Big Banks Leaving Foreclosed Buildings in Ruins

Although most of this video takes place in Los Angeles, problems like this are being caused by foreclosures all across the United States, including Ohio.  I have heard many complaints by local realtors that by the time they get a buyer for a house, the house is in such bad condition that it isn’t saleable any more.

The big banks are not set up to be caretakers or landlords of buildings.  And the homes and condos stay vacant so long, that neglect alone is a problem, not even counting the possibility of vandalism.

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Voluntary Repossession

For many people, voluntary repossession becomes the last (desperate) alternative prior to bankruptcy. Are they one and the same? No, they’re not. When you volunteer repossession to your mortgage lender, you’re still liable for the shortfall between what the property will be sold for and what you owe.

Bankruptcy, a severe option for many, largely wipes out the debtors need to repay debt to creditors. This shouldn’t be viewed as the easy option as going bankrupt does have its negative consequences. However when there’s nothing more to lose (after all … you can’t get lower than ‘nothing’) it can become the more attractive alternative to remaining in debt for years to come.

Voluntary Repossession Of A House

The voluntary repossession of a house involves (pretty much) the handing over of the keys and ownership of your home. However that doesn’t mean that you can then walk away, worry free. You’re still expected to pay the mortgage until it’s sold. Repossessed houses usually find their way onto property auctions, as a means of a rapid turn-around.

This often results in your home being sold for considerably less than its (current) market value. That then leaves you with a larger shortfall to pay out than if you’d successfully sold your home through private means. You will also need to check out your mortgage indemnity guarantee (if you have one) as insurance companies are within their rights to seek redress (i.e. being repaid by you what they cover via the indemnity) once the dust has settled.

The mortgage company can also claim back costs associated with the resale of your home. All auction houses charge a fee, there may have been costs generated from securing or repairing the property, the list goes on. There’s also capital gains tax to consider. Has your home increased in value since you bought it? Do you live in it? Both will need due consideration, otherwise you can just add more money onto the overall debt.

In essence voluntary repossession doesn’t look too good on paper. However, despite the above, it may well be the better alternative than dragging yourself deeper and deeper into debt. For many, volunteering the possession of their home relieves some of the worry associated with defaulting on their mortgage.

Generally, individuals don’t default lightly and it’s largely as a result of a change in financial circumstances. If you’re currently at a crossroads with your home and financial situation, seek help and advice. For general financial aid, contact the CAB. They’re all capable of delivering sound guidance relating to money management and debt related issues.

With regard to the potential house repossession, contact Shelter. Singularly they’re the most robust source of information with regard to housing legislation and problems related to communication between lenders/borrowers. They deliver an effective service to those that need it, and they will do their level best to provide you with the most current, relative advice regarding your needs.

New Home Construction Cannot Compete with Short Sales of Foreclosed Homes

Home building in Ohio is coming off the worst 2 years on record dating back 5 decades.  Data in from May suggests that the trend is continuing.  The construction of single family homes is a significant economic indicator.  80% of all residential construction is single family homes, and that construction is still way down.

Most of the housing permits for new construction are for apartments and condominiums which have become preferred housing with the relative ease of renting instead of investing in a new mortgage.  For Americans who lost their jobs in the recession, and were forced to give up their homes due to foreclosure, renting is a safer, more secure option.

The impact of new home construction is felt around the entire local economy, as the purchase of a new home generates approximately 3 new jobs and $90,000 in taxes for the community.  New home buyers also tend to spend more on purchases for the home like new appliances, furniture, landscaping, and home improvements.  Apartment dwellers do not spend the same kind of money on their apartments.

Because of the large percentage of foreclosed homes in Ohio, resale homes are much more attractive to many home buyers than new home construction.  Buying a newly constructed home in Ohio is about 34% higher than a foreclosed home, which is more than 2 times higher than it would be in a normal healthy housing market.

Until the majority of the foreclosed homes in Ohio are bought, and the mortgages reinstated, new home construction will remain low.

JPMorgan Chase Ousts Chief of Mortgage Bank Foreclosure Unit

In a move meant to help repair its reputation, leadership of JPMorgan Chase forced out David Lowman, head of their mortgage unit.  As bank “fraudclosure” and bank blunders are coming to light during federal regulators’ examination of bank practices surrounding foreclosure, someone had to take the hatchet.

One of the biggest mistakes JPMorgan Chase made in their haste to foreclose on hapless lenders, was to overcharge military personnel on their mortgages, and to foreclose on the homes of 27 active duty military personnel.

For those families who sent their husbands, wives, and children off to war, to protect our country, it is really too much to ask that they need to worry about the homes that they live in here.  In most cases, military wives are almost single moms raising their kids here while their husbands are in active duty.

While I don’t know the personal circumstances for each of the 27 families that were affected, not to mention those who were overcharged, it is good to know that the federal government is chasing down the culprits.  However, it would be even nicer if we didn’t all have to worry about banks trying to steal from hard working American families of any stripe, as most people are just trying to keep their families fed and clothed as the economy languishes, in part due to the negligence of the banks and of law makers in regulating them.

At the very least, why not have the banks hire the people they are throwing out of their homes to replace the uneducated robo-signers that they have had signing overblown mortgages.  Maybe then, Ohioans and other Americans will be able to pay their mortgages, and the financial world will be set back in its feet again.

In the meantime, it is good to know that JPMorgan Chase is finally being taken to task for its huge blunders, and hopefully they will do more than just sacking the chief of the mortgage unit, and actually clean house, foreclosing on their part in this dismal chapter in financial history of the United States.

Bank Foreclosures in Question by Federal Regulators

Federal regulators asked the leading mortgage lenders in the U.S. to give regulators a plan to address problems with current bank foreclosure practices.  We have all heard of some of the bigger problems, banks foreclosing on houses that they don’t own, and fraudulent signatures and bank processes.  Back in April of this year, the federal government asked 16 of the nation’s major mortgage banks and lenders to reimburse homeowners who were incorrectly foreclosed upon.  (It is not bad enough that the banks are foreclosing on real foreclosed homes, they also have to foreclose on ones that aren’t even supposed to be foreclosed.)

The mortgage lenders were given 45 days in April to hire auditors to show how many home owners could have avoided foreclosure in the first place during 2009 and 2010.  Banks were asked to submit new plans to show how they intended to fix these problems in their foreclosure proceedings.

Not too surprisingly, the mortgage lenders are asking for more time to meet the federal regulators’ requests.  The Department of Justice has now extended the deadline by 30 days to work with the state and federal agencies involved.

Some of the lenders named in the regulatory action are Citibank, Bank of America, JPMorgan Chase, and Wells Fargo.

Too bad it is too late for them to go back in time and give those wrongly foreclosed homes back to the owners.

Foreclosures for Sale Causing Dropping Home Equity Values

If you are looking for a bargain on a new home, then buying a foreclosed home for sale will get you a house that is 20% less than normal value on average across the United States.  Recently, studies showed that in Ohio, that discount is even higher, up to 41%  in some cases.  And you may think that at least you can get a bargain on a new house.

You would be absolutely right, except that the falling home equity values, coupled with the continued foreclosing of more homes, is a downward spiral that actually hurts everyone, including you, the home bargain hunter.

A study based on data from the first quarter of this year, shows that more than one in five Ohioans with a mortgage owe more than their home is worth.  The study was conducted by a mortgage data firm, CoreLogic, to find out how many home owners were “under water” nationwide.  Cleveland has an even higher percentage, 27.3%, of homeowners that owe more than their home is currently worth.

This is a problem that is occurring due to the discounted sales of foreclosed properties which is driving home values down.  Until the majority of the foreclosed homes in Ohio are sold, Ohioans will continue to suffer from this loss of income.  Falling real estate rates means that Americans own a smaller percentage of their homes than they have since World War II, according to the Federal Reserve. The average homeowner now has 38 percent equity, down from 61 percent a decade ago.

In a normal situation, home equity goes up as you pay off your mortgage, but right now while homeowners continue to pay off mortgages, their home value goes down, so that they own less and less of their homes.  Many homeowners are battling foreclosure on a home that they are losing equity in.

It just doesn’t seem right that you can pay and pay on your home, and still not own it.  Who owns it then?  Is the bank the true owner of your property, or the lender?

Foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years. We all know that in addition to the problems of foreclosure, bankruptcy, and defaulted loans, there are numerous instances of mortgage fraud, and other instances where lenders have not really helped people who are trying to pay off their mortgage loans.

Home prices are expected to keep falling until the number of foreclosures for sale is reduced, companies start hiring in greater force, banks ease lending rules and more people think it makes financial sense again to buy a house.  That is a lot of conditions that need to be met here in Ohio, where jobs are still hard to find, and companies are just trying to hold on to the status quo.  Many Ohioans are still looking for jobs to replace the ones they lost when the economy fell.

So what does that mean for Ohioans?  It feels like we are bailing out a sinking ship.  Even when we pay our mortgages, we are still not the true owner of our property.  No wonder so many people are in despair.

Ohio Senator Sherrod Brown Announces Funds to Prevent Foreclosures in Cleveland

It is nice to see that some politicians are working to help homeowners in Ohio beat the foreclosure racket.  It was announced today by U.S. Sen. Sherrod Brown (D-OH) that $229,140 was awarded to the Neighborhood Housing Services of Greater Cleveland, Inc. to provide foreclosure counseling to local families. The National Foreclosure Mitigation Counseling Program funds are awarded on a competitive basis to help prevent foreclosures.

Cleveland is one of the leading cities in the nation when it comes to foreclosure rates, and with a large urban population, it doesn’t look like that is going to change soon.  Foreclosures in Ohio have continued to be a serious problem in all parts of the state, with some of the largest gaps between new home rates and foreclosured home sales rates. Brown was quoted as saying,

Foreclosures are devastating to not only the affected homeowner, but the entire neighborhood and local economy. Cleveland-area homeowners, families, and neighbors facing foreclosure deserve a strong support network. That’s why the National Foreclosure Mitigation Counseling service is so important to ending the foreclosure mill that plagues communities in Ohio and throughout the country. We should be finding ways to keep people in their homes, not gouging homeowners and forcing more houses onto an already depressed housing market.

Ohio has been particularly hard hit during the economic crisis of the last few years, with bankruptcies and foreclosures.  This is especially true in urban areas like Cleveland, Columbus, and Cincinnati.  Many homeowners in urban areas are higher risk candidates for loans to begin with, and the economy has continued to make jobs scarce.

Sherrod Brown is the chair of the Financial Institutions and Consumer Protection Subcommittee, and is a leader in calling for assistance to communities affected by the foreclosure and real estate crisis.  He recently introduced the Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011, which would:

  • Protect homeowners from lender errors, miscommunications, and abusive fees.
  • End the rush to foreclosure and require lenders to work with homeowners to find sustainable mortgages.
  • Improve standards for staffing and casework by mortgage lenders.
  • Protect the interests of investors who buy securities backed by residential mortgages.
  • Reform oversight of pools of securitized mortgages.

Sherrod Brown is married to Connie Schultz, a writer and columnist for the The Plain Dealer.

Derelict Property For Sale

There’s something to be said for looking at derelict property for sale. Often, neglected properties need a complete overhaul, and that includes demolition and a full rebuild. The interesting aspect is the fact that (generally) when you knock a building down, you can raise another one in its place.

There can be high value and a great ROI with this method of house buying. For a start you’re looking at a piece of land that effectively possesses the right to rebuild (always check first, never assume), and land being what it is it’s rarely sold at less than premium prices.

Derelict Property

In effect, a plot of land that plays host to a derelict property already has permission for that building; therefore it’s likely that you’ll be granted permission to rebuild over the same footprint. Securing planning permission is often a subjective experience and for that reason alone, your chances of securing it are far higher when you’re reclaiming land that’s already been built upon.

Of course the old chestnut caveat emptor must be taken into consideration; converting from commercial to residential property can become an issue. A house that was formerly a home will be easier to reestablish, whereas going from an old mill to apartment block may be more far more difficult.

Finding Derelict Property For Sale

If you were looking for overseas derelict property for sale you’d find something within a matter of minutes. However in the UK we seem to do things a little different. You will need to check through different estate agents and property auction web sites as to how they list their for sale portfolios.

As an example you may well find renovation properties for sale that are less about being renovated and more about being demolished. Similarly check out land for sale, as plots of land can also throw up derelict places and dilapidated buildings. Give the lower end of the housing market a close inspection.

Sometimes, houses for sale at the bare bones level show up as derelict, and it’s certainly worth trawling through the lists using a low-price filter to sift out the hidden gems.

Derelict Barns For Sale

Usually derelict barns for sale will come under farming and agricultural listings, and these are a highly popular and effective method of middle ground investment for high return. Barns are often huge in terms of size and a full rebuild/conversion often creates a stunningly beautiful home.

Again there are always caveats so don’t rush in having found one and dream of sitting under stunning exposed beams and toasting yourself on a gorgeous open fire. Local authorities differ from area to area and what may work in one may well receive a refusal in another. Do your homework first.

Derelict Property – Things To Consider

There are things to consider before you go ahead and start looking for a derelict property. Top of your list should be the research. Make some general enquiries in relation to what may or may not be likely in relation to planning applications. Can you extend the original footprint? If it’s single story can you build above height?

What about access? This is a common downfall with rural plots; derelict farms often possess rights of way (to the public), make sure you’re aware of what they are and where they are. Beyond the above you’ll need to factor in an architect, engineering, demolition works and builders.

Who’s going to be the project manager? How will you set your budget and stick to it? In real terms most of the aforementioned can, in some way, be attributed to buying a house through the normal route. Many people extend their property post-sale, so architects and builders are required. However, done right, a well-thought out plan can come to fruition.

A derelict property can become your dream home and there’s nothing more satisfying than knowing that the place that you now call home is something that you’ve built from the ground up. Having experienced such a venture a few years ago, I can speak from experience. The highs and lows really are worth it once it all comes together.

What is foreclosure?

A foreclosure is not an overnight process. There are always a number of months, sometimes years, before the first inkling of what’s to come rears its head. Does this make any difference to those that lose their homes? Probably not, as the inevitable result is pretty much the same time and again. The span of time between knowing what’s going to happen and the day that it actually does happen is neither here nor there; the fact remains that very few manage to avoid losing their home to their mortgage lender. Oddly, I know you can’t win in the more positive sense either. I have a member of family that came into a considerable sum of money recently.

As a means of ensuring that their home remains their home, they decided to use the windfall to pay off their mortgage. They approached their bank (that’s who they borrowed their mortgage from) and asked about the early redemption process. The bank was fine with their proposal, with the exception that they had to pay an early redemption penalty! It turned out that they had to find another $7800 in order to pay their mortgage off in full. Fancy that … you want to rid your debt, you want to do the right thing and the banks way of dealing with it is to extract a ‘fine’ out of your pocket.
It’s almost as if you’re punished for wanting to do the right thing. I was pretty shocked, as they were. Of course they decided to go ahead and pay it off regardless, but both were left with a nasty taste in their mouths. It’s almost as if the banks have the right to print money, to extract as much as possible out of your pocket, whether or not you can actually afford it! Anyway, at least there’s no chance of them being hit by a foreclosure any time in the future.

Most of us know what a foreclosure is, and what it entails. The end result is that you lose your home, end of story. It’s a sad fact that over the last couple of years, the rate at which homes are being repossessed by the banks remains on the rise. As the financial crisis tightens, so many families are feeling the ill effects. This is not a good thing, probably not a good thing for the banks either. Let’s face it, the banks don’t want to own a string of houses, they’re not into the realty business. They don’t want to become landlords, owners of vast numbers of properties that require maintenance and upkeep, as well as property management.
However they are repossessing houses on a daily basis across the nation. You only have to take a drive around your local area to realize just how many people are being affected by this horrible trend. There are foreclosed boards up on every street, or so it seems when you’re driving around. In fact this is one of the ways in which people hunt for such properties, as they find them at the source – the side of the road. You drive around, looking for such properties. You find one that you like the look of; you take the details down and find out when the house is up for resale and where.

You then attend the auction (which is where most of these properties are sold) and bid for the house you’re interested in. If you’re successful, fine, you’ve got yourself a new home at what will probably be a rather low price. If not you just enter back into the fray, eventually you will manage to secure one. As time passes, more and more homes are repossessed through foreclosure, and more and more people end up without a family home. If you’re one of these people you’ll know the process, how it works and where it ends up. None of it seems fair, not least if you’ve lost your job. It’s a sad state of affairs that doesn’t look as though it’s going to improve any time soon.

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Condos Foreclosure?

Are there a lot of condos in foreclosure? Bet your bottom dollar there are. The banks are even more likely to foreclose on a condo than they are on a “normal,” stand alone home, because there are likely to be less issues with maintenance as long as there are other tenants/owners in the building. Some sales portals are claiming to have foreclosed condominiums by the hundreds of thousands on their listing books, but the actual number available is pretty opaque.

The problem with back dues then becomes something the other owners may eventually have to deal with and the law is not clear as to who becomes responsible for any homeowners association fees, but usually the rest of the owners are forced to take up teh slack. In fact – almost as many homeowners associations are foreclosing as banks are.

Some owners are attempting to avoid the foreclosure process by filing chapter 7 bankruptcy, but this merely serves to delay the process as inevitably, more debts are incurred after the filing, and these will become a new debt that is not discharged with ethe chapter 7.

Chapter 11 offers little respite either – as long as there is equity, the court trustee will seize the property to free up any equity and use that to pay the debts (after fees), so most people who are well behind in payments, either to the bank or a homeowners association, are walking away becaus ethey are often in a “upside down,” situation of owing more than the property is worth.

Exactly how many condominiums have been foreclosed on, or are in the process of being repossessed is hard to determine. Many condo associations are now in financial difficulty because of the amount of condos in foreclosure, which naturally brings down the value of all the others in the block.

Recent news about this issue suggests that things are not getting any better:

A former president of a condominium association was arrested on fraud charges Friday after police said she swindled nearly $300,000 by trying to sell condos that were in foreclosure or off the market. Source.

Canadians shopping for bargain condos for sale in Florida are wary of the “Chinese drywall,” issue with many properties built between 2004 and 2007:

It’s a reminder never to make a decision based on low price alone. Instead, for the one in five Canadians who, according to a recent Leger Marketing poll, are considering buying U.S. real estate, veteran realtors like Moore advise a detailed, step-by-step approach to evaluating deals in Tampa, Vegas or Scottsdale.

“Air conditioning, electrical and plumbing systems will be toast. You can have trouble breathing, and MLS may not tell you about any of that,” Read more:

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