Are Foreclosures Good For The Housing Market?

The underlying belief in the country, whether one considers a social worker, a professional or the common man, is that foreclosures and short sales are not good for homeowners or the real estate market in general. In fact, it is this premise on which many states have put in place stringent anti foreclosures laws. However, now that some time has passed and the results of these measures are coming to the fore, experts are stating that these anti foreclosures laws are turning out to be counterproductive for the real estate market in general.

According to a recent study conducted by the United States Federal Reserve, states that require judicial reviews for bank foreclosures are more likely to suffer from a slow turnaround of the real estate market than others.

The prime example of the aforementioned fact is that the Nevada real estate market is one of the few markets in the country that is not showing any improvements or even signs of improvement. This is surprising for many because the state, after the 2008 real estate crash, actually put in place borrower protection laws that are considered to be one of the most stringent in the country.

One of the main reasons for this phenomenon, as per many experts of the industry, is that with fewer bank  foreclosures in the market the inventory suffers, resulting in a false price bubble. Similarly, as homeowners with poor credit get to stay in homes that they know they will be leaving in the future, the result is that they fail to maintain it, which reduces its prices further.

Obama Smooths the Way for More Foreclosures

Shocking isn’t it? According to some news outlets the hope and change president has precipitated change that no one wants and taken the hope of many American homeowners! Are these allegations true? If you look at the current rate of foreclosures across the country and the settlement between the states and big banks (orchestrated by the Obama administration), it definitely looks plausible.

This brings up the real question of the day, what are homeowners and potential homeowners to do? Foreclosures are up in New Jersey by 118%, Florida is at 83% and Pennsylvania suffered a 97% increase. These are just a few states seeing record number foreclosures; overall, 17 states have seen dramatic increases.

With this kind of depressing news, floating around buyers may be tempted to take cover and wait out the storm. Which is exactly the wrong thing! In truth, the time has never been better to seek out real estate deals. Foreclosure listings are filling up but that does not mean a buyer cannot find a great deal. Prices are down and credit is hard to come by, but rent to own, HUD homes and short sales provide huge opportunities for the person brave enough to seek them out.

If that sounds like taking advantage, it is not, homeowners facing bank foreclosures are many times desperate to get out from under mortgage payments and are highly motivated to make a deal! Take the time today to examine the foreclosure listings across the country and perhaps find your dream home.

Jack Philson, an analyst at RealtyStore.com, has posted an article discussing both Romney and Obama and their statements on the bank foreclosures crisis.

The Debt Relief Act with Short Sale and Foreclosures

We will likely see an onslaught of short sales within the next six months due to the tax break expiring soon. The Act that first showed in 2007 may disappear by the end of this year. This will cause a rush on selling homes through short sale to avoid possible foreclosures. A short sale is a sale where the price received is a lot less, by as much as 50% of the amount owed to the mortgage company. Many find they are in trouble with their mortgage payments when their cash flow slows down or they lose part of all of their income.

People choose the short sale if the bank agrees to get out from under the hefty mortgage payments they can no longer make. Short sales save homeowners from foreclosures, which are hard on all parties involved. Right now, the 2007 Mortgage Forgiveness Debt Relief Act allows short sales to occur without the burden of paying taxes on the amount they were “forgiven.” Once the Act is gone, sellers will owe taxes on the difference treating it as a gift in which they had to pay taxes. The Act might extend for another year or two.

Short sales are a good way to get a home for less. RealtyStore.com is one of the best resources online for finding such deals.

High Bank Foreclosures in Rhode Island: Despite Millions in Aid Available

Unemployment, horrible housing market and economic hardship is no longer breaking news, even in hard hit areas such as Rhode Island. What may shock you however is the fact that there are millions of dollars in financial aid for homeowners at risk for foreclosures that is not being spent! Rhode Island foreclosures are the highest in New England and one of the highest in the United States as well.

Rhode Island has access to $79 million dollars in aid for struggling homeowners, of which only $25 million has been allocated. The state and several other “hardest hit” areas have received federal aid but Rhode Island seems to be slower than most at dispensing the funds.

With high bank foreclosures in Rhode Island coupled with a nearly 11% unemployment rate, you may be wondering why more people are not receiving this much needed aid. There are several factors at play apparently, including the reticence of some to accept government help. Apparently, the main hold up is a slow roll out of the program and very little information in the general public.

There is also the reluctance of national lenders to work within the guidelines of the program in Rhode Island, citing issues with operational details throughout the 19 different jurisdictions.

Rhode Island has struggled to put the hardest hit funds to good use, as have several other recipient states. Each state had to build programs from scratch that would utilize the money appropriately. Thankfully, the tide appears to be turning and more homeowners will be able to save their homes in the coming years. Requests for assistance are up approximately 40% and the funds will be available through 2017.

The Queen of Versailles: Naivetee, arrogance, or both?

A house that is ready to be foreclosed upon, a family whose idea of economy is taking a super stretch limo to McDonalds and hanging on to the solid gold purse while not paying the staff enough money and working them longer hours, you have to wonder how in the world this billionaire became a billionaire and why his children and wife seem to have the business sense of a retriever.

90 thousand square feet will soon be up for grabs when the threatened bank foreclosures take hold of the Siegel family home, or a short sale is arranged to avoid one. Back in 2012, with the house still under construction and billed as one of the largest homes in the United States, the Siegels had not grasped the fact that their reign was soon coming to an end. In a world where bank foreclosures and short sales are part and parcel of everyday life to many Americans, the Siegels were living in their own little dream world.

David is generally portrayed in the media as a study in hubris, telling the world that he was nearly “singlehandedly” responsible for putting George W. Bush in the White House. Nowadays his wife Jackie, in an attempt to save money, takes a stretch limousine to McDonalds to purchase a meal.

When asked questions about the remainder of the world and how they are having to tighten their belts to make ends meet, the Siegels respond “Let them eat cake.”

If you believe the portrayal of this family in the upcoming “Queen of Versailles” documentary, this is a family that loses multiple pets because they’ve lost track of them and/or forgotten to feed them, while dog feces is often deposited unceremoniously about the floor on costly rugs. It is a study in contradictions.

Today, rather than cake, the Siegels order dollar menu items from a stretch limo and hang on to the trappings of wealth, while trying to sell their home for more than 75 million–a home which is not yet completed.

The world looks in awe at the the lifestyles of people like the Siegels, while those who are a bit more practical can find in this story much cause to be amused and saddened.

You can see a gallery of over 100 photos of the Versailles project here.

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Taking the “Distress” out of Saving Your Home

The Federal Housing Administration (FHA) has homes that it financially “backs up” called HUD homes. These special homes are foreclosed homes listed on foreclosure listings and are one step away from being taken away from one family and put up on the market. This sounds simple, but it is also very heartbreaking. A family works very hard and in the end, they lose their home anyway. That can be devastating, especially if that family has had that home for perhaps generations. How would anyone feel if they work one or two jobs and still cannot meet that big mortgage payment, and the place they call their home gets taken out from under them? This very sad situation is exactly what the Distressed Asset Stabilization Program is all about, giving hard working people a way to keep their homes without the badgering and horrific treatment from a mortgage company.

The Distressed Asset Stabilization Program was developed to make it possible for home owners to keep their homes. The economy is tough all over and mortgage companies are taking houses away at an alarming rate. With the Distressed Asset Stabilization Program someone other than a mortgage company will be able to buy the delinquent loan and together with the actual owner of the home, find a way to work together so that the home is saved. So, between this private company and the home owner, a delinquent loan will become current and in the end a home stays with the family that has put so much work into it.

Single-Family New Home Sales Up by 7.6 Percent

Those hoping to take advantage of the extremely low interest rates of the last few years will be heartened to know that single-family new home sales increased in May by 7.6 percent. According to the Department of Housing and Urban Development (HUD), these sales are 19.8 percent higher than those same statistics from May of 2011. This increase shows that banks are feeling more secure in lending money to homebuyers. The increase in new home sales should bolster the construction industry and benefit the economy in general.

If banks feel on more sure financial footing it stands to reason that not only will they be inclined to loan money for new home purchases but for foreclosed homes, HUD homes, and short sales as well. Additionally, for those banks that have been dragging their feet, foreclosures may begin moving more rapidly. The results will be more foreclosed properties for sale.

For this reason, the near future may be the best time to make that new home purchase and join the ranks of those who can say, “I own it, this house is mine.” Short sales could soon decrease and these low interest rates cannot last forever. The time to buy is now while the supply and interest rates are at optimum levels for potential buyers.

Short Sale and Foreclosure Listings

Due to the increase in short sales in the US, many were able to purchase property at below market value. This occurred because of a 25 percent increase in pre-foreclosure sales, the highest it has been since early 2009. The banks taking on the possibility of more foreclosed properties allowed transactions where the sale price was lower than the mortgage balance. It was good news to property buyers, but bad for banks. Now the trend of selling pre-foreclosed properties is on the rise; rather than waiting for the bank to buy the property back and as a way of easing through the troubled loans.

Short sales help to slow the mortgage losses and help both the mortgage holders and the homeowners from the rigors of the legality of full foreclosures. Mortgage companies now accept lower priced short sales, which keeps the property out of foreclosure processes. The number of repossessed homes is dropping due to hefty settlement fees induced on the five largest US mortgage companies over having wrongfully repossessed homes. There will be fewer properties in the foreclosure listings due to this.

The trend of selling off pre-foreclosed homes is highest in California, followed by Florida, Arizona, Georgia, and Nevada, proving the short sale is the wave of the near future for home sellers and buyers.

Will Foreclosures or Short Sales Drive the Market in 2012?

Bank foreclosures are not a pretty thing to say the least, definitely not from the viewpoint of someone who has taken out a home loan. In essence, they occur when a person who has taken out a home loan fails to be able to keep up with the repayments of his or her mortgage obligations. In bank foreclosures, it is the bank that has taken out a security interest in the person’s home. Therefore, if said person fails to be able to pay back his or her mortgage obligations, the lender (the bank) has the right, thanks to the security interest, to go ahead with a foreclosure on the property. A foreclosure is particularly painful because it will harshly retard the ability of an individual to purchase any form of real estate in the future.

On the other hand, short sale homes options are an alternative to bank foreclosures, yet they are not as widely understood as the foreclosures. A short sale on a home is basically a compromise of sorts between the lender, the person who has taken out the loan and the seller of the property. A short sale is defined as the time when a lender assents to accept a mortgage payoff quantity that is less than what’s owed. This is done for the strategic purpose of making sure that a sale of a property by a financially compromised owner becomes a reality. In essence, what the lender (the bank) does in a short sale is basically forgive the remaining balance of a loan.

With regard to how the rest of 2012 will shape up concerning bank foreclosures or short sales, it seems that short sales will be dominant. Sure, some sources that deal in the financial world have implied that it will be bank foreclosures of cheap homes that will continue to dominate in the 2nd half of 2012. According to CNBC, under President Obama, from December 2011 to January 2012, bank foreclosures skyrocketed by an alarming 28 percent in just one month! That is based on information from Lender Processing Services. Greater than 230,000 bank foreclosures of cheap homes started in January alone!

However, the Calculated Risk Blog implies the opposite, citing that short sales have gone up in lots of places across the U.S., which stands in contrast to foreclosures, which have eased up. Furthermore, according to a March 2012 article in the Chicago Tribune, more and more big banks are utilizing cash incentives to tempt people to pursue short sales instead of foreclosures. This seems to suggest that short sales will be the dominant route in the remaining part of 2012. A March piece in the Examiner.com predicts that short sales will increase in 2012 due to the so-called “robo-signing” settlement reached with the federal government.

All in all, it appears that there are more sources that are pointing to the dominance of the short sale in real estate for the 2nd half of 2012. Hence, it is a good bet to predict that short sales will edge out foreclosures in the 2nd half of 2012.