Archive for the 'Foreclosure Market' Category

REO bank foreclosures will be contained by an enhanced short sale initiative under the Home Affordable Foreclosure Alternatives Program. The enhanced HAMP program will simplify the short sale process so that more homeowners who no longer have the ability to continue home loan payments do not have to undergo foreclosures that cut down their credit scores.

Housing advocates, real estate brokers and community groups prefer short sales over foreclosures because short sales do not significantly affect the credit scores of homeowners. Short sales also leave houses in better conditions than when homeowners are forced out of the homes.

Some lenders do not easily approve short sales because of sharp losses, but they accept short sale proposals once they see some advantages in a proposed short sale deal.

To facilitate short sale transactions, the enhanced HAMP program provides incentives to mortgage lenders, servicers and borrowers. For every short sale or deed-in-lieu transaction completed, lenders or servicers are given $1,000. Borrowers willing to move out of the homes and leave the properties in good condition are also given $1,500 to help them in their relocation.

Over the past months, short sales aimed at cutting down REO bank foreclosures took a long time to get completed, discouraging buyers, homeowners and real estate brokers from pursuing the transactions. Lenders took a long time in accepting the proposed purchase prices and signing agreements that remove the accountability of borrowers for deficiencies in payments.

Under the enhanced program, mortgage services are given 10 days to accept or reject a short sale proposal. When accepting the proposal, they must also agree to accept the short sale price as full payment for the home loan and free the borrower from any loan obligation.

The program also bars mortgage lenders or servicers from reducing the sales commissions of agents carrying out the short sale. This is to encourage more real estate agents to sell homes in short sale listings.

The new program also tackled the share of subordinate lien holders in short sales and limited their share to an aggregate total of $3,000. Subordinate lien holders have been demanding a greater share of the short sale proceeds in recent months. Among the biggest subordinate-lien holders are Wells Fargo, Bank of America, Citigroup and JPMorgan Chase.

According to some bank officials, the short program is effective in reducing the number of REO bank foreclosures, but it should recognize the positions of second lien holders.

A high-profile luxury apartment complex in the West End portion of downtown Dallas will be one of 184 investment properties to be sold at foreclosed homes auctions in Tarrant, Dallas, Denton and Collin counties in September.

The 1001 Ross Avenue apartment complex, which was built in 2003, consists of over 200 apartment units, with retail units at street level and residential units above ground. It is owned by real estate investment firm Jefferson on Ross Avenue LP.

The apartment complex is set to be sold off in the scheduled auctions after Jefferson on Ross Avenue failed to pay its loan balance owed to Bank of America. The original loan amount was $29.3 million, according to a Texas-based foreclosure research firm.

In the city’s list of foreclosure filings for commercial real estate properties, there are properties with over $496 million in unpaid loans. The largest loans are mostly for apartment projects and there are about 50 foreclosure filings involving apartments.

Additionally, there are more than 30 parcels of land also set for foreclosure auctions in September. Among these are large development projects in Denton County, on State Highway 114, and in North Fort Worth, on State Highway 380.

As of January, commercial real estate foreclosures have jumped by over 10 percent compared to the same period last year.

Texas housing analysts also have observed that the type and quality of properties entering foreclosure are changing. Properties in the higher end of the market are now getting foreclosed.

In the Dallas-Fort Worth metro area, nearly 1,700 commercial real estate properties have been foreclosed, including those already posted for the September auctions.

In an interview with some tenants of the Jefferson at 1001 Ross Avenue apartment complex, it appeared that most tenants do not know that their complex is in foreclosure.

Tenant Linda Melcher said she has a lease that ends on August 2010. She is concerned about the effect of the foreclosure on her lease and on the other tenants of the complex.

Recently, a restaurant opened on one of the units on the ground floor, but most of the retail spaces are empty.

Another tenant, Rick Owen, said that several commercial tenants have failed to progress so they moved out, including Cold Stone Creamery and a taco business.

Nevertheless, the tenants are still hoping that the owners and the bank can reach an agreement or that the new owners can run the complex well.

The number of completed repo homes for sale deals in California increased at a significant rate in April, particularly in the counties of Riverside and San Bernardino. And together with the increase in completed repo homes for sale deals was the decline in home prices, albeit at a slower pace than the speed of home sales.

However, industry experts warned against reading too much in the increase in home sales and the decline in home market prices.

Egan-Jones Ratings head of mortgage research Inna Koren pointed out that investors are concerned over the increasing foreclosure rates in Southern California.

She said that investors are not expecting another dramatic decline in real estate prices in California until 2011. She explained that there is a possibility that the housing market in the state is nearing its bottom, but it does not yet indicate a recovery. She believed that the complete recovery of the housing market will depend on what the government would ultimately do.

John Husing, an inland economist, echoed Koren’s sentiment adding that home market prices were showing some signs of stabilization.

Meanwhile, real estate agents are thinking of the possibility that a single home could receive multiple offers within a few days of being placed as repo homes for sale. Adding to their optimism of a fast home sale is the low interest rates which could attract any potential homebuyer.

However, many real estate agents believed that the housing market is far from recovering, with an anticipated second wave of foreclosures in the coming months and its impact on the economy continuing to be a big concern to the industry.

Century 21 Superstars real estate agent Mark Magana pointed out the large volume of repo homes for sale. He said that the home price trend will depend largely on how banks handle the inventory. He added that if banks will flood the market with foreclosed properties, the prices will surely drop.

Meanwhile, house sales in the county of San Bernardino surged by 88 percent last April compared with the same month a year ago. In Riverside, home sales rose by 40 percent for the same period.

Industry experts are quick to point out that distressed properties accounted for most of home sales in the state. And many people are buying repo homes for sale because they thought that they are getting bargains.

Three of the nation’s biggest banks, JPMorgan, Goldman Sachs and Morgan Stanley, who received huge bailout money from the federal government a few months ago as the nation was reeling from the effects of foreclosed homes auctions are now swaggering with their statement that they are now able to repay the funds used to save them from collapse.

Over 60 percent of all properties, including repo homes, that were sold in the United States during the last quarter of the previous year were affordable. This means that a family earning $61,500 annually would allot equal or less than 28 percent of their income for housing payments.