Foreclosure Investing – Page 3

Update To Our Shasta County Public MLS

We just finished upgrading our Shasta County Multiple Listing Service (MLS) web site. The upgraded site allows you to search all available homes is Shasta County with the same MLS data that local REALTORs use. There’s no cost to you and we’ve added some really cool new features, check it out.

1. Create custom searches and you’ll see only see the properties you’re interested in.

2. Receive automatic email. On a 24/7 basis, all new listings that meet your custom search criteria are automatically emailed to you.

3. Modify your custom search at any time. You’ll be the first to know about the hottest new listings.

Start searching the Shasta County MLS here https://www.parsonsrealty.com/parsons_realty/188/shasta-county-mls/

California Foreclosures Starting To Cool Down?

Foreclosureradar.com released its California Foreclosure Report for October 2008. Notice of default filings were up by 2.8% but dropped 42.3 when compared to this month last year. The statewide findings are very similar to what we found for Shasta County foreclosures.

Foreclosure sales dropped by 39.1 percent from the prior month, due to significant increases in cancellations and postponements, the company said.

Under California law, scheduled foreclosure sales can be postponed for a period of up to one year, until they are either canceled or sold. According to ForeclosureRadar, cancellations, where the home is taken out of foreclosure, increased by 78 percent in October, resulting in nearly 20 percent of foreclosure sales scheduled for the month being called off.

Notice of Default filings, which start the foreclosure process, continue to be significantly impacted by CA State Senate Bill 1137, as lenders work through the new requirements the law imposes, ForeclosureRadar said. Based on the company’s data, however, Notices of Trustee Sale rebounded after a significant drop the prior month.

A summary of ForeclosureRadar’s findings include:

– Notice of Default filings increased slightly in October, up 2.8 percent from September, to a total of 16,810 filings. Year over year, Notice of Default filings are down 42.3 percent.

– Notices of Trustee Sale, which schedule the auction date and time, increased by 32.9 percent in October, to 25,408 filings. Despite the significant increase, this level of filings remains well below average levels earlier this year, as September levels were clearly impacted by CA State Senate Bill 1137.

– Properties taken to sale at auction declined by 39.1 percent from September, to 14,042 sales, with a combined loan balance of $6.39 Billion. This represents a 28.8 percent increase from the prior year.

– Lenders took back 94 percent of the properties taken to auction, with a combined loan value of $9.19 Billion. Third party purchases declined 24 percent from the prior month, but increased 25 percent (as a percentage of all foreclosure sales), due to the decline in sales activity.

“It is important to note that the significant decline in October foreclosure sales cannot be directly attributed to CA State Senate Bill 1137,” said Sean O’Toole, founder of ForeclosureRadar. “There were nearly 60,000 properties scheduled for sale at the beginning of October over which the law had no affect. The drop in foreclosure sales, therefore, can only be reasonably attributed to changes introduced by the lenders themselves and not in response to SB 1137.”

The increase in cancellations was led primarily by Countrywide, ForeclosureRadar stated, which saw a 460 percent increase in cancellations from the prior month, and a 48 percent decline in the number of properties they sold at auction. In early October, Bank of America, which acquired Countrywide earlier this year, announced an aggressive loan modification program for Countrywide borrowers who financed their homes with subprime or pay option adjustable rate mortgages (ARMs).

Other lenders in California had similar drops in foreclosure sales, though more often due to postponement, rather than cancellation, ForeclosureRadar reported. Statewide, the percentage of foreclosure sales that had postponed at least once, increased from 36 percent of sales to 58 percent of sales, with the average length of postponement increasing from 24 days to 42 days.

“It would be a mistake to conclude that the declines in foreclosure activity indicate that the foreclosure crisis is over,” O’Toole warned. “While lenders now appear to be embracing the concept of foreclosure moratoriums and loan modifications, neither typically address the core issue of negative equity. Most loan modifications focus on lowering payments to affordable levels by using unsustainably low interest rates, not unlike the ‘teaser rates’ that many have blamed for the current crisis.”

Based on ForeclosureRadar’s October data, average discounts offered by lenders on the outstanding loan balance at foreclosure auction declined slightly from prior months, and averaged 36.1 percent statewide, with 33 percent of properties taken to auction being offered at discounts of 50 percent or more.

Foreclosures Increase by 5% Nationwide

RealtyTrac, an online marketplace for foreclosure properties, released its October 2008 U.S. Foreclosure Market Report™, which shows foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 279,561 U.S. properties during the month, a 5 percent increase from the previous month and a 25 percent increase from October 2007. The report also shows one in every 452 U.S. housing units received a foreclosure filing in October.

“We’ve seen sharp declines in new foreclosure filings after legislation mandating delays to the foreclosure process was signed into law in several states — most notably in California, where overall foreclosure activity was down by double-digit percentage points for the second straight month in October, and where default filings were 44 percent below October 2007 levels,” said James J. Saccacio, chief executive officer of RealtyTrac. “Despite this, October marks the 34th consecutive month where U.S. foreclosure activity has increased compared to the prior year.

“While the intention behind this legislation — to prevent more foreclosures — is admirable, without a more integrated approach that includes significant loan modifications, the net effect may be merely delaying inevitable foreclosures. And in the meantime, the apparent slowing of foreclosure activity understates the severity of the foreclosure problem in these states.”

California posts top foreclosure total despite continued drop in foreclosure activity
California foreclosure activity in October decreased 18 percent from the previous month, but the state still posted the highest number of properties with foreclosure filings for the month — 56,954. That total was down from a peak of more than 100,000 in August, but was still up 13 percent from October 2007.

To see the full report Click Here

Shasta County Sees A Slight Increase In Foreclosure Filings For The Month Of October

Foreclosure filings in Shasta County increased 32% over the previous month. There were 78 notices of default filed with the Shasta County Recorder’s office in the month of October, compared to September’s low of 59.

When we compared this month last year we saw 22% fewer filings. In October 2007 there were 95 notices of default filed and we only had 78 in October of 2008.

Last month we speculated that the cause for the major drop from Augusts high of 206 foreclosure notices was due to State Senate Bill 1137. SB 1137 forces banks to take certain steps before filing foreclosure. We expected a bigger jump in default notices this month as lenders get back on track from the delays caused by SB 1137, but it appears the bill is having a lasting effect and is working.

Earlier this month Countrywide, Bank of America, JPMorgan Chase, and now Citi, revealed plans to keep homeowners in their homes by doing major loan modifications, these programs are scheduled to start in December. Loan modifications in the past have not been that effective; however the banks are starting to realize this and are making significant drops in principal and interest for qualified homeowners. We feel this will have an effect and the foreclosure filings will flatten out over the next few months and start to decline in the first quarter of next year.

Why the Appraisal Is So Important In Short Sales

At some point in your short sale process the bank will want to know what the property is worth. They do this by ordering an appraisal, Broker Price Opinion (BPO) or both.

Whether the bank sends out an appraiser or a broker to do a BPO the result of their evaluation will make or break your short sales success. Most banks won’t consider selling the property for less than 85% of the appraised value, some will ask for 90% or above. With that said, it’s critical that the appraisal or BPO comes in at a price that a buyer is willing to pay.

There are a few things that you can do to make sure the appraiser does not give an inflated opinion of value. First meet the appraiser at the property, and walk through the property. This gives you an opportunity to talk to the appraiser and point out any defects of the property. It is also a good idea to bring a few comparable properties they can use for their appraisal. This will save them work and will make sure that they are using realistic comparable properties.

You should also provide the appraiser with a copy of the purchase agreement. Appraisers are used to working backwards. Most appraisals are done for purchases or refinancing, in both of these instances the appraiser will have a target number, they then try and prove that the property is worth that amount. This is why most appraisals come in at the purchase price or very close to it, even if the property is worth more. With that said, the appraiser is more likely to value the property close to the short sale offer if they are aware of the offer.

The most important thing is communicate with whoever is doing the evaluation. Your short sale is almost sure to fail if the bank gets an appraisal much higher than your offer.

Lease Option 101

In today’s tough credit market investors and homebuyers are having a hard time getting reasonable financing to put deals together. Therefore we have been focusing more on creative financing and one of the techniques we like to use is a Lease Purchase Contract. The term “lease purchase” is known by several other names, such as “rent-to-own,” “lease option,” and “lease with the option to buy.” These are all basically the same thing.

How Does It Work?

The lease purchase contract combines a lease agreement with an option-to-purchase-contract. The tenant/buyer pays to the landlord/seller a nonrefundable deposit that is applied to the purchase price of the home (not the down payment.) The tenant/buyer then pays to the landlord/seller rent to compensate them for the use of the property. Rent payments are typically made on a monthly basis with a portion of that payment applied to the purchase price of the home.

During the term of the lease, but before the option expires, the tenant/buyer has exclusive right to lease and buy the home under the terms to which both parties have previously agreed. The seller cannot change their mind, raise the sales price, or further encumber the property or sell to a different party while the tenant/buyer owns the exclusive right to purchase the property.

What Paperwork Is Needed?

There are three parts to the lease purchase contract, the lease agreement, option to buy, and the purchase contract. The lease agreement spells out the terms of the lease. The option agreement will state the option price which is non-refundable and is applied towards the purchase price. It also contains the option term which is the specific date the option expires and the method of exercising the option. If a portion of the monthly rent is being applied to the purchase price of the home it should be stated in this contract as well. The Purchase Contract covers the escrow instructions and timelines of contingencies.

For more information on how lease options work download our FREE ebook The Lease Purchase Handbook by William Parsons.