Archive for May, 2007

Mortgage defaults sweeping across the entire country for the last six months has not spared northeast Baltimore County.

There are many local realtors who differ on this point as to the severity of the problem of foreclosures in the northeast region stretching from Baltimore city lines to Harford County.

Êone, the head of major real estate organization says that the local foreclosure listings are far less than the national average. It has risen about 12%, she admitted. Nevertheless, she admits that more and more people are opting to sell their homes because they can no longer afford to repay installment dues. Two other professionals echoed her sentiments saying that the region had only a slight fall in numbers as compared to national figures. It was nothing much to crow about.

Goodman representing a reporting service says that Circuit Court in Towson for the last year shows a foreclosure listing of 1,987 – that is a 12% increase during the time period of a year.

Mortgage lenders can legally sell a house once the payments fall behind four months. Why is this happening?

Many young people below the age of thirty-five are living beyond their means. Another group is of the opinion that divorce rates are rising making it impossible for one person to manage the financial responsibilities. Put the other way – are foreclosures leading to divorces? It is a vicious circle where the roof above the head is at stake. A rise in delinquency is the obvious outcome. Broken marriages, loss of jobs and major illnesses are the prime causes for foreclosures.

Homebuyers should avoid loans with high rates of interest. During four years starting from 2002 there was a boom in the real estate market with rising prices. During that time the owners of property could easily meet their commitments and have something left over by selling their houses. But a boom cannot last forever. It is the natural law. The bubble has now burst.

During March there was slight rise of 3% in sale prices for both Baltimore and Harford counties. But this is applicable to only some houses. Many are finding that their houses are worth less than the amount, which they have to pay to the lenders on the mortgage. This situation is termed ‘negative equity’. The house owner does not have any escape route. The only alternative is foreclosure.

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It is mostly the Afro-Americans who are turned down when they apply for a house loan because of their tarnished credit history. But the feeling in them as in all others to own a hearth and home is very strong. This leads them to fall prey to sub-prime real estate dealers who let them have their dream house with a nightmare tagged to it. The rates of interest are much higher than the usual ones. It is inevitable that a rainy day or two in their lives compel them to fall back on their loans repayments. This is when the vultures move in for the kill.

Nearly two million Americans are caught up in this ‘sub-prime tsunami’! The Centre for Responsible Lending has released a report, in which it is predicted that 2.2 million sub-prime loans will land up in foreclosures. It will have a snow balling effect in the housing market that will be flooded by houses. House owners who received mortgages will lose $164 billion in home equity during the period 1998 to 2006. On the other hand the lenders will see a fantastic boom in their profits from $35 billion to $665 since 1994.

Officially all races can take the mortgages but Afro-Americans bear the brunt. A report of ACORN says that more than half of all mortgages were granted to Afro-Americans. Therefore they will suffer the most. Of the sub-prime loans expected to run into default, 10% were granted to Afro-Americans, 8% to Hispanics and 4% to whites.

Griffin, the President of Home-Free USA claims helplessness in the face of this tidal wave of foreclosures. She vehemently denies that they are taking advantage but the fact is that they are helpless. She says that the main reason for this situation is because the borrower is tempted to walk into the trap without directly knowing the clauses that are often couched in difficult terms. It is not open and clear. In many cases the sub-prime loans the annual mortgage rate, ARM, increases after a specified number of years. Many borrowers under the ARM scheme are not even aware that they are under it, until it is too late. So the main thing is to start an awareness campaign. It is the victims themselves that must be armed against these recurring dangers.

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Empty creaking houses are of late a common site in large metro areas. As a result of the lending standards of mortgage companies, there was a boom in the real estate market. It snowballed into increase of foreclosure rates.

The effect of foreclosures is being felt outside the zone of real estate markets and residents of upscale sub divisions outside Atlanta are seeing cracks in their social fabric.

Investors, in some areas are drawn by foreclosures to buy them and then to rent them out to balance costs. This has resulted in the residents frequently hopping in and out leading to an increase in crime rates. The atmosphere of the entire neighbourhood together with the schools consequently takes a nosedive.

Fortunately till now these effects have not touched Camden County, down south. This is largely because the mortgage companies of Camden are good at their job. They look into the interests of potential buyers and accordingly give them the offer that they can afford. It must be taken note of however that Camden has a relatively smaller population who come under the sub-prime market group. Also those who have a bad record do not qualify for alternative financing like interest-only loans or adjustable rate mortgages (ARM).

But winds freely move about and to some degree Camden too has been affected. It can be put this way – the local real estate has been slow in keeping pace with national trends. Sales have slowed down and more ‘for sale’ signs are coming up throughout the county. Currently there are 498 houses up for sale.

Taking an overall view it may be opined that till now the county has been fortunate. The absence of a large sub-prime markets point to the fact that most of the residents are able to afford their property, even at the present prime rate. The latter falls between six and seven. However it is continuing to push upwards.

The population too is expected to grow quickly in the next two decades. Developers, anticipating good days, are already ready with plans. Some are already digging and building large complexes with homes for the higher ups.

Time alone will tell what impact this increase of expensive homes will have on the real estate market. Mortgage companies will be wise to be tight fisted about lending standards to avoid problems with foreclosures in the near future.

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Foreclosure investors are paying $19.95 to hear Alexis McGee give a 90-minute talk on ethics and foreclosures. Foreclosure grabbers have been labeled as preying vultures. But McGee takes another stand. One can go about the business in a straight way without downright cheating. It is not necessary to grab the deal by hook or by crook sacrificing eternal values. McGee makes a shrewd assessment. The people in trouble facing foreclosures should be helped so that will come to you again.
Ridiculous? But statistics says otherwise. Two decades, when she was twenty-three, she earned $180,000 in her first real estate venture. Today she is consulted by all and sundry during these troubles times when Foreclosures is dominating the scene.
McGee is a familiar face on popular television channels as well as renowned journals. Her $9,500 investor seminars for June have all been booked. People pay for her telephone talks as well as for browsing through her online foreclosure listings. This autumn her book on foreclosures and ethics is predicted to hit the sales.
At the core of her work is her website which she operates with husband Tim. It is perhaps the oldest site on foreclosures. Those owners who have failed at least two mortgage payments are listed. Then the houses facing auction and repossession by the banks are checked to make sure that equity is still there.
The procedure is to purchase the property at a price so that some profit is made from reselling it. The logic is that the house owner will have something left over after repaying debts. Otherwise usually the owners find themselves totally in the red with their pockets completely cleaned out.
McGee claims that about 254,000 new households in the country fell behind in mortgage during the first quarter of this year. McGee trained investors come forward to help with tangible solutions. The aim is to find out what investment possibilities are there as well as to help victims avoid foreclosures. This is irrespective of the fact whether the McGee group gets a slice of the cake or not. The idea is to help people, whose house is on fire find the exit route fast, quick and with dignity.
Critics question McGee’s sincerity who is after all selling low and buying high doling out low to the owners. But banks are happy that foreclosures are being thus avoided.

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As dozens of condominium towers conceived during Florida?s real estate boom near completion, investors who snatched up units are trying to break contracts.

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The Economist reports that so far the foreclosure listings at Maryland, Baltimore, had been the lowest in the country but the future looks gloomy with the passing of each day. Anirban Basu, Chief Executive of Sage Policy Group, opines that passions are rising as real estate sharks are eyeing downtown property deals. So far the apprehensions have not turned into actual reality but the writing is there on the wall for all to see what the future has in store. The worst days seems to be ahead and not behind.

Basu, in a talk with The Baltimore Examiner said that the increase in housing stock in Maryland is because of the resettlement of adjustable mortgage rates. Most of the people are unable to meet the new high demands in interest payments. This however is not the sole reason. People have been reckless in their debt dealings with not only their property but with their cars etc. The credit card has gobbled up all avenues leading to an increase to delinquency. The loan culture is beginning to take its toll. All these reasons have combined into the snowballing effect of rising foreclosures. Basu further goes on to add that the regulatory environment is no longer stable but is shifting. Borrowers can longer assess credit according to the 2002-03 scenario. The picture has totally changed and continues to do so. The sub-prime market has shut down to all real practical purposes. If the economy of the state further slows down then unemployment and discontent will vitiate the atmosphere and make the foreclosure markets look murkier.

Till now Maryland has escaped the rising tide of foreclosure listings in both prime and sub-prime markets that are lashing other regions in the country. A look at the statistics will bear facts. Maryland’s foreclosure listings rate of .5% and new foreclosure rate of .31% are still much below the national average of 1.19% and .57%. This is the view of Dough Duncan, Chief Economist and Senior Vice President of Research of Mortgage Bankers Association.

The Maryland Bankers Association is of the opinion that till now 70% Americans were owners of their homes but with the runaway rates of interest and regulations they will no longer remain in the comfortable position.

The ultimate outcome will be that an economic problem will become a social time bomb.

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The number of homes and apartments in New York City occupied by their owners has passed one million for the first time, according to a new census analysis.

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The foreclosure waves are coming in from the mainland and lashing the shores of Hawaii, as per reports from Honolulu. There has been a spate of foreclosure listings in the recent months sending alarm bells pealing.

Till now Hawaii had a very low foreclosure rate as compared to other national figures. But local investors are suddenly waking up to a change in the air. A noticeable number of happenings in the foreclosure market are making them sit up. However one should take this bit of news with a pinch of salt as last Friday’s market showed that real bargains are as yet not a common story. These are still hard to grab.

Investor Stephanie Apodaca, trying to explain their attitude says that they are not really too keen to see others drowning but ‘an opportunity is an opportunity’ and it is all fair and square in the game of real estate market. She went into downtown Honolulu from Kapolei with high expectations for a more than usual number of foreclosure auctions that had been scheduled to be held for Friday. Nearly forty people had crowded around the representative of the lender. The upset bid of $80,000 for a leasehold walk-up in Waikiki was rather too steep for everybody. But one bidder won with a bid for $81,000. This seemed to have been the single auction of the day. The others were either cancelled or did not attract other bidders except for the bank. But Apodaca is not willing to admit that the day had been wasted. She knows which way the wind is blowing for she has been steadily doing the rounds for the last four months.

Experts opine that most of the auctions do not materialize because the affected homeowners somehow manage to find out an escape route for their sheer survival. After all it is a question of their hearth and home! But things cannot continue in this way. Ultimately risky mortgages will start taking its toll. Six months ago there were about thirty foreclosure listings in a month but today the figure has gone up to one hundred during the same time period says expert, Courtney Brown.

For the investor too there are many risks ahead. There are hidden costs, troubles with tenants and ruthless competition. All said and done it is a gamble with very high stakes.

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