Bank Foreclosures Information

The increasing number of repo homes in Ohio, Michigan and South Carolina is a reflection of thousands of shattered American family dreams.

Most of these families who saw their properties turned into repo homes have either rented, live with family or friends or take refuge in shelters.

They have volumes of unpaid bills, closed savings account, negative credit score and endure the feeling of failure, shame and displacement.

Ohio foreclosures increased by 45 percent or 86,000 repo homes in 2008 from 2004. According to the Ohio Supreme Court data, a total of 85,773 homeowners in the state were affected by foreclosures, a gain from 59,041 in 2004 and 83,230 in 2007.

Most of these families who have lost their homes to foreclosure are always moving forward and making an effort to rebuild their lives.

Meanwhile, the Michigan foreclosures rate increased by 10 percent from January to February 2009, with one in every 360 properties were repo homes.

Some families have seen their homes sold at last year’s sheriff’s auction at prices way below the original market value. Some of them argued that because they have reached the bottom in their lives, they have nowhere to go but up.

On the other hand, South Carolina foreclosures increased by 254 percent compared with repo homes data of February 2008. What makes matter worst for families in South Carolina is that as foreclosures surged, so did the unemployment rate which reached 10.4 percent.

Some families who saw their properties turned to repo homes were inexperienced in the process of home buying, have flawed credit background and minorities.

According to data from Federal Reserve, most black homeowners who took out mortgages in 2005 opted for subprime loans. Meanwhile, only 17 percent of white families had availed of subprime loans. The data showed that the brunt of foreclosures fell on minority homeowners in South Carolina.

Nationwide, foreclosures increased by 6 percent in February 2009. This increased was reported despite moratoriums offered by major mortgage lenders. The figures strengthened industry speculations that moratoriums are not providing the much needed help required by homeowners who are in default and on the brink of losing their properties to foreclosures.

Though distressed homeowners may not be immediately forced out of their repo homes, it do them no good in the long run if the mortgages they owe are more than the market value of the house.

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It used to be that homebuyers looking for bargains flocked to foreclosure listings auctions because they know that they could find good property deals. But Florida homebuyers are discovering that this is not the case anymore. Good deals no longer abound in foreclosure listings auctions

This is because banks include in the bid amount the mortgage owed to them, attorney’s fees and whatever expenses incurred during the foreclosure process.

And most of the time, the bid amount is higher than the market value of the house itself, taking into consideration the rapid decline of property prices.

According to First American CoreLogic, a real estate data firm, home prices in Gainesville, Florida declined by 7.5 percent from December 2007 to 2008. During the period, about 18 percent of distressed homeowners in the area owed mortgages more than the total fair market value of their properties.

Also, 6 percent of distressed homeowners were nearly 5 percent of owning more than the real worth of their distressed homes.

Florida is one of the top 10 states with a growing foreclosure listings. It is predicted that the number of homes in the state’s foreclosure listings could increase by 100 percent for this year.

Meanwhile, some foreclosure listings auctions in Florida were cancelled because troubled homeowners declared bankruptcy, were able to negotiate an affordable payment plan, refinance, were able to update their payments or sold the home in short sale.

Homeowners who go through foreclosures went to a courthouse auction. If nobody bids for the foreclosed property, the bank will offer a token bid of $100.

Homes that were not sold during auctions will be added to a growing foreclosure listings of unsold homes and may further drag down home market values.

Foreclosed properties that remained abandoned and vacant for a long time also contribute to the deterioration of neighborhoods.

Currently, there are 57 bank owned foreclosure listings and short sales in Alachua County. These figures represented 3.7 percent of the total 1,551 residential houses for sale.

In 2008, about 27 bank owned properties and short sale were put on the market. For this year, 30 new foreclosure listings were added in Florida.

Foreclosure filings in Gainesville area increased by 50 percent from January of last year to the same month this year.

Foreclosures continue to spread in populated neighborhoods of Gainesville, particularly in southeastern and northeastern.

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Massachusetts Governor Deval Patrick has launched the housing nonprofit called Citizens’ Housing and Planning Association (CHAPA) to manage the acquisition, repair and disposition of residential properties in private and government foreclosures.

CHAPA will prevent foreclosed homes from turning neighborhoods into areas of blight and crime. It will also help lower-income families access affordable properties to buy or to rent. CHAPA will be funded from a $54-million federal scheme aimed at helping states mitigate private and government foreclosures.

Governor Patrick said CHAPA will screen local nonprofit housing groups to pre-qualify about 50 housing nonprofits and several for-profit housing developers it will work with. CHAPA will connect these nonprofits to private mortgage banks, including giant lenders Bank of America, JPMorgan and Wells Fargo and to government-controlled lenders Freddie and Fannie Mae, which have thousands of private and government foreclosures.

The private-public alliance will allow nonprofits to take a first look at private and government foreclosures ahead of speculators and higher-income homebuyers. This will ensure the sale of bulk properties in foreclosure-laden areas, such as Brockton and New Bedford, to nonprofits able to choose needy but deserving families and committed to protect neighborhoods from deterioration.

Massachusetts is 20th in RealtyTrac’s ranking of states by foreclosure rate in January this year. It had a total of 3,362 foreclosure filings, including notices of default, notices of foreclosure sale and real estate owned foreclosures. In 2008, it had more than 12,000 private and government foreclosures.

Since the start of the year up to the middle of March, according to foreclosure.com, there were 6,789 pre-foreclosures, 439 sheriff sales, 2,266 bankruptcies and 2,989 completed foreclosures across the state. Meanwhile, foreclosuresmass.com reported 3,360 foreclosure filings for the previous two-month period. One positive thing about Massachusetts though is its drop in pre-foreclosures in February compared to the previous month, as surveyed by foreclosures.com.

CHAPA President Aaron Gornstein said the program will not only help low-income families and at risk- neighborhoods. It will also help mortgage lenders reduce nonperforming assets and holding costs for lender and government foreclosures.

Furthermore, to make the program more efficient in averting private and government foreclosures, Gornstein made sure that the chosen nonprofits and private home builders have the capability to rehabilitate homes and educate borrowers on how to keep up with payments and avoid foreclosures.

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Wisconsin foreclosures have been climbing steadily since 2005. The trend spawned foreclosed homes auctions conducted weekly and attended by homebuyers who are hoping to find houses at bargain prices.

At Douglas County Courthouse, weekly foreclosed homes auctions were quick and cordial events attended by bargain-hunting homebuyers.

According to Deputy Dan Lindberg, foreclosure auctions were also witnessed by bankers and lawyers.

People familiar with foreclosed homes auctions held at the Douglas County Courthouse said that a good buy deal is not that easy to find. Usually, minimum bid amounts are required for each foreclosure property. The minimum bid amounts include the principal, legal fees and interest rates owed

Attorney Steve Olson of Maki, Ledin, Bick and Olson noted that majority of properties in foreclosed homes auctions priced more than its true market value.

He added that in cases where foreclosed properties are auctioned, the banks will bid what is owed.

In foreclosed homes auctions, banks have the option to sell the homes themselves or negotiate with local real estate brokers about putting them on the list. Major banks usually hire asset companies, such as Century 21 Gilderman and Associates to sell the foreclosed homes.

Under the Wisconsin law, former owners of repo homes still have 10 days after the court confirmed the sale to purchase back the foreclosed properties.

Lindberg cautioned that buying foreclosed homes have its risks. He pointed out that foreclosure properties are auctioned on as-is basis and open house showings before the sale are not allowed.

He explained that potential homebuyers cannot inspect the foreclosed homes because most of the properties still own it.

Some of the common problems that homebuyers will encounter in foreclosed homes purchased in auctions are frozen pipes and busted pipes.

Foreclosures in the state are growing rapidly that some weeks, Sheriff Tom Dalbec signed more than 40 foreclosure sales.

According to data provided by the Director of State Courts Office, foreclosure filings in Douglas County Circuit Court rose by 12 percent in 2008 from 2007. However, the increase was lower than the average rise of 21 percent, statewide.

Out of the 206 filings made in Douglas County in 2008, 107 went into foreclosure proceedings, 75 were dismissed while two remained open.

The total number of foreclosure filings for the period ended March 11, 2009 was 49 and majority of them were filed by national mortgage lenders such as US Bank and Countrywide.

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Freddie Mac showed its commitment to help ensure the success of President Obama’s Home Affordable program by suspending government foreclosures on defaulting loans that qualify for one of the government’s housing initiatives.

With the previous suspension of government foreclosures already expired last March 6, Freddie Mac again reached out to distressed homeowners by ordering its counselors and servicers to find a scheme for these borrowers out of the available workout initiatives before putting their loans to foreclosure folders. These include Freddie Mac’s refinancing schemes, the Federal Housing Finance Agency’s Streamlined Modification Program, Fannie Mae’s refinancing schemes and the HOPE NOW Alliance scheme.

Ingrid Beckles, default asset management executive at Freddie Mac, said Freddie Mac has ordered its servicers and counselors not to proceed with government foreclosures unless they have contacted the homeowner and the homeowner did not show interest or did not have the financial capacity to participate in any of the loan modification or refinancing schemes.

Additionally, Freddie Mac has also launched a new modification strategy that targets high risk loans. It will hire third party servicers to focus on borrowers who took alternative mortgage loans and other highly risky mortgage loans. It has also prepared counselors and specialists trained to help borrowers with high risk loans and to handle the expected high volume of callers.

Meanwhile, Faith Schwartz, executive director of HOPE NOW, reported that HOPE NOW has modified 123,000 in January, an increase of 4 percent from repayment and modification plans in December 2008. HOPE NOW is an alliance of private-sector mortgage servicers, investors and nonprofits aimed at reducing lender and government foreclosures. Schwartz also reported that HOPE NOW processed 125,000 loan payment plans in January.

As the foreclosure prevention programs are being implemented, lender and government foreclosures continued to increase as shown in the February foreclosure data collected by RealtyTrac and foreclosures.com. According to RealtyTrac, there were 290,631 foreclosure filings in February. These include notices of default, bank repossessions and auction sale notices. During the month, one house in every 440 housing units nationwide was given a foreclosure notice.

Foreclosures.com’s data showed that lender and government foreclosures in February increased by over 67 percent from January data. Alexis McGee, head of foreclosures.com, said that if nothing is done on a national scale, lender and government foreclosures will reach 1.2 million housing units by the end of 2009.

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The 6-percent increase in foreclosure filings nationwide in February from the previous month is so unexpected that Rick Sharga, vice-president for marketing at RealtyTrac, has called the increase shocking. Sharga and other analysts expected that foreclosure figures would decrease because of the foreclosure moratoriums given by mortgage banks and government lenders.

More than 290,000 housing units had a foreclosure notice in February, an increase of nearly 30 percent from total filings in February 2008. Included in the data are more than 74,000 mortgage bank repossessions, an increase of more than 10 percent from the 67,000 total in January. If data on tax foreclosure properties are included in RealtyTrac’s report, they surely also reflect increases, since the high jobless rate has affected everyone, including former owners of tax foreclosure properties.

Sharga is concerned about the February increase since foreclosure moratoriums from major mortgage lenders Freddie Mac and Fannie Mae should have covered thousands of troubled mortgages. Anyone analyzing the data would be bothered about how high the increase would be if the mortgage loans are finally uncovered when the foreclosure moratoriums are lifted.

RealtyTrac’s report also highlighted the difficulty of homeowners in default to get out of their distressed situation, which is similar to the situations of people troubled by tax foreclosure properties. Most borrowers in default have gone on into foreclosure even with the moratoriums given. In February, bank repossessions increased by 11 percent, almost twice the 6 percent increase in foreclosure filings.

Housing analysts said many defaulting loan accounts moved on into foreclosure partially because of their underwater conditions. In many areas where there are lots of lender and tax foreclosure properties, home prices have fallen so low that troubled borrowers no longer have the incentive to continue with the payments.

As the foreclosure crisis spreads its claws, many states that previously had very low foreclosure numbers are now feeling the effects of lender and tax foreclosure properties.

In South Carolina, where the unemployment rate hit the second highest level nationwide in January, foreclosure filings increased by 254 percent from February 2008 total filings. It had one foreclosure notice for every 818 houses, putting South Carolina 20th in RealtyTrac’s foreclosure chart for February.

Bruce Marks of the Neighborhood Assistance Corp. of America insisted however that faulty mortgage underwriting is the main cause of foreclosures in South Carolina. The loans were not affordable from the start. Unemployment worsened the situation, causing the rise in lender and tax foreclosure properties.

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Despite efforts by the federal and state governments, banks and nonprofits to help solve the foreclosure crisis, the number of foreclosure filings increased by 67 percent from January foreclosure figures, according to foreclosure and real estate research firm Foreclosures.com.

There were 121,756 completed foreclosures in February, an increase of 49,062 units from the total January foreclosures of 72,694. It even surpassed the highest monthly record of 104,243 in September 2008, setting a new record. Pre-foreclosure filings also increased by 24 percent from the January level, setting a new pre-foreclosure record.

There was no data presented on tax foreclosures, but it is believed that the number of individuals who have lost homes to tax foreclosures have also risen. Unemployment, the key factor cited by Alexis McGee, also affected people troubled not only by lender foreclosures, but also by tax foreclosures.

In January, when foreclosure figures went down by 26 percent from December 2008 data, several analysts had hoped that lender and tax foreclosures were beginning their slide down, but the February data is another letdown.

McGee reported that foreclosures in all regions increased despite moratoriums on foreclosures and evictions. The largest increase occurred in the Northeast, where filings rose by 138 percent from January levels, followed by Midwest, which had an increase of 90 percent. Third was the Southwest, with an increase of 63 percent. The Southeastern region was fourth, with an increase of 46 percent.

Foreclosures.com also emphasized that the foreclosure numbers represent completed foreclosures, not just foreclosure filings going through the foreclosure process. McGee contended that based on the first two months’ data, total foreclosures for the year 2009 could reach 1.2 million if nothing is done to stop the foreclosure avalanche. He is however hopeful that lender and tax foreclosures would decline by the end of the year because of Obama’s more aggressive program in comparison to the Bush administration’s lackluster effort.

Obama’s program, now dubbed Home Affordable initiatives, offers loan refinancing to up to 5 million borrowers of loans provided or guaranteed by either Fannie Mae or Freddie Mac. It also offers loan modification to up to 4 million borrowers whose home values have deteriorated to levels much lower than the amount they owe. Although not included in the program, individuals troubled by tax foreclosures can be indirectly helped by the broader parts of the program intended to create and save jobs.

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Both first-time and expert homebuyers flocked to foreclosure auctions knowing that these are places where they can find cheap houses for sale.

A foreclosure auction in Roselle, New Jersey was attended by potential homebuyers who hoped to find cheap houses for sale that they could purchase. For example, in an auction of 375 foreclosure properties, one house with seven bedrooms and five bathrooms, estimated at $565,000, received an initial offer of $129,000 and was sold at $245,000, less than half of its fair market value.

At Jacob K. Javits Convention Center in New York, about 1,400 potential homebuyers attended cheap houses for sale auctions. The attendance was bigger than the previous year’s first foreclosure auction of Real Estate Disposition Corp.

The increase in the number of auction goers is attributed to the continuing rise of foreclosure rates and the abundance of cheap houses for sale.

Real Estate Disposition Chairman Robert Friedman said that the economy and foreclosures are currently in their worst conditions ever.

He added that the list of cheap houses for sale in the company’s portfolio is growing every day, and foreclosure rates are unprecedented since it started its auction business 19 years ago.

Real Estate Disposition is hired by financial services institutions to handle cheap houses for sale at auctions. In 2008, the auction house held about 300 auctions and for 2009, expects to host an estimated 400 foreclosure auctions.

According to Todd Gladis, vice president of Real Estate Disposition, every potential homebuyer has a role to play in helping reduce the number of foreclosed homes.

In foreclosure auctions, homebuyers are required to pay upfront an equivalent of 5 percent of the property’s total sale price. They are also required to pay cash or issue a personal check for the unpaid balance of the down payment. The remaining balance could be paid through financing with the help of mortgage specialists.

Auction houses usually add a fee of 5 percent to the final sale price of each foreclosed property that has been sold.

Foreclosure auctions attract three types of audiences. One group is composed of experienced bidders who earned their living purchasing, repairing and selling foreclosure homes. The second group is made up of first-time buyers while the last group is composed of people who just want to witness the whole auction process.

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RealtyTrac, which compiles and monitors the foreclosure market in the United States, released a report showing that Central Florida foreclosures increased three times in the span of one year, from 2007 to 2008.

Hardest hit cities are Deltona and Kissimmee where six of their neighborhoods are experiencing high rates of Central Florida foreclosures.

According to industry experts, areas most affected by Central Florida foreclosures are communities that have affordable housing market.

Florida foreclosures took a beating in January 2009 with 10,007 units falling victims to the crisis and pre-foreclosure filings reaching 43,070. It is predicted that Florida foreclosures could rise by 100 percent this year, making critics doubt whether President Barack Obama’s foreclosure prevention plan would succeed in its goal to help as much as 9 million American homeowners remain in their properties.

Meanwhile, Florida Governor Charlie Crist explained his plan to reduce taxes to allow distressed homeowners pay for mortgages.

Florida has the highest number of default mortgages, with one out of five mortgage loans in default in 2008.

On the other hand, the Bank of America will offer $2.5 million grants to help stem the tide of Florida foreclosures.

The $2.5 million grant will be coursed through the Alliance for Stabilizing Our Communities, a coalition led by the National Council of La Raza, National Urban League and the National Coalition for Asian Pacific American Community Development.

The alliance, which was established to help multicultural borrowers facing the threat of losing their properties to foreclosures, will find the best possible solutions for the housing problems, particularly how to control the growing number of distressed homes.

The grant that the Bank of America would provide will fund the hiring of additional counselors, conduct of counselor training, production of multi-language outreach educational materials for at-risk homeowners and resource guide materials to educate and prepare communities on potential foreclosure challenges.

The alliance will host 49 property retention fairs in various cities, including Fort Lauderdale in Florida, to offer over 11,000 distressed homeowners onsite counseling by nonprofit organizations approved by the Housing and Urban Development.

Bank of America will post retention associates at various fairs to partner with alliance nonprofit organizations to review mortgages and determine several foreclosure-prevention options such as refinancing and loan modifications.

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Florida foreclosures rate was the second highest in the United States in 2008. About 4.52 percent or one in every 22 homeowners has filed for Florida foreclosures.

Data released showed that Florida foreclosures remained unabated last year. Following is a breakdown of Florida foreclosure rates by cities:

• Orlando – 5.48 percent or 1 in every 18 housing units
• Fort Lauderdale – 5.95 percent or 1 in every 17 housing units
• Tampa Bay – 4.14 percent affecting 53,630 housing units
• Miami – 5.21 percent or 1 in every 19 households has received foreclosure filings
• Sarasota-Bradenton-Venice – 4.5 percent up by 153.58 percent from 2007
• Palm Beach – 3.71 percent, a rise of 96.33 percent from 2007
• Jacksonville – 2.99 percent up by 78.46 from 2007

As Florida foreclosures continue to increase, it is no wonder then that scammers will take advantage of owners of distressed properties who want to avoid foreclosures. Since last year, thousands of distressed homeowners have been defrauded by individuals or companies of their hard earned money or been made to sign over their properties to scammers who guise themselves as foreclosure rescuers.

Data of Florida foreclosures fraud released by the state attorney general’s office indicated an abnormal growth of complaints from 9 in November of last year to 227 in February of 2009.

Federal Bureau of Investigation (FBI) chief financial investigator Sharon Ormsby noted that a percentage of federal relief funds usually fell on the hands of scammers.

About 35 regional offices have been established by the FBI nationwide to fight mortgage fraud and help desperate homeowners who would do anything to keep their properties.

However Consumer Warning Network’s Angie Moreschi said that if foreclosures would remain unabated for long, the number of Americans who would fall prey to scammers will soon reach an exorbitant number which would be difficult for any agency to handle.

Moreschi is expecting that President Barack Obama’s $75 billion foreclosure prevention program would entice lenders to modify loans and at the same time, attract scam artists who also want to illegally get a slice of the aid intended for homeowners facing foreclosure threat.

She warned that in some cases, mortgage brokers who offered to modify distressed homeowners’ loans are also the ones who will defraud them.

RealtyTrac, a company that monitors the foreclosures market, predicted that homeowners facing foreclosures could grow to 3 million.

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