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Unusual Real Estate Foreclosures In The News

Real estate foreclosure is a grim reality of this current real estate market. In the Pensacola Real Estate market, on February 25, 2010, there were 213 foreclosure properties and 564 short sales listed as Pensacola Homes For Sale. The total number of homes and condos listed in the Pensacola real estate market was just over 4400.  This means approximately 17% of the Pensacola homes for sale are either foreclosures or short sales.

Foreclosure properties are already owned by the bank. Short sales are still owned by the homeowner, but are destined for foreclosure if they cannot be sold at a price lower than the amount owed to the bank. See the article Short Sales – Is It Really Worth It?

A couple of interesting real estate foreclosure stories have surfaced this week that I thought were worth noting. Fortunately, no one got so frustrated that they flew a plane into a bank building, as in the case of the Joe Stack who piloted his plane into the Austin Texas IRS building.

However, a man in Ohio bulldozed his home in retaliation of a bank’s plans to foreclose on his home.  Apparently, Terry Hoskins only owed $160,000 on the home, which was valued close to $350,000. He was already in hot water with the IRS in relation to his businesses. Then the bank refused to stop foreclosure proceedings even though he indicated that he had a buyer who would pay off the balance of the mortgage. As the story goes, the bank wanted to foreclose so they could resell the home for more than the balance owed and actually profit from the deal. There is always more to  a story than you read in the news, so I’m not sure of all the details.  Either way, the home is now a mound covered by snow. bulldozed_foreclosure

Terry has now become somewhat of a hero to those who resent how banks have been so generously treated by the government with bailout money while still giving out large bonuses to employees.  Ronnie Ray Jenkins even wrote a song called the Ballad of Terry Hoskins. Check out the video below. Here are some teaser lyrics:

There were no bailouts for Terry
There were no bonuses to spend
So he grabbed the keys to his dozer
It was the beginning of the end

Thanks for the great song Ronnie!

[youtube]http://www.youtube.com/watch?v=u2sWUZBhgVM&feature=player_embedded[/youtube]

In an unrelated story, Bank Of America foreclosed on a home that was owned by a couple who had paid cash for it. Yes, they owned the home outright.

The couple filed a lawsuit on January 20 that alleges Bank of America seized the house, removed the belongings, and changed the locks on the their home.  The bank had an incorrect address on foreclosure documents. The house it meant to seize was across the street and about 10 doors down. But the couple and a Realtor employed by Bank of America were unable to convince the bank that it had the wrong house. The couple are seeking unspecified damages from Bank of America, including negligence, trespassing, emotional distress, defamation, libel, and a tarnished reputation.

When the media made an inquiry to the bank regarding this situation, here is the email response they received.  “We have reached out to the Cardosos’ representatives and hope to have the opportunity to work with them to properly assess and address their allegations”. “We are reviewing the allegations in the lawsuit, the actual events that led to them and the causes of those events, and will consider any hardship that resulted.”

Talk about legal speak. After the travesty perpetrated by the bank, you would think they could show a little more compassion and understanding when dealing with these sensitive situations. With the money they have, I would think they could hire some PR people that could do a much better job of publicly addressing this embarrasing mistake.

These are pretty extreme stories, but foreclosures are so common today that these types of situations do not come as a big surprise to me. Look for me to publish an article shortly detailing some important things you need to know about foreclosure.

Posted by Karl Burger | Currently 1 Comment »

Data Shows 1 in 5 Homes For Sale In U.S. Are Foreclosures

According to a RealtyTrac report released this week, one in five homes for sale in the United States are properties repossessed by lenders. The report also noted that foreclosure-related filings rose 8 percent from June to July, and 55 percent from a year ago.

Foreclosure-related filings include default notices, auction sale notices and bank repossessions. However, not all homes subjected to foreclosure filings are ultimately repossessed by lenders.

Foreclosure For SaleRealtyTrac is a real estate data aggregator and has said it now has more than 750,000 properties in its active real-estate-owned database, which represents 17 percent of the inventory of existing homes for sale in June, as reported by the National Association of Realtors.

While this is not good news for the economy of the United States, there is a bright spot for Pensacola Florida real estate. According to the Pensacola MLS, of the 6300+ homes for sale on the Pensacola real estate market, only 218 are foreclosure or bank-owned properties. Another 229 are listed as short sales.

That makes foreclosures only 3.5% of the Pensacola real estate market, and short sales just over 3.5%. This is significantly less than the estimated 20% reported by RealtyTrac.

The rate of foreclosure-related filings reported by RealtyTrac was highest in Nevada, California and Florida.

The Cape Coral-Fort Myers, Fla., area had the highest rate of foreclosure-related filings in the nation — one in 64 households, RealtyTrac said.

This shows that Pensacola has a much more stable real estate market than southern Florida, where speculators went crazy during the real estate boom years and basically ended up being part of the cause of the big crash we are seeing now in southern Florida. See my article Did Speculators Accelerate The Florida Housing Downturn? .

Related Articles On Pensacola Real Estate News:

Real Estate “Buy and Bail” – Financial Smarts or Mortgage Fraud

Free Legal Advice For Florida Real Estate Owners Facing Foreclosure

Real Estate Short Sales, Is It Worth It?

Click on Pensacola Real Estate News for a list of articles indexed by category.

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Real Estate “Buy and Bail” – Financial Smarts or Mortgage Fraud

A new real estate strategy is emerging in real estate markets hardest hit by falling  home prices and rising foreclosures. This strategy has been called “Buy and Bail”. The Wall Street Journal article Some Buy a New Home To Bail On The Old gives a good description of the Buy and Bail process. Fortunately, the Pensacola Real Estate market was not hit as hard as other Florida markets by the recent drastic price declines in property values.

Buy and Bail is a very simple strategy, but also very sketchy. Basically, a homeowner who paid a lot for a home when the market was at peak levels now decides to buy another home at a much lower market value and walk away from the original home, leaving the lender holding the bag.

Here is a brief example of the process. Foreclosure_next_Exit_Sign

Bill borrowed money to buy a $400,000 home at the heightof the market. That home is now worth only $200,000 fair market value.

Bill feels cheated by this down real estate market and wants out of the $400,000 mortgage.

Bill has good credit and some cash reserves.

Bill buys a comparable home for only $200,000 in the down real estate market.

Bill walks away from the home with $400,000 mortgage and leaves the bank to foreclose on the property.

Bill’s credit is damaged, and the bank stands to lose over $200,000 on the deal.

Mortgage Fraud?

Many lenders and real estate agents call this mortgage fraud. The homeowners are taking advantage of mortgage-lending practices that allow them to buy a new primary residence before their existing residence has been sold.

In some cases real estate agents and brokers are actually participating in this process. They are coaching homeowners through the buy-and-bail process.  “It’s just a business decision,” says Linda Caoili, a Sacramento real-estate agent who has worked with people who are considering walking away from their mortgages. “If you’re upside-down $250,000, why would you keep it? It just doesn’t make sense.”

In this situation, some homeowners opt to ‘buy and bail’. These owners are using their good credit rating to buy a second home at a lower price, assuring the lender they’ll rent out their first home. Then they just walk away from the first home, and leave the lender holding the bag.

To be sure, walking away from a mortgage, even if legal, has plenty of drawbacks:

Borrowers lose the ability to take out unsecured loans, since foreclosures can stay on a credit report for seven years.

In some states, lenders can sue for assets, including a new house.

Here Comes Uncle Sam

Now the government intends to step in and put an end to “buy and bail”. Under revised Fannie Mae guidelines, loan applicants who claim they will rent out their first home will have to produce supporting evidence, including an executed lease agreement. Borrowers also will have to prove that they can pay the mortgage, property taxes and insurance for both residences. The guidelines will make an exception only for borrowers who have at least 30 percent equity in their current home.
Fannie Mae, the government-sponsored mortgage underwriter, recently revised the amount of time borrowers with a foreclosure must wait to receive a home loan to five years from four. Proposed Fannie Mae guidelines, which could take effect later this month, also would require those borrowers to make a 10% down payment and meet a minimum credit score after the five-year period.

Note that the buy and bail strategy is not common in the Pensacola real estate market. Home values have not dropped as drastically as in other areas of the country where this technique is more used.

How much is it worth to lose your good credit rating?

Click on Pensacola Real Estate News for a the most popular articles indexed by category.

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Free Legal Advice For Florida Real Estate Owners Facing Foreclosure

Thanks to the the Florida Bar and Florida Legal Services, Florida homeowners facing foreclosure can now get access to a lawyer and free legal advice.

With the surge in real estate foreclosures, especially in Florida, this program comes none too soon.

Real Estate LawAccording to Florida Legal Services Inc., 77,000 state homeowners are in foreclosure, making Florida second in the Real Estate Lawnation only to California. And many other homeowners are at least 30 days past due on their mortgage payment.  Fortunately for the Pensacola real estate market, we are not seeing the high foreclosure rates that other parts of the state are seeing.

Florida Legal Services and the Florida Bar Association have partnered in establishing a toll-free hotline that consumers can call.

They’ll be asked some initial questions about their situation to ensure accurate placement, and then be sent to a free attorney.

The attorney will then negotiate with the lender on behalf of the client to keep the home from being foreclosed.

Here is the toll free number:  (866) 607-2187

Hours to call are Monday through Friday from 8:00 AM to 4:00 PM.

More than 10,000 Florida attorneys have volunteered their services in the program, according to Florida Legal Services Inc. Remember that next time you feel the need to tell a bad lawyer joke.

Related Articles On Pensacola Real Estate News:

Real Estate Short Sales – Is It Worth It?

Did Speculators Accelerate The Florida Housing Downturn?

Click on Pensacola Real Estate News for a list of articles indexed by category.

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Posted by Karl Burger | Currently 1 Comment »

Real Estate Short Sales, Is It Worth It?

Pensacola real estate foreclosuresA few years ago, very few people, including real estate agents, had heard the term “short sale”. With the growing foreclosure rate, short sale is now a well known term to both real estate professionals and many consumers.

A search of the Pensacola MLS shows that in February of 2012, of 3511 residential homes for sale on the Pensacola real estate market, 594 are short sales or foreclosures. That amounts to 17% of the homes on the market. Contrast this figure to the data on the original publication date of this article back in March of 2008. At that time, of 6693 residential properties for sale, 417 were short sales or foreclosures, or 6% of the properties on the market at that time. You can see that there has been a drastic increase in short sales and foreclosures over the past 4 years as a percentage of active listings for sale.

For  statistics on Pensacola Foreclosures and Short Sales from March 2010, see the article Pensacola Foreclosures.

For those not familiar with the term “short sale”, think of a short sale as a pre-foreclosure sale.  You are purchasing from a very motivated seller who needs to sell to avoid foreclosure. And you are negotiating with a motivated lender who wants to get their money, but doesn’t want to own a home.

For the lender, foreclosure can be an expensive proposition, due to the fact that many buyers owe more on their home than the home is worth. The lender has to pay all the legal fees process the foreclosure through the legal system, and then turn around and pay all the fees related to selling the home. For these reasons, banks are often willing to accept less than is owed on the home just to avoid losing more money on a foreclosure.

But how good of a deal can you really get buying a short sale? And if you are a seller, what are the chances of getting your bank to accept a short sale? Are the banks really motivated to sell at a discount?

The answer to these questions is that “it depends”. Every bank is different, and every situation is unique.

I read a post on the real estate site Active Rain regarding experiences that many agents were having with short sales. I wanted to share assorted quotes from this post with my readers so everyone could see the reality behind short sales, which are often advertised as the way to get properties dirt cheap in this market. These quotes are from the author of the article and from agents who left comments. The bank names have been removed.   Pensacola Foreclosures

Real estate agents now have a much better understanding of short sales than they did back in 2008. And they have experience working short sales, so it is more likely that short sales will get to closing. However, I would still heed the advice of the agents comments above and be wary of the short sale. And real estate agents also need to be wary of giving advice on short sales. Agents are now being sued for providing what can be considered legal advice to clients regarding short sales. See Hey Short Sale Expert…Do You Have a Good Lawyer?

 

Related Articles On Pensacola Real Estate News:

Free Legal Advice For Florida Homeowners Facing Foreclosure

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