One list where I am glad we are not at the top

I was listening to Clark Howard the other day (I really enjoy his show on talk radio) and he was talking about the top 10 cities with the most foreclosures. Well, working in Orlando I was ready to hear our name. I was so surprised! Even Atlanta was higher than us on the list!

I guess the surprise is based on how many people are calling me in crisis, or how many pre-foreclosures I see when I am out showing property to my clients. It is encouraging to know that as a city, we have the possibility of bouncing back within a few years.

The information on foreclosures can be found on www.realtytrac.com

Although we are not in the top 10, we are number 20 on the list.

As I research about the market on a daily basis, I want to keep on top of these statistics so I can best serve my clients. If you have a home to sell, or want to buy something in this market, please contact me through my website, www.audreybutlerhomes.com

Good news for "short sale" owners

At the end of the year, the President signed in new legislation....I have to admit with all the news is has been hard to figure out what has been written into law. I decided over the next few posts that I would share what I have learned in hopes it will help those who currently face the "short sale" prospect.

A "short sale" is the effort by a Realtor to sell someone's property who is facing foreclosure. Prior to the bank or mortgage company auctioning the property, the property is marketed, and the Realtor works with the mortgagor to accept less than what is owed on the property. This remedy is being used a lot nowadays because of the number of adjusting loans and the property values in Orlando not rising to allow for re-financing.

In many cases, the house ends up being sold for $25,000 to $50,000 less than what is owed. In the past, the amount that was forgiven by the bank in the "short sale," but a 1099 was filed, and the amount was attributed as "income."

Yes, it is hard to imagine, but if the loan cannot be paid, how did the government expect them to pay taxes on the forgiven amount? But I digress.

Law was inacted that eliminates the tax until January 1, 2010. The law is retroactive to January 1, 2007.

If you have any questions about short sales, or the options you can have with a mortgage company when you cannot continue to make the payments, please e-mail me at www.audreybutlerhomes.com or contact me at the numbers provided.

Go Sheila!

The Associated Press is reporting that Sheila Bair, head of the Federal Deposit Insurance Corp., has recommended that the companies that have pre-foreclosure clients consider an across-the-board conversion of adjustable-rate loans to fixed-rate loans if the borrowers were current on their payments and living in the homes.

Yes! Someone with a solution to directly help those in need.

Now I have to carry that a step further-----how about just a few months behind? If people are already current on their payments and still living in their homes, why would they need the help?

How about helping those whose payments have already increased $500 to $1000 dollars a month and can't afford the payments?

Check out my website at www.audreybutlerhomes.com

Foreclosures down in September

RealtyTrac, an online market for foreclosure properties is reporting that foreclosures were down 8 percent in September compared with August when they hit a 32-month peak. However, foreclosures are still up 99 percent compared to September a year ago.

There were 223,538 foreclosures in September — or one in every 557 households. California, Florida, and Nevada led the nation.

Hope Now----really?

OK, so I know I've had a few ranting sessions on a couple of things on this blog, but I really have to wonder about the Hope Now initiative that was advertised on WESH TV last night.....I know it is not the TV station's fault, but why not investigate what Hope Now is really about....INFORMATION ONLY.

I look at the foreclosure problem, and I see a big crisis. Yes, people made some bad choices, maybe didn't read the fine print, thought the interest rate would change, or relied on a factor that did not happen. But the bottom line is that we are seeing a significant number of people losing their homes and their dignity.

The problem in Orlando is compounded by the fact that home values have dropped significantly since all the investors pulled out of the area, and we now have over 26,000 homes on the market.

After hearing the news story yesterday, I went to the website and found the link to Hope Now....(www.hopenow.com) ...All it does is instruct people to contact their mortgage lender and talk to them.....really? The people that I know are in trouble HAVE ALREADY DONE THAT. What happened? Numerous answers: No one can give them an answer.....they can't get to the person that makes the decision....the situation has to get worse before the lender can do something.

Then we direct people that are struggling and stressed out, who have not gotten any help from their lender, and we send them to a non-profit organization. Nice, but does that organization have any say? Do they have a direct phone to the bank, with approval to override the bank? Can they force a lender to modify the loan?

The counselors can recommend some options, but they are just window dressing.

Here is the problem that is not being addressed: Mortgage companies have a lot of foreclosures and clients are not getting answers. The homes cannot be refinanced with a different mortgage broker/banker in Orlando because the homes will not appraise for the amount when they were mortgaged in 2005.

No other bank can help, and NO LENDER has come out with a policy on how to address the problem with their client and help the owner (another question: why would they be motivated to do anything to help? They have to listen to their investors, correct?). Foreclosures seem to be the only option...

...now exactly how does "Hope Now" address this?........

More bad news for Florida homeowners

RealtyTrac reports today that the number of foreclosure filings in August jumped 36% since July in the US. That is more than double from the same time last year.

Florida was one of 3 states that had the highest foreclosure rates, according to their research. Our foreclosure filings were up 77% from July's total. We had 33,932 foreclosure filings! For us, that means that we had one foreclosure filing for every 243 households.

This research confirms what Realtors have been forecasting for weeks. Unfortunately, we are continuing to see the fallout from sub-prime loans. Also, the number of homes for sale are increasing at an alarming rate, meaning that we have over 18 months of inventory in the Orlando area (6 months of inventory gives us an equal buyer/seller market).

As I look at properties for sale in the newspaper, I can immediately tell you which properties are overpriced---be careful about choosing a Realtor in this market who is telling you about the price you want to hear when listing your property. If you have to sell, choose a real estate consultant that is going to tell you the truth. Going with the person who will list your house for the most money may result in your property sitting for over a year on the market. Hire someone that will explain that you have to stay ahead of the curve.

Unfortunately, this trend is only getting worse, not better. When will we hit the bottom? We won't know that until that time has passed......

How foreclosures affect your neighborhood

I had a buyer ask me the other day about a problem in their current neighborhood. The house next door is going into foreclosure. Unfortunately, the husband and wife divorced, the wife got the house, and she could not keep up the payments.

Foreclosures are more of a concern in these recent months, due to sub prime loans. My mother said that in our hometown paper in Georgia there are pages of foreclosure notices. The big question: how does it affect your home's value?

I did some research to see what the experts say. The response: the price of your home may decrease by 1.5% if there is a foreclosure in your neighborhood.

How do you decrease the risk? If you are friends with your neighbor, and they express concern about making their house payment, encourage them to seek out a Realtor. Make sure they are trained on how to handle families in this crisis. Ask them if they are familiar with "short sales." If they are not familiar with the term, ask them to refer you to someone in their brokerage that is familiar with them. I can provide assistance in locating someone who can help them.

When this problem strikes, it is easy for someone to want to stick their head in the sand. This is not the time for that particular action. Quick action must be taken, to insure the homeowner, the bank, and the neighborhood is protected.

Buying a foreclosure is harder than it sounds

With a lot of foreclosures on the market, investing in some of them can seem like picking up found money on the ground. It's not as easy at it sounds. Not only will your expenses include the cost of the property, but repairs and holding costs.

The key is to buy at 30% below the after-repaired market value, according to Daryl White, a foreclosure investor in California. Never rely on appreciation to make a foreclosure deal work.

In Orlando, property is on the market for an average of 90 days----remember that you should figure in the costs of maintaining the property before it sells.

Florida ranks #1 in Foreclosures

CNN Money reported today that Florida had the most homes in the foreclosure process nationwide in February, according to RealtyTrac, which reported a two-fold year-over-year gain in delinquencies – more than 19,144 statewide.

Foreclosure filings are also recording double-digit increases in California, Nevada and Arizona, mainly because large numbers of speculative investors cannot sell properties purchased during the recent housing boom.

Don't get caught in the foreclosure wave

When the real estate market was booming these last several years, lenders often ignored borrowers' credit problems because the property values were rising. Now, with the downturn, lenders are looking at borrowers who are paying late.

According to the Christian Science Monitor, that means 2.2 million people are facing foreclosure and could lose their homes.

The majority of these loans are called subprime---meaning that the loans are for people who do not qualify for prime market rates because of blemished or limited credit. Wikipedia.com says that about 25% of the population falls into this category---they have a credit rating below 700.

In 1995, only 5% of mortgages were subprime. Today, Wall Street estimates it is about 18 to 24%.

I'm all for home ownership for everyone, but one needs wise when purchasing a home. With subprime loans come higher interest rates and a greater risk of losing your house. There may be a short-term gain of a new home, but it could cause greater credit problems down the line if you are unable to make the payment. Also, if you are able to improve your credit prior to your purchase, you could qualify for a better interest rate.

In response to this major problem, Freddie Mac said on February 28th it will stop buying subprime adjustable-rate mortgages and will require more borrowers to prove they earn the income they disclose on their loan applications. Unfortunately, this may be too late for many.