting $60,000 into it, he said. He has added new appliances, granite countertops and fancy door handles."

"'I put quality stuff in them,' Morris said."

"He also hired friends who have lost jobs in the slow economy to work on the houses. He has established accounts at Home Depot for them to come in and pick up materials."

"Since 2003, the foreclosure market has provided more and more investment opportunities, he said. Foreclosed homes are going for less and less and the competition from those who could buy them with risky subprime loans has abated."

"'If you look at the mortgages that people had on some of these houses, they could move back into the same house, beautifully remodeled, and have cheaper payments than what they had,' Morris said."

A Dicey Time To Buy Foreclosures

2007-05-16T15:14:00.000-07:00

A report from Minnesota Public Radio. "Homes that have been foreclosed on often sell for a lot less than they're worth. But that doesn't mean they're a steal. There are a lot of impediments to selling a foreclosed property. There's no question that the spike in foreclosures has put many people out of their homes. But for others, hope actually springs up alongside the 'for sale.'"

"That was the case for Blake Thompson. He's a year out of college and works as an electrical engineer. When Thompson decided to buy his first house this past spring, he specifically wanted a foreclosed property. His plan was to do some rehabbing. It was as close as he could come to his real dream."

"'I've always wanted to build my own house, and in the city there aren't that many places to build at an affordable rate,' Thompson says. 'So I figured I could buy a foreclosure at a reasonable rate and still have money left to do what I wanted, build it the way I want to see it.'"

"Thompson put a bid in on a foreclosed property in St. Louis Park. Its assessed value was $260,000 but was listed at $175,000. 'They were so tired of people coming in and giving him offers and not accepting, the bank thought it was the real estate agent's fault.'"

"'Three people had put in offers and ended up backing out. And it was so bad that when I went in to put in my first offer, they fired the first real estate agent. They were so tired of people coming in and giving him offers and not accepting, the bank thought it was the real estate agent's fault,' he says."

"Thompson's not sure what turned the other buyers off. Maybe it was the tacky mirrored wall in the living room, or the electrical work mandated by the city inspector. But Thompson knew how to do a lot of the work himself and saw the fixes as minor. He finally scored the house for $171,000 and considered it a steal."

"Real estate experts say foreclosures can be a great fit for people like Thompson, a first time home buyer willing to put in a lot of work. But the fact that three buyers bailed before he came along speaks to the difficulty of selling a foreclosed home."

"'There's a reason why they're priced low,' says Twin Cities real estate agent Steele Propp, who specializes in foreclosures."

"Standing outside a foreclosed property in St. Paul, he says these properties aren't for everyone. He steps inside the house and points out that, like many foreclosed homes, it lacks a stove and other appliances. Other houses may have problems with mold, or vandals may have stripped them of copper pipes and aluminum siding. There might be liens on a house due to previous maintenance that a buyer would likely have to pay off."

"On the other hand, Propp says, if a house is in good condition it might be priced at less of a discount than buyers are hoping for. He says on average, a decent foreclosure property will sell for about 85 percent to 90 percent of the fair market value, not the 70 percent some eager buyers expect. Propp says mortgage lenders typically don't want to unload their foreclosed properties for a song."

"'They have a responsibility to their shareholders. And if they were giving away properties, first of all, they'll probably get fired. They have to show they actively tried to market the property, and do their best, this is what the market was willing to [pay],' Propp says."

"Flat or declining home prices are also playing a role, and reducing the pool of potential buyers for foreclosed properties. Rick Sharga of RealtyTrac, says foreclosures can be a good fit for those who want to occupy or rent a property, but not for investors who want to quickly rehab and resell."

"'For people who want to get into real estate as an investment, this is a dicey time to buy foreclosures,' he says. 'This is a really tough time to buy and flip a property.'"

"Jason Cramer of the Twin Cities HomeVestors franchise agrees. That's the 'We Buy Ugly Houses' company, which buys, rehabs, and sells homes. Cramer says it's hard for his company to pick up foreclosed properties at a price that covers the transaction and holding costs and allows for a profit."

"'That becomes increasingly difficult, even for us, as professionals in the marketplace, when you have an unpredictable market value, decreasing market value, and the marketing times are lengthening,' Cramer says."

"All in all, real estate experts say a foreclosed home can be a good investment for someone who wants to hold onto a property for a few years--if they're willing to put in as much work as Blake Thompson, and his contractor father, who recently showed up at his place to help. 'Friday I got a call from my dad asking me what time I was coming home. I was planning to go to happy hour, but that didn't happen,' he says."

"Thompson estimates he's still got three months of work before he'll be finished rehabbing his new home."

Defaults Up 244% In Alabama

2007-05-15T15:57:00.000-07:00

The Birmingham Business Jopurnal reports from Alabama. "Foreclosures were still up in Alabama in April, according to RealtyTrac Inc.'s monthly market report. The foreclosure-data provider reported a total of 899 Alabama properties in some form of foreclosure. That's one for every 2,189 households, ranking Alabama 29th in the country."

"The data represents a nearly 12 percent increase over March and more than 244 percent increase over April of last year."

"'The company expects foreclosure activity to stay above last year's levels for the rest of 2007. The 'combustible mix of risky loans' taken out in the last few years - many in the subprime market, and slowing home price appreciation are not helping, he said."

"For the fourth month in a row, Nevada reported the highest foreclosure rate for the month - one for every 232 households, which is more than three times the national average, according to the report."

"Colorado had the second highest with one for every 314 households. Six out of the top 10 metropolitan cities with the highest foreclosure rates were located in California."

Ground Zero In California

2007-05-11T11:21:00.000-07:00

Reuters reports from California. "Twice a day, would-be real estate moguls gather on the local courthouse steps for the latest can't-miss opportunity in California's land rush: the foreclosure auction. Veterans and 'newbies' crowd around auctioneer Gary Oberdalhoff as he lists a property whose owners couldn't pay the mortgage, one of thousands to go on the block in this sprawling, arid region 50 miles east of Los Angeles."

"'Do I have any opening bids?' Oberdalhoff asks. Several step forward to show him cashier's checks worth hundreds of thousands of dollars, and the bidding begins. It might be a scene straight out of the Great Depression, if you ignore the Bluetooth wireless headsets."

"As the nation's real-estate boom curdles, speculators who a year ago might have camped out in front of new housing developments are now hoping to find a bargain among the thousands of houses emptied by foreclosure. But veterans say true bargains are becoming harder to find as the number of homes on the auction block swells."

"Many of these new homeowners couldn't afford their mortgages, or fell behind when their adjustable monthly payments shot up. Two years ago, they might have been able to sell the house for a healthy profit. But that's not an option now that prices have stopped rising."

"After three months of missed payments, homeowners receive a default notice. Three months after that, the bank can repossess the house and auction it off to pay off the loan. Foreclosure and default filings in the region quadrupled from February 2006 to February 2007, according to research firm First American LoanPerformance."

"During the first three months of the year, 1 in 68 houses in the Inland Empire was in default or foreclosure, a rate surpassed only by Detroit and Las Vegas, according to RealtyTrac."

"'This is ground zero; this is where it's all happening,' says Juan Cruz. Cruz has his eye on a four-bedroom house in nearby Corona offered at $131,000. That figure represents the unpaid balance on the previous homeowner's foreclosed mortgage. Like the other bidders, Cruz has never seen the inside."

"When the bidding starts, Cruz has plenty of competition. The speculators bid steadily in hundred-dollar increments with cell phones pressed to their ears, keeping their bosses up to date on the action. Twenty minutes later the house is sold to a heavyset man for $286,000."

"That's less than it would have fetched last year. But veteran home buyers have grown more cautious as the market has cooled."

"More houses are on the market now than at any time in the past eight years, according to the Multi-Region Multiple Listing Service database. At the current pace it would take more than 13 months to sell them all, compared with 7 months at this time last year."

"Bargains are scarce on the auction block these days. Houses purchased in the last two years are often saddled with steep mortgages that can exceed the house's market value. Sales are down from last year and prices have risen less than 1 percent, according to DataQuick."

"'Now your house has to be underpriced and spectacular to sell,' says foreclosure investor David Schultheiss."

Buying A Home At Auction

2007-05-10T10:21:00.000-07:00

A report from CNN Money. "Rising foreclosures will bring misery to many home owners - but bargain prices for some lucky home buyers. Real estate auction house Hudson & Marshall is currently marketing more than 500 foreclosed properties in Michigan alone from May 19 to May 24. The prices will vary widely but, some people will walk away with homes for less than $5,000, according to Crystal Wright, spokeswoman for Hudson & Marshall."

"Most of the properties have already gone through the entire foreclosure process. First banks took them back from borrowers who fell behind on payments. Then, they then put them through public foreclosure auctions (often held on county courthouse steps) where the homes failed to sell. The banks then cleared any title issues and put them back on the market through a traditional real estate broker."

"If the properties sit for 90 days or more on the market, with expenses piling up, banks get very impatient. That's when they call the auction houses. 'Unlike a foreclosure sale on the courthouse steps, all these homes are sold free and clear, no liens, no debt. The seller even pays for title insurance,' said Dave Webb, one of Hudson & Marshall's owners."

"Business, according to Webb, is jumping; it grew 20 percent during the first quarter of 2007, usually a slow period for the company, compared with the fourth quarter of 2006. He anticipates even better times for the next year or two."

"Dean Williams, CEO of auctioneer Williams & Williams, said his company is also very busy. It sold 3,200 properties in the first quarter and currently offers residential properties from 36 states and the District of Columbia."

"Although many of the sales this year have clustered in the economically hard-hit Midwest, many of the homes coming to auction later this year will be higher-end properties from sun-belt states where the economies are generally strong, but speculative real estate investing has dried up, such as California, Texas and Florida."

"'In June, we'll have 200 properties in San Diego and Los Angeles on auction,' Webb said, 'with an average value of around $300,000.'"

"Not all the auction properties are huge bargains. According to Williams, 12 percent of the houses he sells, most of which have already been marketed for an average of six months as conventional listings, sell at auction for more than the original asking prices."

"But most of the houses do sell for less, and about 15 percent of time 'shockingly' so, said Williams."

"Buying a home at auction is fairly easy and straightforward but, even so, some people approach it with fear and trepidation. According to Wright, inexperienced buyers often attend one or two sales before they actually make bids."

"Bidders don't need to do anything special. Just, 'Be there,' Williams said, 'Bring your driver's licence, show it to get a bidding paddle. If you win the bid you sign a contract and leave a 5 percent earnest deposit; it can be a personal check. After that, you have 30 days to close.'"

Defaults To Weight On Prices In Rhode Island

2007-05-07T15:08:00.000-07:00

The Providence Journal reports from Rhode Island. "Rising home foreclosures in Rhode Island could claim a new casualty, house prices. Of all the ways to sell a house, a foreclosure generally yields the lowest price. Mortgage lenders looking to unload a property seized from borrowers who fell behind on their payments can expect to get back only enough to cover the loan, if that."

"In 2005, house sales in Rhode Island outnumbered foreclosure auctions advertised in The Providence Journal by 14 to 1. Now, that ratio has narrowed to less than 3 to 1."

"'That’s the possible storm cloud on the horizon,' said Timothy Warren Jr., CEO of The Warren Group. 'There’s a threat that those distressed properties, whether they sell at auction or are dealt with another way, could have an impact on the market.'"

"Even one foreclosure in a neighborhood can drive down property values of nearby houses an estimated 0.9 percent to 1.36 percent, according to one study. On a $255,000 house, that amounts to a decline of $2,300 to $9,200."

"The median price of a single-family house in Rhode Island this year has already fallen nearly 3 percent, or $7,000, to $255,000, compared with $262,000 during the first-quarter of last year, according to The Warren Group."

"'The steady increases in house prices in some ways covered up the potential of foreclosures in the past,' said Ren Essene, a research analyst at Harvard’s Joint Center for Housing Studies."

"Paul Talkowski, president of Daniel J. Flynn & Co. Inc. of Quincy, Mass., waits for bidders to arrive at the home of Kenneth and Lisa DeVoy at 6 Anawan Ave. in Bristol, before selling the house at a foreclosure auction. When no bidders registered, Talkowski accepted a pre-submitted bid from the bank for $174,583.02."

"Lenders advertised 678 houses in Rhode Island for foreclosure auction during the first quarter, up 122 percent from the same period last year, according to a Journal analysis of newspaper legal ads. The pace is on track to exceed last year, when just over 1,850 homes were advertised for foreclosure sale, which was more than twice as many as in 2005."

"'There’s a lot less credit available for borrowers, and a lot more foreclosed property being sold at a discount,' said Mark Zandi, chief economist for Moody’s Economy.com. 'I think this will put a pall over the spring market.'"

"During the 1990s real-estate crash, Richard August managed the residential portfolio of foreclosed properties for Fleet Bank. Part of his job was to go to foreclosure auctions for houses where the bank’s subsidiary, Fleet Mortgage Corp., was the lender. If the bids were too low, he was to buy the property back."

"'Investors are bottom feeders and would come up and they’d be looking for a real killing,' said August, who is retired. 'When they saw me driving up they’d say, 'Oh, Fleet’s here again!' They’d know they wouldn’t get a bargain.'"

"To lenders who got burned in the last real-estate downturn, the latest rise in foreclosures is no surprise. 'When mortgage lenders start offering zero-interest loans and start saying to people you don’t even have to have a down payment — we’ll write a separate loan you can defer for several years… you know this problem is coming,' August said. 'It’s absolutely inevitable.'"

"Mortgage lenders, he said, knew this. 'In every group of deals,' August said, 'there’s a built-in assumption that some are going to fail.'"

"In 2005, nearly 11,979 houses were sold in Rhode Island, according to The Warren Group. That year, 829 houses were advertised in The Providence Journal for foreclosure auction. So the ratio of houses sold to foreclosure ads was 14 to 1."

"Last year, house sales in the state dipped to 10,358, while foreclosure ads in the Journal climbed to 1,852, narrowing the ratio to about 6 to 1. Foreclosure impact on the market now is even more acute, with just under 2,000 houses sold in Rhode Island during the first quarter of this year, and 678 advertised for foreclosure, a ratio of 3 to 1."

"In previous real-estate downturns, most of the loans were made by banks and government-insured lenders. Now, more than half of all outstanding loans have been packaged into mortgage-backed securities financed by Wall Street investors. So if there is no return on these investments, the money to finance such loans dries up. That means less money available for homeowners to refinance their way out of debt — and less to loan to new buyers."

"There were 5,639 single-family houses on the market in Rhode Island as of the end of March, the largest number for that time of year since 1997, according to data provided by the statewide MLS to the Rhode Island Association of Realtors."

A "Perfect Storm" In Texas

2007-05-02T12:36:00.000-07:00

ABC 13 reports from Texas. "There isn't a lot of good involved in a foreclosure, but there may be a way to get out from under a home about to be taken by the bank. Selling the house at auction just might be the way to avoid the financial ruin associated with a foreclosure. Foreclosures can be devastating if the bank will not work with you. The better option may be a quick sale and auctions offer that."

"One home near TSU is for sale, but instead of sitting on the market for weeks on end, it will be auctioned off to the highest bidder in two weeks and that house is not alone. 'We have about 70 properties that we are selling that day,' said auctioneer Kelly Toney."

"'We're basically trying to bring the buyer and the seller together and take the seller out of the middle of the equation and put the auctioneer there mediating the price up rather than negotiating the sales price down,' said Toney. 'It's another option for a seller in distress that keeps them out of further credit problems,' said Toney."

"'Sometimes there are great deals and sometimes the properties go for market value and above,' said Dwight Toney with Tranzon auctions. Buyers must be able to put down 10 percent of the auction price at the time of sale. They then have 30 days to come up with the rest of the money."

"The idea of buying at auction may seem odd, but it may be the right time to consider it. 'We almost have what we call the perfect storm if you are a buyer because you have a lot of property on the market,' said Steven Kaufman with the Realty Investment Club of Houston. 'Demand that is low, not as many buyers able to buy, and you have low rates.'"

"Kaufman says there are opportunities and the auction route could be worth exploring, but... 'If you know a realtor that is willing to look up some comparable sales for you in the neighborhood, I think that is a great idea,' said Kaufman. 'That's the best thing to do, to see what the house is really worth.'"

An Auction Opportunity In California

2007-04-30T13:42:00.000-07:00

The LA Times reports from California. "Many see trouble in falling home prices and rising foreclosures. Karen Krynen sees opportunity. So after dropping her two children off at preschool one day last month, Krynen headed for Los Angeles County Superior Court in Norwalk, where foreclosed houses were being auctioned on the steps outside.

"The two dozen or so bidders, mostly men, whispered into cellphones, tapped into databases from their laptops and juggled clipboards loaded with documents and printouts. No one seemed particularly friendly."

"'I walked up and thought, 'Oh no, this is what they do for a living,' said Krynen, 42. 'They knew what they were doing. I kind of hoped that nobody else would be around.'"

"There were 5,977 foreclosed homes on the auction block in Southern California in the first three months of the year, up from 711 in the same period last year, according to DataQuick. State law requires these properties to be sold at public auction, which in theory puts everyone on an equal footing. Amateurs such as Krynen, however, face competition from professional real estate investors as well as the lenders themselves, who come to the auctions ready to bid for homes they issued loans for if it appears that the properties can be resold at higher prices."

"The notion of buying a home this way didn't take shape until a few weeks ago, when she came across a website. The site offered a trial subscription to troves of foreclosure data, which are public but not very accessible. Krynen was intrigued. A few mouse clicks later, she found a house about five miles from hers in Whittier. The owners had defaulted on the mortgage and were facing an auction in two weeks. Opening bid: $100,000."

"Krynen figured the four-bedroom home was worth about $800,000 and thought it would be the perfect replacement for the 1,400-square-foot house she and her husband, Jeff, have owned for 14 years."

"But that's about all she can say about it. Although she has driven past the place at least a dozen times, she could never get inside for a good look. That was lesson No. 1 Krynen learned about foreclosures: Buyer beware. You buy property 'as is,' with no chance of a pre-purchase inspection."

"'That scared me a bit, that I couldn't see inside,' Krynen said. But her husband, a professional contractor, assured her that he would be able to mend whatever needed fixing."

"From her online research, Krynen learned that the road to a foreclosure sale in California typically begins when a homeowner misses three mortgage payments. The lender then files a notice of default with the county recorder. If the homeowner fails to pay up in 90 days, the trustee, usually the title company, sets a date for a public auction."

"By long-standing custom, most auctions are held outside courthouses or the recorder's office. Krynen found this aspect of the process especially appealing. 'If it goes to the courthouse steps, there's a level playing field,' she said."

"Neither local government nor the courts play a role, however. The title companies and other trustees hire professional auctioneers to run the sales. It's the real estate equivalent of last rites, making Kyle Speer something of a priest of property. At 10 a.m. sharp each weekday, Speer takes his place on the courthouse steps in Norwalk."

"With his back against the marble wall and his face to the crowd, the professional auctioneer cracks open his leather portfolio, clears his throat and begins the archaic ritual of 'crying the sale.'"

"A 17-year veteran of foreclosure auctions, Speer says he's seen a sharp increase in newbies such as Krynen showing up. Bombarded by questions from beginners, he recently began offering a $200 seminar every Thursday to decode the auction process."

"One day last month, as Krynen stood off to the side taking notes, prepping for the upcoming auction of the Whittier house, Speer kicked off the bidding for the day's auction by reading the property's street address, followed by a long string of parcel numbers, deed numbers and loan numbers."

"'Do I have any opening bids?' he asked. 'Cashier's checks needed to qualify.'"

"That was news to Krynen. Before entering the bidding, you must show the auctioneer a cashier's check good for at least the minimum bid amount. Auction pros carry cashier's checks in varying sums.

"There were six homes on the block this day. They were bought in 2005 and 2006, at the crest of the housing boom, by buyers who financed the entire purchase. That means the homes are probably worth the same, or less, than the amount the buyers owe. No one bid."

"'I get asked every day if there are any good deals,' Speer said. 'Not too many right now.'"

"Homes that aren't sold are turned over to the lender, which can then sell the property however it chooses."

"When there is a bargain, a bidding battle usually ensues, pros say. At 10:30 a.m., after Speer had finished, Travis Toth, an auctioneer hired by other trustees, stepped up to market a foreclosed condominium near La Cienega and West Jefferson boulevards in Los Angeles. The opening bid was $259,592, which was the sum owed on the mortgage plus about $20,000 in processing fees."

"Right away, two men and a woman produced cashier's checks to identify themselves as serious bidders. With cellphones at their ears and hands cupped over their mouths, the bidders bumped up the price in $1,000 and $100 increments. One man worked a laptop too, scrolling a title company's research page on the Internet."

"After 10 minutes of back-and-forth, the auctioneer calmly declared, 'Sold.' The winner handed over four checks in amounts ranging from $500 to $120,000. He politely declined to give his name to a reporter except to say that he had been doing this for 11 years."

"Whatever his identity, he appeared to have scored a bargain. The final sale price was $267,500, more than $100,000 below its estimated value."

Filings Continue Record Setting Pace: MA

2007-04-24T10:51:00.000-07:00

A press release from Massachusetts. "ForeclosuresMass.com released its Massachusetts Market Analysis Report for the 1st Quarter of 2007 today, with data revealing that foreclosure filings in Massachusetts continue to escalate at a record-setting pace and reached a new high during the first three months of 2007."

"The report shows that 6,624 foreclosures were initiated statewide during the 1st quarter of 2007 (January, February and March), 76 percent more than the number recorded in the 1st quarter of 2006."

"Over the past 12 months, lenders initiated foreclosure proceedings against 22,342 homeowners, representing an 80.61 percent increase over the same period a year earlier. March 2007 was the 6th consecutive month with more than 2,000 foreclosure filings, indicating no slowdown in historic surge in foreclosures being initiated throughout the Commonwealth."

"'It is clear that tens of thousands of Massachusetts residents are trapped in properties they can no longer afford. They can’t keep up with mortgages payments that are too high, and the downward pressure on statewide housing prices means that they can’t sell the home to pay off their debts,' said Jeremy Shapiro, president of ForeclosuresMass.com. 'With no substantial market turnaround in sight, we expect Massachusetts foreclosure rates to continue at record or near-record levels for months to come.'"

"Highlights of the ForeclosuresMass.com 1st Quarter 2007 Market Analysis Report include: Foreclosures spiked by nearly 50% in March 2007 compared to March 2006. The increase statewide was 46.78% (2,190 v. 1,492). On average, there were 110 foreclosure filings every business day in March. March was the third-highest month on record, and marked the sixth consecutive month with over 2,000 foreclosure filings."

"6,624 foreclosures were initiated statewide in Q1 2007 (January 1, 2007 through March 31, 2007). Foreclosures jumped 76% higher than Q1 2006 (3,769). Q1 2007 had the highest number of quarterly foreclosure filings on record. This is the 2nd consecutive quarter with over 6,000 foreclosure filings."

"22,342 foreclosures were initiated in the past 12 months (April 1, 2006 through March 31, 2007): Foreclosures increased 80.61% statewide when comparing the past 12 months to the same period a year earlier (22,342 v. 12,370)."

"Barnstable, Worcester and Suffolk Counties experienced the largest increases. Barnstable County experienced a 93% increase (1,084 v. 562), Worcester County had an 87% increase (3,461 v. 1,850) and Suffolk County jumped by 87% (2,434 v. 1,302)."

"In communities with 50 or more foreclosure filings over the past 12 months, the biggest increases were in the town of Dartmouth (241% increase, 92 v. 27), the town of Somerset (194% increase, 53 v. 18), the city of Everett (186% increase, 166 v. 58), the town of Bourne (158% increase, 103 v. 40) and the city of Chelsea (151%, 113 v. 45)."

"In communities with 10 to 49 foreclosure filings over the past 12 months, the largest increases were in Adams (467% increase, 34 v. 6), Huntington (433%, 16 v. 3), Boxford (300% increase, 20 v. 5), Westborough (289% increase, 35 v. 9), and Hardwick (267% increase, 11 v. 3)."

Auction Horror Stories

2007-04-22T07:43:00.000-07:00

The Ann Arbor News reports from Michigan. "Buying foreclosed property is not for novices. 'There are horror stories,' said Special Deputy Jimmy Moore, who auctions off mortgage foreclosures every week at the Washtenaw County Courthouse. 'There have been a lot tears.'"

"He said he knows of a case where a couple bought a house at an auction. Later, it burned to the ground. Because they couldn't insure something they don't yet own, and there's a six- to 12-month redemption period before they take ownership, they lost everything except for the value of the land."

"It's also possible for someone to pay $100,000 for a house only to learn later that the federal government has a $150,000 tax lien on the house, Moore said. Unless the new homeowner comes up with the taxes, he's out $100,000, Moore said."

"Moore said it's important to check on the history of the house at the county's register of deeds, and check with the IRS, a process he admits could take hours, to find out if there's a tax lien on the house. 'And don't buy anything you can't really afford,' he said."

"There aren't many private buyers at the sales, Moore said, because there really aren't many great deals as there were years ago due to the fact that most have little equity."

"Washtenaw County Treasurer Catherine McClary said the sharp increase in the number of property foreclosure inserts in the Washtenaw County Legal News, where the first listing of at-risk properties occurs, verified concerns about an increased trend in tax delinquencies, a leading indicator of fore-closures to come."

"'You would think Washtenaw County would be healthy and immune from some other areas of state, but we're seeing six to seven new insertions every business day. It's a huge amount,' she said."

"Kip Sen of Northfield Township showed up at a recent foreclosure auction, hoping he'd walk out with a new house. He has had his mind on a Dexter Township house since reading about it in a foreclosure notice. After trying unsuccessfully to reach the owners to discuss a preforeclosure deal, Sen showed up early for the county's foreclosure auction."

"The homeowners had come up with the $15,000 they owed on the house, which was then removed from the auction list. Sen says he'll be back. After all, the foreclosure numbers show no signs of abating any time soon."

"'It's like a lottery,' said the Northfield Township engineer. 'If you don't try, you won't get it.'"

Redemption Clause In Tennessee

2007-04-18T13:34:00.000-07:00

The Jackson Sun reports from Tennessee. "A statement in Sunday's business story about buying foreclosures was not completely clear. The statement said, 'It is important for those buying a foreclosure to have the redemption right' of the seller waived."

"Sally Pate, a local real estate agent who specializes in selling foreclosed property, called Monday to say that while Tennessee is a redemption state, the mortgage holder waives the ability for that property owner to reclaim their property in their deed of trust at closing."

"'One of the few times a redemption clause comes into play is when a property is being sold at the courthouse for unpaid property taxes,' Pate said."

Sheriff Sales In Wisconsin

2007-04-16T13:58:00.000-07:00

The Monroe Times reports from Wisconsin. "It's 9 a.m. and Deputy Steve Hoesly is ready to start the auction. Foreclosures of homes resulting in sheriff's sales have increased recently, from 10 in 1997 to 58 in 2006, according to statistics from the Green County Sheriff's Department. The highest number in a given year was 67 in 2005."

"Locally, auctions generally are held in the basement conference room of the Green County Sheriff's Department. But the room is occupied, so Hoesly conducts the sale in the employee break room. Beth Luhman from the Green County treasurer's office joins him, a representative from the office always sits in on the sales. Any back taxes owed on the property will become the responsibility of the new owner."

"On this Tuesday morning, there is one written bid for the property, and it's from the current owner of the house. He has bid about $7,000 more than the amount of judgment against him. If just one person steps forward and offers one cent more than that, the property would be theirs."

"But no one else shows up. With little ado, the bid is declared the winner."

"It's not always this simple, Hoesly said. Sometimes, third-party buyers, or individuals who aren't representing either the mortgage holder or the homeowner, show up at sheriff's sale to bid. Once in awhile, there will be active bidding."

"Hoesly is quick to point out he's not an auctioneer. He's a deputy with 23 years in at the Green County Sheriff's department, the last six in civil process. State statutes dictate the local sheriff's department conduct sheriff's sales in foreclosure cases. Civil process also handles evictions, small claims matters, restraining orders and the occasional vehicle repossession."

"After the sale, the buyer is required to provide 10 percent down on the property. A real estate transfer form then is filed and a confirmation hearing before the judge makes the property transfer official."

"Stereotypes about foreclosed homes sold at public auction aren't always true. The homes sold, for example, aren't necessarily run down or abandoned. 'There's all kinds of homes,' he said. Some are in poor condition, others are 'quite nice.'"

"Nor is it always a great deal for potential buyers. Lenders often will submit a bid to make sure a property doesn't go too cheaply. And because homes in foreclosure aren't open for inspection before the sale, buyers don't know what kind of repairs may be needed."

"'Sometimes, you get a good deal, sometimes not,' Hoesly said, adding he doesn't have any information about the home or its condition. 'I just post them,' he said."

"Often, homes at auction still have people living in them until a sheriff's sale and confirmation hearing. Because of that, Hoesly warns interested buyers not to trespass to get a better look at the property. 'I tell them if you go up and peek in windows, you do so at your own risk,' he said."

"Once in awhile, the homeowner will attend or contact Hoesly to find out the auction's result. But they usually aren't emotional about it, he said. 'When it gets to that point, they pretty much figure it's done,' he said. 'A lot of times, it's a relief.'"

Area Foreclosures Ranked

2007-04-11T11:23:00.000-07:00

A report from the LA Times. "The congressional Joint Economic Committee released a report today detailing the local impact of high-risk sub-prime mortgages and foreclosures. California ranked 14th in the nation for foreclosures per household last year, one for every 86 households, according to RealtyTrac."

"Colorado's foreclosure rate was the highest, one per 33 households, followed by Georgia, Nevada and Texas. The average national foreclosure rate was one per 92 households."

"Among metro areas, Detroit had the highest foreclosure rate last year, with 40,219 total foreclosures, followed by Atlanta, Indianapolis, Denver and Dallas, according to RealtyTrac."

"Two California metro areas made the top 20. Stockton ranked 11th with 5,153 foreclosures, one per 37 households. Riverside-San Bernardino-Ontario ranked 13th with 30,255 foreclosures, or one per 39 households."

"The report also found that: The Rust Belt, Sunbelt and Colorado saw the highest number of foreclosures in 2006, with 60% due to sub-prime loans, despite the fact that such loans are only 14% of the total outstanding mortgage debt, according to RealtyTrac."

"Overall, 1.8 million hybrid ARMs (30-years adjustable rate mortgages with low teaser rates that often reset after two or three years to much higher rates) are expected to reset 2007 and 2008. Half of sub-prime borrowers over the past two years provided limited financial documentation and 90% overstated their income."

"Foreclosures this year are on track to match or surpass the 1.2 million in 2006, according to RealtyTrac."

Foreclosures "Spike" In New York

2007-04-09T12:19:00.000-07:00

The New York Magazine. "Maybe you’ve read the sad stories about all the adjustable-rate mortgage casualties who are losing their homes, and thought: How terrible! Can I get one for cheap? The answer is a qualified yes. The past three months have seen a 56 percent spike in foreclosures over late 2006. Most are in Queens, but the current list of delinquents includes a small yet surprising number in Manhattan. Yes, you’ll be profiting off someone’s bad luck, but how else can you get a home for a third below market value?"

"Just don’t expect to find one on a breezy Sunday jaunt with an agent. There are no open houses, no walk-throughs with inspectors. If you purchase at auction, you’ll be up against full-time investors—a scary bunch with years of experience. If you win, you must put down 10 percent immediately, with the rest due 30 days after. All this without even being able to peek inside."

"'It’s like Deal or No Deal; you open that suitcase to see what’s inside,' says Jessica Davis, who teaches foreclosure buying. 'You take a chance for the thrill of it.'"

"Still want in? First, some basic jargon. After three missed mortgage payments, a property will go into lis pendens (lawsuit pending), meaning the creditor, usually a bank, has put the owner on notice. The time from lis pendens to the auction block is up to a year, during which time a foolish homeowner will remain in denial and a smart one will try to sell."

"The challenge for you is persuading him to do so. If the mortgage remains unpaid, the bank will swoop in, foreclose, and sell the property at auction. (Upcoming sales are listed on the same Websites that supply lis pendens data.) There’s a fair bit of sleuthing required before you bid—interviewing neighbors and doormen, perusing title history (through the city’s database, acris, a836-acris.nyc .gov), checking for violations on the Department of Buildings Website, and finding out how much similar homes are selling for. Experts advise bidding 20 to 30 percent off that price (you have to assume it’s a wreck)."

"A common mistake is not doing a full accounting of liens, outstanding mortgages, and other debts, which are detailed in a file available at the courthouse three weeks before the sell-off. At a recent Brooklyn hearing, one eager newbie outed himself by bidding $180,000 for a house worth about half a million—except he’d failed to note the $400,000 mortgage he’d also be responsible for. (He later chickened out.) And never get so whipped up that you overbid."

"'You can’t get emotionally involved,' says Wesley Barney, who’s been buying and selling such homes for seventeen years. 'I’ve seen that happen plenty of times, even to me. But there’ll be another sale next week.'"

Lenders Hold Thousands Of Homes: D/FW

2007-04-06T12:35:00.000-07:00

The Dallas News reports from Texas. "Foreclosure signs are popping up in front of thousands of Dallas-Fort Worth homes for sale this spring. 'I'm finding more of them when I look at the listings in a neighborhood for comparable prices,' said Carrollton real estate agent Wendy Hulkowich. "The foreclosure market is definitely affecting our listing price comps.'"

"Last year, lenders foreclosed on more than 18,000 homes in the D-FW area, according to research by Foreclosure Listing Service Inc. During the same period, about 38,000 single-family homes were listed for sale in the multiple listing services. Currently, about 6 percent of the MLS listings in North Texas are identified as former foreclosures. But those numbers don't include nearly all of the repossessed properties, agents say."

"'I think the price impact will start showing up this year,' said James Gaines, an economist with Texas A&M University's Real Estate Center. 'In subdivisions where foreclosures may run as high as 20 percent or more, we can anticipate not just a slowdown in price increases, but price declines and perhaps significant – greater than 5 percent – price declines.'"

"The good news is that unlike the late 1980s slump, home foreclosures haven't been concentrated in particular areas of the city. A study of April's foreclosure postings shows a wide distribution of homes facing forced sale."

"But if home foreclosures continue to rise, they are up 15 percent so far in 2007, the resale of these properties will put a damper on home appreciation. That's more likely to be the case if lenders decide they need to more quickly unload the thousands of homes they are now holding."

"So far they aren't dumping foreclosures, agents who sell the properties say. 'They are cutting prices, but so far not a lot,' said Connie Zetterlund, a Dallas residential agent who specializes in sales of foreclosed homes. 'But because of what is in the pipeline, I think we will be seeing some price cuts. When a neighborhood has so many foreclosures, they have to do something to sell the properties.'"

"Getting the homes out of their hands takes time. Agents said that it can be two to four months after a property is sold at foreclosure before it comes up for sale. 'They are hanging onto the properties longer,' said Ms. Hulkowich. 'They are overpriced. Once in a blue moon you can actually find a good deal on a foreclosure property.'"

"She estimates that the foreclosed homes she sees on the market have been discounted from 11 percent to 14 percent to start. But many of the houses need expensive repairs, Ms. Hulkowich said."

"Ms. Zetterlund said the lenders she works with who are selling higher-priced homes are more willing to spend money to fix them up. 'But at the lower end, they often won't,' she said."

"The average home foreclosed on in the D-FW last year was valued at about $145,000, according to Foreclosure Listing Service. That tracks with the average pre-owned home sales price in the area last year."

"Collin County had the highest average foreclosed home value at $185,197. The largest number of foreclosures, about 8,600 homes, was in Dallas County. Tarrant County was second, with about 5,600 homes foreclosed on by lenders."

"About 44 percent of the homes posted for foreclosure in 2006 were actually sold at auction to the lender. Only about 7 percent of the foreclosure auction sales went to third-party buyers who bought the house on the courthouse steps, Foreclosure Listing Service found."

"Wells Fargo Bank, Deutsche Bank, Bank of New York, U.S. Bank and Chase Home Financial had the largest number of home foreclosures during the first quarter of 2007, according to public records surveyed by Foreclosure Listing Service. In the first quarter, these five lenders alone foreclosed on almost 2,000 D-FW area homes."

"'The subprime lenders deserve some of the bad rap,' said George Roddy, chief executive of Foreclosure Listing Service. 'But the foreclosures are widespread among regular lenders. A lot of it is home equity loans and second liens.'"

"In some cases the companies foreclosing on the homes just service the mortgages and didn't originally make the loans."

"Officials with Fannie Mae, the country's largest source of mortgage funding, say they are working in markets all over the country to make sure the foreclosures they sell don't add to the housing sector's problems. 'We have an economic interest in what is going on in these communities,' said Jason Allnut, a vice president for credit loss management with Fannie Mae. 'We have lots of loans that are performing right next to our foreclosed assets.'"

"Fannie Mae knows that if it poorly handles its foreclosed houses it can be a drag on the rest of the neighborhood, Mr. Allnut said. And not just because of pricing. 'Foreclosures can, if let alone, be a huge negative impact on a community, not just from a home price perspective,' he said. 'If you don't secure a home and don't get it back on the market with people living in it, it can become a magnet for crime.'"

"The Department of Housing and Urban Development currently has about 500 foreclosed homes for sale in the Dallas area. After pricing the homes and putting them on the market, HUD may mark the price down in 45 days if it hasn't sold, said HUD spokesman Lemar Wooley. If that doesn't work, the home price can be cut again."

"'The initial list price is based upon the 'as is' appraised value of a property,' Mr. Wooley said. 'Approximately 76 percent of our properties are listed at any given time.'"

"But some owners of foreclosed homes may decide to 'cut and run' as their inventories of foreclosed homes grow, said William Brueggeman, chairman of the real estate department at SMU's Cox School of Business."

"Dr. Brueggeman saw firsthand the impact of lenders dumping foreclosed homes in Texas in the late 1980s. 'I don't see things this time getting that bad,' Dr. Brueggeman said. 'It's certainly going to flatten things. I wouldn't be looking for too much home appreciation,' he said. 'The entry-level homes are going to see more of the brunt.'"

Tips On California Foreclosures

2007-04-02T17:18:00.000-07:00

The Desert Sun reports from California. "It pays for homeowners, and investors interested in distressed properties, to understand how the foreclosure process works in California. There are often good deals to be found on homes, but also plenty of pitfalls, said John Sloan, Realtor in Palm Desert."

"At a recent public auction for a home in Riverside County, Sloan said the new owner discovered some disturbing news. 'They found out the guy (previous homeowner) also had over $2 million in liens by the IRS,' Sloan said. 'That puts the new owner in a lot of jeopardy.'"

"Here are tips from area mortgage lenders and real estate agents on navigating the process. Once borrowers fall three months behind on payments, the foreclosure process typically begins in earnest. Lenders send a default notice to the borrower, county of residence, and anyone else who has an interest in the property, including a financial institution that holds a second mortgage."

"The notice is filed with the county recorder's office, as well as published in certain newspapers and online. The lender files a Notice of Trustee sale with the county 90 days after the default notice is sent out, and the property owner gets letters."

"Notices of default for Riverside, San Bernardino, Los Angeles, Orange and other counties are published in the legal newspaper the Daily Commerce, as well as other newspapers and paid Web sites."

"A foreclosure date is set (it must be at least 104 days after the original default notice is sent) for those homeowners who can't pay. A homeowner can pay off late mortgage payments up until five days before the closure sale."

"When an auction to sell the home takes place, county officials oversee it. Proceeds are used to pay off the mortgage and other debts secured by the house. Buyers at auctions typically purchase homes based only on what they see on the outside."

"Payment for the entire bid must be made by cashier's checks. Many banks won't finance foreclosure bids, partly because homeowners may not let appraisers inside before the auction."

"When no one makes a minimum bid on a home, the property reverts to the lender. Lenders often turn to real estate agents to sell those properties."

"Investors can and often do try to buy homes directly from homeowners before an auction. A foreclosed homeowner gets the leftover money from the auction - if there is any. Debt that is left over, in some cases, is the responsibility of the new owner."

An Enormous Amount Of Competition

2007-04-01T09:57:00.000-07:00

The Sun Sentinel reports from Florida. "The scene plays out every week in Room 385 of the Broward County Courthouse. 'Case No. 06-19776,' intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass. Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac. His research sheet told the story: Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December."

"'They borrowed themselves right out of a home,' said Lawrence, a real estate investor who has been coming to the public auctions for 25 years. There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property. The same thing happened with most of the 88 properties up for auction last week."

"Florida has more foreclosures in the pipeline than any other state, 19,144 in February, according to RealtyTrac."

"The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren't nibbling. 'Would you buy a property for $420,000 if you could only sell it for $400,000?' said Adnan Kabbara of Weston, a developer and contractor who has bought homes at auction for four years."

"Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss."

"You'd think with more foreclosures, there'd be more opportunities for the opportunists. But the auctions have become ultra-conservative, with only a handful of properties triggering bids."

"When a property does get action, a high-stakes poker game erupts. 'There's an enormous amount of competition,' said Lawrence. 'There are so many people trying to get the few viable properties, they get bid up to the point of razor-thin margins.'"

"On Thursday, one investor almost made a costly mistake. He bid $406,000 for a waterfront mansion in Lighthouse Point. He didn't realize the $402,132 foreclosure judgment was a second mortgage, and that there was also a first mortgage of $938,000 about to foreclose."

"'He thought he was going to get a $1 million home for $400,000,' said Dominic Abreu, attorney for the lender."

"Before the man paid nearly $27,000 in deposits and fees to the court clerk, Abreu asked him if he was aware of the first mortgage. 'His jaw almost hit the ground,' Abreu said."

"The man scurried out before paying, scuttling the deal."

1,000,000 Foreclosures Ahead: NAR

2007-03-30T16:47:00.000-07:00

USA Today has some pointers on foreclosure purchases. "You're a would-be buyer who's been sitting stubbornly on the sidelines, having seen home prices soar to nonsensical levels, waiting for their inevitable fall back to Earth. Lately, you've seen prices slipping. And you've heard about foreclosed homes being thrown on the market at bargain prices."

"After all, there will be more than 1 million foreclosures over the next two years, according to the National Association of Realtors. A house in foreclosure might well offer a great deal."

"Michelle Mangione knows. She and her husband, Jeff Haag, are living in a home in Fallbrook, Calif., that she bought from the owner about three years ago, just before it went into foreclosure. Having paid about $680,000, she estimates she saved about $200,000."

"Still, her savings came at a price: a lot of needed work on the house. 'You have to be willing to live in a mess for a while,' Mangione said recently, as painters were working in the home."

"'There are some good buying opportunities,' says David Lereah, the NAR's chief economist. 'But don't repeat the mistakes of the foreclosed borrowers.'"

"With the market sinking for 'subprime' borrowers, buyers short on cash are finding it harder to get a mortgage. Before you try to buy a home in foreclosure, be sure you have a good credit score and enough cash for a sizable down payment. Prime borrowers, Lereah notes, should still be able to qualify for traditional fixed-rate loans with rates remaining near historic lows."

"If you do shop for a home in foreclosure, don't reel in the first one you see. In particular, don't get sucked into an auction right away. Auctions aren't the only way to buy a home in foreclosure, and they can sometimes be the most hazardous."

"Here are your main options: Auction. The typical one is a state process. It's generally held on the courthouse steps, in the clerk's office or in front of the foreclosed house. 'The auction probably represents the highest potential return but also the highest risk,' says Rick Sharga of RealtyTrac."

"That's because buyers typically can't inspect the home in advance of the auction and must pay on the spot in cash or with a cashier's check. It's also possible that the current homeowners will refuse to move out, and then you must deal with an eviction, says Alexis McGee of Foreclosures.com."

"REO (real estate owned). If a foreclosed home isn't sold at auction, if, for example, the highest offer is less than the homeowner owes the lender, the bank would repossess it. Though the bank will want to unload the home, it won't necessarily do so cheaply. So you aren't guaranteed a fabulous price."

"'The bank can take their time in responding to an offer,' says Jim McEachern, a buyer's agent in Las Vegas. 'It's just a piece of paper on a banker's desk.'"

"Still, you'll be able to arrange an inspection and title insurance. In that way, it's safer than an auction."

"Jenny Nelson recently bought a home in Stone Mountain, Ga., from the lender that seized it. She had time to research the home, which had been empty for about a year and was in rough shape. 'It's nerve-racking to think what could have happened to this house,' she says. Once Nelson hired an inspector, she learned that a broken pipe in the basement had caused mold to grow. Nelson, who had the problem repaired and cleaned up, plans to move in in June."

"Pre-foreclosure. Because an auction is risky and an REO is more costly and time-consuming, some experts recommend buying a home in pre-foreclosure. You can find a house in pre-foreclosure by studying the public notices about homes in default. The information is available from such Internet firms. You'll pay a fee, though, for their services."

"Plus, there will be little if any competition because the home usually isn't up for sale. It's a private deal. You offer a price that's less than market value but more than the amount owed on the bank loan. 'The thing that makes it difficult for people,' McGee notes, 'is the idea of soliciting somebody who hasn't put a for-sale sign up front.'"

More Records In Massachusetts

2007-03-28T15:30:00.000-07:00

The Boston Herald reports from Massachusetts. "Bay State home foreclosures have hit a record high for the second straight month. ForeclosuresMass.com reported today that 2,227 Massachusetts homes last month fell into foreclosure."

"Over the past 12 months, 21,644 Bay State homes have entered foreclosure, also an apparent record."

From South Coast Today. "Foreclosures in Massachusetts sky-rocketed over the past year, with SouthCoast seeing some of the biggest increases in the state, according to a report released today."

"Dartmouth and New Bedford were among highest increases in the entire state, according to ForeclosuresMass.com. Bristol County experienced one of the largest increases, with a 92.33 percent increase."

"In communities with 50 or more foreclosure filings over the past 12 months, the biggest increases were Dartmouth, with a 244 percent increase (86 foreclosures in the past 12 months versus 25 in the previous 12 months), and New Bedford, with a 142 percent increase (476 versus 197)."

Money, Labor And Risk In Colorado

2007-03-27T15:22:00.000-07:00

The Gazette reports from Colorado. "The recent epidemic of residential foreclosures along the Front Range has, as usual, generated interest in investing in foreclosed properties. But, while there might be money to be made in this enterprise, there is also labor involved, and risk."

"As with any other purchase of real estate, you will need to know what the property is worth, what condition it is in, and what liens will still be present after your purchase. You will also need to know the details of foreclosure law and how the public trustee’s office, where foreclosures are conducted, does business."

"You will need to have liquid funds available to make your purchase; cover repairs and updates; and pay taxes, insurance, assessments and utilities while you’re trying to resell, or rent, the property. Although determining market value might not be hard in a tract house neighborhood, finding out the condition of a property in foreclosure can be problematic."

"Unless you’re dealing directly with the owner in pursuit of a bailout transaction, you may not have a chance to see the crayon artwork on the walls, experience the essence of cat that permeates the house, or investigate why water is dripping onto the kitchen floor from the upstairs bathroom."

"As for liens against the property, you can find out about delinquent taxes from the county treasurer, and a title insurance company can tell you what shows up as recorded documents, but there can still be surprises."

"For example, if work was recently done on the property, a mechanics lien could be filed after your purchase but with a priority that dates back to before your purchase."

"And then there is a multitude of purchase strategies to consider, each with advantages and disadvantages. You can, for example, buy the foreclosing lender’s position and complete the foreclosure yourself. You can make a deal with the owner being foreclosed on to buy the property. You can bid at the foreclosure sale itself."

"You can make the foreclosing lender an offer immediately after the foreclosure process ends, knowing that the lender is now stuck with a property it doesn’t want and needs to sell. You can buy the position of someone having a small junior lien on the property and exercise a redemption right at the end of the foreclosure process."

"If you still think there’s a wealthwithout-work opportunity here, start by reading carefully article 38 of title 38 of the Colorado Revised Statutes. (The law is changing July 1, so be sure you have an up-to-date copy.)"

"Next, sit in on a few public trustee sales. And, before you take your first plunge, have a title insurance company and a lawyer standing by to help you try to avoid unpleasant surprises."

The REO Realtors

2007-03-22T12:39:00.000-07:00

The Voice of San Diego reports from California. "For most families, the thought of losing their home due to missed mortgage payments is their worst nightmare. But in a wood-paneled office on University Avenue in La Mesa, one family rallies around the real estate F-word: foreclosure. Indeed, for Donna Sanfilippo and two of her sons, Eric and Robert Weichelt, foreclosures are the family business."

"The brothers' wives also work in the office, as does Sanfilippo's husband, their step-dad. Sanfilippo opened the office in 1992. Robert got into the business in 1986, and Eric followed in 1996. Even Robert's 11-year-old son told his grade-school class a few years ago he wants to grow up to be a 'loaner' -- a mortgage broker, like his dad."

"They work for lenders, selling the homes for which borrowers have fallen months behind on their mortgage payments. They become the local eyes and ears of faceless nationwide mortgage lenders, the hands that tuck a moving notice in the doorframe of the homes inhabited by embattled homeowners. They are the liaison between whoever lives in the foreclosed home, even an unsuspecting tenant, and the lender. And at a time when every month bears a higher number of county homeowners missing payments and moving into the foreclosure process, business in this part of the market is exploding."

"When a new listing comes in from the lender, the agents write it on whiteboards with blue and orange markers. By the time the office gets the listing, the bank has already posted a notice of trustee's sale on the homeowner's door, warning them the home will be auctioned. The REO Realtors drive to the property to see if anyone is still living there. They deliver a letter to the home, alerting the inhabitants of any money the lender may be willing to send their way to help them move. They set a deadline with the inhabitants, and when the house is cleared, they recommend repairs and give a price estimate to the lender. Then the agents list the home for sale and sell it on behalf of the lender."

"Robert Weichelt is old school when it comes to his business mindseto. Unlike some people who got into extremely specialized facets of the real estate industry when homes were sizzling a few years ago and are now losing their jobs, Weichelt claims he wears enough real estate hats to weather any direction the market can go. He considers himself a jack-of-all-trades in the business, having worked in title insurance, mortgage brokering, refinancing and lending, escrow and listings. And, of course, foreclosures."

"Weichelt and his family are reminiscent of Dog, the as-seen-on-TV bounty hunter in Hawaii. That television show has its share of car chases and fugitive rough-handling, and at the end of the day, it's about catching the wanted person. But Dog and his sons and his wife also pepper the show with bursts of compassion that humanize both criminal and bounty hunter. Weichelt shows similar bursts of kindness as he hunts houses instead of people."

"People aren't often too happy to see him, he explains. He loathes entering a house he's thought to be vacant, only to find someone sleeping inside."

"'It scares the daylight out of me,' he says. 'I feel like a cop without a gun.'"

"The REO Realtors often have to go with marshals to what's called a 'marshal lockout,' where the inhabitants of a house refuse to leave until they're forced out by armed officers."

"Weichelt explains it's their job to get as much money for the lender as they can. The last time the foreclosures business boomed was in the mid-1990s, after the last real estate bust. Then, banks had to unload the properties at '50 cents on the dollar, fire sale' prices, Weichelt explains. Now, at least while foreclosures are still at relatively low rates, the lenders are hoping to get top dollar for the properties."

"'The last thing [the lenders] want to do is be the downturn in the market,' Sanfilippo explained earlier. 'They're just like Mr. and Mrs. Smith -- they have an appraised value and they want to sell as close to that as they can.'"

"But they'll still sometimes offer relocation assistance in return for a quick move-out. In the business, that's called 'cash for keys,' and Weichelt considers offering that to pinched families one of the most important parts of his job."

"'At the end of the day, I'm there to get them out,' he says. 'Banks don't mess around. But if I can do it with a smile, at least I'm getting them options.'"

"After a pause, he continues: 'It's not all about the Benjamins, you know what I mean? I do whatever I can to be sympathetic. I'm not going to say, 'That's OK, take your time.' But I am going to say, 'Beat it' -- with a heart.'"

"Most of the people he's talking to these days are still victims of the typical reasons for foreclosure -- the 'life happens' kind, such as illness or job loss or divorce, he says. But a growing number are defaulting on loans they shouldn't ever have taken out, he says."

"Recent tumult in the mortgage market has shed light on lax lending standards embraced by brokers and banks during the boom that allowed hundreds of thousands of people to get into loans they would have previously been barred from. The number of homes in foreclosure activity was at a record low for years during the latest real estate boom, because homeowners in trouble could either sell their homes for a profit or refinance their roller-coaster mortgages for a more predictable, traditional payment. Now, though, declining home values mean more and more homeowners find themselves stuck between payments they can't make and slow sales conditions that make it difficult, if not impossible, to sell their homes before the bank repossesses them."

"Under the housing market's current conditions, foreclosures represent a niche that is growing nearly as quickly as home values ascended a few years ago. The number of San Diego County homes in some level of foreclosure activity reached 1,150 in January, according to RealtyTrac, a nationwide tracker of foreclosure data. That was up 20 percent from January 2006 and up more than 240 percent from the first month of 2005. Sanfilippo has increased her staff by one-third to handle the jump in business. Tuesday, they had seven new properties come in, more than double their daily usual, even these days."

"'It certainly is an uptick in foreclosures,' Sanfilippo says after two decades in the business. 'In 2003, 2004, there were very, very few in San Diego County, because of that quick appreciation.'"

"And some buyers who used mortgages to cover the entire cost of their homes near the end of the price-appreciation boom are now upside-down, owing more than their now-declining home is worth, with no equity cushion to protect against sudden illness, job loss, divorce, or the payments on adjustable-rate mortgages ramping up. The loans to consumers with poor credit, termed subprime mortgages, have proved especially troublesome in recent weeks."

Bidders Cautious In Michigan

2007-03-19T15:47:00.000-07:00

Reuters reports from Michigan. "With bidding stalled on some of the least desirable residences in Detroit's collapsing housing market, even the fast-talking auctioneer was feeling the stress. 'Folks, the ground underneath the house goes with it. You do know that, right?' he offered."

"After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: 'The lumber in the house is worth more than that!'"

"The rising cost of mortgage financing for Detroit borrowers with weak credit has added to the downdraft from a slumping local economy to send home values plunging faster than many investors anticipated a few months ago. At a weekend sale of about 300 Detroit-area houses by Texas-based auction firm Hudson & Marshall, the mood was marked more by fear than greed."

"'These people are investors and they know the difficulty of finding financing. They know the difficulty of finding good tenants. They're cautious,' said realtor Stanley Wegrzynowicz, who attended the auction."

"Steve Izairi, who re-financed his own house in suburban Dearborn and sold his restaurant to begin buying rental properties in Detroit two years, was concerned that houses he thought were bargains at $70,000 two years ago were now selling for just $35,000."

"At least 16 Detroit houses up for sale on Sunday sold for $30,000 or less. A boarded-up bungalow on the city's west side brought $1,300. A four-bedroom house near the original Motown recording studio sold for $7,000. 'You can't buy a used car for that,' said Izairi. 'It's a gamble, and you have to wonder how low it's going to get.'"

"In the most spirited bidding of the day, a sprawling, four-bedroom mansion from Detroit's boom days with an ornate stone entrance fetched just $135,000."

"Even with the steep discounts on Detroit-area properties, some buyers handed over their deposits with a wince. 'I'm not sure it's congratulations,' said Kirk Neal, a 55-year-old auto body shop worker who bought a ranch in the suburb of Oak Park for $34,000. 'My wife is going to kill me.'"

"Realtor Ron Walraven had a three-bedroom house in the suburb of Bloomfield Hills that had listed for $525,000 sell for just $130,000 at the auction. 'Once we've seen the last person leave Michigan, then I think we'll be able to say we've seen the bottom,' he said."

Firm Claims Defaults Are Understated

2007-03-17T12:46:00.000-07:00

The Central Valley Business Times has this press release from California. "Home foreclosures in the United States being reported by the media likely understate actual foreclosure sales activity, according to Foreclosure Radar. According to the company, February saw 4,171 foreclosures with a total loan value of $1.64 billion for distressed properties sold at auction in California."

"This dollar volume surpassed the prior record reached in the third quarter of 1996, and represents a 48 percent increase from December 2006, says the company which tracks actual foreclosure sales, not just initial listings."

"'The foreclosure sale numbers, sometimes referred to as REO's reported by similar listing services do not reflect current foreclosure sales activity. Instead, they are based on a document called a Trustee's Deed that gets recorded with the county weeks after the sale. With the rapid changes in the foreclosure market, the delay in waiting for these documents to be recorded has resulted in actual foreclosure sales to be under reported by more than 300 percent,' he says."

"'If you look at the data for Contra Costa County, for example, the number of foreclosures has increased by 865 percent in just one year and this is by no means the worst example in California,' says Mr. O’Toole."

"Such figures help explain the sudden surge in subprime lender failures, with nearly two dozen shuttered, Mr. O’Toole says."

A "Continuous Climb" For Dallas/Ft Worth

2007-03-16T12:32:00.000-07:00

The Dallas Morning News reports from Texas. "Homes posted for foreclosure auction in April rose 18 percent in the Dallas-Fort Worth area from the same month last year, the Foreclosure Listing Service said Thursday. That's up slightly from the 15 percent increase in the first three months of the year compared with the same period a year earlier."

"'We're not seeing the light at the end of the tunnel yet,' said George Roddy, who heads the Addison-based research firm. 'We have not seen year-on-year figures go down in the last few years. It's just a continuous climb from 2001 to this date.'"

"In the 10-county Dallas-Fort Worth area, 3,452 homes are posted for foreclosure auction in April."

"'There's really not a good reason for foreclosures to go down,' he said. 'The only reason they would is if lenders tighten up their lending practices, if they turn away people who don't have good credit.'"

"'We could be in for a little bit of a shakeout,' said Craig Jarrell, who oversees the Dallas-area operations of Pulaski Mortgage Co. 'I'm afraid that we've just begun to see the effects of all the negative factors: the subprime, the delinquencies, the rate adjustments on the ARMs.'"

"Home prices could fall in neighborhoods with lots of foreclosures, Mr. Jarrell said. 'There's going to be a little bit of pain,' he said. 'But we can handle it, and I think the economy is mudding through it.'"

"In North Texas, Collin County had the largest increase in foreclosure postings for April, up 40 percent from the same month a year ago, according to Foreclosure Listing Service. Over the same period, foreclosure postings rose 11 percent in Dallas County, 20 percent in Tarrant County, 20 percent in Denton County and 29 percent in Rockwall County."

"Total residential foreclosure postings since the start of 2007 numbered 14,307, up 15 percent from the comparable period a year ago."

"Texas has been one of the nation's top foreclosure markets in recent years. 'What it tells us is that we're in the midst of some sad economic times for a lot of people,' Mr. Roddy said."

"The Trend Is Accelerating": Massachusetts

2007-03-15T12:46:00.000-07:00

The Republican reports from Massachusetts. "Indicators of delinquent mortgage payments that could lead to foreclosure rose dramatically in Massachusetts in February, according to a report issued yesterday. The first step taken by a lender against a delinquent borrower, petitions to foreclose filed in state Land Court, rose 92.1 percent to 2,242 across the state compared to the number of petitions filed in February last year, according to The Warren Group."

"Advertisements for foreclosure auctions, the last step before a property is actually sold at auction, rose an alarming 199 percent to 1,005 statewide compared to the year before, according to the report."

"Terence F. Egan, editor at The Warren Group, said the 'trend is accelerating.' Month-over-month comparisons throughout 2006 and into 2007 have shown steady increases, he said. 'It's likely to get worse before it gets better,' he said."

"Petitions to foreclose in Hampshire County rose 177.8 percent, from 9 to 25; in Franklin County, petitions were up 122.2 percent, from 9 to 20; and in Hampden County, petitions were up 101 percent, from 99 to 199."

"Egan said 'what's really interesting' is that foreclosure petitions in the Pioneer Valley are tracking the increases across the state, but the increase in auction announcements is 'dramatically lower' than the rest of the state. That may be because housing prices are lower in Western Massachusetts and did not spike as high as eastern Massachusetts housing prices during the boom years."

"Also, he said, homeowners may find it easier to sell their homes than eastern Massachusetts homeowners, who have watched housing values slide. 'There's not a lot of wiggle room when you owe more on your home than you can sell it for,' Egan said."

From News Center 5. "NewsCenter 5's Amalia Barreda reported that the numbers mean that in just about any neighborhood in any Massachusetts town, homeowners could be on the brink of losing their most important financial investment. Mortgage broker Don Larsen had to break the bad news to his client on Wednesday. New Century Mortgage, a wholesale lender, did not have the cash for a promised $417,000 loan."

"'They've always said everything was fine. Keep sending loans in, everything will fund. Unfortunately, this one didn't fund, and it makes me look bad and makes my borrower unhappy,' Larsen said."

"Foreclosure loomed for Barbara Gosselin and her husband recently. A risky zero percent down payment loan helped them become first time buyers of a property in New Hampshire. But tight finances got tighter when her husband had unexpected business problems."

"'The stress has been unbelievable. I've had days where I've cried. At work I've cried trying to do my job and just worrying about the stress of losing the home,' Gosselin said."

From CNN Money. "Jemima and Ricardo Sanon saw the possibility of trouble before they ever signed their mortgage documents in 2004. The Sanons had diligently saved $5,000 in preparation to buy their first home, but the sum was just enough to cover the closing costs. So to finance the $290,000 purchase price of a Waltham, Mass home, they took one loan for $232,000 and also a piggyback loan for $58,000, both from New Century Financial, a subprime lender."

"'I worried about how we would make payments when they increased,' said Jemima. 'The mortgage broker [at New Century] told us we could refinance.'"

"Fast forward a couple of years, and the Sanons, like so many other subprime borrowers today, are struggling to keep their heads above water. As the housing market boomed, refinancing or selling your home was a simple solution for borrowers who had trouble making the mortgage payment. Now that the housing market has stalled, subprime borrowers are stuck with loans they really couldn't afford in the first place."

"Defaults and foreclosures are rising, and the industry is roiling as lenders face the consequences after years of handing out money irresponsibly. Says Bruce Marks, CEO of a non-profit that is trying to help the Sanons and other subprime borrowers refinance into sensible mortgages: 'Lenders knew these loans were structured to fail.'"

"For the Sanons, the initial monthly payment on the larger loan was some $1,300. Two years later, that payment jumped to over $1,800. As a result of the sticker shock, the couple fell behind on their credit cards and student loans."

"In November, Jemima had to leave her job for several months because of a difficult pregnancy, which put them even further behind on the bills. She recently returned to work. But not in time to stay current with the mortgage; in February, the Sanons paid late. Now the March payments are due, and the latest adjustment has pushed the sum on the larger loan to over $2,000."

"After the first adjustment, Ricardo called Litton Loan Servicing (the company currently servicing the mortgage) to try to work something out. 'They threatened us,' he says. 'They said, 'If you don't make your payment, we'll foreclose.'"

"Ricardo's working with Marks' organization to try to get into a loan that makes sense. In the meantime, he has been logging seven days a week at the drug store where he is employed as an assistant manager to keep up with the house payment. With their newly blemished credit record, the couple hasn't yet been able to refinance out."

"'We want to keep our house,' says Jemima. 'But we can't do it with the mortgage we have right now.'"

US Foreclosures Set Records

2007-03-13T12:25:00.000-07:00

A housing report from MarketWatch. "Many more U.S. homeowners were unable to keep up with their mortgage payments in the fourth quarter, the Mortgage Bankers Association said Tuesday, with the rate of homes entering the foreclosure process hitting a record 0.54% and the delinquency rate on U.S. home loans leaping to 4.95% from 4.67% three months earlier."

"The rise was led by subprime mortgages, where delinquencies increased to a seasonally adjusted 13.33% from 12.56%, and FHA loans, which saw a record-high delinquency rate of 13.46%."

"Delinquency rates for prime adjustable-rate mortgages rose to a seasonally adjusted 3.39% from 3.06%, while subprime ARMs increased to 14.44% from 13.22% over the quarter. The rate of delinquent prime fixed-rate loans rose to 2.27% from 2.10%, while subprime fixed-rate loans increased to 10.09% from 9.59%."

"The foreclosure inventory rate increased to a seasonally adjusted 0.5% from 0.44% for prime loans and to 4.53% from 3.86% for subprime loans. At 0.54%, the rate of homes entering the foreclosure process hasn't been this high since the second quarter of 2002, after the recession, said Doug Duncan, MBA's chief economist."

"'One of the impacts of (home-price) declines, of which some local markets clearly are registering declines today, is that it's an evaporation of equity or potential equity. And to the extent that a borrower gets in trouble in making their payments, it reduces their options for recovering from that,' Duncan said."

It Does Not Appear Things Have Hit Bottom

2007-03-09T12:15:00.000-08:00

The Capital Times reports from Wisconsin. "There were 69 property foreclosure filings in Dane County in January and 66 in February, the firm reported. The total of 135 is 17.3 percent more than in February last year and double 2005. Foreclosures totaled 752 in Dane County in 2006 and 477 in 2005."

"Statewide, foreclosures are up 27 percent this year, to 3,240 in January and February of this year from 2,549 in January and February of 2006. Sixty-three percent of state counties are seeing more foreclosure filings this year, 11 percent the same amount, and 26 percent fewer."

The Ann Arbor News from Michigan. "In 2006, 1,944 homes were sold in the county compared with 2,707 the previous year, according to information from the Livingston County Association of Realtors. Listings are up 3.6 percent from the previous year, the average sales price has dropped by about 3.3 percent and sales volume is down by nearly one third from 2005."

"Michelle Brant, executive director of the Livingston County Association of Realtors, said the county faces many of the same pressures that other counties are seeing around the state. 'We're all in the same boat,' she said."

"The average sale price for Livingston County in 2006 was $242,043, compared with Oakland County's $226,879 and Wayne County's $126,904, according to Brant."

"Livingston County Register of Deeds Sally Reynolds personally handles foreclosures that arrive at her office. 'I'm definitely seeing an increase,' she said. 'It's been steadily growing each year, but 2006 is when it really jumped.'"

"Total foreclosures, which include mostly residential homes, have increased substantially since 2000 when there were 85 total for the year. In 2005 there were 280 and in 2006 the number jumped to 614."

"She speculates that the increase is due not only to a down economy, but that so many people have little home equity and thus no cushion when tough times hit. Tougher federal bankruptcy laws also have contributed, she said."

"It does not appear that things have hit bottom yet. January saw 72 foreclosures compared with 38 in the same month in 2006 and 22 in 2005. 'I'd like to say that we have (seen an improvement), but we haven't,' she added."

"But where some people are losing their properties, Reynolds added, another market is opening up for those looking to buy."

Music Stops In Massachusetts

2007-03-07T08:16:00.000-08:00

The Boston Herald reports from Massachusetts. "The number of foreclosures in Boston is escalating dramatically in the new year as scores of the high-interest-rate subprime mortgages go bust. As of the end of February, lenders had filed 301 notices to foreclose against homes and condos in Boston, reports Dorchester housing researcher John Anderson."

"That’s up from 86 during the same period last year, according to Anderson. If the current pace continues, Boston could wind up with 2,500 to 3,000 foreclosure filings by the end of the year, Anderson estimates. That’s compared to the 1,100 foreclosure filings in Boston last year, the worst in the 10 years he has been tracking these numbers."

The trend, though, is not a new one, with foreclosures in the city having begun to rise as far back as 2005, Anderson says. 'It’s overwhelming,' Anderson said. 'Everybody who is all of a sudden concerned; they are two years behind.'"

"The nation’s subprime lending industry is now in full 'meltdown' and its woes are far from over, experts warned yesterday. 'It’s a total meltdown,' said Ernest Napier, an analyst with Standard & Poor’s. 'Everyone had anticipated that the music would stop (on these type of high-risk mortgages). Well, it has.'"

"'I think we’re just seeing the tip of the iceberg,' said Lee Forker, president of Boston’s New England Research and Management. 'This is serious stuff. . . . It’s not time to be putting your head in the sand.'"

"Gerard Cassidy, an analyst at RBC Capital Markets, agreed the situation is serious, especially since subprime lending accounted for about 22 percent, or more than $550 billion, of the entire $2.5 trillion mortgage industry in 2006."

Ohio Pros Offer Advice

2007-03-06T12:17:00.000-08:00

The Toledo Blade reports from Ohio. "With foreclosures soaring across northwest Ohio and southeast Michigan, Toledo real estate investor Matt Dewood has plenty of prospects, and not just ramshackle places in older areas of Toledo. 'There's a ton of opportunities out there,' said Mr. Dewood."

"He and other pros offer advice to prospective buyers on how to find and snag foreclosed homes, known as REOs, or real estate owned by the lender."

"But first, the experts dispelled a myth. Sheriff's auctions of foreclosed properties aren't the happy hunting grounds many would-be buyers believe. Odds are good that the successful bidder in the Toledo area will be the bank or other lender holding the mortgage on the property."

"To protect their interest, lenders typically submit opening bids for the loan balance. Home values didn't rise in this region as much as they did in some other areas of the nation during the long housing boom. So, unless the homeowner has built up significant equity, these properties seldom represent the kind of deals auction participants are seeking."

"Mortgage-holders get subsequent sales proceeds before other creditors. Although there are exceptions to this rule (such as abandoned properties sold for delinquent taxes), the greatest opportunity for prospective individual buyers begins after the lender has taken deed to the property and put it up for sale."

"Lucas County records show buyers are landing deals. A newer McMansion - four bedrooms, five baths, nearly 5,000 square feet - in the upscale Country Walk development in Sylvania Township was appraised at $575,000 for a sheriff's sale a year ago."

"It was acquired by the lender and was resold seven months later for $315,000, or $260,000 below the appraisal, according to the Lucas County auditor's office."

"A three-bedroom bungalow in Toledo's Point Place section was appraised at $86,000 for a foreclosure sale a year ago, bought by the bank, and resold in January to a couple for $38,000, county records show."

"A 1948 brick two-story near Toledo's Ottawa Park sold for $50,000 in a foreclosure sale. Lucas County lists the home's value for tax purposes at $114,200."

"One in 60 houses in the Toledo area was in foreclosure last year, ranking the city 30th worst among the nation's largest cities, said RealtyTrac Inc., of Irvine, Calif. In Lucas County alone in 2006, 2,573 properties were sold at involuntary auctions for $95.3 million, according to the sheriff's office."

"Fifth Third bank, like other lenders, tries to work with borrowers who miss house payments to prevent an involuntary sale. Homeowners unable to right their financial ships used to be able to turn the keys over to the bank and walk away. But now, policies at Fifth Third and most other lending institutions require the house be taken formally through foreclosure."

"In such situations, the lender files suit against the homeowner in state court, known in Ohio as Common Pleas court. If a judge rules in favor of the bank, the house is to be sold at a regularly scheduled auction overseen by the county sheriff's staff."

"Banks try to avoid foreclosures. In Lucas County, the process takes at least nine months and is costly, not only legal expenses before the sale, but also costs afterward including heating and lawn-mowing. Once Fifth Third takes possession of a house, it lists it with an outside agent. These lists typically are the most valuable sources for bargain-hunters, industry experts said."

"Fifth Third doesn't post a list of properties in branches or on the Internet. But it maintains a list internally and provides information to interested customers."

"National City Bank, which is a top mortgage lender in the region, delivers most deeds to Fannie Mae and other secondary lenders after successful foreclosures. Its mortgage unit operates a Web site, ncmcreo.com, listing remaining properties for sale."

"Each lending institution handles REO properties differently. Some sell houses on which mortgages are in default en masse at steep discounts to firms that specialize in the resale of these properties, experts said."

"A number of Internet sites, some of which charge a fee, provide listings of REO houses. The site reotrans.com listed 33 Toledo properties last week. Ocwen.com, operated by Ocwen Financial Corp., West Palm Beach, Fla., lists hundreds of homes recovered by the Veterans' Administration and other lenders."

"Unlike at sheriffs' auctions, however, prospective buyers don't bid against lenders. Sixteen northwest Ohio homes will be on the block at a sale scheduled for 7 p.m. Wednesday at the Holiday Inn French Quarter in Perrysburg. The properties are listed on the firm's Internet site, hudsonandmarshall.com."

"As a rule of thumb, agents who specialize in these properties say the longer an REO property is for sale, the better the potential deal for a buyer. 'Lenders aren't in the property ownership business; they're in the money business,' said Rod Culler. He is a specialist in foreclosed homes, and nearly all of the 80 to 100 homes he handles at any given time are REO properties."

"Unlike conventional sellers who can accept whatever their pocketbooks permit, banks must follow guidelines. Those guidelines loosen as the listing becomes 'seasoned,' Mr. Culler said."

"Because homes are sold 'as is,' he urges buyers to pay for professional inspections. Bank sellers are typically unwilling to lend to the new buyer, sales agents said."

"Agents who specialize in these properties warn prospective buyers that transactions sometimes get delayed because of a backlog of foreclosed homes awaiting final processing at the sheriff's office."

"Foreclosure specialist Linda Drews, of Loss Realty, Toledo, encourages prospective buyers not to get their hopes up too high. 'So many people have taken these classes that teach them they can buy for pennies on the dollar,' she said. 'From where I stand, that doesn't work. We'll have a home listed at $90,000 and someone will write an offer for $45,000. The seller isn't going to take it.'"

"She quickly added, however: 'There are deals to be had mainly because there are so many properties.'"

"Many REO homes are purchased by investors, noted agent Ray Doster, a foreclosure specialist at ReMax Preferred Associates, Toledo. Often, these are cash sales. Bank sellers usually adjust the price of a home every 30 days. On a property that hasn't sold after six months, 'somebody is probably looking at a pretty good price,' Mr. Doster said."

Memphis Sales Almost Equal To Defaults

2007-03-02T12:54:00.000-08:00

The Memphis Business Journal from Tennessee. "The old adage that if you give someone enough rope, he'll hang himself seems to be behind the high rate of foreclosures in the Memphis area, according to the results of an online survey."

"A recent story published in Memphis Business Journal found that there was one foreclosure for every 1.06 homes sold in 2006 in the Memphis MSA. Specifically, there were 19,738 homes sold in 2006, and there were 18,155 residential foreclosures last year."

"MBJ asked its online readers to pick a reason for the high rate of foreclosures. The survey, which provides an unscientific snapshot of reader opinion, received 202 votes. Most respondents, 59 percent, blamed the foreclosures on creative home financing that is aimed at marginal homebuyers, while 39 voters (19 percent) put the blame squarely on the shoulders of uneducated homebuyers."

"A smaller number of respondents, 8 percent, blamed unethical mortgage brokers. Another 5 percent of voters said the economy is to blame for the number of foreclosures. And 6 percent of voters said something else was to blame."

"Comments left by voters included the following: 'Creative financing is bad, but these people need to be able to 'live within their means.' Too often they are allowed to purchase more than they can afford.'"

"'Too many financially uneducated people have been caught up in these creative financing schemes then been talked into refinancing and taking out what meager equity they had built up.'"

"Too Much Credit" In Minnesota

2007-03-01T10:41:00.000-08:00

The Winona Daily News reports from Minnesota. "Last year, Winona County had 42 home foreclosures. The county is on track to have that many by spring this year. There have been 10 already this year with another 20 pending, putting the county on pace for a record increase, said County Recorder Bob Bambenek."

"The county is poised to see 'drastic changes,' Bambenek told the county Board of Commissioners in a real estate market update Tuesday night."

"The trend, largely a result of too much credit, isn’t unique to the area, or even the state, which saw a 46 percent increase in foreclosures between 2005 and 2006 and recorded 738 new ones in January, according to RealtyTrac."

"In Fillmore County, foreclosures jumped 33 percent over that same period. In Houston County, they doubled. 'It’s really scary,' said Houston County Recorder Beverly Bauer. 'A lot of people in the last few years have extended themselves very deeply.'"

"Bambenek said that of the foreclosures his office has handled this year, both completed and pending, several are associated with Internet lending companies. Some of those companies, which often deal in giving subprime loans to people with poor credit, have high interest rates and use overly complicated formulas to mask fees and other charges."

"Bauer also said she’s seen an increase in recent years of mortgages from outside lenders, which she said she’s 'leery about.' 'People have done online mortgages and all of a sudden had problems,' she said. 'They try to contact those people, huge corporations, and don’t get to talk to a real person. They come here and say, 'What can we do?' There isn’t much we can do besides giving them a copy of their foreclosure.'"

"Minnesota Attorney General Lori Swanson has suggested a series of bills to reform lending practices, some of which will be introduced in the Legislature in the coming weeks. Her agenda includes criminal penalties for those who consciously provide 'grossly unsuitable' loans, banning prepayment penalties, and requiring lenders to verify that borrowers can repay a loan."

Interview With An Auctioneer

2007-02-28T14:25:00.000-08:00

The Houston Chronicle interviews an auction veteran. "Ron Laird is not a fast talker and doesn't use a gavel much during his work. But he's auctioned off thousands of properties in Houston and across Texas since he got into the business nearly 25 years ago."

"Q: What types of properties are best suited for selling at auction? A: Properties that have high demand are going to get your best competitive bidding. Fully leased up, income-producing properties do extremely well at auction and will maximize the sales price."

"That's just the opposite of what brokers say. They say it has to be someplace way out in the middle of nowhere where there's no market at all. We've auctioned those properties. The more isolated they are, the more they need the auction method because we market on such a big basis."

"Properties that make sense in the traditional market of real estate make better sense at an auction. I've been trying to tell people that for years, but I don't think I've made many converts among the real estate brokers."

"Q: What types of preparations need to be done before an auction from both the buying and selling ends of a transaction? A: From a seller's end, properties sold at auction are sold on an 'as is, where is' basis.'

"There's no due diligence after you arrive at the sales price. We make full disclosure of all due diligence prior to the sale. Whether it be environmental reports, title reports, surveys, all that's provided to the buyer upfront in order to give that buyer a better comfort level bidding at auction because there's no contingencies."

"From a buyer's standpoint, he needs to thoroughly investigate all aspects of a property and review the due diligence that's provided. Maybe do some of his own. In an auction contract, there's only two blanks: the name of the buyer and the sales price. Therefore, we have a 100 percent closing ratio. We don't have deals fall through."

"Q: Can you identify any trends or changes you've seen in the business of property auctions? A: One of the things that is changing is handling more and more higher-end properties. Most of our residential properties are priced at $600,000 up to the millions of dollars. That's a new trend for Texas and for Houston. It's done all the time on the East Coast and West Coast."

"Q: How many people usually attend an auction? A: I've had 80 or 90 people show up for one property. I don't want 80 or 90 people."

"You send out 10,000 brochures. You advertise this property to a million people. What you're looking for is three or four bidders. You will arrive at market value, maybe more. It's not unusual to have 20 to 30 people show up. Shortly after the bidding starts, you're down to three or four serious people."

"We usually publish a minimum reserve price right in our brochure. That eliminated all the people who thought they were going to come out and buy a $1 million house for $50,000."

"In a real estate auction, you don't use that bid calling like those cow sellers. Everybody can understand where the bid is, what we're asking for, because the majority of people never have been to an auction. Am I going to scratch my nose and end up with a property? No, it's not going to happen."

"It's Easy To Walk Away"

2007-02-26T11:40:00.000-08:00

The Dayton Daily News reports from Ohio. "More than 20 residential properties in the region are slated for the auction block in the coming weeks, as the nation's largest auction firm of foreclosed properties makes it's way to Dayton. Dallas-headquartered Hudson & Marshall's is planning an Ohio tour in early March, in which the company is slated to auction off 186 properties on behalf of several national lenders."

"The firm will be in Fairborn on March 6 to auction off local properties valued between $5,000 and $250,0000 located in Middletown, Dayton, Springboro and Fairborn."

"Benefits in the auction process exist for both prospective buyers and lenders, said Erica Brown of the National Auctioneers Association. Unlike trustee's and sheriff's sales, real estate auctions typically allow potential buyers to inspect properties beforehand."

"For the lenders, she added, the chances of landing a truer market value for the property is increased because of the competitive bidding process. Additionally, sellers can decline the final bid, if they choose."

"'With auctions, you also have a specific time and date in which the home is going to be sold, unlike the traditional selling of real estate where the home can be on the market for seven or eight months,' Brown said."

The Saginaw News from Michigan. "On Bewick, where the average state equalized value, SEV, of a home is $33,000, it's easy to assume anyone who can afford a house on Five Oaks can keep up with his or her mortgage. On Five Oaks, where the average SEV is $180,000, it's easy to assume a home on Bewick is a comparative cakewalk to pay off."

"Real estate listings tell a different story. Bewick and Five Oaks are small streets each with fewer than 35 homes. On both streets, three of those homes have gone into foreclosure, listings from RealtyTrac, indicate."

"The number of foreclosures in Saginaw County more than doubled last year, to 1,326 from 530 in 2005, RealtyTrac statistics indicate. Bewick and Five Oaks demonstrate that the high rate of foreclosures is a distinction not unique to the two contrasting residential neighborhoods."

"The consequences are more clear: blight, widespread displacement of families and a drag on a housing market that can't afford any more hits."

"Residents at risk of losing their homes for failing to pay property taxes crowded into the Saginaw County treasurer's office this month to try to negotiate a deadline extension. 'The room was completely full,' Treasurer Marvin Hare said."

"Carl E. Young still has his one-story on Bewick, barely. He rounded up payments on his 2004 taxes in the last few weeks, banking on a big income tax refund to cover part of a debt that quickly accumulates late fees."

"'By the time you get to pay it off, you're in trouble. If you owe $700, that's up to $1,000, and then every month it's another $20, $20, $20,' said Young. 'Then you're at $1,300. If you couldn't pay $700, how are you going to pay $1,300?'"

"Young's mother, Lonnie, wasn't so lucky. Her landlords lost the house where she lived next door to her son while she was in the hospital recovering from a stroke last month, Young said. When the family brought her home last week, they found a note from the bank giving her 10 days to move"

"The only good news was that she had plenty of empty houses to choose from, Young said. His sister found a 'miracle' rental on Nebraska with an option to buy, and the bank gave Lonnie Young a few extra weeks to move. 'Isn't that cool?' Young said. 'They were so nice.'"

"Young's worry now is the new liability next door. 'It's not gonna sell,' he said. He pointed to a home a few doors down, empty for the past two or three years. The original asking price of $42,000 was a laugh, he said. County property records show no house on Bewick selling for more than $28,000."

"'Any time a foreclosure exists within any given street, it's a negative influence on the remaining property owners,' said appraiser Ronald C. Reimers of Saginaw. 'The houses are normally already trashed. I have yet to see a foreclosure you could turn around and sell without doing more work on it. As that property remains vacant, generally it isn't maintained. The longer it sits, the more negative an impact it's going to have on surrounding houses and lower their value.'"

"The foreclosure spike likely comes out of a perfect storm of financial factors, said Rich Bernthal, mortgage loan originator with Citizens Bank in Saginaw. 'Some of these people went into these adjustable-type-rate loans that are now coming up for adjustment, and the adjusted rate is higher than original,' Bernthal said. 'The combination of two, if they have a job loss and an adjustable rate doubling their mortgage, that's just too much.'"

"The sudden increase might have to do with interest trends about five years ago that made adjustable-rate mortgages more attractive next to a standard, 30-year fixed-rate mortgage. 'Right now there's very little spread, but five to six years ago, there was a big spread,' Bernthal said."

"'It relates back to if a person doesn't have any bank account and is able to move into a house that has zero down payment, or where the seller will give the money to buy that house so it qualifies as a down payment,' Reimers said. 'If they have a problem, if they're suffering bad economic times, it's easy for them to walk away. If a person has no equity in a house, they can just get up and move to an area where they get a job and let the house go back to the bank.'"

"Massive Backlog" In Denver

2007-02-22T11:12:00.000-08:00

The Rocky Mountain News reports from Colorado. "Hundreds of foreclosures in Denver are on hold because of a massive backlog in the Clerk and Recorder's Office, putting lenders in a 'precarious position' and forcing the city to hire more help. On Wednesday, 661 foreclosure packets, which are supposed to be recorded within 10 days, were more than two weeks past due, according to an internal report obtained by the Rocky Mountain News."

"The problem is so bad that employees are working weekends to catch up and fielding urgent pleas from law firms handling foreclosures. 'I'm desperate!' starts off one e-mail to the clerk and recorder. 'I have a (Department of Housing and Urban Development) title package that has to be sent out tomorrow.'"

"Interim Clerk and Recorder Stephanie O'Malley said she inherited the problem when she was appointed to the post Jan. 9 by Mayor John Hickenlooper. 'The only thing I could do was say, 'I need to get more people in here to help move this process along,' and that is what I've done,' she said."

"O'Malley, who is running for the seat in May, said there are two factors contributing to the backlog. First, foreclosures in Denver have tripled since 2002."

"The other factor delaying Denver foreclosures points to former Clerk and Recorder Wayne Vaden, who resigned in the wake of the disastrous Nov. 7 election. While in office, Vaden approved the purchase of a $143,500 software program that requires employees to manually transfer data from about 2,500 older but active foreclosures into the new system."

"'My staff has been held captive in having to migrate data physically from that old system to the new system and be attentive to new packets,' O'Malley said. 'It is a lot of work.'"

"Rhonda Stewart, a deputy public trustee, said it used to take 10 minutes to process a foreclosure. With the new software, it now takes about 30 minutes, she said."

"Metro-area law firms that handle foreclosures and do business with the city either declined to comment or did not return calls. But in e-mails obtained by the Rocky, it is clear the backlog has put them under pressure. 'I know HUD could refuse title if we don't get it to them,' states another e-mail."

"HUD requires that all documentation, including the original or certified copy of a deed, be submitted within 45 days of the request for deed recording."

"O'Malley said the backlog 'doesn't bode well for the community.' 'When you just have these properties sitting there dormant, from a community standpoint, that's not a good thing,' she said."

"The delay also hurts business. 'If you have a piece of property out there that's (on hold), the lender is put in precarious position because now they're sitting on a piece of property of which they're not getting any revenues,' O'Malley said. 'There's no payment on the mortgage,' she said. And so their goal, of course, is to move the property so that they can get a return on their investment."

Credit Union In Danger Of Insolvency

2007-02-21T07:29:00.000-08:00

The Ann Arbor News reports from Michigan. "A federal agency announced Monday it has assumed control of operations at Ann Arbor-based Huron River Area Credit Union. Regulators from the National Credit Union Administration), the independent federal agency that charters and supervises federal credit unions has taken over the credit union's management, placing it in conservatorship."

"'We found it's been operating in an unsafe and unsound manner and is in imminent danger of insolvency,' said Kathy Fagan, spokesperson for the Michigan Office of Financial and Insurance Services. 'This was something that came up suddenly.'"

"A credit union is typically placed into conservatorship when its loan or investment portfolios are judged by regulators as too risky, putting the institution's viability in danger, said David Adams, chief executive officer of a trade association that represents credit unions, including Huron River."

"'Most often regulators are identifying problems well in advance of it being a crisis and I suspect that's what's happened here,' said Adams."

"According to its Web site, the credit union serves people working primarily in engineering or scientific fields in southeast Michigan and has branches in Howell, Brighton, Center Line, Auburn Hills, Chelsea and Ann Arbor."

"Sreedhar Bharath, a professor of finance at University of Michigan's Ross School of Business, speculated the move may be due to the actual or anticipated future foreclosures due to the area's recent job losses. He also suggested the move may be an attempt keep customers, including other financial institutions, from panicking and withdrawing their money."

"'Home lending in Michigan in this climate is a risky bet. They may be being cautious and taking action even before bad things are happening,' he said. 'My guess is you might see more of this happening in the future. Foreclosure rates are up in Michigan.'"

Defaults Grow In Northeast Denver

2007-02-17T14:40:00.000-08:00

The Rocky Mountain News reports from Colorado. "Foreclosures in Denver since 2003 will log a fivefold increase by the end of the year, a trend that is tearing apart neighborhoods throughout the city. A new city-funded report that tracked the swelling number of foreclosed homes found that once a neighborhood has several foreclosures, it quickly multiplies."

"Vacant and abandoned houses drive down surrounding property values, hurting schools that depend on property taxes and can attract transients and criminals. Neighborhood complaints about yards overgrown with weeds and filled with trash correlate exactly with areas plagued by foreclosures."

"Nowhere is the impact of foreclosures more evident than in northeast Denver. 'I would say on some blocks, but not every block, in Montbello, 25 percent of the homes are in foreclosure,' said -Realtor Phil Heter, who specializes in selling foreclosed homes. 'The same thing happened to Montbello in the '80s, with all of the HUD foreclosures."

"Heter has about 120 distressed properties to sell, double what he had a year ago. On one block in northeast Denver's Montbello, he has three homes he is selling for a lender, and other brokers are listing a few more across the street."

"In 2006, a record 19,425 real estate foreclosures were filed in the seven-county Denver area. That's up from about 9,000 in 2003."

"Realtors Carolin Sandberg and Sarah Hayes are in the process of selling a house in Green Valley Ranch in a short-sale. For this type of sale, the property doesn't go through the entire foreclosure process, even though the borrower is behind on mortgage payments. Instead, the lender accepts less than the amount of the loan."

"The loan is for about $170,000, but Sandberg and Hayes are listing it for about $165,000. The bank is paying the closing costs, legal fees and commissions, and the move to an apartment for the family."

"City Councilman Rick Garcia, who is co-chairman of the Foreclosure Task Force, said questionable loans are to blame. 'It does appear that the growing number of foreclosures, in part, are being driven by folks who got involved perhaps in riskier mortgage products than they understood,' Garcia said."

"What's Changed Is That There Are No Buyers"

2007-02-15T06:00:00.000-08:00

The Westborough News reports from Massachusetts. "The dramatic rise in foreclosures across Massachusetts in 2006 did not spare Westborough. Driven by plunging housing prices, petitions to foreclose on town properties nearly tripled from 2005, according to a report. The report said mortgage lenders filed 30 foreclosure petitions on Westborough homebuyers in Massachusetts Land Court last year, compared with 11 in 2005. The total number of foreclosures in Worcester County increased 75 percent to 2,987."

"The numbers for the town and county mirrored record-breaking foreclosure figures across the state. Last week Boston-based real estate publisher The Warren Group reported a 70 percent increase in Massachusetts’s foreclosures in 2006. The report attributed the increase in large part to a 6 percent drop in the median price of a single family home."

"Tim Warren, CEO of the Warren Group, said the housing slump had a direct impact on why so many homeowners defaulted on their mortgages. 'The rapidly rising market we’ve had for the last 12 years or so covers up a lot of sins,' Warren said. 'When people lost their jobs or couldn’t make payments, they could refinance and take out the extra equity they needed. Now with prices dropping they can’t do that.'"

"The Warren Group report said although the median price of homes in Westborough rose slightly in 2006, the number of homes sold dropped to its lowest level since 1991. Median sale prices for single family homes in December 2006 were down 14 percent from December 2005."

"Warren said many homeowners’ problems have been compounded by the recent rise in interest rates. The monthly payments for some mortgages signed with low introductory 'teaser rates' are now going up. 'These numbers give a sense of a bad experience for a lot of homebuyers,' Warren said. 'Some people have gotten in too deeply and don’t have enough of a cushion.'"

"Jay Cox, owner of Commonwealth Mortgage Lending in Westborough, said in recent weeks some lenders in the area had stopped giving loans to borrowers with mediocre credit scores. They had also started reducing the number of interest only and no money down mortgages."

"Judith Pfeffer, vice president of Westborough Bank, said while her bank’s lending practices are largely unchanged, the number of people buying houses has dropped noticeably. 'What’s changed is that there are no buyers. It is extremely slow,' Pfeffer said. 'It started in the latter part of last year and has gotten worse in the last month.'"

Defaults Jump In Lowell, Mass.

2007-02-13T14:57:00.000-08:00

Lowell Deeds reports from Massachusetts. "From February 1st to the 12th, a period of just eight business days, we recorded 13 foreclosure deeds. For the same eight day period in 2006, there were only 2 foreclosure deeds and the same was true for 2005."

"For 2007 to date, there have been a total of 31 foreclosure deeds recorded. Of those, 20 have been for properties in Lowell, 7 in Billerica and one each in Chelmsford and Dracut. This number is considerably higher than that seen in 2006 (12) and 2005 (5)."

"Here are the number of foreclosure deeds recorded between January 1 and February 12 of the years indicated: 1991 - 57; 1992 - 70; 1993 - 97; 1994 - 74; 1995 - 45; 1996 - 47; 1997 - 43; 1998 - 27; 1999 - 15."

"What can we tell from these stats? First, it’s not as bad now as it could be. But also that once it gets bad, it tends to stay that way for a group of years - 5 or more if the 1990s are any guide."

Bulk Sales Planned In New York

2007-02-12T11:06:00.000-08:00

The Democrat & Chronicle reports form New York. "Roughly one-third of the tax foreclosure properties recently listed for sale at a city auction were in the 14621 neighborhood in northeast Rochester. So Joan Roby-Davison was concerned when the city this month proposed a bulk sale pilot program, allowing investors to buy more than the current limit of three city-owned properties at one time."

"Many of the foreclosed properties are among the 165 properties to be included in the pilot. And most if not all those properties are in the crescent, a 7.5-square-mile swath of impoverished and problem-plagued neighborhoods that wraps around downtown's perimeter from the northeast to the southwest."

"'We already have a concentration of these poverty and rental units,' said Roby-Davison, executive director of Group 14621 Community Association Inc. Only 5 percent of houses sold at auction end up as owner-occupied homes, and she said the pilot program appears unlikely to improve that figure."

"Mayor Robert Duffy pitched the bulk sale idea as a way to maintain if not increase the inventory of properties on the tax rolls."

"And the pilot program gives the city more control over the potential buyers. Unlike participants in normal auctions, potential buyers must pre-qualify to bid on properties, demonstrating the financial and organizational ability and know-how to take on multiple properties. Winning bidders cannot own any tax-delinquent property in the city or any property with code violations. They must put down a sizable deposit and complete any needed repairs within 12 months of closing."

"'One of the concerns we do have is being able to control the out-of-town interest in our properties, especially those the city is selling directly,' said Robert Barrows, director of housing and project development for the city."

"Last year, one in every five bidders at the city's tax foreclosure auction was from out of town. That ratio increased to one in four this year, officials said. City officials said properties owned by out-of-town landlords are more likely to have problems than those with local owners."

"Rochester has one of the nation's most unbalanced housing stocks; rentals comprise 60 percent of occupied units."

Defaults 15 - 20% Of Memphis' For-Sale Inventory

2007-02-09T13:06:00.000-08:00

WREG Memphis reports from Tennessee. "Lenders' greed and borrowers' mistakes are breeding an epidemic of home foreclosures in Shelby County and Tennessee. Mortgage sources tell 3 On Your Side lenders promising loans under the prime interest rate with 100 percent financing and no money down are luring folks with bad credit or no credit into homes they cannot afford."

"They suck borrowers in, only to hit them six months later with adjustable rates that send their notes into orbit, with high pre-payment penalties that prevent the homebuyers from refinancing. The result is a Memphis housing market where 15 to 20 percent of the homes for sale are foreclosures."

"'(Lenders) should be underwriting those loans based on the worst-case scenario in terms of having that adjustable rate go up,' says Corky Neale, research and innovation specialist for the RISE Foundation, a non-profit that helps people in debt become credit-worthy and own their own homes. 'If the lender didn't consider their ability to repay as a part of underwriting that loan, then they get into really hot water when that interest rate bumps up.'"

"Memphis Daily News, the publisher of Shelby County's property records and the county's preeminent tracker of home foreclosures, conducted a study of foreclosure trends in 12 Shelby County zip codes over the last two years. It determined that Frayser's 38127 set a record pace for foreclosure notices: 962 in 2006."

"The Daily News says that zipcode also leads the county in bankruptcies. Cordova's 38016 holds the most startling trend: a 128 percent increase in foreclosure sales from '04 to '06."

"'The strength of hot markets like Cordova's is made possible, to some degree, by spreading the net wider to accommodate people who may not be 100 percent financially ready to own their own homes,' says David Yawn, associate publisher of Memphis Daily News."

"Broker/listing agent Walter Dunn markets foreclosures for 65 banks. He has seven foreclosures for sale in Cordova's Riverwood subdivision alone. He says one of the homes is 4,600-square feet. The couple who 'bought' it got in under a 'cash for keys' program, where they put just $750 down to get into the house. But they lost the house when they couldn't hold the note."

"'That's like putting up a deposit, and the notes are like renting, and the least little thing that happens, you're gone,' says Dunn. '(They) get in under these teaser rates, then all of a sudden, the note goes up $500-$600 a month.'"

"3 On Your Side talked to 11 'sub-prime' lenders who offer loans like these in Shelby County. Every one of them refused our requests for on-camera interviews. One of them, Fieldstone Mortgage, accepted our request, set an appointment, then stood us up when we arrived. Another lender, on the condition that she would not be identified, told us, 'Everyone's being greedy. Some lenders are not disclosing (terms and conditions of the loans) or counseling borrowers. If everyone had perfect credit (in Shelby County), we would have a lot of renters.'"

"Memphis lender Lisa Reid is the president of the Tennessee Mortgage Bankers Association. She says the state's predatory lending law requires lenders to disclose loan terms/conditions and to counsel borrowers on their credit-worthiness. They must put both in writing and make them available to the borrower."

"'It's unfortunate, though, sometimes if they don't take our advice, they go down the street, and someone will get them into a home one way or the other,' Reid says."

"'They'll look at that and go, 'You set them up to begin with. They had no way they could have made this payment,' she says. 'There's criminal liability, and there are civil penalties that go along with it.'"

Opportunities At Three Stages

2007-02-07T11:46:00.000-08:00

The Press Enterprise reports from California. "Mortgage defaults reported to have doubled in a year in Riverside and San Bernardino counties are enticing bargain hunters to the foreclosure market. Professional investors say they are spotting more novices at foreclosure auctions, and real estate agents are fielding calls from clients demanding foreclosure properties."

"But they warn families who believe an upswing in defaults and foreclosures is synonymous with affordable housing that, so far, deals are not easy to find. 'It's not that you can't get a good deal. But you have to be very, very cautious,' said Jennifer Harrison, a professional bidder from Moreno Valley who works for an investment firm."

"Here's why: In a softening housing market, owners of homes in default often owe as much or more than the house is worth. That means once the home is sold and the loan repaid, there is little profit left for investors."

"And those with experience from previous housing downturns say foreclosures as yet are not voluminous enough to prompt lenders to give large discounts on foreclosed properties. But with foreclosures expected to continue increasing, they add that in six months to a year that could change."

"Kurt De Meire, owner of a foreclosure tracking service, outlines buyer opportunities at three stages: the nearly four months following a notice of default when owners can sell to avoid foreclosure, the foreclosure auction on the courthouse steps, and after the auction when lenders market homes that received no bids."

"In the months after a default notice is filed, particularly as the foreclosure auction approaches, homeowners in financial distress who have some equity may cut a deal to sell their home rather than lose both the house and their credit rating."

"'There are potential deals because you have a motivated seller with a time-frame problem,' said Bruce Norris, owner of a Riverside investment firm. If a property is overencumbered with debt, he said, an alternative is a 'short sale,' which means obtaining the agreement of the mortgage lender to accept a sales price that is less than what is owed."

"Rick Stallworth, a Moreno Valley investor, said many homeowners facing foreclosure are in denial. They won't discuss a sale when he knocks on their doors. 'I sent 100 letters to people in default and got no response. I offered to bring them current (on their mortgages), take over their payments and give them a couple thousand dollars for moving expenses,' Stallworth added."

"Lenders will permit a homeowner to sell a house for less than the mortgage only for hardship, such as a loss of a job or death in the family, said Lee Medlin, an agent in Corona. It generally takes time for a lender to agree to a below-market sales price, he said. 'But for people willing to go through the hassle, that is how you get a good deal,' Medlin added."

"Buying a house at a foreclosure auction is widely considered the most risky approach for an amateur wanting to buy a family home. 'Avoid trustee sales at all costs. That is a pros' game,' said Norris."

"Unlike those who buy a home from an occupant or lender, those who buy homes at auction have no right to inspection nor insurance to guarantee a clear title. Also they must come to the auction with a cashier's check for the total price."

"De Meire cautions that before bidding on a home at trustee auctions, it is vital to know which lender is foreclosing. If a second or third mortgage holder is auctioning a home at a starting price that seems a steal, that's because the buyer will still have to pay off the senior lenders."

"Norris said investment companies have teams of employees who check the titles for the properties they are interested in. 'You need to make no mistakes' at a trustee auction, he said."

"Right now, there are so few good deals at trustee auctions that many days only a handful of bidders show up. Greg Norris, Bruce Norris's son who has been making the rounds of auctions, said today a bidder is lucky to buy a house at 20 percent below market. By contrast, Bruce Norris said during the economic downturn of the late 1990s, 'I bought hundreds of properties from lenders at less than 50 percent of value.'"

"With the rate of defaults rising, Greg Norris predicted lenders will be overwhelmed with foreclosures and start discounting significantly in six months to a year."

"De Meire said for lack of bidders, more than half of foreclosed homes are returning to lenders after the auctions. He said the best time to negotiate with a lender for a discount is the day a house is rejected at the foreclosure auction, and before it is assigned to a broker."

"Medlin said it is a myth that bank-owned houses are always the cheapest. Sometimes people with troubles like divorce or a job change are more motivated to cut prices to sell quickly, he said. 'I get offers every day that are ridiculous because they think the banks will give away the farm and they won't,' said Mike Novak-Smith, a broker-agent in Moreno Valley who specializes in selling homes for banks."

"He said, however, that banks, unlike some private owners who are emotionally attached to their homes, will lower their price to follow a declining market."

North Carolina Defaults Up "Three-Fold"

2007-02-05T11:52:00.000-08:00

The Kinston Free Press reports from North Carolina. "Ten years ago, Carolyn Craig, a real estate broker in Kinston showed no foreclosed homes to prospective buyers. Last year, she had 19 on her for-sale list. Her experience mirrors the trend in Lenoir County, where foreclosures jumped from 80 in 1997 to 270 last year. In Lenoir County, the need for housing after the flood of 1999, and the willingness of some lenders to take advantage of an emergency, put people into newer, bigger and more costly homes than the ones they replaced.

"'Certain lenders will pay off your credit cards to help you reduce your debt and increase your credit score in order to get you in a home,' Craig said. 'It wouldn't be so bad, but because the credit card isn't closed, it provides people with a false sense of money they have, and they are more likely than not to go out and spend it.'"

"Attorney George Jenkins agreed. 'I can't give you specific numbers, but yes, we did have significantly more lenders here, especially after Hurricane Floyd, that are no longer here,' Jenkins said. 'Some of these lenders were responsible for placing people in homes they couldn't afford.'"

"The chief mechanism for getting at-risk buyers into a home, however, is the sub-prime loan. It is also the easiest way for homeowners to get into trouble with lenders, experts say. They blame such lending practices for the dramatic jump in foreclosures, up three-fold in the state in the past eight years."

"Margaret Wood, mortgage lender at First South Bank in Kinston, said interest rates on these loans typically range about 2 percent higher than traditional loans, but can go higher."

"'I often tell people that they really need to use the two or three years they have before their interest rates increase to pay down their credit cards and get their finances under control, to use this short period of time they have as an opportunity,' she said."

County Defaults Already Exceed 2006: Kentucky

2007-02-01T12:28:00.000-08:00

The State Journal reports from Kentucky. "Local housing foreclosures after only one month are on track to exceed the number of properties sold in foreclosure last year, says Charles Jones, master commissioner of Franklin Circuit Court. 'Franklin County had about 90 foreclosure auctions last year, and already we could end up exceeding that by 25 percent,' Jones said."

"'Even though Ive not held the position more than four months, my prior knowledge leads me to think the numbers are certainly increasing,' Jones said."

"However, Jones said large out-of-state mortgage companies and not local lenders like Farmers Bank or First Federal file most of the foreclosure cases. A local bank executive, who asked not to be identified because of the sensitive nature of the information, agreed and said its because local banks have strict lending guidelines."

"'If you look at the legal notices in the Friday night papers you wont see Whitaker or First Federal or Farmers,' he told The State Journal. 'Most of it is Chase-Manhattan or Wells Fargo.'"

"The national mortgage brokers will charge up to $9,000 in closing fees, but offer a lower interest rate, the executive said. They also will lend up to 120 percent of the appraised value of the home, he said. But local banks will rarely lend more than 85 percent for a mortgage."

"'We like to see our customers put money into the deal because they have equity as soon as they close on the loan,' the executive said. The trend is the same across the nation, said Mike Fratantoni, senior economist for the Mortgage Bankers Association. The association conducts a quarterly survey that indicates the number of loans in foreclosure grew slightly across the country, from 0.98 percent to 1.05 percent."

"'The most significant increase was in sub-prime and adjustable-rate loans,' Fratantoni said."

"At the end of 2006, only about 2 percent of all fixed-rate prime loans were in foreclosure nationwide according to the report, but almost 10 percent of all sub-prime fixed-rate loans were in foreclosure. About 3 percent of all prime adjustable-rate loans were in foreclosure according to the Mortgage Bankers Association. More than 13 percent of sub-prime adjustable-rate loans were in foreclosure as well, according to the report."

"Kentucky also experienced a slight increase and is significantly above the national average with a foreclosure rate of 1.78 percent for all types of loans."

"Jones said foreclosures dont always end in an auction. He said the process is costly because there a lot of fees and commissions to pay along the way, and sometimes, the house sells for less than the appraised value. 'In many instances, the mortgage company will not be made whole on what is owed,' Jones said."

"If it does come to an auction, Jones said 90 percent of the properties are bought back by the lending agency. Occasionally, real-estate speculators or developers will buy a property, but Jones said it is a big risk because they cant inspect the home. Two citizens are required to appraise it, but neither Jones nor the buyers can actually visit or inspect the property."

"'They are buying it essentially on a windshield inspection of the property,' Jones said."

Defaults "Skyrocket" In NY, MA

2007-01-29T08:49:00.000-08:00

The Boston Globe. "Petitions to foreclose on Massachusetts homeowners rose nearly 70 percent in 2006, and the number of distressed properties that went to auction increased 46 percent, a report said today."

"In Suffolk County, which includes Boston, petitions to foreclose jumped 79 percent in 2006, the report said. In 2006, mortgage lenders filed 18,926 petitions to foreclose, compared with 11,155 in 2005, the Warren Group said; lenders announced 6,729 foreclosure auctions in 2006, versus 4,620 in 2005."

"'As housing prices decline, people who had borrowed 90, 95, or even 100 percent of the value of their home now find themselves owing more than their homes are worth,' the Warren Group's chief executive, Timothy Warren Jr., said."

The New York Post. "The number of New Yorkers forced into foreclosure is skyrocketing, especially in Nassau County, where foreclosures have jumped a stunning 82 percent in the past year. According to RealtyTrac, the number of city foreclosures went up 15 percent in 2006 from the year before, while Long Island jumped 55 percent. The national rate surged by 42 percent."

"'People in general are living outside of their means,' said wealth manager J.J. Burns. 'This generation wants everything now. People are not saving for the rainy day.'"

"In the city, Staten Island led the pack with a 47 percent rise in foreclosures, usually initiated by banks when homeowners can't pay their mortgages. Foreclosures in Brooklyn and The Bronx rose about 25 percent each and Manhattan saw a 4 percent increase."

"Queens was the only borough that saw a drop, with an 8 percent decrease in foreclosures. Foreclosure increases are higher in the suburbs - Westchester jumped 44 percent, Suffolk County shot up 32 percent and Nassau County rose a shocking 82 percent."

An Auction In Colorado

2007-01-28T09:04:00.000-08:00

The Pueblo Chieftain reports from Colorado. "Temperatures hovered below the freezing mark and snow continued to cover the ground. But the inclement weather conditions didn't deter a handful of people who could be seen stomping around in the snow outside a vacant house in Pueblo’s Highland Park neighborhood on a recent Tuesday afternoon."

"What they had in common was the desire to get a terrific deal on the foreclosed house on Lynnwood Lane that was being auctioned by an Oklahoma-based auctioneer. By 4 p.m., the group had grown to include several dozen. Many waited in the relative warmth of their vehicles."

"Potential bidders were invited to fill out a form and exchange it for a bidding card. The door was opened to the house for the long-awaited inspection. Inside, the 1950s-style tract home appeared the polar opposite of 'staged.' Cold, bare and unadorned, its 1,064 square feet were laid out in a classic FHA floor plan with three bedrooms, two bathrooms and a spot in the kitchen for the clothes washer."

"Snippets of overheard conversation suggested similar questions and observations from the many lookers: 'How old is the heater?' 'What’s with the painted paneling on the living room ceiling?' 'See the water marks on the wall.' People continued to arrive and elbow their way through the house."

"Within the hour, people were asked to the carport area where the auction would begin. Forty bidders congregated on the cement slab in the fading light and freezing temperatures. 'Any questions?' the auctioneer asked."

"One bidder asked if the buyer was responsible for any previous liens or taxes. 'No, title would be free of any liens or taxes,' was the reply."

"Terms and conditions were reviewed. The successful purchaser would be responsible for a $5,000 deposit or 10 percent of the purchase price whichever was greater. Closing costs would include standard expenses such as title insurance and recording fees. The buyer also would pay a $3,000 service fee to get the home out of foreclosure. Closing would take place within 30 days."

"The bidding started and quickly ran up to $70,000. Two of the bidders competed until finally the house sold for $77,000 to Bryan Wilson. Wilson, who also owns 12 other rentals, said he’s not sure if he will rent it or flip it."

"The seller, Bank of New York Trust CO NA, has seven days to accept the high bid. According to the auctioneer, 95 percent of the bids are accepted. Assuming that Wilson’s bid is ultimately accepted, he will pay $77,000, plus closing costs for a home that sold in March of 2004 for $107,000, according to Pueblo County assessor records."

"A second property on Main Street in Rye auctioned quickly for $56,000 and the auction was over."

California Defaults "No Surprise"

2007-01-25T16:05:00.000-08:00

The Press Democrat reports from California. "The number of default notices lenders sent to Sonoma County homeowners more than doubled in the fourth quarter of 2006, compared with the same period in 2005, and was the highest in nearly a decade, according to DataQuick."

"'We're in the midst of an adjusting market right now, and we won't know until spring or summer if this is ominous or not,' said Marshall Prentice, DataQuick's president."

"Just over half of the loans that went into default statewide during the fourth quarter were made between January 2005 and February 2006. So those loans were made to buyers purchasing homes around the time the market was peaking in summer 2005, DataQuick analyst John Karevoll said."

"'Just because of the higher-priced homes, that is the product that is in demand in order to qualify,' said Colleen Oller, real estate loan officer for Exchange Bank. 'But now we're seeing a downside to that, especially if they're needing to sell. The value of those homes is not what they paid for them and they've got no equity built up.'"

The Contra Costa Times. "In the last quarter of 2006, about 1,000 more mortgage default notices than last year went out to Contra Costa County homeowners, a 179 percent increase."

"An additional 700 showed up in Alameda County (a 157 percent uptick) and 500 more (or 163 percent) went out in Solano County, signaling the highest rate of foreclosure activity ever for Solano County and the highest since 1998 for Alameda County, DataQuick reported."

"Ed Jeffry, a loan consultant in Walnut Creek said that in the past few months four lenders he has used have stopped providing home loans. The quality of applicants has deteriorated, and he is referring many of his clients to bankruptcy attorneys, he said."

"Many succumbed to the lure of easy home equity or low payments. 'For so long people have relied on the advice of the guy who used to sell shoes at Payless who now sells loans,' Jeffry said."

The Santa Cruz Sentinel. "Mortgage defaults in Santa Cruz County jumped 36 percent last year, part of a statewide trend. 'It's crazy out there,' said Liese Varenkamp, publisher of the Santa Cruz Record. In the first two weeks of the new year, 16 foreclosures have already taken place, up from two last year."

"'Look at that difference,' Varenkamp said, adding the 80 percent of the homes go back to the bank that made the loan."

"The 37,273 default notices mailed between October and December was up 145 percent compared to 15,196 in the same period in 2005. Most of the default notices were sent to Southern California addresses, with homeowners in Los Angeles County receiving the largest number of notices."

"About 32 percent of homeowners who had previously been in default lost their homes to foreclosure in the fourth quarter, up from 8 percent in the same quarter of 2005, DataQuick said."

"The number of foreclosed homes last quarter was 6,078, compared with 874 in the fourth quarter of 2005 and 3,435 in the third quarter of 2006, the firm said."

Inside Bay Area. "In San Joaquin County, default notices hit a record high. Some 1,293 homeowners received default notices, compared with 464 a year earlier. San Joaquin County's increase in foreclosure notices is partly linked to speculators who are finding it difficult to sell homes in today's slowing market, said broker Renee Becker."

"'The market has turned, so maybe (speculators) have not been able to sell the homes,' she said. 'They are stuck with them.'"

The Sacramento Bee. "Hundreds of Sacramento-area homeowners who missed their first mortgage payments early last year fueled the region's most dramatic rise in home foreclosures since the 1990s during the fourth quarter of 2006."

"The 865 fourth-quarter foreclosures compare to 63 the same time last year in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. 'What's the old saying? 'The chickens are coming home to roost,' said John Arvanitis, president of Sunrise Vista Mortgage Corp."

The Merced Sun Star. "In Merced County, homeowners received 466 notices last quarter, up from 118. That's a rise of 294 percent, second highest in the state. Lenders also warned a record 909 Stanislaus County homeowners in the last three months of 2006 that they are at risk of foreclosure. That's an increase of 471 percent, highest in the state."

"Rick Seymour, House Mart branch manager in Merced, said the rush among homeowners to buy into the housing market before they were priced out is a major cause of the foreclosure rate doubling. 'The problem was that the market turned,' he said. 'When they paid top dollar, and then turn around and it's $30, $40, $50,000 less, they aren't going to be too motivated to make those payments.'"

"'If you are making $5,000 a month, you don't want a $3,000-a-month house payment,' he said. 'I knew three years ago that this would happen based on the people who were buying.'"

"Merced County Association of Realtors President Scott Oliver said many Bay Area families already stretched thin invested in Merced County homes and took out questionable loans. 'I believe that a lot of loans went into place that should not have happened,' he said. 'It was inevitable that with the market exploding the way it did that you'd see a high rate of foreclosure.'"

The Fresno Bee. "Foreclosures in Fresno County more than quadrupled in the fourth quarter from last year, a sign, analysts say, that a day of reckoning is coming for thousands of home buyers who used unconventional loans."

"'This is just the first wave,' said Shannon Martin of Mid-State Realty in Fresno. 'Within the next few years, you'll see more foreclosures coming.'"

"Locally, real estate agents and credit counselors have seen huge jumps in foreclosure-related activity. Martin, who specializes in selling foreclosed properties for lenders, said such listings he handles climbed from 10 to 70 in the past six months."

"'People who bought their houses within the last year or two with zero down are at the high-water mark,' he said. 'As the values have decreased, they owe more than the house is worth.'"

"Martin said he has foreclosure listings in all price ranges and geographic areas. 'I've got them from $640,000 to $120,000. They are all over,' he said."

"'It's no surprise," said Martha Lucey, VP of a nonprofit credit counseling organization in Fresno. The number of phone calls to her housing credit counselors has increased threefold over the past six months."

"Many of those families are first-time home buyers who have little or no equity in their houses. Many should have thought twice about buying the house they did, she said. 'It is wishful thinking,' she said."

The Daily News. "In Los Angeles County, 7,445 property owners received default notices, up an annual 113.9 percent. In Ventura County, 794 property owners received notices, up an annual 204.2 percent."

"Most of the loans that went into default in the 2006 fourth quarter were made from January 2005 to February 2006. The median age for the loans was 15 months. On primary mortgages, homeowners were a median five months behind on their payments when the lender started the default process. And they owed a median $10,555 on a median $324,000 mortgage."

"'It's what we expected,' said Jack Kyser, vice president and chief economist at the Los Angeles County Economic Development Corp."

The Press Enterprise. "Riverside County saw a nearly 182 percent increase in mortgage defaults compared to the fourth quarter of 2005, while San Bernardino County saw a year-to-year increase of 140 percent. In the fourth quarter, Riverside County recorded 4,631 notices of default. San Bernardino County recorded 3,538 notices."

"Nancy Herrera, a broker-associate with Corona Mortgage, said she gets requests from people who want to refinance, but who have borrowed to the hilt against the properties and don't have enough equity."

"Herrera said in recent years lenders relaxed qualifying guidelines to the point that people with relatively low credit scores could buy a house with 100 percent financing and without documenting their income. She said although lenders have recently begun to tighten their requirements, 'people are still buying homes they can't afford.'"

"A nonprofit credit-counseling agency in Riverside handled 10,000 calls about mortgage defaults in 2006, said the organization's president Dianne Wilkman. 'And the phone is ringing off the hook this year,' Wilkman said. Wilkman said nontraditional loans, especially those that originated last year, are driving much of the activity."

Over 5,000 NOD's In Riverside Co.: Q4 2006

2007-01-23T15:22:00.000-08:00

The North County Times in California. "Foreclosure activity in Riverside County continued to rise sharply in the last three months of 2006, reflecting overstretched buyers and flattening real estate values, according to a research firm."

"Lenders sent out 5,329 notices of default to home buyers who had fallen behind on their mortgages, up from 1,835 in the fourth quarter of 2005. The notices of default sent out in the fourth quarter include several dozen that went to participants in an unusual real estate investment group centered in Murrieta, according to signed declarations filed last week as part of a civil lawsuit."

"The plaintiffs allege that a Murrieta mortgage brokerage suckered them into buying multiple homes with inflated mortgages and then pocketed the difference in cash, in some cases about 20 percent of the legitimate value of the homes, according to court documents."

"The suit names 11 plaintiffs who said they each bought between two and 10 homes under the arrangement. Many of the plaintiffs have defaulted on multiple mortgages."

ARMs Put Some "Over The Edge" in Arkansas

2007-01-18T14:40:00.000-08:00

The Times Record reports from Arkansas. "The number of foreclosures in Benton, Washington, Sebastian and Crawford counties rose in the fourth quarter of 2006, according to a report. Those larger populated counties, excluding Washington, also had an increase in foreclosures for 2006 compared to 2005."

"In northwest Arkansas, where the housing market has cooled drastically since 2005, Benton County had the most foreclosures in 2006 with 905, a 16.3 percent increase compared to 778 the year prior. For the fourth quarter, it also had the most foreclosures with 285."

"Todd White, senior vice president of Arvest Mortgage Co. in Lowell, said many factors other than adjustable rate mortgages and subprime loans lead to foreclosures. 'While that may very well have some effect, I think it’s a combination of a housing market that has cooled, short term rates and an economy that has been positive but flat,' he said."

"People who took out an adjustable rate mortgage in late 2003 when rates were low are now seeing their rates adjusted up, White said. 'There are certain people who live paycheck to paycheck. That extra $50 to $100 a month is enough to put them over the edge,' he said."

"Carroll County also had a rise in foreclosures, increasing 42.1 percent to 27 in 2006 from 19 in 2005. But for the fourth quarter, foreclosures dropped 60 percent."

"South of the tunnel, Crawford County had the largest increase in foreclosures, jumping 33.7 percent from 312 in 2005 to 417 last year. The county also had a rise in the fourth quarter, increasing 23 percent over the third quarter."

"Sebastian County’s slow economic growth hasn’t kept it immune from defaulting on mortgages. There were 811 foreclosures in 2006, 12 percent higher than 724 than the previous year. In the fourth quarter, it had 181 foreclosures, a 21 percent jump from 150 in the third."

"In the Fort Smith MSA, Sequoyah County in Oklahoma had a 72.7 percent increase from 11 foreclosures to 19 last year. Crawford County had the largest number of households in foreclosure in the fourth quarter at 0.52 percent — one foreclosure for every 192 households."

Low Income Areas Hit Hardest: N. Carolina

2007-01-15T06:28:00.000-08:00

The Charlotte Observer reports from North Carolina. "Last year, more N.C. families were threatened with losing their homes through foreclosure than ever before, a new state report shows. Hardest hit were homeowners in Mecklenburg and surrounding counties, where foreclosure filings are among the state's highest and rising fast."

"North Carolina recorded more than 45,500 foreclosure filings in 2006, according to the Administrative Office of the Courts in Raleigh. Mecklenburg County had the highest concentration; 35 per 1,000 homeowners, according to the Observer's analysis. Gaston County was fifth with 27. The N.C. average was 19."

"Foreclosure filings are growing faster in most Charlotte-area counties. They're up 13 percent in Mecklenburg, compared with 6 percent statewide. Experts estimate that about half of foreclosure filings result in owners losing their homes. In Mecklenburg since 2003, it has been at least 40 percent annually."

"Why are foreclosures rising across the state, and especially in the Charlotte area? Certainly, more homeowners are straining their budgets tighter than ever to purchase homes. But growing numbers of new mortgage loans help them do it, experts say, especially high-interest and adjustable-rate subprime mortgages."

"The subprime industry was designed for borrowers with credit problems, and it offers mortgage loans to consumers who couldn't qualify for them in the past. But subprime loans carry high interest rates and are more likely to foreclose. 'These are one-way, exploding mortgages,' says Mal Maynard, director of the Financial Protection Law Center in Wilmington. 'They never drop below the original rate; they can only go up.'"

"Al Ripley, of the nonprofit N.C. Justice Center in Raleigh, says his group typically sees lower-income home buyers whose payments rise suddenly from about $900 a month to about $1,250. 'That's a big jump for most people -- especially when they were barely able to afford the $900-a-month payment to begin with,' Ripley says."

"Subprime loans make up 14 percent of all mortgage loans in Mecklenburg, according to the most recent data. In Wake, the state's second-largest county, it's about 10 percent. Wake, where Raleigh is located, also has far fewer foreclosure filings, 19 per 1,000 homeowners compared with Mecklenburg's 35."

"Another factor may be Mecklenburg's higher concentration of lower-priced homes, which make up a majority of foreclosures. Forty-one percent of Mecklenburg's housing is valued under $150,000, compared with 33 percent of Wake County's, according to the U.S. Census."

"The Observer recently examined Mecklenburg foreclosures from 2003 through early 2006. The findings include: More than 80 percent of foreclosures involve homes valued at $150,000 or less. Most foreclosures cluster on the county's west, north and east sides, where houses and land often carry lower price tags."

"'My business just keeps coming,' says Tony Smith, a Charlotte real estate broker who specializes in foreclosures. 'My best clients are still sending me new assignments every week.'"

Bankruptcies To Grow: Poll

2007-01-12T14:13:00.000-08:00

The Kansas City Star has this report. "A majority of respondents to a poll by the American Bankruptcy Institute expect an upsurge in bankruptcies among middle-size private and family businesses this year."

"According to the poll by the national organization, which monitors bankruptcies, 27 percent of respondents 'agreed strongly' and 44 percent 'somewhat agreed' that middle-market business bankruptcies will substantially increase."

"The poll is significant because business bankruptcies were down in 2006, due in part to a stronger economy, lower interest rates and an improving market."

"The decline last year led to speculation of when, if at all, the next restructuring 'boom' would occur, bankruptcy institute officials said in a statement released today."

Pre-Auction Negotiating

2007-01-11T14:57:00.000-08:00

Inman News reports on the protocol for buying foreclosures. "DEAR BOB: A house is about to go to foreclosure auction sale. I am interested in buying it. Can I make a cash offer directly to the foreclosing lender before the property is offered at the public auction? --Cathy T."

"DEAR CATHY: Negotiating with the foreclosing lender before the foreclosure auction is usually a waste of time. Until the auction takes place, the lender has no authority to sell the property to you or anyone else except at the required public auction sale."

"If no bidders show up at the foreclosure auction, then the lender owns the property (subject to any redemption right of the defaulting borrower) and can make a deal with you. That's the time to contact the lender, immediately after the public auction."

40B Red Tape In Massachusetts

2007-01-11T06:13:00.000-08:00

The Independent reports from Massachusetts. "The Charles Ridge condominium complex is going on the auction block on Jan. 24. The 17.5-acre site off Beaverbrook Road is in the hands of T.D. Banknorth, holder of the mortgage on the property. The development was granted a comprehensive permit in September 2005, according to Board of Appeals Chairman Sherrill Gould, but racked up permitting problems and delays that may have caused the financial setback."

"Minutes from the Appeals Board from last August reveal substantial problems. Plans for the multi-unit buildings deviated materially from what was approved, and developers changed hands without seeking a new comprehensive permit."

"Under the state’s 40B law, a developer can build housing that may not meet local zoning standards so long as some of the units are offered at 'affordable' prices. Another feature of the law is that the plan that is granted a comprehensive permit must not be altered in any meaningful way without re-approval."

"But Gould said the management team changed at Charles Ridge, and changes were made to the units that caused the board to rethink its decision. She said the new team moved walls and amended the floor plans in a manner that was 'inconsistent' with what was approved."

"'The new management team was not as familiar with the 40B process, and changes were made to plans that were inconsistent with the comprehensive permit,' said Gould."

"For instance, she said the firewall between units was moved 'without permission of the board,' which put safety at risk. Other issues the ZBA found include a septic system that was 'marginal at best,' and walls that had obstructed Fire Chief Steven Carter from performing an inspection."

"Building Inspector Roland Bernier said Charles Ridge includes 43 condominium units in 10 buildings. In order to maintain its 40B status, 25 percent, or 11 of the 43 units must be for low-income residents. Bernier said seven units have been approved, or 'released for occupancy.'"

"'One building is complete, and a second one is very close to receiving its certificate of occupancy,' said Bernier. 'The rest are in various stages, but it will stay a 40B development even if it changes hands.' He said two buildings were set aside for over-55 residents."

"Bernier said if there is a new owner, that entity must be approved by the Board of Appeals and state."

"Gould said an independent engineer was hired to insure the units’ safety, but the added costs and delay most likely affected the project’s marketability. Stepping away from her role as appeals board member, Gould said as a lawyer, foreclosure means that the owner of the mortgage defaulted on payments to the bank that lent the money, and the bank has taken back the project for which the mortgage was given."

"She said in that case, the lender, or bank, will 'make an effort' to recoup as much of the cost as it can."

"Unrealistic Appraisals" In North Carolina

2007-01-08T09:03:00.000-08:00

The Winston Salem Journal reports from North Carolina. "The pace of foreclosures in Forsyth County slowed in 2006 but still rose by 2.8 percent, according to data released yesterday by the N.C. Administrative Office of the Courts. There were 1,864 foreclosed homes in Forsyth last year, compared with 1,813 in 2005 and 1,592 in 2004."

"By comparison, Guilford County's foreclosure rate rose 7.2percent, Wake County's was up 6.8percent, Durham County's was up 8.4 percent, and Mecklenburg County's was up 12.9 percent. Forsyth's foreclosure rate was up 174 percent from 1998, when there were 680 foreclosures."

"'But overall, what we need to focus on is that Forsyth's rate, like most counties in North Carolina, has gotten dramatically worse in the past eight years,' said Al Ripley, the director of the Consumer Action Network for the N.C. Justice Center."

"The three main causes of foreclosure, according to analysts, are typically divorce, health crisis or job loss. There also has been an increase in foreclosures connected to lenders and potential homebuyers pursuing increasingly creative, and risky, mortgage strategies."

"Local officials said they believe that more consumer education on mortgage loans, along with programs aimed at assisting homeowners who have lost their jobs, have contributed to the slowdown in foreclosures. 'I will tell you that the calls are coming in fast and furious here for foreclosure-prevention counseling, a trend we expect to continue as the ARMs adjust upward,' said Kathy Banks, an official with Consumer Credit Counseling Service of Forsyth County Inc."

"Banks said that Forsyth has been fortunate not to have had entire neighborhoods go into foreclosure, which has been the case in some neighborhoods in the Charlotte area. She said that the main detrimental factors in those neighborhoods have been 'unrealistically high appraisals of homes' and mortgage products that result in homes being financed at more than 100 percent of market value."

"In Northwest North Carolina, Davie County had the highest rate of increase in foreclosures at 28 percent - from 137 homes in 2005 to 176 homes in 2006."

Insurance Or Extortion In Florida?

2007-01-05T07:10:00.000-08:00

The Venice Gondolier reports from Florida. "Norm Finn, who is retired, has lived at 181 Cocoanut St. in downtown Englewood for 10 years. His wife, Marilyn, owned the home 20 years before that. More than a decade ago, the home's $40,000 mortgage was paid off. In ensuing years, it has been refinanced."

"Finn has a $242,900 mortgage through Bank of America. Sarasota County assesses the homesteaded lot at $260,000. His tax valuation increased from $13,000 to $19,000 in 2006. He has replaced windows, walls, and put a new roof on the home. 'I've got about $200,000 in improvements in this place,' he said."

"Finn carried enough insurance through a national provider to cover the mortgage. That's all he thought he needed. That's all he wanted, especially since rates increased twice within a year."

"In September, Finn saw a man on his front lawn, 'measuring off my property.' The man was conducting a 'home care review' for Finn's insurer. It included questions about furnishings and interior amenities."

"Finn didn't think much of it until a letter arrived in October telling him his policy was being rewritten to cover the home's '100 percent total replacement value.' Instead of covering the $242,900 mortgage, it would now cover the home's $304,866 replacement value."

"Starting Jan. 1, Finn will pay $4,560 a year for insurance, or about $400 monthly -- nearly $100 a month more than what he now forks out. And that's not all."

"Apparently, Finn's carrier 'passed me off to Citizens,' the state's 'insurer of last resort.'"

"The whole thing angers Finn. 'It's extortion,' he said, noting his insurance agent said if he didn't renew the rewritten policy 'the bank can foreclose on me' because he wouldn't have insurance."

"But when Finn went to the bank, it told him, 'I only need to be insured for what my mortgage is.' Finn said he is confused and uncertain if he's required to insure at replacement value."

"The short answer, said Dave Dignam at Englewood's Key Agency, is 'yes.' 'That's correct,' he said. 'We don't insure mortgages, we insure houses.'"

"Dignam, an independent broker, said Finn is typical of many homeowners ensnared in the state's insurance crisis. 'He's taking a double hit,' he said. 'The premium is twice as much, and they are also getting the increase of the house structure price.'"

"While he is unfamiliar with Finn's specifics, Dignam said the situation seems common. A bank and an insurance company have different priorities, he said."

"'The bank is trying to protect its interests,' the mortgage, Dignam said. 'The insurance company's obligation is to protect the replacement value of the home.' He said it's difficult to explain the difference to people, even to Realtors and mortgage brokers."

"'I tell them, 'For you, it's a date. For me, it's a marriage,' Dignam said. Insurance clients 'are with me. If it's done wrong, I have to deal with it.'"

"Replacement value is assessed differently than tax and market values, he said. 'You are basically reproducing, on paper, the cost to replace the house, broken down to actual costs at today's current building code,' Dignam said."

"Finn is among Floridians hammered by this 'double whammy' because some insurers, overwhelmed by hurricane claims in 2004-05, are leaving the state. 'We've had to rewrite a tremendous amount of people,' Dignam said. 'In reviewing these policies, we found a large amount of clients were underinsured. It is a complicated thing to explain to a client.'"

"'It's a bad scene. We can't have any more companies leave the state or we'll be left just with Citizens,' he said. 'It's a mess and there is no silver-bullet answer out there,' Dignam said. 'They can't keep raising rates like this,' Finn said. 'People can't afford it.'"

300 Homes To Be Auctioned In Detroit

2007-01-03T11:03:00.000-08:00

A Press Release from Michigan. "In a wilting real estate market with foreclosures rising, buyers are now in the driver's seat of home sales and can find even greater bargains in pursuing property through auction. Hudson & Marshall, the country's largest auction firm of foreclosed property, will auction over 300 Detroit homes on January the 20th and 21st. All the foreclosed homes are owned by banks or financial lenders and come guaranteed with title insurance."

"'Real estate auctions accelerate the selling process, making it a win-win proposition for everyone. Motivated buyers and sellers come together in a competitive bidding environment that allows a property's true market value to emerge,' said Dave Webb, principal, Hudson & Marshall."

"The Detroit metropolitan area continues to experience a surge in foreclosures. According to RealtyTrac®, in November 2006 Detroit posted the nation's second highest foreclosure rate for the second month in a row with 3,333 properties entering some stage of foreclosure."

"Foreclosed property doesn't mean distressed property, it means a homeowner defaulted on his mortgage and the lender took back possession of the property. Because lenders are eager to sell foreclosed homes quickly to avoid the high carrying costs of bad debt, buyers can typically purchase foreclosed homes below their market value at auctions."

"All properties are sold 'as is' and interested buyers are encouraged to visit all properties beforehand. Buyers can view an entire listing of properties online. Winning bidders will be required to write a check for 5% of the purchase price or $2,500, whichever is greater."

"Making the buying process even easier, buyers may also purchase property online prior to auction. This hybrid online program allows buyers to submit bids through the company's website and receive an immediate response from sellers, usually within 24 hours. Over 30% of homes sell through the Bid Now program before auction, giving sellers another great vehicle to move properties quickly from the market."

Upside-Down A "No-Win Situation" In Texas

2007-01-02T05:57:00.000-08:00

The Statesman from Texas. "Travis County home foreclosure postings for the first month of 2007 will rise slightly in today's auction, to 300 from 295 in December, according to a report. Compared with 278 postings in January 2006, however, foreclosures will be up 8 percent."

"Still, the postings are far lower than those filed in the January auctions for 2004 and 2005. The January '07 postings are 13 percent lower than the 345 filed two years ago and about 20 percent lower than the 373 record three years ago."

"Many of the upcoming residential foreclosure auctions 'had an upside-down loan-to-value ratio,' said George Roddy, president of the Addison-based firm that tracks foreclosures. 'Simply put, the homeowner has borrowed more money on the home than it is worth,' he said. 'So, generally, the homeowner cannot sell the property for the amount that he or she owes on it, and the lender has invested or loaned more than the property is worth. This creates a no-win situation.'"

"The highest percentage of upside-down postings in the Austin area for January will be in Bastrop County. 30 percent of the postings filed for January are upside-down. Upside-down postings make up 21 percent of the notices filed in Travis County, 21 percent in Williamson County and 23 percent in Hays County."

"Of the 20 counties tracked by Foreclosure Listings Service Inc. in North and Central Texas, Travis ranked sixth in total commercial and residential postings for 2006, with 3,713. That's a 6 percent decline from 2005. Leading the state was Dallas County, with 19,184 postings, followed by Tarrant, 12,763; Bexar, 8,837; Collin, 4,477; and Denton, 4,181. Williamson County, with 2,435 postings, ranked seventh, just behind Travis."

How Many Go All The Way?

2006-12-29T14:49:00.000-08:00

The Atlanta Journal Constitution reports from Georgia. "The jump in the number of people whose home mortgages are foreclosed on and its potential impact on struggling families and local economies is news. The headlines are especially big in Georgia, which now has the nation's third-highest rate of foreclosure."

"But of the thousands of Georgians each month who land in the line to the courthouse steps, many manage to slip out of the queue. The question that is not often asked or answered is: How many go all the way?"

"There's no central repository for the data that would answer that question definitively, but estimates hover at less than half."

"The number matters. Foreclosures take homeowners' biggest investments and taint their credit ratings; they cost lenders time and money. If foreclosures are truly epidemic, they also threaten the real estate market and the economy. They undermine a community's home values and eat away at buying power that underpins the economy."

"More than 7,000 properties were listed in Georgia for foreclosure in November, up 60 percent from a year earlier, according to RealtyTrac. Some say the increase in foreclosures is far less grievous, Equity Depot of Alpharetta says it is closer to a 15 percent increase, but everyone agrees that foreclosures are rising."

"But those numbers represent homeowners who enter foreclosure, not those who lose their homes. 'To my knowledge, there is not any national or even state system of tracking the filings that actually go to sale,' said Marty Stone, vice president of foreclosure operations at Atlanta-based McCalla Raymer, which represents national lenders. 'But I think that it can be no more than 40 to 50 percent.'"

"McCalla Raymer's number carries a lot of weight: The firm handles more than half the foreclosures in metro Atlanta, Stone said."

"Some lawyers say the percentage of properties actually sold is lower, a few say it is closer to 20 percent or 25 percent. None put the number as high as one-half, although it might occasionally spike that high."

"Philip A. Hasty of Atlanta law firm Shapiro and Swertfeger said the percentage of listed properties handled by his firm that were sold has swung from a low of 30 percent in November 2005 to a high of 53 percent in June. 'I'd say it averages somewhere between one-third and 40 percent that make it all the way through to a sale,' he said."

"The rising pool of foreclosed homes costs lenders money in lost payments, in lawyers' fees and in lower sales prices in what is increasingly a buyers' market. So they are more willing to dicker with struggling homeowners."

"That means the percentage of houses that go all the way through to a foreclosure sale is probably decreasing, even though the total number is going up, Hasty said."

"If 40 percent of those filings ended in sales, that would mean 2,822 families lost their homes."

"On the road to foreclosure, there are several possible exits. Among them are filing for bankruptcy, which stops the process and protects homeownership; coming up with the overdue mortgage payments, or paying off the mortgage. Another route is working out a payment plan meant to gradually get the borrower back in the lender's good graces."

"With foreclosures mounting, lenders are increasingly willing to make such deals, said Hasty."

"Among reasons for the growing number of foreclosures is that home mortgages have become a lot easier to get. Not only are terms more generous, as with interest-only and adjustable-rate loans, for example, but qualifications for buyers are less stringent. Lenders often have not required savings or down payments. They have made a record number of 'subprime' loans to borrowers with spotty credit histories."

"'Subprime lenders are selling the most dangerous loans to the most vulnerable borrowers,' said Michael Calhoun, president of the Center for Responsible Lending, a Durham, N.C.-based nonprofit research and advocacy group. 'About 80 percent of all subprime loans are adjustable-rate mortgages.'"

"Borrowers in those circumstances tend to be less able to negotiate deals or find ways to get up to date on delinquent payments, so they account for many of the properties that do go all the way through the process. A study by the Center for Responsible Lending shows that the rate of foreclosures for subprime loans is roughly 10 times as high as for the rest of the market, Calhoun said."

"Based on the center's survey, a prediction is possible for the subprime loans of the past two years, he said. 'One out of three will ultimately lose their home.'"

"There Is A Tsunami Coming": Colorado

2006-12-26T05:59:00.000-08:00

The Denver Post reports from Colorado. "A crew of nine movers swarms over a Lakewood townhome, quickly clearing out three floors and piling the contents in the alley. Luke Beuthel, a field inspector with a property management company called Mercury Alliance, opens drawers in the kitchen one by one, snapping digital photos to show they are empty."

"Nearby, locksmith Bill Grasmick hurries to replace a deadbolt on the front door. In under an hour, the house is emptied and physical control gained by Wells Fargo, holder of the delinquent mortgage. 'There is no packing involved,' says mover Art Fields. 'This is one-way: easy and quick.'"

"For most of 2006, Colorado has had the highest foreclosure rate in the country, a grim tally of mortgage defaults behind which lie thousands of stories of personal heartache. But money can be made even from misery, and this year, profits from foreclosures have soared."

"There are lawyers who initiate foreclosures, property managers who oversee troubled homes, service providers who maintain them and listing agents and auctioneers who sell them. There are also investors who buy and flip the foreclosed properties and Realtors who specialize in 'short sales,' or selling a home before it is lost in foreclosure."

"This Lakewood eviction generates about $1,000 for Field's moving crew and the locksmith. The property management firm won't get paid until it sells the house, but then it will reap 2.2 percent of the home's resale price, roughly $3,600. Others will take bites of the foreclosure profits as well. About 1 percent, or $1,650, will go to Premiere Asset Services, Wells Fargo's property management arm. The Realtor who provides a buyer will get about 2.8 percent, or $4,620."

"Tom Di Mercurio, owner of Denver- based Mercury Alliance, makes no apologies for his line of work. 'There is an entire cottage industry around the foreclosure business,' said Di Mercurio, who has managed thousands of lender-owned properties in a 35-year career. Mercury Alliance's business is up 150 percent this year, he said."

"The work is time-consuming and the margins slimmer than conventional real estate sales. Watching over empty homes for months isn't easy work."

"Di Mercurio said he has seen it all: Homes abandoned with unfinished meals on the table; a home swept clean and the key and an apology note placed neatly on the table; most frequently, homes left in utter disrepair."

"Some angry former owners have stripped properties of appliances, cabinets, even light fixtures. More vindictive owners have been known to plug drains with concrete and turn on the water. Vandals and vagrants will target abandoned homes."

"But with more than 18,000 foreclosures expected this year - a record for the metro area, servicing foreclosures is where the action is in real estate these days. The sooner foreclosed homes are resold and occupied by people who will care for them, the better for nearby home owners and for the metro area's ailing real estate market, Di Mercurio said."

"Metro Denver has the largest concentration of third-party REO property managers of any city, a legacy of a real estate downturn, and a wave of foreclosures, that accompanied the oil bust of the late 1980s. The current foreclosure epidemic traces more to overbuilding and aggressive lending than to fundamental economic problems, but the industry spawned by the earlier deluge of defaults is coming on strong."

"'We are hiring like crazy. We expect to get busier in 2007,' said David McCarthy, president and chief executive of Integrated Asset Services, one of the country's largest independent REO property managers. The firm of 116 workers has hired 42 people this year and plans to add another 30 in the first quarter of 2007. The number of foreclosed homes it has sold has jumped from about 3,000 last year to 4,000 this year."

"Head counts are up about 25 percent at Fidelity National Asset Management Solutions, another big REO property management firm, president Chad Neel said. Fidelity Solutions sells about 1,000 foreclosed properties a month, a pace about 40 percent ahead of last year, he said."

"'I am turning away business,' Neel said. 'Every client we have says there is a tsunami coming.'"

"When REO property managers can't sell a home, they call on auctioneers like Dallas-based Hudson & Marshall. Co-owner David Webb was in Denver just before Thanksgiving, auctioning 90 homes in a ballroom sale. Webb plans to be back in late February with another batch of homes."

"As more foreclosures flood the market and the inventory of unsold homes rises, auctions will increasingly become an important way to match buyers and sellers. 'They are telling us Colorado is very heavily hit and we will be active here for the next year and a half,' Webb said."

Filings Up Almost 700% In Birmingham

2006-12-24T08:41:00.000-08:00

The Birmingham News reports from Alabama. "In a cramped hotel ballroom on an early December night, an auction company employee revved up bidders considering offers on 10 homes lost by owners who couldn't keep up payments. Auctions like the one staged by Texas-based Hudson & Marshall are becoming more common in Birmingham, where foreclosure filings spiked nearly 700 percent in September, and across Alabama, which saw an expansion in foreclosure activity that outpaced every other state in November."

"Some industry experts say mortgage defaults in Alabama could continue to climb as strapped homeowners wrestle with climbing interest rates and bankruptcy laws offer fewer protections."

"'I don't think the foreclosure problem has even come to a head yet,' Birmingham bankruptcy lawyer Matthew Dunaway said. 'It's still building. Over the next five years we'll see how bad those mortgage products are and the bad decisions that people made.'"

"Foreclosure activity in Alabama, from the first notice of default to sale at auction, increased nearly 466 percent in November compared to the same month a year ago. That was the fastest rate of growth in the nation, according to RealtyTrac. The 690 homes that were in some stage of foreclosure in November represented a 33 percent increase from October."

"The first wave of three-year and five-year adjustable-rate mortgages was due to reset in September, RealtyTracs Rick Sharga said. 'Not coincidentally, that's when we saw a large spike in foreclosures.'"

"In September, 354 homes in Jefferson County were in some stage of foreclosure, up 669 percent from September 2005, when only 46 homes were in some stage of default, according to RealtyTrac. In Shelby County 18 homes were in foreclosure in September, up from three a year earlier."

"In a recent survey by the Association of Community Organizations for Reform Now, Birmingham tied with Detroit for ninth place on a list of metro areas at risk for what the group called 'rate adjustment shock' for consumers with adjustable-rate mortgages due to be reset at higher interest rates this year."

"Some Birmingham lawyers say a 2005 bankruptcy law, which makes it harder for homeowners to delay foreclosure, also is fueling the rise."

"Dunaway said many of his clients have been in their homes for only about four or five years. They put little or no money down or they drained their equity with a second mortgage. The homes being lost aren't all in economically struggling areas, either, he said. 'Many of my Chapter 13 foreclosure cases are in Greystone and in Hoover, homes valued at $500,000 or even $1 million,' he said."

"The real estate boom that came to a halt this year plays a role in the number of mortgages in default. Home values were rising and home prices were climbing. Once a home went on the market, people expected to receive multiple offers."

"Many homeowners were so convinced the market would stay strong that they took out second mortgages to pay off credit cards or take vacations. Then suddenly they found themselves saddled, in a slow market, with a high mortgage payment on a home that isn't worth as much as it once was. 'At some point the music stops and some people don't have chairs,' Dunaway said."

"The selection of homes at auctions like the one held earlier this month in Hoover continues to broaden. Vestavia Hills resident Mitchell Baldwin, who owns 38 rental properties, is a regular at the auctions and says more higher-end homes are ending up on the auction block and more people are showing up to bid on them."

"Baldwin, who was at the auction at the Hoover hotel, watched quietly as bidders offered nearly full value for the homes on the block. A two-bedroom, one-bath house on 42nd Street in Birmingham with an asking price of $55,900 sold for $40,000. A home on Northwest Third Street with an asking price of $89,000 sold for $79,500. 'You've got to do your due diligence,' he said."

"Baldwin said he believes the buyers weren't experienced bidders and got caught up in the excitement of an auction, with the company's hawkers hounding them to make a bid amid the auctioneer's quickfire cadence. Baldwin made a few bids, but he left without a new property."

"'You have to stick to your guns on how much you're going to pay for a house,' he said. 'Sometimes the best deals are the ones you don't get.'"

Record Defaults In Victoria, Australia

2006-12-23T13:10:00.000-08:00

The Herald Sun reports from Australia. "More than 50 Victorian homeowners a week are being dragged before the courts for falling behind on their loan repayments. The figure has hit an all-time high in the five months to November, with experts warning it will get worse with crippling post-Christmas debt."

"The number of Victorians being pushed out of their homes because they can't pay mortgages has tripled since 2000-2001, according to court statistics. Unscrupulous lenders were hitting people in financial difficulty who used equity in their homes to refinance, the Consumer Action Law Centre's Carolyn Bond said."

"Some did not fully consider a client's ability to repay the loan and burdened them with high fees. Some people defaulted within months, she said. With personal debt running at $30 billion nationally, a major crisis could come after the Christmas credit card bills arrived, she said."

"Victorian Supreme Court figures released to the Sunday Herald Sun showed a steady increase in lenders taking court action against clients. In 2000-2001 lenders lodged 897 writs to oust home buyers, which was 2.5 applications per day. That jumped to 7.3 per day, or a total of 2689, in the 2005-2006 financial year. In the five months to November, 1112 writs were lodged, increasing the daily rate to 7.5."

"The head of the Australian Bankers' Association, David Bell, blamed non-bank lenders, which launched 70 per cent of the default legal action while lending only to 5 per cent of the market."

"Victorian Council of Social Service chief executive Cath Smith said housing affordability had doubled to six times the average annual wage in the past 10 years. Foreclosures particularly affected the outer suburbs, where the past three interest rate hikes and petrol prices were driving people to the edge, she said."

Mortgage Risk Up On Honolulu

2006-12-21T12:16:00.000-08:00

The Star Bulletin reports from Hawaii. "While mortgage risk is in decline nationwide, Honolulu is bucking the trend with a 29 percent increase in risk in October from a year earlier, according to a report released yesterday by a consumer Web site. Mortgage risk measures the likelihood that homeowners in a given area will not make mortgage payments on time."

"Honolulu, which ranked the 100th lowest in mortgage risk out of 379 metropolitan statistical areas surveyed, was among the 172 regions where the index rose, said Michael T. Ela. Honolulu's risk index was 1.56 in October as opposed to 1.21 the previous year, indicating that volatility has increased, Ela said."

"'The market risk in Honolulu is trending up. It's not a huge risk at this time, but it's notable,' Ela said. 'Consumers and investors may want to keep their eye on this market because the upward shift is an indicator that the market is turning.'"

"The report assessed the risk for thousands of Honolulu properties and averaged them to get a blended rate for the region, Ela said."

"The company looks at several components such as the volume of sales transactions, the number of foreclosures, flipping activity, appreciation and depreciation rates, property histories and other factors such as proximity to freeways and landfills or ocean views and golf courses, he said."

"Honolulu-based real estate analyst and appraiser Stephany Sofos said statistics aside, she already has seen anecdotal evidence that Oahu is on a downward cycle. 'If you read between the lines of that report, it means that we are about to start a downward cycle,' Sofos said. 'There are more pre-foreclosures going into effect and mortgage brokers are starting to see a lot more people trying to refinance out of their adjustable-rate mortgages.'"

"While Honolulu's home values are up year over year, in many local regions prices have dropped, Sofos said. 'I'm seen prices come down anywhere from 10 to 30 percent in Waianae,' she said. 'When primary and ancillary markets start dropping, that is a sign that most others will soon follow suit.'"

"There are many signs that Oahu's market is in transition, said John Riggins, owner of John Riggins Real Estate. 'We are in the process of seeing a market correction,' Riggins said. 'It's normal. After every run-up since World War II, we have seen market adjustments of approximately 10 to 15 percent off the high sales price.'"

"Greater volatility in the marketplace also impacts financial markets because it causes investors and lenders to become more cautious, Ela said. 'Several factors are at play here, one of which is that lenders are more cautious now than they were a year ago,' Ela said. 'In areas where risk is rising, it could become more difficult to get a loan or at least one with terms that are as attractive as they were in the past.'"

"In Honolulu, more buyers are being asked to prequalify for loans, Sofos said. Buyers also are likely to see more lenders asking for higher interest rates and/or larger down payments, Ela said."

"'Buyers should be more alert to local market risk conditions before buying a home. It will save them money down the line,' Ela said. On the other hand, sellers have to make sure that they list properties 'in range' of what a changing market will bear, he said."

"'Properties that are priced too high in a volatile market will sit for longer periods,' Ela said."

"Payment Shock" In New Hampshire

2006-12-19T11:37:00.000-08:00

The Concord Monitor reports from New Hampshire. "The number of people in Merrimack County losing their homes to foreclosure has gone up nearly 60 percent in the past year. According to credit and mortgage counselors, homeowners who signed up in recent years for adjustable-rate and interest-only mortgages, hoping to refinance when their rates increased, are having a hard time making their payments."

"The sluggish real estate market had made it harder for homeowners to draw equity from their property or sell to recover debt. 'Some people are apparently experiencing, for lack of a better word, payment shock,' said Dean Christon, executive director of the New Hampshire Housing Finance Authority."

"Last year, there were 56 foreclosures in Merrimack County. So far this year, there have been 89, an increase of 58.9 percent. In Concord, that number went from six foreclosures in 2005 to 16 this year."

"Forty of this year's foreclosures were on homes financed with adjustable rate mortgages that started in 2002 or later, Register of Deeds Kathi Guay said. 'Those people that got a great interest rate to begin with, now that the interest rates have changed, have run into a problem,' she said."

"Kerry York, executive director of Consumer Credit Counseling Service of New Hampshire and Vermont, said the increase in foreclosures can be attributed to many factors, not just the type of mortgage. Many of the people serviced by his agency have reached their limit on several credit cards and are facing high interest rates on those, York said. The cost of gas and home heating fuel is going up. And then their mortgage rate adjusts and their payments get bigger."

"'What was a problem six or eight months ago is now a huge problem,' he said. 'Income doesn't go up - not at that rate.'"

"James Kenney runs a website aimed at people who want to invest in foreclosed properties. He said the market for them is good. 'Since there have been so many foreclosures lately, the banks aren't really in the business of real estate, so they want to get rid of the properties quickly,' he said."

"According to his records, 418 foreclosures were posted in October, an increase of 214 percent over October 2005."

"As Is" Not What It Was

2006-12-14T06:45:00.000-08:00

A foreclosure report from the Virginia Pilot. "When Branson Barry saw the gated house off the Chesapeake Bay, he figured he could splash on a new coat of paint, lay new carpets and resell it for a profit. So he bought the foreclosed house in July for $592,000, as is. But the house is not what it was."

"After the previous owner moved out last week, Barry found the house had been gutted of everything, including the bathroom sink. Now Barry has filed a police report. He alleges that the former owner, Chauncey Hannibal caused $40,000 to $50,000 in damage and is waiting for police to decide whether to file charges."

"A police detective will determine what property belonged to whom before warrants are issued, said police spokeswoman Margie Long."

"The three-bedroom house at the corner of Shore Drive and Beech Street was not a fixer-upper. It was built for Hannibal in 1996. Then Hannibal ran into financial trouble, filed for bankruptcy twice in three years, and could not pay up. Two liens on the house had to be cleared before Barry could take possession. Once that was done, he had to evict Hannibal. In November, a judge ordered Hannibal out in 10 days, four months after the house was sold."

"Barry thinks that's when Hannibal ripped out the marble floor and the granite counter tops. 'He literally took everything but the kitchen sink,' Barry said."

"The security keypad was taken. Light fixtures that hid security cameras at the gate were missing. And so was the gate. 'The doorbell should come with the house,' Barry said."

"Inside, air vent filters, in-wall speakers, an intercom system and gas wood for the downstairs fireplace were gone. The spot where a ceiling fan used to be looked as if it had been ripped down in haste, wires and all. Upstairs, the floor of the master bathroom resembled a quarry pit, crumbled, cracked and bare. Scraped chunks of marble left exposed white tile around the tub."

"Hannibal could not be reached for comment. His phone number, listed in a 2006 bankruptcy petition, has been changed."

Leads Change In Race To The Bottom

2006-12-13T08:31:00.000-08:00

From a press release. "RealtyTrac today released its November 2006 U.S. Foreclosure Market Report, which shows that 120,334 properties nationwide entered some stage of foreclosure during the month, an increase of 4 percent from the previous month and an increase of 68 percent from November 2005. The report also shows a national foreclosure rate of one new foreclosure filing for every 961 U.S. households, the highest monthly foreclosure rate reported so far this year."

"'Defaults, auctions and bank repossessions all trended higher in November, bringing the year-to-date foreclosure total to almost 1.2 million, up 43 percent from the same 11-month period of 2005,' said James Saccacio. 'With home price appreciation slowing, and even declining in some areas of the country, homebuyers who stretched themselves financially to purchase a property don't have much equity to work with if they experience even a small bump in their mortgage rate or disruption in their income.'"

"After eight consecutive months with Colorado posting the nation's highest foreclosure rate, Nevada's foreclosure rate jumped to the top spot thanks to a 12 percent increase in foreclosure activity from the previous month. Nevada reported 2,506 properties entering some stage of foreclosure during the month, nearly triple the number reported in November 2005."

"For the fourth month in a row, Greeley, Colo., posted the highest foreclosure rate among the nation's 200-plus largest metropolitan areas. The Greeley metro area (Weld County) documented 428 properties entering some stage of foreclosure, an increase of 13 percent from the previous month and a foreclosure rate of one new foreclosure filing for every 155 households -- more than six times the national average."

"With one new foreclosure filing for every 439 households, Georgia documented the nation's third highest state foreclosure rate for the second month in a row. The state reported 7,056 properties entering some stage of foreclosure, a 2 percent increase from the previous month and a nearly 60 percent increase from November 2005."

"Other states with foreclosure rates among the nation's 10 highest were Ohio, Texas, Michigan, California, New Jersey, Indiana and Tennessee."

"California reports highest number of foreclosures for third straight month. More than 19,000 California properties entered some stage of foreclosure during November, the most of any state for the third straight month and an increase of more than 19 percent from the previous month. California foreclosure activity has more than tripled from a year ago."

"With one new foreclosure filing for every 250 households, Riverside/San Bernardino, Calif., documented the nation's third highest MSA foreclosure rate in November. The two-county metro area reported 4,747 properties entering some stage of foreclosure during the month, an increase of more than 57 percent from the previous month and 3.8 times the national average."

"Texas foreclosure activity jumped more than 40 percent in November after posting a decline in October. The increase pushed the state's foreclosure total to 13,664, the second highest total of any state."

"Florida reported the third highest foreclosure total in November. The state reported 9,362 properties entering some stage of foreclosure, up more than 5 percent from November 2005."

"Massive Increase In Filings": Massachusetts

2006-12-12T12:47:00.000-08:00

"A provider of Massachusetts foreclosure data released its November 2006 report today, revealing that foreclosure filings in Massachusetts are shattering previous records. The report shows that 2,188 foreclosures were initiated statewide during the month of October 2006, 111% more than October 2005 and 219% above 2004 levels."

"'2006 has been a very unhappy year for thousands of Massachusetts homeowners, we are seeing a massive increase in foreclosure filings,' said Jeremy Shapiro, president of ForeclosuresMass.com. 'By October 31st of 2006 every county in Massachusetts already had more foreclosure filings than the entire 2005 calendar year.'"

"October 2006 saw over 70 foreclosure filings per day (including weekends and holidays) and nearly 110 every business day. 11,493 foreclosures were filed for the entire year in 2005. So, with 2 months to go in the year we have already eclipsed 2005 totals by 3,640."

Ohio Defaults Head To Federal Court

2006-12-11T07:36:00.000-08:00

The Plain Dealer reports from Ohio. "Lawyers who do not want to wait for their foreclosure cases to wend through a swamped Cuyahoga County Common Pleas Court have jumped to an express lane in federal court. Seizing on a long-established but previously little-used option, lawyers have filed more than 350 foreclosures this year in U.S. District Court, up from eight in 2003."

"Now, all the lawyers have to do is direct prospective buyers of confiscated homes to sales that have attracted no interest."

"For a foreclosure to get into federal court, the debt must total at least $75,000 and the parties must be from at least two different states. In the modern mortgage market, out-of-state lenders are common. Most of the foreclosures are uncontested and sail through in three to six months, which is important to lawyers who are graded by lenders according to speed."

"'It is an attempt to find creative solutions on our part,' lawyer Kevin Williams said. 'We're just trying to do a good job for clients.'"

"The federal court can move faster because its foreclosure volume is much lighter than the county's backlog, which totaled 11,398 as of Oct. 6, according to the CSU study. The federal court also requires that all cases, motions and other documents be filed electronically, eliminating paper work. The federal court charges $350 to file a foreclosure; the county court fee is $475."

"While some foreclosure lawyers have found their way to federal court, buyers looking for bargain-priced homes have yet to follow. County foreclosure sales fill the Justice Center auditorium on Monday mornings. But auctions held at 12:30 p.m. the same day at the nearby federal courthouse draw only attorneys who reclaim property for mortgage holders."

"At the federal auction last week, eight properties sold in 15 minutes. In each case, the only bidder was Cleveland lawyer Cliff Babcock, standing in for Manley Deas Kochalski. He faced no competition for property in Cleveland, Bedford, Maple Heights, Oakwood and Warrensville Heights."

"Lenders' lawyers bid about the minimum, two-thirds of appraised value, but no money changes hands because the companies would be paying themselves. The lawyers would love to be outbid. 'It's an opportunity,' said Mark Dottore, one of 18 'master commissioners' who auction land for the court after having it appraised.'"

As Loans Reset, Georgia Defaults Double

2006-12-06T04:59:00.000-08:00

The Atlanta Journal Constitution reports from Florida. "Hundreds of Georgians lost their homes Tuesday. The houses, taken from debt-laden homeowners, were sold to bidders on courthouse steps statewide. Foreclosures in Georgia are up a stunning 99 percent in the past year."

"The state now has the nation's third-highest rate of foreclosures: One in every 449 households. In October, that meant 6,895 properties were in the foreclosure process."

"The taking of homes has always been brisk here because state laws are written for speed. Georgia is one of three states in which lenders can foreclose on houses in as few as 37 days. Foreclosures ramped up in recent months as once-low introductory interest rates on adjustable mortgages edged up, making monthly payments unaffordable for some homeowners."

"'We really haven't had any letup," said Ralph Goldberg, a Decatur attorney whose clients include many distressed homeowners. 'We know, toward the end of the month, people are going to be coming in. The Friday and Monday before [monthly] Foreclosure Day are always busy.'"

"The danger for the overall economy is that a rising pool of foreclosures will overflow into other segments of an already troubled real estate market. Most critically, foreclosures add to the number of homes for sale. They offer bargains to buyers, but dampen the prices other sellers might get."

"The surge of foreclosures is, in some ways, the backwash of the five-year housing wave that began washing out last year. Homeownership, construction and sales reached unprecedented levels, partly because lenders tried so hard to get people into houses. By standards of the past, many first-time purchasers were marginally qualified, with modest incomes and little in savings."

"But with creative mortgage arrangements, the buyers often were able at least to start off paying interest rates dramatically below market levels. They often avoided a down payment entirely. Atlanta has been among the nation's leaders in the percentage of borrowers taking adjustable rate or interest-only mortgages."

"'They get qualified at the teaser rate,' said attorney William J. Brennan Jr., director of the Home Defense Program Atlanta Legal Aid Society. 'Of course, they can't afford to pay when the rate goes up.'"

"Most foreclosures happen on mortgages held less than five years, according to a study last year by Harvard University's Joint Center for Housing Studies."

"Goldberg said an increase in mortgage payments can be crippling. 'There are a lot of people who seem to have mortgages that are astronomically high, and they are just being eaten up,' he said. 'You look at the money they have, and you look at the mortgage, and you think, 'How did this happen?'"

"Lenders have a powerful incentive to find and qualify borrowers, whatever their income or past. The risks are eliminated for lenders that sell the loans to companies that package thousands of loans together. Those firms figure any defaults will be offset by the vast majority of loans that are profitable."

"Buyers are willing co-conspirators. Buyers often lose their homes because they have no cushion to absorb unexpected expenses. 'We see people with the same issues over and over,' Brennan said. 'There's a death in the family, or someone is losing a job, or someone gets sick.'"

"That can mean trouble even for white-collar professionals. Phillip Newman is a mechanical designer. He bought a home in Lithonia two years ago, obtaining a mortgage that required a monthly payment of $1,260. Four months later, his company was purchased and his job eliminated."

"He was out of work for five months, then found a one-year contract job. When that ended, he scrambled for three months and in July found his current position, where he makes about 25 percent less than he had as a consultant. He fell way behind in his mortgage payments and was scheduled for foreclosure in October."

"He kept talking to the mortgage company and arranged to pay a little more each month to catch up, something that the new job makes possible. 'Hope the car doesn't break down,' he said."

"One sign of how widespread foreclosures have become is the growing willingness of lenders to negotiate with delinquent homeowners, said Herb Heitman, an Atlanta bankruptcy attorney. 'Ten years ago, they never made deals.'"

"In January, the Consumer Credit Counseling Service of Greater Atlanta assisted 450 people with financial troubles, nearly all of them dealing with the threat of foreclosure. In October, the agency counseled more than 1,000, said Susan Hunt, director of the housing program."

"'I have doubled my staff, and we still haven't met the need,' she said."

"Millions of home buyers are just coping with their first big jump in mortgage rates. 'About 40 percent of the people we talk to have a mortgage with an adjustable rate,' Hunt said. 'And that is true across the board. We have people who live in Alpharetta in great big mansions. Their adjustable rate escalates, too.'"

"By Foreclosure Day, it's too late for Consumer Credit to help, Hunt said. 'Someone will call and say, 'I am on the courthouse steps, and my house is next. What can I do?,' she said. 'And we can't do anything then.'"

Hot Markets Need Only Look To Denver

2006-12-05T09:41:00.000-08:00

The Rocky Mountain News reports from Colorado. "It's official. A record number of real estate foreclosures have been filed in the Denver area this year. In the first 11 months of 2006, public trustees in the seven-county metro area opened 17,782 foreclosures. That's 3.85 percent higher than the record set in 1988, during the oil industry bust."

"Experts say other parts of the country that recently had hot real estate markets need only look to Denver to see what's in store for them."

"A large percentage of filings are concentrated in the 'foreclosure belts' of Adams and Weld counties, north Aurora, and northeastern Denver neighborhoods such as Montbello and Green Valley Ranch."

"Today's foreclosure crisis is increasingly taking its toll on homeowners, especially with scams and fraud on the rise. 'It's like the wild, wild West out there,' said Zach Urban, a housing counseling manager for (a) nonprofit."

"Mark A. Murphy is trying to sell his house in Aurora before the lender takes it back. He has fallen four months behind on his mortgage after losing his job. 'After being out of work for a few months, it came down to paying my bills or paying my mortgage,' Murphy said."

"When he bought his home two years ago, other comparable homes in his neighborhood were selling for $235,000, he said, about $50,000 more than he paid. The four-bedroom, three-bath home, with 1,944 square feet of finished space, is on the market for $205,000."

"Ironically, Murphy bought his home out of foreclosure. 'I believe this property has been in foreclosure four times,' Murphy said."

"Urban said he is seeing an increasing number of mortgage-fraud schemes. In some cases, people are offered more than the house is worth in exchange for a 'gift' donation. The phony buyer collects the gift and never makes a mortgage payment."

"In other cases, homeowners who think they are refinancing their mortgage really are signing quitclaim deeds, so the person becomes a renter in their own home."

"The biggest culprits in the rising mortgage tide are a flat housing market and overbuilding in certain areas, such as north Interstate 25, said Boulder lender Lou Barnes. 'Our housing market went flat in early 2001, and since then, foreclosures have been rising in the foreclosure belts about 50 percent a year,' Barnes said."

"Despite what some think, foreclosures aren't being driven 100 percent by financing, he said. He noted that the Veterans Administration has been providing zero-down loans for decades, and Federal Housing Administration-insured loans only require a 3 percent down payment."

"But it's never been easier to qualify for a loan, so many people who would have been unable to buy a home previously can now buy one, he said. Despite rising foreclosures, Barnes said there has been no move to tighten borrowing requirements because the federal government wants to encourage homeownership."

"Previously hot markets such as the West Coast, Phoenix and Las Vegas now are softening. Said Barnes: 'If the national lag in these 'bubble zones' is anything like the lag we saw after the technology crash,' he predicts other cities will see an increase in the foreclosure rate similar to Denver's."

"'I think (the metro area's record foreclosures) are very significant for the rest of the country,' he said."

Defaults "Poison The Market" In Memphis

2006-12-03T10:58:00.000-08:00

The Commercial Appeal reports from Tennessee. "With interest rates rising, some homeowners locally and nationally are finding it harder to make the mortgage, and their American dreams are being foreclosed and sold to the highest bidder."

"A well-manicured family cottage in Whitehaven and an Atoka mobile home sitting on an acre of land are two of the 25 foreclosed homes that will be auctioned off by Hudson & Marshall auction company Dec. 13."

"The Memphis sale is part of an auction-circuit of more than 200 foreclosed properties in Tennessee, Georgia and Alabama. Armed with personal checks and prepared to pay at least $2,500, buyers can snatch up homes for as little as $10,000. Buyers like the auctions because many of the homes sell for less than market value and Texas-based Hudson & Marshall guarantees there are no back taxes or liens."

"Lenders resort to real estate auctions to get property off of their books quickly. With the number of default mortgages more than doubling in some parts of the country, foreclosure auctions are gaining in popularity, said Hudson & Marshall principal Dave Webb."

"An online foreclosure database ranked the Memphis metropolitan area 10th in the nation in foreclosures. In October 2005, Shelby County recorded 618 properties in some stage of foreclosure. One year later, the number of foreclosures for the same five-week period nearly tripled to 1,717. Similarly, Tipton County's number of foreclosures doubled from 17 to 40 year-over-year."

"With one foreclosure for every 144 households, the Memphis area foreclosure rate is 2.5 times higher than the national average. That statistic doesn't surprise Corky Neale who works with RISE and the Memphis Debt Collaborative. 'We've traditionally had a very high foreclosure rate,' said Neale who cited divorce, job loss and illness as traditional causes."

"'But now on top of all that we've got this adjustable rate mortgages where the rates have been going up and it looks like we haven't seen the end of rate increases and so we can anticipate that we're going to have more foreclosures,' he said."

"'It cost the public tax collections, it cost the lenders. Everybody loses with a foreclosure,' he said. 'It's almost like you get a critical mass of foreclosures then you poison the market then nobody can sell.'"

REO Market Heating Up

2006-12-01T12:24:00.000-08:00

The Wall Street Journal has this on foreclosures. "As a weak housing market nudges the foreclosure rate higher, next year is looking promising for investors in distressed real estate. So far, the U.S. housing slump hasn't produced a bonanza for such investors, but lenders stuck with foreclosed property are becoming more inclined to slash prices or sell properties through auctions, industry experts say."

"'We're all going to have to be more creative in the next 12 to 24 months' in selling foreclosed homes, says Chad Neel. Mr. Neel's company helps lenders manage and sell foreclosed homes."

"Williams & Williams Inc., a Tulsa-based auctioneer, says its sales of foreclosed homes will nearly double this year to about 5,060. CEO Dean Williams expects another near doubling of sales in 2007."

"Dallas-based Hudson & Marshall Inc. expects its auction sales of foreclosed properties to total about 4,800 this year, up 23% from 2005. David Webb, co-owner of the auction company, believes sales will rise at least 20% in 2007."

"The auction firms say their busiest auction markets recently have included Michigan, Ohio, Indiana, Pennsylvania, Texas and Colorado. 'Word on the street is that California, Florida and Arizona will also be very active in the next 12 months,' Mr. Webb says."

"In the first half of 2006, REO properties accounted for 3.1% of all U.S. home sales, up from 2.4% two years earlier, according to a study. The study found that those homes sold at a median discount of 14% to their estimated value in the first half, compared with 12.5% two years before. The discounts reflect the gap between the actual sale price for the homes and the value estimated by a computer model, which takes into account sales of comparable homes nearby and price trends."

"It has taken a while for foreclosures to mount. The housing boom of recent years reduced foreclosure rates because most people who fell behind on their loans could refinance or quickly sell their homes for at least enough to pay off the loans."

Repossesions "Record" In Arkansas

2006-11-30T10:20:00.000-08:00

The Morning News reports from Arkansas. "Area economists and bankers alike agree the housing market in Northwest Arkansas is slumping from last year's all time high. The oversupply in upper end homes, predominantly in Benton County, has been the talk for months. But another less discussed aspect of the recent market downturn is foreclosure and the opportunities that exist for potential buyers."

"Betty Galloway, broker in Springdale, said her company is listing a record number of repossessions, almost one per day, primarily because the homeowners were enticed into buying homes they couldn't afford thanks to adjustable rate mortgages and interest only loans. 'I have been in the real estate business since 1976 and I have never seen this many repos come through my office for listing,' Galloway said."

"'When you are this far into a housing boom, this type of fallout is not terribly surprising,' said Kathy Deck, associate director for the Center for Business and Economic Research at the University of Arkansas. 'We have listed several homes for local banks and they were priced to sell quickly, at about 5 to 10 percent below appraisal,' said broker Mike Price."

John Sullivan, broker in Tontitown conducts area auctions for homeowners looking to sell property quick, sometimes to prevent foreclosure. He said auctions and foreclosures do represent excellent opportunities for interested buyers."

"'We have worked with a number of homeowners who were trying to avoid losing their homes to foreclosure. We also get calls weekly from builders who want us to auction their property,' Sullivan said. 'The problem with the builders is they don't own it, the banks do.'"

"Sullivan blames the lack of equity problem on a rampant misuse of financing, particularly refinancing. He said those families who refinance and don't stop spending can soon find out they can no longer afford to live in their home. Sullivan said he rejects many auctions because homeowners don't have enough equity in the home to cover the expenses and pay off the loan."

"'We are seeing some sellers who have recent appraisals and loans higher than the real market values. Appraisals for refinances are often done by banks who want to lend the money. Some use a liberal approach,' Sullivan said."

"In the end, the market value appraisal is only the amount a buyer is willing to pay. Sullivan said buyers today are paying less than they were a year ago and that means buyers have the advantage."

"Repos also add to the housing surplus and can drive down other home prices, Galloway said. For instance, if a repossessed home in a neighborhood sells for less than market price, other homes for sale in the same neighborhood will likely get similar offers."

Mortgage Fraud Drives Defaults In Colorado

2006-11-29T11:28:00.000-08:00

The Denver Channel reports from Colorado. "Colorado's housing foreclosures are nearing a record, driving down prices and damaging neighborhoods and one reason is mortgage fraud. A hit-and-run death has led 7NEWS investigator John Ferrugia on a trail to what may be a ring involved in setting up illegal immigrants with fraudulent mortgages."

"Daniel Martinez-Ruiz is an illegal immigrant charged this month with using phony documents to purchase property. His wife Conception Hernandez is charged with similar crimes and is out on bail. 7NEWS Investigators first learned about them and the questionable loans after they began investigating the death of Justin Goodman, who was killed in 2004 by a hit-and-run driver. The man who killed him and who is now serving time in prison is Roberto Martinez-Ruiz, another member of the same immigrant family."

"So, how could he and his family get mortgages to buy homes? 'There's lenders out there that will do a completely fraudulent loan to get them a house so that they can stay here,' said John Vizzi. Vizzi is in the real estate and mortgage lending business and he is the uncle of Goodman."

"7NEWS' investigation has found that the immigrant family used phony documents, and in apparent collusion with realtors and lenders, received fraudulent loans to buy two homes in Thornton which were backed by F.H.A. loans."

"7NEWS investigators have learned Martinez used a phony name on a fraudulent alien card because he had no credit and documents show that Hernandez used a fraudulent Colorado driver's license. Adams County district attorney Don Quick has now charged three members of the family and a realtor with several felonies."

"'In this case, the buyers themselves are charged as being part of the scheme,' said Quick. 7NEWS has learned that part of the scheme also involves phony W-2 forms and pay stubs from a Colorado cleaning service. Golden Eagle Cleaning was set up by Daniel Martinez, again with fraudulent documents, as income verification to obtain the loan, John Ferrugia said."

"But Hernandez claims it wasn't the family who produced the fraudulent financial documents, but the realtor and lender. The lender's name is William Romano. 7NEWS investigators learned it is Romano whose name appears on the loan application and who accepted the fraudulent documents."

"But was it Romano who actually produced the phony W-2s and check stubs? Romano said he didn't know anything and he was clearly not anxious to discuss his work. 'The lender's responsibility at the end of the day is to make sure the underlying documents are sufficient and accurate,' said Quick."

"Because of 7NEWS' investigation, Quick is now investigating Romano and the realtors he has dealt with. 'In this case, we know a number of people who were involved in those documents. We're still pending the investigation to determine if it's a broader net than that,' said Quick."

"The real estate agent who dealt with the illegal immigrants has been charged."

"The point is how mortgage involving illegal immigrants works, Ferrugia said. It is clear that everyone in the chain of illegal activity gets paid and there's no law that makes anyone in the chain, the realtor, the lenders, the FHA, directly responsible for insuring documents used in the transaction are legitimate."

"In this case, foreclosures on these houses cost taxpayers a total of about $140,000 because the FHA protected the lenders. This is only one of thousands of such cases costing taxpayers millions in the state of Colorado alone. Most of it simply goes unnoticed because no government agency has time or the mandate to investigate."

"Mortgage Reset And Equity Strain": California

2006-11-27T11:38:00.000-08:00

The Modesto Bee from California. "Foreclosures are soaring dramatically in the Northern San Joaquin Valley as homeowners struggle with rising mortgage rates, falling home prices and a stagnant real estate market. A higher percentage of Stanislaus County homeowners were in default on their mortgages last month, 0.47 percent, than in any other California county."

"Many Merced County and San Joaquin County homeowners also are in trouble, with default rates over 0.35 percent. Merced had the third highest percentage of defaults in California. San Joaquin had the fourth highest. The three Valley counties had more than 1,600 homes in default on mortgages in October. That's about eight times as many as in October 2005."

"While most homeowners in default typically can sell or refinance before foreclosure, the number of those who can't is growing. There were 128 homes in Stanislaus, Merced and San Joaquin counties taken over by lenders during October. Compare that with October 2005, when 10 homes were lost to foreclosure in the three counties, according to DataQuick."

"A new analysis predicts 4,866 homeowners in Stanislaus, 7,591 in San Joaquin and 2,309 in Merced likely will lose homes to foreclosure because adjustable-rate mortgages will push their payments too high during the next five years. That's on top of foreclosures caused by traditional problems."

"Christopher Cagan, director of research and analytics for First American Real Estate Solutions, recently published two studies on foreclosures, and his predictions for the Northern San Joaquin Valley aren't pretty. Cagan warns 'the double whammy' of adjustable mortgage interest rates on homes with little or no equity will force borrowers into foreclosure."

"Homeowners in the biggest trouble are those who bought homes with little money down and 'teaser' rate mortgages. Such adjustable-rate mortgages aren't new, but what's changed is the real estate market."

During 2004 and 2005, Cagan said, homeowners who had mortgages adjust to unaffordable levels had ways to get out of trouble. That's not the case now because home prices have dropped about 5 percent compared with last year in the Northern San Joaquin Valley."

"'Some homeowners will find it hard to sell or refinance because they may have little or no equity in their residences,' Cagan said."

"He calculated that about 19 percent of homes, that's nearly 1 in 5, that were purchased or refinanced since 2004 in the Northern San Joaquin Valley are likely to be foreclosed during the next five years because of what he calls 'mortgage reset and equity strain.'"

"Borrowers who agreed to such adjustable-rate loans with little or no down payments may not have comprehended what they were getting into, said Frank Mandella, president of the San Joaquin Valley chapter of the California Association of Mortgage Brokers. 'I'm sure some of those loans were made to people who did not understand the advantages and disadvantages,' Mandella said. 'Maybe they were not educated properly on how the lending program worked.'"

"Mandella, who owns Meadow Lake Mortgage in Stockton, said that during the past few years there were mortgages available for as much as 125 percent of a home's assessed value. 'They were designed for people to consolidate debt,' Mandella said. He said there also were loans for 103 percent of value to enable buyers to pay for a home and its closing costs."

Loans for more than 100 percent of a home's value have become rare, Mandella said, but there are still a wide variety of mortgages offered.

"Homeowners who choose the wrong mortgage and have their homes foreclosed may end up watching their property get auctioned on the county courthouse steps. More times than not these days, however, no one bids on foreclosed houses because lenders are owed more than the property is worth. That means the starting bid often is too high to attract buyers."

"Lenders then end up taking possession of the foreclosed homes, and they list them with real estate agents. Increasingly, those houses end up selling at a loss. 'They don't want to sit there holding onto it,' Cagan said."

"He estimated lenders may lose $1.8 billion because of foreclosures in the Northern San Joaquin Valley during the next five years."

Arizona Defaults Havn't Slowed Lending

2006-11-24T14:01:00.000-08:00

The Arizona Republic. "The rate of residential mortgage foreclosures in Maricopa County rose 35 percent in August. The rise in foreclosure filings has not translated into more stringent requirements for business borrowers, commercial lenders say. 'We're talking to business owners every day,' said Bonnie Jessen, First National Bank of Arizona vice president. 'There is so much availability of money right now that it's not an issue. If anything, it's more of a buyer's market for a mortgage than it's ever been.'"

"Scott Coles, president of the state's largest and oldest private mortgage lender, said that when the market tightens, his firm scrutinizes the borrower and the project more closely. 'We're feeling the pinch in a small portion of loans,' Coles added. 'In a few cases, there have been some concessions.'"

"The commercial real estate market in the Valley 'will hold itself,' Coles predicted. "Properties can be converted for multiple uses. Condominiums can become office space or retail complexes.'"

"Randy Persson, president of Kenwood Mortgage and Investment in Scottsdale, said his firm's portfolio is holding steady, but Kenwood is engaged in land loans in locations such as Eloy and La Paz. 'In a downturn, the outlying areas get into trouble first,' he said. 'We're adapting a wait-and-see attitude.'"

Banks Offering Deals: Michigan, Ohio

2006-11-21T11:58:00.000-08:00

From ABC Local 12 in Michigan. "Real estate agent John Cunningham says more than one-third of the home sales pending right now in Genesee County are in foreclosure. He's personally handing 43 homes that are in the process of foreclosure."

"'Buyers have a misconception that people are going to have to pay what somebody owed on the house,' Cunningham said. 'People are owing on this house over $190,000. Now the home's for sale for $149,900.'"

"The downside for sellers is that the rest of the market is competing with all those foreclosed homes and that's pushing down prices. 'Trying to sell and move out is bleak,' Cunningham said."

"Banks are getting very aggressive offering great deals. The inventory is sky high: more than 7,100 homes are for sale in Genesee County alone."

From USA Today. "Ohio's foreclosure rate is weighing on Cleveland's real estate market. In a one-two punch, manufacturing job losses and predatory lenders have hurt homeowners."

"In Ohio, one in every 10 subprime loans is in foreclosure. The number of homes for sale in Cleveland has risen to 49,000, a two-year supply. Nationally, by comparison, there's only about a seven-month inventory of homes for sale."

"'A lot of industrial jobs have left,' says Dennis Rath of ERA Rath Realtors. People used to commute to work at the steel mills in Lorain, for example, but now, 'Lorain is like a ghost town. There's nothing left.'"

"The market for first-time buyers, in Cleveland, typically homes priced below $150,000, is still strong, while homes listed above $180,000 are selling slowly."

Arkansas Builders Going Into Default

2006-11-19T13:38:00.000-08:00

The Arkansas Democrat Gazette. "The companies providing lumber, concrete, cabinets and the central vacuum system for the house at 1 Partridge Run want their money, but Betty’s Homes isn’t paying. The house is at the heart of the spiffy Quailridge subdivision, where new brick homes start at $275,000."

"A few months ago, a house like the one on Partridge Run would have sold before it was finished. Not these days. Builders now have more homes than buyers, particularly ones with price tags near $300,000. More and more Northwest Arkansas homebuilders are dealing with liens and foreclosures because they can’t pay their debts to banks and construction suppliers."

"'There are undoubtedly going to be more foreclosures on the builders,' said Ross Ridout, an attorney and vice president of Ridout Lumber Co. 'Northwest Arkansas is overbuilt significantly. Builders need to sell houses, and if they don’t sell, they can’t afford for them to sit there unsold and pay interest.'"

"The 2,245-square-foot house on Partridge Run is on the market for $291,900, but a quagmire of materialman’s liens, foreclosures and bankruptcy complicates the sale. Bella Vista-based Betty’s Homes, one of the region’s largest homebuilders and the company that built the Partridge Run house, filed for bankruptcy Oct. 20. The company owes $ 8,984,741.33 to banks, according to its Chapter 11 filing. The company, which built houses in Bella Vista, Centerton and Lowell, also owes $885,928.54 to construction supply companies."

"'Things kept getting later and later, but we did continue to extend credit to them,' said Jennifer Grandon, a billing supervisor for a Springdale company that hasn’t been paid $2,085 for garage doors that went on the Partridge Run house on June 26. 'After a certain point, we did have to file liens. If they would pay, we’d still do business with them.'"

"Liens give vendors leverage against builders by preventing the sale of a home until the builder pays for the materials used to build it."

"Materialman’s liens are increasing in Washington County, too, although less dramatically. The filings grew from 85 in 2004 to 139 in 2005, county records show. There were 207 in the first 10 months of this year."

"Many suppliers are convinced they’ll never get all the money owed by Betty’s Homes. Banks are paid first in bankruptcy proceedings. They get first dibs because they obtained collateral for their loans, Tulane Law School Dean Lawrence Ponoroff said. 'It’s not that they’re banks,' Ponoroff said. 'It’s that they’re secured creditors.'"

"The construction supply companies are unsecured creditors, so they get paid after the banks. Betty’s Homes listed more than 130 unsecured creditors in paperwork filed Nov. 6 with the bankruptcy court. Betty’s Homes listed assets of $15,925,652.06."

"Dennis Tune, president of Tune Concrete in Fayetteville, said the 25 liens filed by his business against Betty’s Home are more than he’s filed in the previous 20 years. Tune said he’ll be surprised if his company receives 'a dime for every dollar' it’s owed. 'I’m mad at myself because I let them get that far in debt, and I’m mad at myself for not shutting it off earlier,' Tune said. 'It’s the homebuilders’ fault, the banks’ fault because they loan anybody who has a pulse money, and the suppliers who have been overzealous with credit. It’s all our fault.'"

"The changed home-building environment has affected employees of some companies. Betty’s Homes has let six or seven employees go, Bond said. Wholesale Overhead Door laid off six employees, Grandon said. Other companies have taken similar approaches, reducing employees’ hours and eliminating jobs."

"Between 1, 100 and 1, 250 newcomers move into Benton and Washington counties each month, according to researchers at the Center for Business and Economic Research, a part of the Sam M. Walton College of Business at the University of Arkansas at Fayetteville. Despite the rapid growth, there were 525 more unoccupied homes in Benton and Washington counties in September than in May, according to the Skyline Report."

"The latest Skyline Report, made public Monday, showed 2,956 unoccupied homes in the two counties at the end of September. The figure is significant because new housing starts for both counties dropped to the lowest point in two years. Builders started 204 single-family houses during the third quarter, well below the record 462 started in the second quarter of 2005."

"The glut of unsold houses shouldn’t have been a surprise, said Jeff Collins, the center’s director who began pointing out the signs of a coming surplus as early as two years ago. 'Things weren’t looking very good,' Collins said. 'It’s like this: I kept telling people two plus two is four. If you don’t like four, I can’t help that, but the number is still four.'"

"The glut didn’t worry Don Marley, the Fort Smith developer who started the Quailridge subdivision in Centerton last year. Quailridge builders will be able to keep selling houses despite the abundance of similarly priced houses in other subdivisions. 'I wanted to set a better standard,' Marley said earlier this month as he showed off the curvy, community swimming pool behind the property owners association clubhouse. 'We wanted this to be a neighborhood.'"

"The subdivision is among the newest in Northwest Arkansas; the first homes were occupied in the spring. At present, 13 homes in Quailridge are occupied, and 44 others are finished on the outside and within a month of competition inside. None have buyers, though. Another 33 houses are in an earlier stage of construction, and 78 lots have been sold but construction hasn’t begun.'"

"Ridout, the lumber company vice president, said some responsibility for what’s changed in Northwest Arkansas’ housing market rests with the banks. 'There’s a tremendous amount of banking competition in Northwest Arkansas, and they are starving for construction lending,' Ridout said. 'They are doing a poor job of qualifying their customers. It’s the banks being in tough competition and needing construction loans, and there’s an influx of builders who are new to the market.'"

"Northwest Arkansas’ booming economy and the region’s population growth are main reasons for so many new banks and bank branches, said Charles Miller, government relations director for the Arkansas Bankers Association."

Tax Lien Sales Up In Colorado

2006-11-17T13:26:00.000-08:00

The Denver Post reports on tax liens. "The number of homeowners and businesses falling behind on their property taxes in the metro area is on the rise. Adams, Arapahoe, Denver and Jefferson counties, in recently concluded auctions, sold 51 percent more property-tax liens to investors this year than last; 10,398 versus 6,879."

"The jump reflects several trends, including a sharp rise in mortgage foreclosures, and homebuilders unable to generate cash they need to cover taxes on their undeveloped lots. 'We are early on in the pain game,' Adams County Treasurer John Lefebvre said. 'How long can people hold on?'"

"But one person's pain can be another's gain. Tax-lien sales are designed to find investors willing to pay overdue property taxes needed to fund counties, school districts and other local governments. In return, investors have the potential to earn an enticing return, 15 percent this year, that the delinquent property owner must eventually pay."

"But there's a catch. When a lot of people bid on tax-lien certificates, a premium is often required, typically 5 percent to 8 percent of the lien amount. Someone who pays a 6-percent premium for a tax lien that is paid off by the property owner in a month or two will lose money. And about two-thirds of liens get paid off within a year."

"Arapahoe County limited attendance at its tax auction Wednesday to 250, with 50 more people waiting to grab empty seats as people left, said Jan Neilson, deputy treasurer. Close to 300 people registered to bid on more than 3,000 tax liens in Adams County, compared with 178 people last year."

"Veteran investors, who years ago faced almost no competition, must now bid against corporations, nationwide investment pools and wealthy out-of-staters. That means higher premiums for counties, and premiums are pure gravy."

"Jefferson County, for example, collected $449,000 in premiums from its online tax-lien auction, deputy treasurer Dave Vil lano said."

"A common myth promoted at some real-estate seminars is that tax liens are an easy path to acquiring properties on the cheap. That almost never happens, treasurers said. Even in a foreclosure, mortgage lenders will step in to make good on the tax lien rather than have an investor cut them out."

"Property owners are allowed to go three years on a tax lien before a lien holder can apply for a deed to the property. When owners don't cover a lien, it is usually because the land is worthless."

"But lien buyer Hans Pieren from Greeley, said the returns are hard to beat, especially if a lien doesn't get paid off for two or three years. 'You are lucky if you can get 15 percent in the stock market,' he said."

Short Sales, Defaults Surge In Stockton, CA

2006-11-15T09:17:00.000-08:00

The Record.net reports from California. "Foreclosure activity locally has been surging, according to a new national survey. Stockton placed 20th highest for foreclosure activity out of 100 metropolitan areas across the United States in a new report an online marketplace for foreclosure properties."

"The Stockton metro area, basically, San Joaquin County, had 1,050 mortgages in some stage of the foreclosure process. The top foreclosure rankings went to Detroit; Fort Lauderdale, Fla.; Denver; Miami; and Dallas."

"California metro areas accounted for seven out of the top 50 foreclosure areas in the country, with only the Riverside/San Bernardino area (12th) and Stockton (20th) in the top 20. 'The third quarter saw a marked increase in the number of properties entering some stage of foreclosure,' said James Saccacio, CEO of RealtyTrac. 'It appears that a combination of factors, including a slowdown in home sales and lower home appreciation rates, are contributing to higher numbers of delinquencies.'"

"It's also likely that part of the reason for the increased foreclosure rates is the long-anticipated effect of the first wave of adjustable-rate mortgages re-setting at higher monthly payments, putting homeowners into financial distress, he said."

"The latest quarterly data report from DataQuick showed that third-quarter residential foreclosure activity in San Joaquin County increased to its highest level in more than seven years. Lenders sent out 898 default notices in San Joaquin County last quarter. That was a 178 percent jump year to year from 323 notices in the third quarter of 2005. Unlike RealtyTrac, DataQuick measures only the issuances of default notices."

"Statewide, lenders sent out 26,705 default notices to California homeowners during the July-to-September period, up 111.8 percent from 12,606 in the third quarter of 2005, the report said."

"Ben Balsbaugh, residential sales manager in Stockton, said that more houses on the verge of foreclosure are hitting the market, especially 'short sales,' where a bank is working with a seller who owes more than the property is worth."

"Short sales are up these days, Balsbaugh said, but this doesn't necessarily mean bargains for home buyers. 'There are so many homes for sale out there right now, the chances of getting a deal is better with an individual seller who is highly motivated in this competitive market,' he said."

"Plus, bank short sales typically have a much longer escrow period than deals involving noninstitutional sellers, he said."

Multifamily REO's In Colorado

2006-11-13T09:31:00.000-08:00

The Denver Post reports from Colorado. "Homeowners aren't the only ones having problems paying mortgage loans. Some investors in Colorado have also had rental properties foreclosed upon recently, especially in and around Longmont and Greeley, where there's a big rental market, some Realtors say."

"Recent 'for sale' listings show at least 10 duplex and apartment buildings owned by banks and on the market in Longmont."

"'(Investors) thought they were going to make a fast buck, and they got caught, because the housing economy goes in cycles,' said Lynn Bishop, a spokeswoman for the Colorado Mortgage Lenders Association. 'You're going to 'walk' on it if you can't find a renter.'"

"If an investor with renters faces foreclosure, those renters are forced to move when a bank takes over, said Bryan Potter, a property manager at Alert Realty in Longmont with more than 2,000 rental properties. Potter said he has seen such cases two or three times in the past six months."

"If rental properties go into foreclosure, it's usually because investors have taken on interest-only mortgages with high monthly payments, said Lu Etta Legler, a Realtor in Brighton who also owns investment property. Investors who manage to find good renters still have to plan for a softer market and potential vacancies. For example, a rental home Legler owns in Greeley that used to take in $1,000 per month now reaps only $800 per month, she said."

"'A lot of people in this market say, 'This is the time to buy and rent it out and it will make my mortgage payment for me.' But they don't plan for vacancies,' Legler said. 'You have to plan for at least four months.'"

A 'Foreclosure Bubble" For Dallas

2006-11-10T09:00:00.000-08:00

From the Dallas News. "The biggest threat to the local housing market isn't overheated prices or a slowdown in sales. What has the greatest potential for problems is the North Texas foreclosure bubble. So far this year, more than 35,000 homes in the Dallas-Fort Worth area have been posted for foreclosure. More than 15,000 homes have been taken by lenders when the owners couldn't keep up with the payments."

"That means more than a quarter of the pre-owned houses up for sale in the Dallas-Fort Worth area are foreclosed properties. Is that a problem? You bet it is. In the late 1980s and early 1990s, a surge in home foreclosures destroyed residential values in Texas."

"Eventually the sale of reduced-priced foreclosed houses drives down overall residential values. So far, lenders have been holding the line on foreclosed property prices. They remember what happened in the last crash and don't want a repeat of the home fire sales."

"But with the inventories of foreclosed houses growing in other U.S. markets out West and in parts of Florida, I wonder how long the lenders will be able to keep their prices up."

"And there's no sign that home foreclosures are slowing. In November, postings were up almost 50 percent in the D-FW area."

"On Sunday an auction company will be peddling about 80 homes in the Dallas-Fort Worth area. The properties it is selling range from $10,000 to more than $400,000, according to spokeswoman Crystal Wright. The homes include everything from a 999-square-foot condo in northeast Dallas to an almost new 4,000-square-foot house in Frisco."

"'It's a real opportunity for people to get properties in good condition at significant discounts,' Ms. Wright said."

Auctions Pick Up In Nevada, Florida, Colo.

2006-11-08T09:08:00.000-08:00

From Tampa Bay Online in Florida. "More than a year after launching one of the area's most expensive condo conversions, Bay Communities is trying a novel approach to unload its unsold units at The Hamptons in Tampa Palms. The developer will sell 100 condominiums on Dec. 9 at a public auction, 40 condos will be sold 'absolute' - awarded to the highest bidder with no minimum bid."

"The developer owes the county $1 million in back taxes. The Tampa Palms Owners Association also has a lien on the property for unpaid dues."

"The Hamptons has 315 units, and they were the priciest conversions in New Tampa. As of this summer, Bay Communities had sold just 70 units. With 13 condo conversions in one year, most New Tampa developers gave up and started leasing the units again."

The Palm Beach Post. "Florida led the nation in foreclosure activity for the third quarter of this year as adjustable rate mortgages came home to roost, a report shows. The number of households in foreclosure throughout the state spiked 55 percent compared with the second quarter of this year, and rose 26 percent over the third quarter of 2005."

"In Palm Beach County, one in every 153 households was in foreclosure in the third quarter, up 26 percent over the third quarter of 2005. Foreclosures rose 38 percent over the previous quarter."

"St. Lucie County foreclosures jumped 68 percent over the same quarter a year ago, and 65 percent over the second quarter of this year."

The Review Journal reports from Las Vegas. "Looking for an affordable home? Your chance to buy a foreclosed home at below-market value in Las Vegas comes Nov. 19 at the JW Marriott. Hudson & Marshall is offering nine Las Vegas homes valued from $275,000 to $460,000. They're among more than 100 homes on the block in the foreclosure-battered states of Colorado and Nevada."

"The homes are 'real estate owned,' or REO, property taken back by national lending institutions and asset management companies after every effort was made to work with the borrower. 'Posting a foreclosure doesn't necessarily mean foreclosure,' principal Dave Webb said. 'These homes are in foreclosure, not default. Realtors have already had their shot at (selling) them.'"

"Rising interest rates have forced many homeowners with adjustable-rate mortgages to default on their loans because they no longer can afford the rising mortgage payments, Webb said."

"'We've had some large sales in Las Vegas. I'd say we did two to three (auctions) a year in Vegas from 1999 to about 2003 with a big inventory, 40 to 50 homes,' he said. 'Then the market took off. You were building like crazy. There were very few foreclosures from then until about the last six months.'"

Banks Hiding Defaults At Auctions: Australia

2006-11-06T14:01:00.000-08:00

The World Today from Australia. "On any Saturday in Western Sydney, banks and other lenders can now be found selling off the dreams of dozens of homeowners. Real estate agents who've worked in the stricken areas for a generation say they've never seen anything like it, even during three recessions."

"In a move, as we heard introduced by nearly every bank and non-bank lender in the past few months, real estate agents are now being told to hide the fact that properties being sold are repossessed after failed mortgages."

"The World Today's Michael Edwards reports on a single day he spent watching the sell-off that marks the move from boom to bust in Sydney's outer suburbs. If you were to listen to the auctioneer, as he dismissed some small bids, the house is an opportunity to make money."

"But the contract for sale tells a different story. This house, like many others being auctioned today, is empty. The people who took out a mortgage to live here have been moved on."

"The seller is the institution who wrote them their loan, have now taken their house back. The World Today has established that in Sydney alone as many as 20 homes a week go under the hammer as mortgagee sales."

"But the sell-off of seized properties started much earlier this Saturday, in Chester Hill, where 8 Mountview Avenue sold for $410,000. Its owner had bought it for $25,000 more than that, and pumped tens of thousands of dollars into improvements, before failing to make his mortgage repayments and losing it to his lender."

"By midday, when The World Today arrived at this auction in Castle Hill, in Sydney's north-west, half a dozen places had already been put under the hammer. The steady stream continued throughout the afternoon. All of them, whether advertised as so or not, were mortgagee auctions."

"The World Today has uncovered a new and deliberate policy by banks and non-bank lenders, to hide the fact that auctions were the result of defaulted mortgages. Several real estate agents explained the policy had been introduced by lenders in the past few months as repossessions spiked, and that sensitivity is reflected in a policy that saw The World Today barred from two other mortgagee auctions in Sydney's north-west on this same Saturday."

"In fact, one Sydney real estate agent told the program that he estimates nine out of 10 auction sales in outer western areas of Sydney are now the results of mortgage defaults. In the battler suburbs on the city's fringes, it's turned on its head the notion that buying a home used to deliver status and security."

100 Colorado Homes To Be Auctioned Off

2006-11-04T10:47:00.000-08:00

A notice of auction from Colorado. "Hudson & Marshall is planning to auction more than 100 homes in foreclosure-flooded Colorado and Nevada on November 16, 18, and 19. Increasing interest rates have led to the steep increase in defaulted home loans in these areas. But these foreclosures, in turn, could lead to more opportunities for potential home buyers."

"Some say auctions actually make the process of purchasing a home more fair, due to the lack of negotiations and contingencies. Plus, sellers guarantee clean titles on all properties, which ensures the houses are free of any liens or back taxes."

"Hudson & Marshall will start auctioning the REOs, which are valued from $25,000 to more than $430,000, in Colorado Springs on the 16th. The second stop will be in Denver on the 18th, and the last auction will be held in Las Vegas on the 19th."

"The auctions for the homes, which are owned by leading financial institutions and asset management companies, will occur at the actual properties. And the highest bidder is only required to pay 5 percent or $2,500 down—whichever is greater—by personal check, making the sell a relatively simple process."

"'From listing to closing, real estate auctions accelerate the sales process for sellers. Using an aggressive marketing program, Hudson & Marshall secures maximum exposure for properties and closes multiproperty sales in less than 30 days, reducing the time homes linger on the market,' said Dave Webb, principal, Hudson & Marshall."

"'The auction method is a win-win for lenders and asset management companies who are able to swiftly move large volumes of foreclosed properties and avoid the high carrying costs on these assets.'"

Filings Ramp Up In Alabama

2006-11-01T14:36:00.000-08:00

The Birmingham News from Alabama. "Foreclosure filings in Alabama rose 27 percent in the third quarter from the same period a year ago, according to a California firm that operates an online foreclosure marketplace. RealtyTrac said there were 1,215 foreclosures in Alabama in the July-to-September period. The number increased every month in the period, 307 in July, 379 in August and 529 in September."

"The figure was 26.83 percent higher than the third quarter of 2005 and 32.93 percent higher than the previous three-month period, RealtyTrac said."

"'What our third-quarter research appears to be showing is that the first wave of adjustable rate mortgages is having a negative impact on the number of homes going into foreclosure,' said RealtyTrac CEO James J. Saccacio."

Bubble States Leading US Defaults

2006-10-30T15:17:00.000-08:00

The Central Valley Business Times. "More than 37,000 homes went into the foreclosure process in California in the third quarter, a 171 percent increase over the same period in 2005, according to RealtyTrac. The California number was up 35 percent from the second quarter of 2006."

"Nationally, 318,355 properties entered some stage of foreclosure during the third quarter of 2006, a 17 percent increase from the previous quarter and a 43 percent yearly increase from the third quarter of 2005."

"'Higher interest rates and a general softening of the real estate market are the two key factors contributing to the 43 percent increase in foreclosure filings from the third quarter of 2005,' says James Saccacio, CEO of RealtyTrac. 'What our third quarter research appears to be showing is that the first wave of adjustable rate mortgages is having a negative impact on the number of homes going into foreclosure. With the volume of these loans, more than $1 trillion of them due to adjust over the next 15 months, this is a trend that definitely bears watching.'"

"Colorado posted the highest foreclosure rate in the nation for the second consecutive quarter, reporting one new foreclosure filing for every 127 households, 2.9 times the national average. After declining almost 13 percent between the first and second quarter of the year, foreclosure activity in Colorado was back up 24 percent from the second to the third quarter, with 14,374 properties entering some stage of foreclosure, the eighth highest foreclosure total in the nation."

"Nevada moved up from having the sixth highest rate in the second quarter to the second highest rate in the third quarter. The state reported 5,561 properties in some stage of foreclosure during the quarter. Florida, which had the ninth highest foreclosure rate in the country for the second quarter, took over the No. 3 spot from Texas during the third quarter."

"With 40,136 properties in some stage of foreclosures during the quarter, Florida reported the highest number of foreclosure filings during the quarter, barely beating out Texas, which held the No. 1 spot for the previous two quarters."

"Other states with foreclosure rates ranking them in the nation's top 10 for the third quarter included Georgia, Michigan, Texas, Indiana, Utah, Ohio and Illinois."

"Appears To Be No End" To Denver Defaults

2006-10-27T16:05:00.000-07:00

The Rocky Mountain News reports from Colorado. "Prompted by local business leaders' concerns over the area's real estate market, economist Patty Silverstein has issued a report that says Denver's high foreclosure rate will continue, somewhat abated, into 2007. 'A lot of conditions are improving, but we're not out of the woods yet,' Silverstein said."

"Residential foreclosures in metro Denver are on pace to hit a record high in 2006 of about 19,200. Through the third quarter, 14,132 foreclosure cases were opened in the seven-county region, a 34.2 percent increase over the January-September period in 2005."

"What's happening, Silverstein said, is a longer lag between the negative job-loss news and the foreclosures, when compared with Denver's problems in the 1980s. During the last great foreclosure boom, it was roughly two years between Colorado's job losses and its high foreclosures, Silverstein said. Colorado's recent job- loss peak, in 2002 and 2003, is now three to four years in the past."

"'Given the severity of it and the slow growth since then, we've had a longer lag,' she said."

"New or recently popular mortgage products also have played a role, Silverstein notes, and ARMs represent a disproportionate share of Colorado foreclosures: In the second quarter of 2006, 52.5 percent of the loans in foreclosure in Colorado were ARMs, compared with 35.7 percent nationally."

The Denver Post. "Despite solid growth in jobs, incomes and population, metro Denver's foreclosure rate is on track to hit 1.7 percent of all homes this year, according to an analysis. That rate is a midpoint between last year's 1.3 percent and a record 2.1 percent set in 1988, when an oil bust drove up unemployment levels and more people were leaving the metro area than moving in."

"The high foreclosure rate in Colorado, which has led the nation for the past seven months, is part of a downward trend in the overall housing market."

"Builder incentives and price cuts are putting pressure on the median prices of existing single-family homes, which fell 2.2 percent in the metro area and 2.5 percent nationally year-over- year for September. There were 31,450 unsold properties in the metro Denver market in September, compared with 27,248 a year earlier."

"For the past five years, home prices haven't appreciated in a "foreclosure belt" stretching from Weld to Adams to Arapahoe County, said Lou Barnes, a mortgage banker in Boulder. Overbuilding has dampened price appreciation, which has contributed to high foreclosures in those areas because homeowners have less equity and aren't able to sell quickly, Barnes said."

"Economist Patricia Silverstein links the genesis of the current foreclosure cycle to the loss of 61,200 metro-area jobs in 2002 and 2003. Many workers had difficulty replacing the incomes they lost in the downturn and appear to have turned to higher-risk mortgage products such as no-money-down and adjustable-rate loans to stretch their finances."

"Broker Phil Heter, whose company only sells foreclosed homes on behalf of lenders and Fannie Mae, said that while there are huge differences between now and 1989, there appears to be no end to the number of foreclosed homes hitting the Denver-area market."

"'We were busy before, but it was like they just opened the faucet wide open 90 days ago,' Heter said."

More Condos Headed For Auction

2006-10-26T15:47:00.000-07:00

Scipps News reports on some auction tricks. "As the nation's residential real estate market cools down, condo auctions are heating up. A penthouse in Denver's Cheesman Park that had been languishing on the market for two years was recently auctioned off in less than 5 minutes for $1.935 million."

"According to the National Auctioneers Association, the number of residential auctions was up by 8.4 percent in 2005 and another 4.4 percent in the first half of this year."

"Across the country, developers and owners are opting to hire professional auction houses to sell residential condominiums rather than wait indefinitely for them to sell by traditional means. While sales of single family homes dipped 1.6 percent in September, condo and cooperative housing sales dropped 3.2 percent, according to figures just released from the National Association of Realtors, signaling that the condo market is lagging other types of housing in a recovery."

"In a changing market where last year's prices might no longer make sense, auctioneers say public auctions can determine today's true market value. 'An auction is a great way to avoid long-term carrying costs on a property,' says Scott Kirk, senior marketing consultant with Grand Estates Auction Co."

"'The sellers know when the property will be sold,' he says, 'so they have an end date, and they can set a reserve price and feel comfortable that they will not be forced to sell below that.'"

"About that reserve price, sellers should be sure they would be willing to accept it as the final sales price, says Alan D. Wallace, a real estate attorney in Sherman Oaks, Calif. 'If a condo is worth $200,000,' Wallace says, 'many auctioneers will tell the seller he has to set a minimum bid of $130,000 in order to get enough people to come. Theoretically, in the auction frenzy it will be bid up to a price much higher than that. But, it could end up selling for a lot less than the owner thinks it's worth.'"

"An alternative to a reserve auction is an absolute auction. In that scenario, the property simply goes to the highest bidder, regardless of price. The absolute auction obviously exposes a seller to more risk, but from a buyer's perspective, the tantalizing possibility of getting a really good deal can be irresistible."

"The buyer's burden: Auctions are fast-paced, competitive events, says Annette Elms, owner of Jupiter, Fla.-based Christenson-Elms Auction Group, '"buyers can get caught up in the hoopla. So they need to do their homework and come prepared.'"

"Bidders must present a cashier's check in order to qualify for a given auction, she says, and the winning bidder has to put down 10 percent of the price in hard cash on the day of sale."

"'We have open house every Sunday afternoon for three successive weeks,' Williams says. Be sure of what you're getting, he says. A buyer 'might want to bring in a building inspector, because ultimately, due diligence is the buyer's responsibility. If it's going to be your house, you need to be doing the checking.'"

"'At most auctions, when the gavel goes down, the sale is final,' Wallace says. 'When you buy at auction, there is no contingency. That's a big difference.'"

"A buyer's research should include legal issues as well as the property's physical condition, says Helio De La Torre, an attorney with Siegfried, Rivera, Lerner, De La Torre & Sobel in Miami.'Make sure the title is clean,' he says, 'and know what the conditions of the auction are.'"

Auction Business "Booming" In Indiana

2006-10-25T13:50:00.000-07:00

The Star Press reports from Indiana. "The rising rate of foreclosed homes in Delaware County has already prompted more sheriff's sales, and now a private auction company has scheduled a foreclosure sale. Large national auction company Hudson and Marshall will conduct an auction of foreclosed homes Thursday."

"Seventeen homes will be auctioned in Muncie, but business is booming for the auction company, which is selling more than 400 single-family homes in several states in the next few days."

"The Star Press previously reported on the growing number of sheriff's sales of foreclosed homes in Delaware County. Through September, 564 homes were listed for sheriff's sales compared to 594 in all of 2005."

"Texas-based Hudson and Marshall, a 40-year veteran of the auction business, has scheduled auctions of more than 400 homes in Indiana, Illinois, Ohio and Pennsylvania through Nov. 1."

"The Star Press has reported that the area was high in state and national rankings for risky loans that can sometimes lead to foreclosures. Hudson and Marshall cited those loans in its press release announcing Thursday's sale."