Foreclosures and More

Repo homes for sale continue to flood the housing market in South Carolina, particularly in Anderson County where almost 1,600 repossessed homes were listed. And industry experts see no easy way out of the foreclosure problem or to improve the situation.

Anderson County has been ranked by the South Carolina State Housing Finance and Development Authority as number 7 in terms of foreclosure rate. The agency studied several counties in the state, taking into account the average number of repo homes for sale, the volume of abandoned and vacant residential properties and the high-cost mortgage loans.

Anderson County interim administrator Rusty Burns described the foreclosure situation in the area as horrible. He blames the economic recession on the worsening foreclosure problem in the county. He laments the fact that many hardworking and honest county residents have been severely affected by the economic crisis and foreclosures.

Burns pointed out the devastating psychological impact of the foreclosure problem on homeowners and their families.
He said that the County Council decided not to increase taxes this year to help ease the burden on homeowners who are struggling to make their mortgage payments. He added that the council plans to hold business and energy seminars for county residents.

Meanwhile, the State Housing Finance and Development Authority has awarded Anderson city and two local nonprofit agencies with $2.17 million to allow the city to purchase repo homes for sale. The funds to purchase foreclosed homes sale were awarded in accordance with regulations set by the U.S. Department of Housing and Urban Development (HUD).

Anderson city’s director of economic and community development Erica Craft noted a great number of foreclosure properties in low-income areas. She said that the HUD tasked her office to identify areas in greatest need of funding.

On the other hand, GrandSouth Bank Chief Executive Officer and President Ron Earnest said that the economic downturn has made it difficult for county residents to own properties. He explained that his bank continues to underwrite home loans based on the ability of the borrower to pay.

In upstate South Carolina, job losses have affected the ability of residents to pay their monthly mortgages, according to Elaine Worzala, Clemson University’s director for its Center for Real Estate Development.

She advises homeowners who are facing repo homes for sale to talk to their lenders immediately to modify their loans.

Nassau and Suffolk counties in New York are set to join a national program designed to address the growing number of Bank Foreclosure Properties. The National Community Stabilization Trust program will link local governments and banks holding foreclosed homes.

Under the program, banks and municipalities agreed to work together to contain the increasing number of Bank Foreclosure Properties. Participating banks will allow local officials to have the first priority in viewing and buying foreclosure properties on their inventory before placing them on the market for sale.

However, municipalities are given only three weeks to view and finalize a sale before the property will be put on the market. This is usually the time it takes for banks to prepare a foreclosed home for public listing.

Trust president and housing advocate Craig Nickerson said that the program would give officials in Nassau and Suffolk leverage over private buyers and investors looking for bargain properties.

Being the first to view and make an offer over foreclosed houses give local officials competitive edge because more and more expert investors and first-time homebuyers are jumping into the real estate foreclosure bandwagon.

According to Nickerson, cities and their for-profit and non-profit partners should be in the best position to control and determine the future of their communities by choosing strategically important houses, purchasing and rehabilitating them.

He added that so far, under the program, banks were able to close transactions on almost 50 percent of bids offered by municipalities on Bank Foreclosure Properties.

Nickerson also said that most major lending institutions have participated and financial companies under the program represented 65 percent of repossessions nationwide.

Wells Fargo senior vice president Tamara Swain said that the lender has signed up at the program and is willing to identify local foreclosure homes for the program. Wells Fargo is one of the top three lenders in terms of foreclosure cases in Long Island since last year.

Swain said that the lender knows that it is selling foreclosed properties to responsible parties, adding that it believes that putting occupants in homes long been abandoned and vacant is crucial for the recovery of the housing market.

The program addressing the growing number of Bank Foreclosure Properties has been established by five major nonprofit organizations, including the National Urban League.

Rates for 30-year home loans inched downward this week, but still remain above record lows posted during the spring, Freddie Mac said Thursday.

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The increasing number of Bank Owned Foreclosures continues to wreak havoc on the housing market as home prices in 20 metropolitan areas in the country slide down further. Economists said that the pace of home price decline in April was the same with previous months as foreclosures inched up.

The Standard and Poor’s/Case Shiller’s index of home prices dropped by 18.6 percent from the previous year following an almost 18.7 percent decline in March. These figures are based on results of the Bloomberg News survey which also showed that consumer confidence increased to its nine-month peak in June.

Studies showed that the increasing unemployment rate, the highest in 25 years, has greatly contributed to the growing number of Bank Owned Foreclosures. The trend is expected to further put pressure on property values in the coming months.

Meanwhile, a slowdown in consumer spending is expected to hinder any economic recovery. According to experts, many Americans affected by the declining property prices are saving more, thus current consumer spending is sluggish.

Barclays Capital Inc. economist Michelle Meyer said that the housing market will continue to remain imbalance due to the flood of Bank Owned Foreclosures. She predicted that home prices will continue to drop in a slower pace even if the economy emerges from the current recession.

Meanwhile, a report from the Conference Board may show that the consumer confidence index rose by 55.3 percent, the highest since its peak in September the previous year.

On the other hand, the total number of foreclosure filings in May inched up by 18 percent. These figures include notices of default and auctions and property repossession. The May figures peaked at 300,000, with one out of 398 houses in some kind of foreclosure proceedings.

The decline in prices caused by repossession is helping strengthen and stabilize foreclosure homes on sale. Resale of homes increased by 2.4 percent last month to 4.77 million. Meanwhile, the median sales price dropped by 17 percent, the third biggest decline on record, according to the National Association of Realtors.

In Las Vegas, Nevada, foreclosures accounted for 73 percent of foreclosures sale last May, representing a 56 percent increase compared with the same month last year. Additionally, Bank Owned Foreclosures sales in California accounted for 51 percent of the total existing home sales, an increase of 40 percent from the previous year.

The Obama administration is expanding a program to stave off foreclosure for borrowers who owe more than their homes are worth.

Homebuyers could be seen flocking on areas where there are high Bank Foreclosure Listings. Encouraged by below market values, $8,000 federal tax credit for first-time homebuyers and low interest rates, more and more people are vying for foreclosure properties as aggressively as speculators during the peak of the housing market.

The flock of buyers could be seen in areas hardest hit by the foreclosure crisis, including counties of San Bernardino and Riverside in Southern California, Las Vegas in Nevada, South Florida and Phoenix in Arizona.

Already, multiple bids are common occurrence as buyers try to compete for properties on Bank Foreclosure Listings that are priced 50 percent below their original value.

According to data, properties on Bank Foreclosure Listings accounted for 40 percent to 80 percent of the inventory, with many of them sold at prices that were only enough to cover the construction costs.

Industry experts said that homeowners who want to sell their properties may find it difficult to compete with bank owned foreclosures.

According to the National Association of Realtors, distressed properties accounted for one third of the total sales in May which affected the median price of existing homes in the United States. The median home price dropped by 16.8 percent to $173,000 compared to previous year.

In 2008, sale prices in top real estate foreclosure markets declined by almost 30 percent based on several first quarter estimates, with Miami, Florida leading the sale price drop.

Meanwhile, properties in Bank Foreclosure Listings in counties of San Bernardino and Riverside are selling at prices comparable to the year 2000 values, while foreclosed homes in South Florida and Las Vegas are priced similar to that in 2003.

And recovery in the housing market is far from coming what with the projected second wave of foreclosures as unemployment rates continue to increase and higher resetting of adjustable rate mortgages are expected to further push down home prices.

According to industry experts, there are many qualified buyers for properties on Bank Foreclosure Listings in areas hardest hit by repossession, adding that most of them are willing to buy foreclosed homes more than their listed price.

And it is expected that banks will soon bring out their large backlog of property inventory that will continue to keep home prices low.

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