Foreclosures Rise in August

Market Analysis - Foreclosures:


WASHINGTON -- Foreclosure activity jumped in August for the second consecutive month as banks started the process on more properties and scheduled more housing auctions, industry firm RealtyTrac said Thursday. http://t.co/wZcHqLaoQ7

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Foreclosures Down Sharply Over the Last Few Years

As recently as 2011, distressed sales made up a full 30 percent of all housing sales. By 2013, that number had been cut in half to 15 percent, and in the month of June it rested at just 11. While the steep decline in distressed sales has caused overall sales numbers to dip, traditional or non-distressed property sales have risen over the last year, marking a noticeable recovery in the market. http://ow.ly/3nSEav


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$42,500 3 beds, 2 baths Single Family Home in Houston, TX

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Why Missing Mortgage Payments Carries a Heavy Price

Foreclosures: Why Missing Mortgage Payments Carries a Heavy Price ow.ly/2Kk4Xj

Mortgage Modifications

A Mortgage Modification is permanent change in a homeowner’s home loan terms that makes the monthly loan payments affordable. The goal of mortgage modification is to prevent foreclosure.

Mortgage modification can benefit homeowners by preventing them from losing their home and can benefit lenders by avoiding the costly foreclosure process.

To apply for a mortgage modification, a homeowner must complete an application package documenting income, assets, expenses and financial hardship.

The biggest mortgage modification program in the United States is the Home Affordable Refinance Program, created in 2009 by the federal government in response to the nation's housing crisis. This program helps homeowners who are struggling to pay their Freddie Mac or Fannie Mae-backed mortgage apply for mortgage modification with their loan servicer.

These are borrowers who cannot do a traditional refinance to improve their loan terms because their home value has declined below the mortgage balance.

A similar program called the Home Affordable Modification Program helps borrowers with Federal Housing Administration-backed mortgages. Borrowers can also apply for a mortgage modification outside these federal programs. A nonprofit housing counselor can help with the process.

While a mortgage modification generally means less income for the bank because of a reduction in the mortgage’s principal amount, interest rate or both, this loss may be less than what the bank would experience by foreclosing on the borrower and reselling the property. Mortgage modification can turn a less-than-ideal situation into a win-win.

Still, foreclosure was much more common than mortgage modification during the housing crisis because banks claimed they lacked the resources to handle the large number of modification requests. As a result many homeowners who may have qualified for mortgage modifications were not able to get into a modification program and, instead, lost their homes to foreclosure.

Bank Owned Properties

Bank Owned Properties, also known as real estate owned (REO) properties, are properties that are taken into a bank's inventory, after a foreclosure sale.

Bank-owned property are acquired by a financial institution when a borrower does not make their mortgage payments. These properties then sell at a discounted price, much lower than current home prices.

This type of property is taken back by lenders during foreclosure. Lenders and banks with the highest bid in a foreclosure gain the rights to obtain the property.

Bank-owned properties tend to have low interest rates and low down payments. Large national lending institutions have departments called loss mitigation departments, that sell these properties.

Understanding Short Sales

Short sales are purchases negotiated with the owner and lender(s) before foreclosure. Typically the purchase price negotiated is less than the balance owed on the property.  For investors, short sales present an opportunity to buy real estate below market value and help borrowers avoid foreclosure.

Short Sale Process

• Both parties consent to the short sale process, which allows them to avoid foreclosure, which involves more fees for the bank and foreclosure being reported on the borrowers credit report. However, this agreement does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
• The bank or mortgage lender agrees to discount the loan balance because of an economic or financial hardship on the part of the borrower.
• The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender.

Short Sale vs Foreclosure

• Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem.
• Banks will incur a smaller financial loss than would result from foreclosure or continued non-payment.
• Borrowers are able to limit damage to their credit history, and partially control the debt.
• A short sale is typically faster and less expensive than a foreclosure.
• It does not extinguish the remaining deficiency balance unless settlement is clearly indicated on the acceptance of offer.

For more information about short sales visit Carlisle Mitchell - Real Estate Tips for Investors

U.S. Foreclosures Hit 8 Year Low

Foreclosure activity across the United States dropped to an eight-year low in May as banks reclaimed fewer homes and foreclosure starts saw their lowest levels in years, RealtyTrac said in a report on Tuesday.

RealtyTrac, which tracks and maintains housing market data, said 109,824 properties across the country were at some stage of the foreclosure process in May. That marked a 5 percent decline from April and left foreclosure activity -- foreclosure notices, scheduled auctions and bank repossessions -- 26 percent below the year-ago level.

Short Sales

Short sales are purchases negotiated with the owner and lender(s) before foreclosure. Typically the purchase price negotiated is less than the balance owed on the property.

For investors, short sales present an opportunity to buy real estate below market value and help borrowers to avoid foreclosure.

Carlisle Mitchell - Houston - Judicial Foreclosures

Carlisle Mitchell - Houston - Judicial Foreclosures.
Judicial Foreclosure is a foreclosure proceedings in which a mortgage lacks the power of sale clause. In such an instance, many states require the foreclosure to be processed through the state's courts. If the court confirms that the debt is in default, an auction is held for the sale of the property in order to acquire funds to repay the lender.

This differs from non-judicial foreclosures, which are processed without court intervention.
Many states require judicial foreclosure to protect equity the debtor may have in the property. Judicial foreclosure also serves to prevent "strategic disclosures" by unscrupulous lenders.

In instances where the sale of the property through the auction does not generate enough funds to repay the mortgage lender, the former homeowner will still be held liable for the remaining balance.

Income Property

Income property is property bought or developed to earn income using various investment strategies. 

Income property can be residential or commercial. Residential income property is commonly referred to as "non-owner occupied". A mortgage for a "non-owner occupied" property may carry a higher interest rate than an "owner occupied" mortgage as it is viewed by lenders as a higher risk.

A common practice during periods of home price appreciation is for investors to purchase residential income properties with the intent that rents will cover their monthly expenses for a period of time until the property can be sold for a large capital gain. 

As with all markets during times of fast price appreciation, and as with all market bubbles, investors that enter the market first and get out first usually do well. Investors that enter the market later, and get out last usually don't do as well.

Short Sales

Short Sales
A home that is listed for sale at a price lower than the amount owed on the mortgage. Homeowners hope to sell their home as a short sale to avoid penalties associated with going into foreclosure. What can make it difficult to buy a short sale is that there are often two mortgages on the home and both lenders must approve the sale. The ownership of the mortgages on a short sale home usually belong to more than one party, so you'll likely have to convince multiple banks and lenders to take a loss on their original loan. This is why it often takes so long to approve a short sale offer. If the short sale fails and the homeowner can't afford to pay his mortgage, then the bank forecloses on the home.

No Slowdown in Sight for Houston Housing Market

HOUSTON — Home buyers kept Houston-area REALTORS® hopping in February, generating a 15.5 percent increase in sales compared to the same month last year, according to the latest monthly data compiled by the Houston Association of REALTORS® (HAR). The buying spree held local housing inventory to the same level as January — 3.6 months — which is the lowest supply of homes on the market since December 1999.

February marked the 21st consecutive month of increased home sales, with average and median prices reaching the highest levels for a February in Houston.
Contracts closed on 4,407 single-family homes during the month. All housing segments saw gains except for those priced below $80,000. That suggests the likelihood of an exhausted supply of available homes at that price point. Homes selling from $250,000 to $500,000 registered the greatest sales volume increase, accounting for the price appreciation.


“The recent flurry of home buying and reduced inventory may seem unusual, but is exactly what the Houston market experienced back in the late 1990s,” said HAR Chairman Danny Frank with Prudential Anderson Properties. “The difference is that now we are seeing multiple offers and bidding wars. We are still in a seller’s market, and I would advise anyone who is considering selling their home to consult a REALTOR® who can price it right and handle all the details and paperwork, including sorting through whatever offers may come in.”

The single-family home average price increased 9.6 percent year-over-year to $220,445, the highest level for a February in Houston. The median price—the figure at which half of the homes sold for more and half sold for less—rose 7.9 percent to $161,700, also a record high for a February.

Foreclosure property sales reported in the HAR Multiple Listing Service (MLS) declined 23.4 percent compared to February 2012. Foreclosures currently make up 15.8 percent of all property sales, down from 19.6 percent one month earlier. The median price of foreclosures climbed 7.7 percent to $85,000.

February sales of all property types in Houston totaled 5,324, a 17.2 percent increase over the same month last year. Total dollar volume for properties sold rocketed 26.5 percent to $1.1 billion versus $887 million a year earlier.

February delivered positive results to Houston’s overall real estate market when all sales categories are compared to February 2012. On a year-over-year basis, total property sales, total dollar volume and average and median pricing were all up.