Agents, get ready.

The real estate crash is no longer a ‘sub-prime’ only story. Now, its gone prime time…as in prime mortgages….specifically, Jumbo Prime. Thats right, Jumbo Mortgage Homes are now in the cross hairs of the foreclosure free for all.

This report shouldn’t surprise any Harris Real Estate University student…we have been reporting that there would be a  surge in Jumbo defaults since 2008.

The banks have been extending and pretending for as long as they can and now they have to foreclose. Its been our theory that that the banks have been holding off foreclosing (and listing as REOs/ Bank Foreclosures ) higher end homes because of the inevitable domino effect. Think about this, a luxury home/ expensive home is listed as a REO. That home is priced to sell. So, in most markets that means 30-50% less than the peak of the bubble. When that upper end home sells that new sales price ( ‘comp’ in real estate speak ) is the new benchmark for pricing.

NOTE: Agents, stop trying to argue that foreclosure/ REO and Short Sale comps are not true comps. OF COURSE THEY ARE. A sale is a sale.

So, that formally expensive home is now priced down market…thus, downward pricing pressure is forced upon the lesser expensive homes. The next domino falls.

A record number of borrowers once judged the most creditworthy are heading into foreclosure as the job market leaves more homeowners unable to keep up with mortgage payments.
Foreclosures among borrowers with prime conforming loans have shot up 425% since January 2008, according to Lender Processing Services, which compiles mortgage data. Conforming loans are those eligible for purchase by Fannie Mae and Freddie Mac, the federal agencies that buy mortgages from lenders.

Jumbo prime loans not eligible for purchase by Fannie or Freddie have done even worse — foreclosures on those have increased nearly 600%.

Jumbo loans are typically mortgages worth more than $729,750.

“Jobs is a major impact. It’s a huge factor,” says Ken Shuman, a spokesman with Trulia.com, a real estate search engine. “A lot of homeowners on the higher end are also savvy investors. They’re seeing their home has lost 30% of their value, we’re seeing a lot of strategic defaults.”

FULL STOP. OK, lets take a little break here. A strategic default is a walk-away. As in, a foreclosure. Foreclosures simply tear down the neighborhood, the community. If housing is to ever recover..foreclosures must be abated. Agents, its YOUR JOB to reach out to homeowners who are considering a strategic foreclosure and explain to them why they should do a short sale. Short Sales are the solution for homeowners who are on the foreclosure path. We created the Luxury Distressed Property Designation (LDPD) so agents would have the tools to work with the upper end, luxury home distressed seller.

There IS a difference between working with a normal short sale seller vs a luxury distressed seller.

Do this…Watch the FREE Agent Short Sale Secrets video and download the FREE Short Sale Secrets book.

A strategic default occurs when a borrower stops paying a mortgage they can afford to pay, often because the house’s value has fallen below the loan balance.

While the U.S. may be seeing signs of a peak in foreclosures in some of the hardest-hit markets, foreclosure activity continued to rise in many of the nation’s metropolitan areas in the first half of the year.

RealtyTrac reports today that 154 of 206 U.S. metropolitan areas with populations of 200,000 or more posted year-over-year increases in foreclosure filings, covering properties in various stages of the foreclosure process.

The top 20 metro areas with the highest foreclosure rates were in four states — Florida, California, Nevada and Arizona, according to the report.

Other RealtyTrac findings:

•94,466 properties received a foreclosure filing in the Miami-Fort Lauderdale-Pompano Beach metro area during the first half of 2010, more than any other metro area.

•The metro area with the second-highest total filings was Los Angeles-Long Beach-Santa Ana, which had 93,263.

•Las Vegas continued to post the nation’s highest metro foreclosure rate in the first half. One in 15 of its housing units received a foreclosure filing — more than five times the U.S. average.

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