Short Sale, Foreclosure and Strategic Default


Saturday, June 23, 2007

Stages of a Foreclosure

Here is a quote from

The stages of the foreclosure process include:

- Stage 1 Pre-foreclosure filing: The initial notice that the property is now in foreclosure for an unpaid secured lien or loan.
- Stage 2 Auction filing: The notice that the public court house auction sale date has been set because the unpaid secured lien or loan remains unpaid. Some states, like Arizona, combine Stage 1 & 2 into one notice, and are reported Stage 2 only.
- Stage 3 REO (real-estate/bank owned) filing: The notice that the foreclosure has gone to auction and the property has transferred to the winning bidder or reverted to the lender. The home owner has lost their house to foreclosure.

Recently when speaking with a few Real Estate agents. I realize some do not remember the 90s when it seemed everyone knew what an REO was. Perhaps the crisis will not be over till everyone one knows what an REO is again.

Of course if the banks are smart instead of foreclosing in places like Sarasota and San Diego they will encourage short sales.

When does a real estate market turn?

It has been reported at the recent Bank of America Homebuilders conference the CEO of Hovnanian Enterprises said the following.

When asked about the signs he would be look to to indicate a turning point in the decline Hovnanian responded:

“Well clearly, one of the things we are much more focused on then we ever were before is MLS listings in a given market. That is a dynamic that’s changed, we’re tracking it in every market. At the moment, unfortunately, most markets are showing negative signs in terms of the increasing MLS listings and lower monthly sales every month. ”


this is interesting that it is a new dynamic for him. Real Estate agents have been taking about it for 3 years. We look at supply and demand to determine (novel idea?) - buyers, balanced and sellers markets. I noticed the market changed from buyers to sellers in Sarasota, Bradenton and Lakewood Ranch within in a few weeks of President Bush announcing that his blue Ribbon committee suggested a change to the home mortgage deduction. During the height of the bubble where houses were going up 10% a month we had about 40 "sales" ( I use pending and backups needed so I do not have to wait a month for "sale" data) and 40 properties "active". Now we have over 600 homes listed in our area and recently we popped up from about 20-22 sales going pending and backup needed to 45.
the union tribune mentioned that Coldwell Banker acquired a 200 employee real estate firm in san diego. If prices do drop significantly will it be caused by the economy instead of the arm resets.

“It's a sobering number when you realize that sales are down 41 percent,” Hoffman said. “There are going to be small independent brokers as well as large players that are going to have to face the realities of the market. Consolidation may become necessary and appealing to some brokers.”

Over the past year, 2,100 real estate brokers and 700 “credit intermediation” workers – mostly mortgage brokers – have lost their jobs in San Diego County, according to data from the California Employment Development Department.

“There's just not enough work now,” said Nathan Moeder, who tracks the local real estate market at London Group Realty Advisors. “We're starting to see shops close up and mortgage brokers closing their doors, looking for jobs elsewhere.”

Those figures don't tell the full story. A large number of workers in the real estate industry are self-employed and do not show up in the state's figures, which are based on company payrolls.

Tuesday, June 19, 2007

Foreclosures are back

Foreclosures are back

A long article with some good information about working forclosure deals in Sarasota, North Port and charlotte.

More from the investor perspective rather than the homeowner perspective. I think it also reveals why a homeowner needs to consider there separate solution sets.

The old woman with the equity may have needed to learn about reverse mortgages or a short payoff and refi with another lender.

Before agreeing to sell a homeowner should consider mortgage solutions and legal solutions.

UCLA economists say state will avoid recession North County Times - North San Diego and Southwest Riverside County News

A UCLA economist says California will avoid recession. That would be good news. If we did not know this joke that a CNBC economist Bill Wolman once told. The secret to being a good economist is forecast early and forecast often.

the point of story is that overseas sales do to the weak dollar will compensate or the housing weakness.

"In contrast to past recessions, when waves of foreclosures were triggered by job losses, most recent foreclosures have been the result of families having overextended themselves. Many stretched to buy houses they could barely afford and chose to take out loans with rates that adjust upward after two or three years. The biggest wave of those rising house payments is due to take place in early 2008, the report shows.

It could be the middle of 2009 before the market turns the corner, according to the report."

It may not be time for San Diego's budding "short sale specialists" to pack it in just yet.

UCLA economists say state will avoid recession North County Times - North San Diego and Southwest Riverside County News Don’t look for help from lawmakers Don’t look for help from lawmakers

Lawmakers seem to be taking a wait and see approach to the potential "mortgage crisis".

“We have an obligation to prevent fraud and abusive lending,” Federal Reserve Chairman Ben Bernanke said in a speech Tuesday. “At the same time, we must tread carefully so as not to suppress responsible lending or eliminate refinancing opportunities for subprime borrowers.”

However, John Robbins, chairman of the Mortgage Bankers Association, predicts foreclosures among borrowers with the riskiest credit will amount to 0.25 percent of U.S. mortgages.

“No seismic financial occurrence is about to overwhelm the U.S. economy,” Robbins said in a speech last month.

In keeping with the metaphor your blog reporter is starting to see some fault shaking in the florida real estate markets, particularly in bradenton and sarasota, but
as long as the lenders do not shut off the spigot I see plenty of buyers on the side line looking to scoop up short sales.

Tax package offers little for landlords

Tax package offers little for landlords

Article from the herald tribune quoting people upset with the tax reform legislation.

Many of the people from Sarasota and Bradenton in the article were understandably upset by the compromise reached by the Florida legislature.

But they were being pulled to ways. You had second home owners, business owners, and landlords pulling the legislature for a general reduction and you had full time residents saying my property taxes are killing me don't worry about the businesses and the snowbirds.

I am reserving judgment on the legislation until I see my tax bill.

However, there was a quote in the article about California Real Estate a law. A lady said that tax rate portability freed up California real estate. Having lived there for 14 years and still being out there a fair bit, I would say that the fact that 55 year old can move once without increasing their taxes had almost nothing to do with the bubble. It is a nice law for people facing retirment but it had nothing to do with the bubble.

Sunday, June 17, 2007

How to buy a dream home?

The Great Depression of 2006: How to Buy a Dream Home in San Diego

The author of the site above points describes one of the ways a couple with no money can buy a home in a down market.

The author, who is a San Diego blogger, implies that this little deal might be one of the ways prices seem to remain a little higher than they are.

I noticed a similar transaction occur in Lakewood Ranch a few months ago.