Search US Foreclosures

Total Shadow Inventory for the top 25 states:

Percentage of distressed sales (short sales and foreclosures) by state:

Number of months it would take to clear the shadow inventory at today’s sales pace. Note: this is assuming only shadow inventory is selling.

via State-by-State Shadow Inventory | housingstorm.com.

We all know that the foreclosure problems in the US are pretty serious right now. Hundreds of thousands of “home owners” are underwater, and owe far more on their homes than they could ever sell them for.

Many of these homeowners have come to the conclusion that walking away from their home is a better financial decision than making payments and waiting for real estate values to recover. Lots of these “strategic defaulters” can afford their mortgage payments.

With the way the foreclosure process works, it usually takes at-least 8 months of missed payments before the bank will actually finalize the foreclosure and repossess the homes. With the huge number of foreclosures, some banks are literally taking years to initiate foreclosure auctions.

Underwater homeowners can not only eliminate thousands in debt by being foreclosed on, but with way the system works, can also save money by not making home payments.

This flaw in the foreclosure process is actually providing what is known as “stealth stimulus. ” People who are living rent free in homes undergoing foreclosure, have a lot of extra cash, and most of this is helping the overall economy by being spent.

Some owners of underwater homes are actually making money off of the foreclosure process by renting out their homes that they aren’t making payments on.

Foreclosure was meant as a way to protect banks from irresponsible borrowers by using the real estate as collateral. With the current real estate market, and lending practices that occurred during the housing boom, foreclosure is providing the opposite effect. It is providing financial benefits to underwater borrowers while bringing huge losses to banks.

While strategic defaulting is definitely not ethical, in some cases it provides huge financial relief to insolvent borrowers. The slow foreclosure process is also stimulating our slow economy by giving extra cash to people who would ordinarily be using income to make housing payments.

While nationally foreclosures were down slightly during June, for Governement backed Fannie Mae loans, the foreclosure amounts actually increased. One of the reasons for this might be the increase in the number of FHA and Fannie loans that began with the contracting of the credit market in 2007. Starting in September of 2007, the number of FHA loans and Fannie/Freddie backed products rose substantially. Here is some date from the Inman News.

In releasing number for June, LPS said foreclosure starts among loans guaranteed by Fannie Mae and Freddie Mac have been accelerating and are currently at all-time highs.Foreclosure starts are accelerating along with Home Affordable Modification Program HAMP cancellations, LPS said, with most of the increase and volume concentrated loans that were delinquent by six months or more.Among homes in foreclosure, homeowners were behind on their payments by 461 days on average, up from 343 days at the same time a year ago and 274 days in June 2008.

via Foreclosure starts hit record high for Fannie, Freddie loans | Inman News.

What are foreclosures? They are the way to get money back when a debt is not paid.

NOD – Notice of Default – The first step to being “in foreclosure” is receiving the notice of default. Missing payment is just getting in default. Foreclosure has not actually begun yet. Until the notice of default is issued, the foreclosure is not issued. Default notices can be issued for reasons other than missed payments, such as having a meth lab or other reasons that violate the terms of the trust deed. The notice of default must be recorded in the county where the property is located.

Reinstatement Period – Lasts 90 days after the NOD to give the homeowner an opportunity to reinstate the loan. This is a statutory requirement that can’t be shortened. It is a built in protection in favor of the homeowner. During this time they can modify a loan, sell it, or get it reinstated.

Notice of Trustee Sale – The Date of the sale is published In a newspaper of general publication three times, once a week for three consecutive weeks. Must occur 10-30 days after the last publication. Must be published publicly at County Court House, on the Property’s Door. The purpose is to make sure the owners are aware, as well as advertise it to potential bidders. It is full of legalize.

Court House Steps Foreclosure Auction – The lender has the opening bid at the amount owed. No money actually changes hands for them. Trustees can postpone these sales for up to 45 days for any reason, like if there is a short sale closing that has a chance of happening that needs to be postponed. After the 45 days, the notice process needs to start over again.

If you bid on a foreclosure auction, and can’t perform, they can sue you for damages of not performing. If you win the bid, then you get a Trustees Deed, a simple deed with no warranties.

Second Liens, Home Owners Association Assessments, are all wiped out. But, Federal Tax liens might not be eliminated if they fail to give notice. If the trustee does give proper notice to the federal government of the upcoming trustee sale, then the Federal Tax Lien is actually wiped away. Property Tax Liens do have to be paid. You will have to pay these off. They are really the only thing a buyer at a trustee sale would be responsible for.

If there are actually excess funds from the bid, then the trustee applys those funds to any junior leins.

You can’t force lenders to foreclose. It’s their decision, their right to foreclose if they want to.

Deficiency Judgements – Lenders can sue the person who they foreclosed on for the actual loss of a foreclosure. To do this, they must sell the property within 90 days, then judicially sue. Chances are the owners are insolvent, and the bank won’t be able to collect anything. Fore these reasons, deficiency judgement are rare. But, it is common to 1099 the foreclosed person, so they are responsible for the amount they were forgiven on their taxes. The junior liens are in a different situation, the have 6 years in which the can go back and sue for the deficiency they lost.

This stat is pretty sick. Well you know all the talk about HAMP loan modifications, making homes affordable so that people don’t foreclose, going through hoopes to give default borrowers below market rate loans, and reduce principle. Well, according to the Fitch Ratings, most of these borrowers are going to default anyways. There is still going to be a foreclosure even after all of the wasted effort.

Fitch Ratings Ltd. forecasts that borrowers whose loans are modified under the federal Home Affordable Modification Program, or HAMP, are 65 percent to 75 percent likely to re-default within a year.Fitch says the failure rate is high because borrowers have too much other debt, including car loans, credit cards, and other obligations.Officials defend the program, saying that if HAMP saves the homes of one-third of the borrowers, it is a success.Source: The Wall Street Journal, James R. Hagerty 06/16/2010

via REALTOR® Magazine-Daily News-Many HAMP Modifications May Fail.

We all know that the housing market, the number of distressed borrowers, and the number of future foreclosure homes is bad, but is there actually light at the end of the tunnel? According to DN news the number of default homes is down. It’s default homes that become foreclosures, so if the number of delinquencies declines, the number of future foreclosure homes will also decline.

The number of loans held by Fannie Mae and Freddie Mac that were 60-plus-days delinquent stood at 1.7 million at the end of the first quarter of 2010, the two companies’ conservator said in a report to Congress this week.

While the volume of past dues may seem like an extraordinary negative weight on a servicing community already stretched thin, the Federal Housing Finance Agency (FHFA) says the number of GSE loans in the 60-plus-days delinquency bucket actually decreased by 1.3 percent, or 23,800 loans, in Q1. It marked the first decline in two years.

via Report: 1.7 Million GSE Loans at Least 60 Days Past Due.