Posts Tagged ‘wyoming’

Real estate investors who are active in the Wyoming foreclosures for sale industry, know two things. Both of these have been proven by analysis and statistics. The first thing they know is that the amount of foreclosures to come on the market indicates the state of the market, and secondly, that the amount of foreclosures coming onto the market should not rise above a certain level. Real estate investors know that when the second occurs, the first doesn’t.

During the second half of last year this actually occurred, and fortunately enough momentum was maintained to carry the market through the first few months of this year. The amount of Wyoming foreclosures for sale increased way beyond what the system was able to handle. This was found to be due to specific lenders providing mortgage loans by means of predatory practices. Many of these have now gone out of business and this is something of a moral victory. This slump in the housing market meant that many of the newer homeowners found themselves with mortgages they owed more on than the value of the property. As many as 8.5 million homeowners had no or negative equity in their properties. This represents more than 16% of homeowners who had to manage mortgage repayments. It has been estimated that this figure will increase to 12.2 million or nearly one in four property owners.

The amount of Wyoming foreclosures for sale is also on the increase because of the fact that foreclosures went above the acceptable level. This caused the system to break down and the mechanism that was designed to prevent the real estate market from going into the red; became a liability that nearly destabilized the entire US economy.

Because the real estate market was in such a bad state, it did not take long for a credit crunch to take place. This is because lenders require money from investors to make profits, and people who would in more normal circumstance be applying for loans and mortgages, were finding credit too difficult to come by.

It is interesting to note that what might save the entire economy from going belly up is the amount of foreclosures for sale. Although this is the reason for the problem in the first place, if enough foreclosed properties are available for the right price, a whole host of first time buyers will enter the market and revitalize it. They will not only be spending money on foreclosed properties but will want to purchase DIY, furniture, insurance, furnishings and lawnmowers. Essentially this spending is expected to uplift the economy and prevent the credit crunch from persisting.

Financial institution have been taking massive losses, losses in the billions, with the advent of late payments and more foreclosures, this has pushed the economy to the brink of a recession. In order to bolster the failing economy the government has requested that financial institution freeze interest rates and rework mortgage terms for some homeowners.

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The remedies prescribed by Bernanke for mitigating the foreclosure crisis are to be discussed at a forum. He was forced into the role of a foreclosure firefighter. This made him take bold steps during the past year to battle the worst catastrophe the nation is facing since decades.

There are many who opine that he had gone too far. Bernanke wanted to avoid further economic slump. But the actions of the Feds have been criticized. The charges are that the taxpayer’s money is being put to great risk. By expanding the safety nets the financial bodies are being encouraged to go on with their gambling ways. This does not bode well for the future.

A high profile debate will be held in Jackson Hole, Wyoming. In the forum the past financial crisis and present foreclosure problems will be discussed as also the challenges facing Bernanke and various central banks as efforts are afoot to stabilize the financial markets across the globe. The Federal Reserve Bank of Kansas is sponsoring the conference. It will be a three-day event from 21st August 2008. The Fed policy makers will be given a reception together with other economists, academics and bank officials of standing. The primary attraction is a speech by Bernanke about financial stability related to the ongoing foreclosure crisis. From Friday morning there will be piles of academic papers to swim through accompanied by discussions.

At a similar conference last year when the foreclosure crisis had started baring its fangs, Bernanke had been thinking about lowering the interest rates. He advised the Feds to do so and accordingly it was done seven times right through till April. But the problem remains and from all indications it will continue to smolder right through the following year.

The International Monetary Fund has commented that the foreclosure crisis is the worst “since the Great Depression.” But Bernanke who had made in depth studies on the Great Depression said that the present situation is not even remotely akin to it, although it is “the most severe” episode in the era following World War II. The roots of the foreclosure crisis lie in lax lending practices given to borrowers without good credit history.

With elections round the corner the prime concern of the voter is foreclosure crisis. It is this that is causing the slump in the economy – something that both the candidates Obama and McCain will have to address.

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Bankers are watching and waiting with uncertainty the snowballing effect of the sub-prime tsunami crisis.

Even though April provided a breather by a dip of 1% in foreclosure listing, it was still up by 62% compared to last year. Even then it will be far above the average of last year. Statistics pouring in show a worsening of the situation. No one knows the actual number of active sub-prime mortgages, its source of origin or refinancing procedures in Northeast Minnesota and Northwest Wisconsin.

Risky loans had triggered off this crisis. Some of the biggest sub-prime lenders like Ameriquest and New Century Financial are toppling down.

Some regions of the country have remained untouched by this virus – Wyoming, Vermont, North and South Dakota, Mississippi, Delaware and Washington D.C. Topping the list are 10 cities of which six are in California. These six ranks first among the group of notorious 10. Las Vegas comes first. Others claiming this dubious distinction are Nevada, Colorado, Connecticut, Florida, Arizona, Illinois, Michigan, Ohio and Georgia. As a result of this fall out Michigan, Minneapolis and Ohio are reeling under massive layoffs.

Big national financial services are practically non-existent in some important regions. Yet sub-prime activity has been typical with apprehended results. Real estate businesses having taken a U turn, lenders are tightening loan conditions thus putting marginal borrowers in a soup. Their rates of mortgage interest are rising while the value of their property continues to plummet.

The situation is so alarming that Lutheran Social Services have come forward to provide pre-bankruptcy counseling in Minnesota and Douglas County. The sub-prime lending has hit not only the borrowers but also local banks and communities. A ‘teaser’ rate tempts the borrower to fall into the net. Later the net closes in on the catch with disastrous consequences to all but the lender-agent nexus. Sub-prime lending essentially steals business from smaller entities.

Authorities have come forward and tightening the belt of the law – a grim reminder that playing around with lending will attract felony charges coupled with compensation and damages. However it applies only to current frauds and does not extend backwards. Thus primarily the focus is on prevention.

Wisconsin is the only state that has no limits on interest rates. Pay-day lending has been rampant which many regard as an unhealthy drain on the economy. The heat is on to find a solution and save the people.

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