Norada Real Estate Investments

Foreclosure Timeline

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Novice short sale and other real estate investors are often confused by the entire process; it's not your fault! Foreclosure has never been simple but with the current backlog and other pressures, it's become worse than ever.

Here to help is an easy to read foreclosure process timeline. It will help novice investors understand the different methods used to purchase short sale, pre-foreclosures and foreclosed properties.

  1. First month missed payment. This counts as day one for the bank but notice, the homeowner had 30 days just like normal to come up with a payment. They will always remain 30 days ahead of the bank schedule.

  2. Second missed mortgage payment…day 30 for the bank.

  3. Third missed mortgage payment…day 60 for the bank. The loan is now seriously delinquent.

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Short Sales: Fact vs. Fiction

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Looking for big profits in short sales? An internet search for the phrase “investing in short sales” brings up tens of thousands of hits, many of which offer strategies and tricks to make a killing on the rising number of short sales in the U.S. These properties are sometimes viewed as easy money because the seller is in distress. But this is not necessarily the case.

The concept behind a short sale is this: a homeowner is unable to continue making mortgage payments; however, the outstanding mortgage on the property is higher than the market value of the house (i.e. “upside-down”). The homeowner makes a deal with the lender to sell the property at market value, and the lender eats the loss.

But are short sales really the money-making scheme that many believe them to be?

Not that it’s impossible to get good deals – many investors manage to buy short sales at a discount – but investors should be aware that negotiating a short sale is no walk in the park.

“Our biggest challenge [with short sales] is getting the banks to recognize that the property is not worth what they think it is. When we submit offers, and we think it’s a fair offer, and we fight with the banks on behalf of…the buyer, it’s very difficult to get them to meet us halfway at times,” says Mia Lutz, president of Say No To The Bank, a community counseling organization that works with foreclosure buyers and sellers.

Time frame can also be a major impediment for looking to purchase short sale properties. Short sales can take anywhere from 30 days to six months from contract to closing, and the deal can fall apart at any time.

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The Housing Market is About to Get Even More Oversupplied

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While both the media and stock investors believe that housing has bottomed, they are unaware of the massive supply of homes that are already in the foreclosure process that will certainly drive home prices down even further when they are sold. We have been projecting a “W” shaped recovery for some time, and we are becoming even more convinced that we are right. The shape of the second leg down is almost completely dependent on the level of government intervention that will take place.

For a number of reasons, banks have not been aggressively taking title to homes and selling them, which has resulted in very few distressed sales in comparison to the actual level of distress in the market. This delay in REO sales, along with historically low mortgage rates and an $8,000 tax credit, has helped to stabilize the housing market – temporarily.

It is very clear that price stabilization is temporary unless something is done. Here are some facts to help project what housing will be like in 2010:

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Foreclosures Hit All-Time High!

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Just when you thought foreclosure filings were stabilizing, they hit another all-time high with almost 938,000 homeowners filing in the third quarter, according to Realty Trac.  This is a 5% increase from the previous quarter.

Six states account for 62% of the nations foreclosures:
California, Florida, Arizona, Nevada, Illinois and Michigan accounted for 62 percent of the nation's total foreclosure activity in the third quarter.  That accounts for 579,541 properties receiving foreclosure filings in the six states combined.

Although California's foreclosure activity decreased almost 2% from Q2 there were still 250,054 properties that received a foreclosure filing.   That was a 10% drop in default notices but a 4% increase in scheduled auctions and 12% increase in REOs.

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HUD Properties, FHA & Title Seasoning for Real Estate Investors

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With HUD properties, title seasoning, FHA loans, and short sales, have had some confusion regarding the rules.  This article will clarify all of these issues for you.

HUD is the United States Department of Housing and Urban Development, a government agency whose goal is to increase homeownership and support community development .  The Federal Housing Administration (FHA), which is part of HUD, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States.

HUD and FHA come into play in three different scenarios in the investor/foreclosure arena.

HUD Foreclosed Properties

When a person gets an FHA loan, it is funded through a private lender and the loan is insured or backed by the Federal Housing Administration.  When the loan is in default, FHA pays out the lender and take an assignment of the loan.  When the property is foreclosed, it is owned by HUD.  HUD then offers these properties for sale to both owner-occupants and investors.  The properties are offered on the local MLS computer database, but you have to submit an offer through a HUD-approved real estate broker.  The offer is made under a bid process, under which the HUD will either accept or reject your offer depending on what other offers are submitted.  An investor can buy, hold, or flip these properties if their offer is accepted.

FHA Loans and Title Seasoning

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Foreclosures Rise 18%

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The epidemic of foreclosures is rising, according to newly released figures from RealtyTrac, despite a slight slowdown in activity during the month of May. Year over year foreclosures rose 18%.

Foreclosure filings, including default notices, scheduled auctions and bank repossessions were reported on 321,480 properties during the month, a decrease of 6% from April. The drop apparently developed as a result of moratoriums on foreclosures by the nation's largest banks and mortgage companies.

“While defaults and scheduled foreclosure auctions were both down from the previous month, bank repossessions, or REOs were up 2% thanks largely to substantial increases in several states, including Michigan, Arizona, Washington, Nevada, Oregon and New York,” said James Saccacio, chief executive officer of RealtyTrac. “We expect REO activity to spike in the coming months as foreclosure delays and moratoriums implemented by various state laws come to an end.”

Ten states represent 77% of foreclosure filings, according to the report. Foreclosures are forecast to rise through the remainder of the year by Housing Predictor as a result of the financial crisis and the tight money supply. Nevada continued to document the nation's highest foreclosure rate, with one in every 64 housing units receiving a foreclosure filing during the month.

[Read more…]

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Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

(949) 218-6668
(800) 611-3060
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