Realtor Coaching & Training: Georgia
Foreclosure Firestorm Ahead.
Just in case any of you were actually believing the housing markets where anywhere near bottom……..
NEW YORK (Reuters) – U.S. foreclosure activity for May ebbed from April’s record, but mortgages still failed at a staggering pace as President Barack Obama’s rescue programs had not had time to fully take root, RealtyTrac said on Thursday.
Foreclosure filings dipped 6 percent in the month but increased 18 percent from May 2008, marking the third highest month on record.
“There were almost one million foreclosure filings in a three-month period, and that’s simply unprecedented,” Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.
Temporary freezes on foreclosure activity ended in March. Failures of many seriously delinquent loans that were put on hold during those moratoria have been thrust back into the foreclosure cycle.
Realtors, there are 2 kinds of agents…those who know how to easily list and sell short sales (and are making a fortune) and those who refuse to learn anything new…struggle to stay afloat…and will probably not be in real estate for much longer. What kind of agent are YOU? Watch the FREE Agent Short Sale Secrets video then download the FREE Agent Short Sale Secrets book. Don’t wait, don’t procrastinate….FINALLY take action and learn how to become one of the agents who is THRIVING in this market.
One in every 398 households with loans got a foreclosure filing in May. Filings, which include notices of default and auctions, were reported on 321,480 properties last month.
Stemming foreclosures is seen critical to bolstering home prices, consumer confidence and the recessionary U.S. economy.
Bank repossessions, known as real-estate owned or REOs, rose in May and should spike in coming months because the moratoria ended, RealtyTrac said.
OBAMA PLAN NEEDS TIME
The administration’s plans to ease loan modifications and refinancing were detailed in early March and haven’t been implemented long enough to derail foreclosures.
The hurdles are high. Unemployment reached a nearly 26-year peak in May and mortgage rates have leaped a percentage point from their spring lows to more than 5-1/2 percent.
“One of the cures to this problem is enough buying activity to eat up the inventory of distressed properties,” Sharga said. “If mortgage rates go up to where people decide to wait out the market again, that’s just going to add to the inventory numbers and put more downward pricing pressure on all homes.”
RealtyTrac forecasts about 4 million foreclosure filings will be made this year on about 3.1 million households with loans. Last year, there was a record 3.1 million filings on about 2.4 million households.
In a more typical year, Sharga said there would be around 800,000 filings on 550,000 households.
“When you have a glut of inventory and downward pricing pressure that does tend to push properties into foreclosure,” said Sharga.
States where sales and prices soared most in the five-year housing boom earlier this decade remained the hardest hit.
Nevada stayed at the top of the foreclosure rate rankings by state, with one in every 64 housing units getting a foreclosure filing. California, Florida and Arizona, Michigan, Georgia, Colorado, Idaho and Ohio were the other states with the highest foreclosure rates.
Realtors, learn the skills that this market requires and you will have nothing to fear. Learn how to easily list and sell short sales. Watch the FREE Agent Short Sale Secrets video now…next, download the FREE Agent Short Sale Secrets book.
Ten states, led by California, accounted for almost 77 percent of total number of foreclosure actions in May.
“We need to give the administration’s programs a little bit of time to gain traction,” Sharga said. “If unemployment continues to worsen, all bets are off on foreclosure rates.”
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Commercial Foreclosures Spike
Even as banks grapple with rising foreclosures, many lenders have something else to worry about: A rising tide of potential losses from commercial real estate loans that could reach into the billions.
Delinquency rates and defaults on office and retail buildings and hotels have more than doubled in just six months. For apartments and industrial buildings, the rates have increased more than 80 percent, according to Reis Inc.
While homeowners are defaulting at almost four times the rate of commercial landlords, the sudden spike in late payments has many industry insiders worried about the collateral threat to the economy and financials system. Nearly $73 billion worth of commercial real estate loans are in some level of financial distress, according to Real Capital Analytics.
The risk to the economy is unknown, but likely underestimated in the government’s stress test of 19 major banks. The results released last week projected that should the recession worsen, the losses from commercial real estate loans could hit $53 billion, or 8.5 percent of their overall loan losses over the next two years.
The exercise notably left out the majority of the regional and local lenders, which hold a big chunk of the nation’s $3.5 trillion commercial property loans on their books and remain vulnerable.
Pressure rising
“Because of the severity of the economic downturn, now the pressure … for commercial real estate, is much higher,” said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services.The economy has forced many businesses to downsize and others like Linens ‘N Things and Circuit City to go out of business. That’s left behind empty storefronts, office buildings and warehouse space.
Landlords are finding it hard to attract new tenants. Increasingly, they are slashing rents or offering incentives like money for tenant renovation. Tenants, likewise, have also become more aggressive about demanding concessions from landlords.
Starbucks, for example, recently pressed its landlords to renegotiate the rents for leases at company operated stores. The coffee chain declined to say what kind of deals it obtained, but said it is pleased with the outcome.
While interest rates have declined, commercial property owners are having difficulty refinancing their loans because credit markets remain frozen.
And that’s what is worrying people like Kyle McLaughlin.
Overall, some $270.5 billion commercial property loans are expected to come due this year alone, said McLaughlin, a financial analyst for Reis. And it’s likely many borrowers won’t be able to refinance.
That’s what snagged General Growth Properties, the nation’s second-largest shopping mall owner. Unable to pay or restructure its debts, the company sought shelter from creditors last month, making it the largest U.S. real estate bankruptcy in history.
Real estate experts are concerned financially strapped landlords from General Growth to General Motors may have to sell property at bottom-dollar prices. On Monday, General Motors said it may sell the Renaissance Center in downtown Detroit, which not only includes the automaker’s headquarters, but also hotels, restaurants and more than a dozen shops.
As many homeowners know, sales of foreclosures and other distressed properties can create a downward spiral for similar properties in the neighborhood. Vacant commercial buildings, like vacant homes, also invite vandals and vagrants.
Troubled Las Vegas
Marcus & Millichap projects U.S. vacancy rates this year for office space will hit 17.6 percent; 10.9 percent for retail; 12.6 percent for industrial; and 7.7 percent for apartments.Las Vegas accounted for the biggest slice of troubled commercial properties of any metro area.
“Twenty-four percent of the Las Vegas commercial market is in distress,” said Jessica Ruderman, a senior market analyst with Real Capital Analytics.
Apartments account for most of Sin City’s troubled properties. The only market that even comes close to is Detroit, with 20 percent of its commercial properties in distress.
On Friday, Fannie Mae said apartment building loans that were at least 90 days past due almost quadrupled between December and March to a rate of 0.34 percent.
As a result, Fannie Mae’s credit-related expenses for apartment loans jumped to $542 million from $59 million at the end of last year. The company said its troubled loans are concentrated in Florida, Arizona, Georgia, Texas and New York.
Apartment loans are expected to rise further as unemployment climbs, leaving landlords struggling to fill vacancies and make their mortgage payments.
“The apartment market really trails the economy; we’re just now in the midst feeling the effects of these extreme job losses that started back in October of last year,” Nadji said. “And even if the job losses were going to stop tomorrow, the ripple effect will take a few months to show up in the commercial markets.”
Source: MSNBC.com
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Property Tax Revolt.
Here is a great people helping…and money making tip for you….
When Julie and I sold real estate in Ohio, every spring we would send a letter to all of the homeowners in our community offering guidance how to have their property tax bill reassessed. It seemed to be common practice for the homes in our community to be over-taxed.
Its a fairly simple process. There is a form that the homeowner needs to complete (You can usually find this form online…go to your local tax auditors web site). Next, they will need a CMA. Thats it! You provide all of this to your community, your friends, family and past clients. In virtually every real estate market homes have depreciated creating a situation where homeowners are overpaying for their property tax.
Imagine the gratitude that homeowners will have when you help them save money!
Obviously, this is a fantastic way for you to provide a much needed financial boost to your real estate clients….and a powerful method to expand your real estate business.
Homeowners watching the value of their houses slowly ebb are storming tax offices from Ann Arbor, Mich., to Atlanta, demanding that county officials reassess their homes and lower their property taxes.
It is a question of fairness, says Gene Burleson of Atlanta, who stood in line April 1 to appeal his assessment. His house has lost 25 percent of its value since it was last assessed, he adds: “I’m just trying to insulate myself from coming tax increases.”
Property taxes have become a rallying point for disgruntled Americans because, unlike sales or income taxes, they can be challenged directly by individual citizens: Some 40 percent of assessment appeals are successful. Yet the movement threatens already stressed counties, putting the tax receipts that pays for schools and police at risk.
“The property tax is the only tax where [a citizen] can go in and eyeball the guy,” says Billy Cook, executive director of the Institute for Professionals in Taxation in Atlanta, noting that appeals often lead to small-claims-style hearings to press one’s case against the county’s tax valuation.
“Think of all the taxes in the U.S.: The taxpayer renders their returns and the government audits to make sure you do it right,” adds Cook. “The only tax where the taxpayer audits the government is the property tax.”
In many areas across the U.S., home values have dropped so rapidly that assessors have not been able to keep up. Even as their home values depreciate, homeowners are likely to see increases in their tax rates, because appraisals sometimes have been done years earlier.
“You have a lot of things coming together right now” resulting in the rush on tax assessors’ offices, says Joan Youngman of the Lincoln Institute of Land Policy in Cambridge, Mass. “You have homeowners knowing that the value has dropped. You have rapid shifts in the market. And on top of that, it’s harder for assessors. … It’s more likely that there’ll be inaccuracies now than when everything is stable.”
Tax Appeals From Georgia to Nevada
Assessment appeals are up in cities nationwide:
In metro Atlanta, more than 50,000 people — a 10-fold increase over last year — filed appeals ahead of the April 1 tax deadline. The result was long lines of grumbling taxpayers. Little wonder: A survey released Tuesday said average home prices in Atlanta are down to 1996 levels.
Some assessors say the trend is being driven more by dramatic headlines than by real shifts in property values.
“I think there’s a genuine concern for what property values have done, but I think there’s also a reaction to national headlines that are reflective of markets in far worse condition than ours,” says Phil Hogsed, chief assessor of Georgia’s Cobb County, north of Atlanta.
Still, the onslaught highlights the delicate balance of property-tax assessments. While the tax assessor’s job is technically nonpolitical — they assess value, while politicians set the tax rate based on that value for their revenue needs — there’s constant pressure to keep valuations high to maximize revenue.
Assessments can be political, as a recent Supreme Court case in Nevada showed. The court ruled that dramatic differences in assessments in different counties bordering Lake Tahoe suggested that more than just the real value of the homes and properties was taken into account.
“Politicians … put pressure on the local assessor to keep that value as high as possible so they don’t have to raise the tax rate,” says Cook of the Institute for Professionals in Taxation.
Given what’s happening now, however, elected officials will be under increasing pressure to debate publicly the prospect of higher taxes to fund government, Cook says. Many states’ expenditures were growing by 10 percent a year before the recession began.
“If house prices are down 30 percent in any given market, then the property tax rate has got to go up … or the government’s got to shrink by 30 percent something’s got to give,” says John Baen, a real estate expert at the University of North Texas in Denton. “Any taxing authority taxing real estate is always [eager] to increase values based on a few select sales of some cherry-picked, high-priced properties … yet on the way down they’re slow to react.”
Why Appeal Taxes? ‘I Just Don’t Believe the Assessment’
Atlanta IT specialist Jacquay Waller stood in line this week at the Fulton County government complex. He bought his house in the Sandtown neighborhood for $350,000 two years ago. The county assessed it at $380,000. If he were to sell it today, Waller doesn’t think he’d get more than $250,000, based on comparable sales in the neighborhood.
“I just don’t believe the assessment,” says Waller. “I just don’t want to pay more in taxes on an amount that I could never sell it for.”
In good times, few people worried about their assessments and even saw high valuations as a good omen for their properties. Now, especially for those homeowners who bought at the height of the market, those values are a burden.
“People who bought in recent times at the highest prices are the ones whose values have fallen tremendously,” says Tom Richardson, a tax attorney in Ann Arbor, Mich., which has seen a record number of tax appeals this year. “It’s the people who have taken the worst hit who are now at risk.
Along with looming tax increases, those shaky valuations are forcing a secondary standoff between government and the people, says Sharron Angle, a former Nevada assemblywoman: “When people don’t feel like they can spend money because the government is going to tax them, and [homeowners] need money to forestall whatever attack the government is going to make on their pocketbook, it pits the government against the people and stagnates the economy.”
The National Taxpayer Union, an antitax lobbying group in Washington, claims that as many as 60 percent of homes in the U.S. are overassessed. For the 722,000 homes in New Jersey that are potentially overassessed, average savings on the tax bill could equal nearly $2,000, according to the website EasyTaxFix.com.
“It’s a muddled situation out there with what is a house’s true value right now,” says Verenda Smith, a spokeswoman for the Federation of Tax Administrators in Washington. “Everything is just an educated guess.”
“The standard wisdom is that homeowners win on the upside and lose on the downside and over time that evens out,” she says. “But they don’t want to hear that it evens out when they’re worried about their job and their house value.” Source: ABC News.
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So, we are coming out of a ‘Bubble Market’ when so called ‘Lair Loans’ were as common as people with real estate licenses in California. The Government, Lenders, Loan officers are now playing by new rules when it comes to writing mortgages……and what happens when the rules require more verifications? In other words, now that the ‘Liar Loans’ have gone the way of the SUV, guess what is happening….
Residential mortgage fraud soared to a record high in 2008, with incidents up 26 percent from the previous year, according to a report released Monday by the Mortgage Asset Research Institute.
The institute reported that mortgage fraud is more prevalent today than it was during the height of the housing boom that occurred during the first half of the decade.
Did you catch that….MORE prevalent now vs the boom when nearly anyone could get a mortgage loan….
It blamed the financial pressures of the ongoing recession for prompting many borrowers, lenders, brokers to make false statements on loan applications during 2008.
“As far as our calculations and research are concerned, this is an all-time high” since the institute began keeping records in 1990, said Jennifer Butts, one of the report’s authors.
Ah, no. Its because for the first time in years (and years) lenders are now actually forcing folks to prove their financial ability to pay their mortgage! Imagine that. So, for the first time in almost 10 years lenders have to collect full financial packages on their borrowers and the borrowers themselves must provide actual….proof!
Study results were presented during a telephone news conference from a Mortgage Bankers Association’s national meeting on loan fraud in Las Vegas. Officials stressed that mortgage scams are on the rise, “further draining lender, law enforcement, and consumer resources in the industry’s most challenging times.”
Among states, Rhode Island ranked first in the country for mortgage fraud last year, with more than three times the amount of fraud that had been expected, based on origination volume.
Despite the national surge in mortgage fraud, the rate for California in 2008 dropped to eighth place among the 50 states, from fourth place in 2007. The change was attributed to stricter law enforcement.
Florida, which ranked first among states in 2007, dropped to second place. Next in line for 2008 were Illinois, Georgia, Maryland, New York and Michigan.
The bankers association did not release a state-by-state breakdown of fraud incidents. Representatives said the totals were being withheld to protect the anonymity of lenders who participated in the study.
The ranking of the states was based on a fraud index created by comparing the number of loans issued and anticipated fraud cases to the actual number of incidents that were reported.
The top incident type nationally was application fraud, representing 61 percent of reported cases. It was the fifth year in a row that it topped the list.
Next came frauds related to tax returns and financial statements, which increased from 17 percent of reported frauds in 2007 to 28 percent in 2008.
In order of volume, other fraud types included appraisals or valuations, verifications of deposit, verifications of employment, escrow or closing costs and credit reports.
You know….all the stuff that they didn’t have to collect for loan approval only 18 months ago.
While home-loan standards have become tighter in recent months, in the years leading up to the mortgage market meltdown, underwriting was lax by historical standards.
Ya think!
Tens of thousands of adjustable-rate mortgages were issued without determining whether the borrowers had the savings or income to make their payments after their introductory “teaser” rates adjusted upward.
Edit: Millions vs tens of thousands.
Most analysts tie these weak standards to the current surge in foreclosures and the sharp decline of home prices in formerly hot real estate markets like San Diego County.
John Courson, chief executive officer of the bankers association, said loose underwriting didn’t make lenders responsible for the surge in fraud. Some people simply took the opportunity “to create fraud and take advantage of the system,” he said.
Courson acknowledged that lenders were not as careful as they should have been about screening loan applications, however.
Come on guys….lets stop this BS about how its the next guys fault. Borrowers, Loan Officers, Appraisers, Wall Street…..everyone was part of this real estate Ponzi Scheme.
“Clearly, some of the credit standards in the mortgage lending business and verification practices were not as robust as they should be,” he said.
Thanks to Emmet Pierce and SignonSandiego for this great article.
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From RealtyTrac
:
RealtyTrac has released its U.S. Foreclosure Market Report for February:
Foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 290,631 U.S. properties during the month, an increase of nearly 6 percent from the previous month and an increase of nearly 30 percent from February 2008. The report also shows one in every 440 U.S. housing units received a foreclosure filing in February.
“The increase in foreclosure activity from January to February is somewhat surprising, given that many of the foreclosure prevention efforts and moratoria in place in January were extended through most of February as well,” said James J. Saccacio, chief executive officer of RealtyTrac. “There were some notable exceptions to this: a 45-day voluntary moratorium in Florida expired at the end of January, and foreclosure activity there was up 14 percent from the previous month; and many New York foreclosure
proceedings delayed by a new law for an extra 90 days appear to have hit the system in February, when the state’s foreclosure activity increased 23 percent from the previous month.”
Which states have the highest foreclosure rates?
1. Nevada: 1 in 70 homes
2. Arizona: 1 in 147 homes
3. California: 1 in 165 homes
4. Florida: 1 in 188 homes
5. Idaho: 1 in 358 homes
6. Michigan: 1 in 360 homes
7. Illinois: 1 in 369 homes
8. Georgia: 1 in 389 homes
9. Oregon: 1 in 446 homes
10. Ohio: 1 in 451 homes
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Thanks to Coach Jonathan for sending this to me to share with you…….
WASHINGTON – Despite halts on new foreclosures by several major lenders, the number of households threatened with losing their homes rose 30 percent in February from last year’s levels, RealtyTrac reported Thursday.
Nationwide, nearly 291,000 homes received at least one foreclosure-related notice last month, up 6 percent from January, according to the Irvine, Calif-based company. While foreclosures are highly concentrated in the Western states and Florida, the problem is spreading to states like Idaho, Illinois and Oregon as the U.S. economy worsens.
“It doesn’t bode well,” for the embattled U.S. housing market, said Rick Sharga, vice president for marketing at RealtyTrac, a foreclosure listing firm. “At least for the foreseeable future, it’s going to continue to be pretty ugly.”
The rise in foreclosure filings came despite temporary halts to foreclosures by Fannie Mae and Freddie Mac, and major banks JPMorgan Chase, Morgan Stanley, Citigroup and Bank of America. Those companies pledged to do so in advance of President Barack Obama’s plan to stem the foreclosure crisis, which was launched last week.
Two states that contributing to the increase were Florida and New York, where temporary bans on foreclosures ended.
But other states are moving to enact similar measures. On Wednesday the Michigan House approved legislation that would give homeowners facing foreclosure a 90-day reprieve. The legislation now goes to Michigan’s Republican-led Senate, where its future is unclear.
While the number of foreclosures continue to soar nationwide, banks have held off listing properties for sale, Sharga said. There were around 700,000 such properties nationwide at the end of last year, making up a “shadow inventory” of unsold homes that could drag the housing crisis out even longer.
“It’s going to take us longer than you might anticipate to burn through he inventory of distressed properties,” he said.
The results highlight the challenge ahead for Obama and his economic advisers. The Obama administration is aiming to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
Still, the faltering economy, driven down by the collapse of the housing bubble, is causing the housing crisis to spread. Nearly 12 percent of all Americans with a mortgage — a record 5.4 million homeowners — were at least one month late or in foreclosure at the end of last year, according to the Mortgage Bankers Association. That’s up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007.
The RealtyTrac report said more than 74,000 properties were repossessed by lenders in February as the worst recession in decades, falling home values and stricter lending standards continue to sap the U.S. real estate market.
Nevada, Arizona, California and Florida had the nation’s top foreclosure rates. In Nevada, one in every 70 homes received a foreclosure filing, while the number was one every 147 in Arizona. Rounding out the top 10 were Idaho, Michigan, Illinois, Georgia, Oregon and Ohio.
Among metro areas, Las Vegas was first, with one in every 60 housing units receiving a foreclosure filing. It was followed by the Cape Coral-Fort Myers area in Florida and five California metropolitan areas: Stockton, Modesto, Merced, Riverside-San Bernardino and Bakersfield.
Source: Associated Press.
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Dear Tim and Julie,
A friend from church called me over to their house because I am a Realtor and they needed to sell their house. When I got there they explained how he was getting laid off from his job and he can’t find any work locally. Their third child was on the way, so they were very concerned. They went back to Georgia to the area where they moved here from and he was able to get a job offer at a great company. The problem was, there house would never sell for what they needed it to. They were afraid he would have to go and leave his wife here with their children until the house sold.
After some discussion, it turns out there house was totally upside down. I described how I could help them do a Short Sale and that they had nothing to worry about. They were in shock of how positive I was and how I was making light of such a touch situation. This problem kept them up at night and here I was smiling about how I can fix their problem.
We listed the house, they all moved into a rent to own house in Georgia and he started his new job. With in five days I had a pile of offers on the house. I ended up completing the short sale in under 45 days and their credit didn’t take much of a hit at all.
They love were the live now and the stress is gone. This was my first short sale and it couldn’t have gone any smoother!
Thanks for all of the great skills you taught me!
Donna Dorsey
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