Search US Foreclosures

Foreclosure numbers throughout the US are only increasing. They are especially prevalent in the hardest hit areas like Nevada Real Estate, Phoenix Arizona Homes, and Fresno CA Homes, but they are everywhere. The number of home buyers isn’t exactly increasing either. If we wan’t to really get rid of the massive quantities of REO homes, we need to do something different. I really like what Elizabeth Duke suggested about what should be done regarding foreclosures:

It is not sufficient, given current economic conditions and the significant needs of our neighborhoods, to do things the way we have always done them. Homeownership, long promoted by federal policy and facilitated by local housing organizations, cannot and should not be the only alternative for REO properties. Indeed, redevelopment strategies profiled in the conference publication include rental housing, lease-purchase, and even converting owners to renters to avoid vacancies. Including rental options among the mix of stabilization strategies makes particular sense at a time of high unemployment. Even in the best of times, homeownership limits mobility in the labor market.

Today’s summit and companion publication also highlight several promising models of “non-redevelopment” to stabilize communities, such as simple code enforcement, land banking, and demolition. The scale of the problem is such that communities must consider a variety of strategies to repurpose REO properties within the context of a comprehensive plan that addresses a variety of community needs. Only in this way will our neighborhoods be restored to health and vitality.

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.

In the crazy world of increasing foreclosures, foreclosures are costly, they hurt both the bank and the person being foreclosed on. Short Sales, are the most common alternative to avoid foreclosure, but short sales are very time consuming, ineffective, and subject to lots of fraudulent behavior.

Another solution, that hasn’t been used much as a foreclosure prevention option is the “Deed in Lieu of Foreclosure” It’s so simple, and so much more beneficial to many banks and underwater borrowers, that it’s surprising they haven’t been used more. Apparently the light has been lit, and deeds in lieu of foreclosure are becoming a real, viable, alternative to foreclosure. Here is an excerpt from a Washington Post Article on Deeds in Lieu of Foreclosure, by Kenneth Harney:

Deeds in lieu also are surging because they provide a win-win for borrowers and mortgage investors that short sales often cannot match. Tops on the list: speed. Travis Hamel Olsen, chief operating officer of Loan Resolution, a Scottsdale, Ariz., firm that works with lenders to solve troubled borrowers’ problems, said deeds in lieu represent “a very expeditious way to move on” for underwater borrowers who are facing potential foreclosure.

“A lot of owners just want to be finished with it now,” he said. “They don’t want to deal with [the house] anymore.” They don’t want to deal with real estate agents or signs on the front lawn that reveal their financial squeeze to neighbors. They don’t want to haggle with potential buyers coming in with lowball offers. But they also don’t want to simply walk away — strategically default — because that will crater their credit files and scores for as much as seven years.

Greg Hebner, president of the MOS Group of San Diego, which also works with banks and investors across the country to resolve defaulting borrowers’ situations, said a key motivation is that lenders are stuck with massive backlogs of underwater homes that haven’t yet gone through foreclosure and been put on the market — the so-called shadow inventory.

Not only is it cheaper for them to do deeds in lieu to gain control of those properties, but with mortgage rates below 5 percent, they also will probably be able to resell them faster and on potentially more favorable terms in the summer and fall.

via Kenneth R. Harney – Kenneth Harney: Foreclosure alternative gaining favor.