Are Foreclosures Really Decreasing?

RealtyTrac – a leading provider of tracking data on Foreclosure Activity, used by many private and public sector organizations to help evaluate foreclosure trends, reported late last week on a national level foreclosure activity dropped 9% in April.

Sounds like good news right?

Well – hold 0n just one minute there, Bucko.   There may, indeed, be more to the story.

What if there were lots and lots of  homeowners, who can’t afford their payments have realized that the banks are taking a long time to take action against them?

What if some of those homeowners just stopped making their payments and are staying in their homes, making no payments for up to a year or more?

Diana Olick of CNBC says these are questions that have to be considered.   Here is her article from May 13, 2010 on this very subject called  “Banks Ignore Delinquent Borrowers”

I’ll hang on here while you go read that.

OK  – Done?

So how does that affect owners that are operating outside of this part of the market.  You know, people who have equity in their house and would like to sell.

While no one knows for sure when those foreclosures are going to hit the market – or if they are in your town, your neighborhood, one thing is for sure.  If they do, it will affect the value of your home in a negative way.

Again – every situation is different and you have to work with your Realtor to determine the best course of action for you.  Having said that, if you are interested in selling, come up with marketing plan and a price point that will move your house quickly.  The idea of  “Trying a high price” for a while – may have passed.

If you have a need to move for one reason of another, such as wanting more space, less traffic, nearer to work or school – just get it done.   Even though the economy shows signs of getting better, the decline in housing prices may not be over – not for quite a while.


Rick Schwartz,   REALTOR

Homes for sale in Danbury, Bethel, Brookfield, Newtown, New Fairfield, New Milford, Ridgefield and Redding CT.


Upcoming Foreclosure Prevention Clinics in Hartford

Any of these dates:

  • May 18, 2010
  • June 15, 2010
  • July 20, 2010

Each Seminar will begin at 5:30 and runs for two hours.  They will be held in the Handel Performing Arts Center Community Room at the University of Hartford.  You can get directions here.

They are being presented by the University of Hartford Paralegal Program and the CT Fair Housing Center

In addition to learning about the process and how best to minimize the impact of foreclosure, you will also have the opportunity to meet with volunteer attorneys as well as Paralegal students.

There is no pre-registration required and anyone can attend.


Rick Schwartz,   REALTOR

Homes for sale in Danbury, Bethel, Brookfield, Newtown, New Fairfield, New Milford, Ridgefield and Redding CT.

Should you buy a Short-Sale or a Foreclosure?

December 29, 2008 Leave a comment

Bargain-hunting is the name of the game in free market capitalism.

We hear so much today about the number of short sales and foreclosures that it’s natural to wonder if this is where the bargains are.  Are these areas that we should be pursuing?  Will we get a “great deal”?

First, let’s go over the difference between a short-sale and a foreclosure.

A short-sale simply means that a seller is offering his home for sale – and that he owes an amount greater than the current value.  So if the value of a home is currently $100 and the seller owes $105 – he will, upon the closing of the sale, come up five dollars short – hence the term short sale.

Contrary to what you read, being in a short sale position does not always mean that the seller is in danger of having the bank take his home away.  It could simply mean that the owner wants to sell his home for a new job, or because of a growing family or other reasons. He may indeed have the five dollars he needs to make up his shortage and thereby can pay all that is owed at the time of the sale – even though he will be taking  a loss.

The short-sales that we hear most about in the news are the homes where the owner owes more than the value of the house and is being forced to choose between selling and having the bank take the house away because he is behind on his payments with no resolution in sight.

These sales are very cumbersome and time consuming.  If you need to purchase a house because you have a need to move into it quickly, you should probably not consider this option.  The sale price must first be negotiated with the seller – and then, if the price is less than the mortgage amount, it must also then sit subject the approval of the lending institution.  The lender may not only want to recoup the amount that they are owed on the mortgage but also any late fees and penalties that have accrued.  So once you bid, you simply have to wait- and wait – and wait.  The time frame before the offer is approved can run into months.

Aside from the monetary approval, during the course of the sale, other liens may surface. If there are other debts on the property that have had liens taken out – the additional amount of these debts must be paid off before title can pass to a new owner.

This is not to say that there aren’t some bargains in short sales but if you choose to pursue this avenue you need to go into it with your expectations set accordingly.

Foreclosures are typically a cleaner transaction.  Once a home has gone through the foreclosure process, the original home-owner is not involved. The bank now owns the property and only their approval is necessary.  The listing Realtor, represents the bank – not the original homeowner. So should you choose to make an offer, the listing Realtor will present the offer and the bank will respond.  It can still take a bit of time – but we’re usually talking weeks as opposed to months as can happen with short-sales.

The question is – how much of a bargain will you get on a foreclosure?  Here are some of the things to consider.

If the original amount of the mortgage was 90-100% of the value of the home – at the time it was purchased – and that value has declined by 20% in the last few years – the bank could be looking to collect an amount that far exceeds the current value. PLUS, in addition to late fees and penalties (the same as with short sales) there will be administrative costs and legal fees that the bank incurred during the foreclosure process.

If the home was foreclosed on more than a few months before you are making a offer – the bank also has been paying land taxes as well as  utilities, in some cases. They will likely want to recoup that money as well.

Also – depending on how long the house has been vacant, the condition of the home may not be tip-top.   There are cases where frustrated homeowners on the verge of losing their house, abandon it  – even before the foreclosure.  If the house was abandoned, for a lengthy period of time , there could be freeze damage, burst pipes, ruined floors,  vandalism and a host of other issues. Remember, if they abandoned the house before they were forced out, the house could have been vacant for some time without the bank knowing so they would not be protecting the property by keeping utilities connected or “winterizing” a vacant home.

So if you do ultimately purchase the foreclosed home, you have to mentally add the cost of making the home habitable to what you paid.  Whether you are buying it to live in or as  investment, you still must being the house up to a certain condition.  So if you could save 50K by purchasing a foreclosure and you have to put 40K into it, you’re savings is 10K.   Still a deal, but is it enough of a deal to make you happy.

Lastly, keep in mind that unless you are paying cash, you’ll have to get your own lender to approve you for a loan to buy the house. You may have great credit but remember that a lender looks at your credit and also at the value of the home you want to buy.  When they do an appraisal – it has to present at the value you are buying the house for.  Otherwise, they’ll be lending you more than the value of the house and you will instantly be “upside-down” – the bank won’t do that.

Seeking to buy foreclosures and short sales is becoming more popular for folks looking to get a great deal.  It certainly is possible to accomplish this but it’s important to educate yourself on this issue in detail as to what is a great deal and what is not.

So, talk this over with your  Realtor who can give you some specifics on what properties are available in your area and how best or proceed.


December 22, 2008 Leave a comment

So there’s this article on Fox News this morning asking the question that everyone seems to be asking. How are the banks spending the money that they’ve been given so far from TARP. Keep in mind that TARP stands for Troubled Asset Relief Program. The idea is that the banks would use the money to somehow offset the bad loans they made, giving the debt holders some relief – the plan being to get the money back into the economy so things will pick up all over.

Until the banks are given some relief and then pass it along to homeowners in trouble, we will still have a glut of housing inventory which continues to push prices down and causes the housing market to stay stalled – which, of course, stalls the entire economy.

According to this article, some of the banks won’t answer (or don’t know) where the money went. Interesting reading.

I hope that the new administration demands answers and takes the money back if it’s not being used the way it’s supposed be used.

When will the market come back?

I suspect that most Realtors are being asked this question daily – probably multiple times.

Every day and night – we are being bombarded with headlines like “Housing prices tumble”, “Housing market continues to decline”, “No end in sight for drop in home sales” “Foreclosures up”.

The net effect of this kind of sensational journalism is that people who need to make a move are waiting. The question is, what are they waiting for and when will it happen.

If you ask most of these folks, exactly what they are waiting for – the answer is often that they are waiting for housing prices to begin to climb as they did in the early part of this decade.

Well – guess what? That’s not likely going to happen any time in the foreseeable future. Here’s what is going to happen.

Right now, we are in a depreciating market. This basically means that while the number of buyers looking to buy homes is roughly the same as it was last year and the year before, the number of houses for sale is much higher than it was. This puts the buyers in a good position. They can pick and choose which houses to buy. This also means that they set the price. The homes that do sell are selling for less than would have sold for 18, 24 and 36 months ago.

At some point, the glut of inventory (the number of homes for sale) will start to drop a bit. This will happen because some folks will pull their homes off the market or they simply won’t put them on. Buyers will start to act a little more quickly as they see homes they were considering start to sell out from under them. This will in turn decrease the inventory a bit more. This cycle will keep going until eventually the market will “bottom out” which simply means that the prices will stop declining.

Home prices, at that point will probably remain stable for a while and they start to rise a bit. The thing is that even when they do start to rise, the odds that they will rise as they did a few years ago are extremely low. Housing prices will rise, but at a normal pace – most likely keeping in stride with the economy in general.

You must realize that the level of increase from a few years ago was artificial. Prices went up because everyone was buying/selling/buying. People were purchasing homes with the intent of staying in them only a year or so and then “flipping” to another house where they would do it again. I know people that moved 5 or 6 times in 3 or 4 years. A feeding frenzy was rampant. Houses were selling in a matter of days or even hours after being put on the market. Bidding wars ensued.

None of this has any precedent. It was a self-perpetuating house of cards that had to tumble at some point. It did.

Now, at some point, the market will hit bottom, and begin to start a new cycle.

As to when it happens, some people think it’s very near. Anecdotal evidence suggests that houses that are priced properly are selling in a few weeks instead of a few months. Hard data isn’t available yet to say what 2008 is actually going to be like.

Some think it’s going to be a while.

So – when will the market come back? It will probably never come back to where it was 24 months ago, but it will come back to a normal cycle – soon (we hope).

If you have a need to move, talk to your Realtor and look at the market conditions in your own town. In spite of the gloom and doom from the national media, every market is different. If you have a need to move, you should move.

Banks urged to help avert foreclosures

Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.

“Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,” Bernanke said in a speech to bankers on Tuesday at the Orlando World Center Marriott Resort. “Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.”

Bernanke’s call goes beyond the stance of the Bush administration and previous Fed comments, indicating that he sees housing as a serious threat to the economy that can’t be addressed by fiscal or monetary policy alone. The Fed’s Feb. 27 report to Congress called for lenders to “pursue prudent loan workouts” through means such as modifying mortgage terms and deferring payments.
Orlando Sun-Sentinel 3/8/08

click here to read the entire article