December 4, 2014

Building A Second Wave Of Distressed Properties

The Banker & Tradesman reports on Massachusetts. “Foreclosure starts in the Bay State continued to climb in October, posting a 91.5 percent increase year-over-year, according to The Warren Group, publisher of Banker & Tradesman. This marked the eighth consecutive month of year-over-year increases and is the highest number of starts since November 2012. ‘Lenders continue to work through their backlog of long-delinquent mortgages and push the legal work through a pipeline that was clogged for all of 2013,’ said Timothy M. Warren Jr., CEO of The Warren Group. ‘The experience in Massachusetts is similar to national trends.’”

The Washington Post. “The opportunity to buy a bargain-priced foreclosure hasn’t completely passed, though, because some foreclosures are still coming on the market in the Washington area, particularly in Prince George’s County. ‘Prince George’s County’s housing market has been recovering well in recent years, but it has a higher number of foreclosures than other parts of the D.C. region,’ says Will Stein, broker/owner of Belair Realty in Bowie. ‘Banks have been holding onto their inventory of foreclosures, so we’re expecting an increase in the availability of these properties over the next 18 months.’”

The Press of Atlantic City in New Jersey. “Court-ordered delays kept banks and other lenders in the New Jersey market from processing foreclosures, building a second wave of distressed properties. ‘As I’ve said the past year, I fully expected in 2014 to see median home prices fall, not as a function of a broad-based depreciation, but more as a function of the big inventory of distressed assets that would come onto the market,’ said Anthony D’Alicandro, broker with Coldwell Banker Argus Real Estate in Northfield. Also, about 20 percent of sales are short sales, in which the amount owed on the mortgage exceeds the sale price, ’so they’re not people who could be moving up’ to a better home, he said. That plus foreclosures, he figures, have reduced demand for middle- and upper-market homes by about a third.”

From WHEC Rochester in New York. “Back in September, we showed you one home in the North Winton village that’s been vacant for almost five years. Despite Bank of America giving the homeowner a foreclosure notice in 2009, we’re told the foreclosure process was never completed. Now, less than three months after our report aired, neighbors tell us that home has been demolished. Del Smith, Commission of Department of Neighborhood & Business Development, says, ‘With one lender at this point and time we have over $1 million in demolition costs and maintenance costs associated with just maintaining their set of properties that are in the zombie state.’”

“In the City of Rochester there are currently 2,400 abandoned homes. At last check, 320 of those homes were scheduled to be demolished.”

From King 5 in Washington. “Zombie Houses are on the march in Mukilteo. Like their monster movie counterparts, zombie houses just won’t go away. The owner has walked away but the bank hasn’t taken ownership, either because of paperwork problems or because the bank doesn’t want to declare a loss. As a result, the houses just sit and fall apart right before their neighbors’ eyes. Mukilteo, an affluent enclave in Snohomish County has no laws on the books to deal with abandoned houses. Neighbors are concerned that the dilapidated homes will lower property values, allowing crime to creep in. At that point the zombie houses begin feeding on the value of other homes and turning them in to zombies, as well, just like in the movies.”

“‘It’s just a mess,’ said Jerry Arnold, who lives across from one. The house across from Arnold’s place has a tree down in the middle of the driveway. A tarp has been torn off the leaky roof, and no one has lived there for more than six years. ‘It’s sad because it didn’t have to happen,’ he said.”

From Vegas Inc in Nevada. “Banks seized tens of thousands of homes in the valley after the economy collapsed, and Nevada’s foreclosure rate led the nation for years. Lenders aren’t repossessing nearly as many homes anymore, but with the economy sluggish, they still deal with plenty of delinquent borrowers. Nevada had the third-highest foreclosure rate in the country in October, according to RealtyTrac. Meanwhile, local officials still grapple with abandoned homes, one of the more visible side effects of the recession.”

“At the same time, a large number of people live in their homes mortgage-free. Whether they can’t afford to pay or just don’t bother to, residents are skipping payments without consequences because banks, under closer scrutiny from government officials, have been waiting years before seizing homes from delinquent borrowers. A man who recently visited the Financial Guidance Center hadn’t made a mortgage payment in more than seven years. CEO Michele Johnson’s group meets daily with others who haven’t paid in three or four years. ‘It is not an exception,’ she said.”

“In the year ended June 30, people in Clark County spent almost $5.5 billion at car and auto-parts dealers, furniture and home-furnishings stores and electronics and appliance shops. That’s down 9 percent from 2007 but up 43 percent from 2010, according to the Nevada Department of Taxation. Locals beefed up their savings at the depths of the recession, but — perhaps lulled into a false sense of security because the worst of the economic carnage is over — ‘now you can see what they’re doing with their money,’ Johnson said. ‘We have very short memories,’ she said.”

Bits Bucket for December 4, 2014

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