Foreclosures Blog - Foreclosure Listings Nationwide

Home buyers who were expecting to purchase homes at discounted prices in foreclosure auctions were surprised to find out that banks are asking for higher prices to recover their investments.

Harmony Homes real estate agent Jimmy Marston likens finding a good deal in foreclosure auctions to searching for a needle in the haystack.

He said that lenders are asking for higher prices because homeowners owe them more on their properties.

People are losing their properties after just a few years of paying for it. This means that banks will have to sell the foreclosed properties at higher prices to recover their investments.

A study of land records for foreclosed homes in 2008 showed an average period of three years and nine months between the taking out of the loan and foreclosure. The size of a property’s outstanding loan principal is a major factor being considered by a mortgage lender when it sets the minimum bid price.

In Lynchburg, Virginia, out of 211 forfeited properties in the area this year, 180 were auctioned but failed to find a buyer. Instead, these properties were returned to the lenders’ portfolio.

A foreclosure auction is the final step in the binding agreement between the borrower and lender. Under the agreement, the borrower gives authority to the lender to sell his home if he defaults on his monthly payments.

In the event that the borrower missed a payment on his mortgage, the lender will charge him a late fee. Aside from that, the lender will send letters to the borrower or make telephone calls to remind him of his financial obligation.

If the borrower and lender failed to work out a deal that will allow the former to retain homeownership, the property goes into foreclosure proceedings. The lender will then hire a lawyer to help auction the property and recover its losses.

The Federal Deposit Insurance Corp. (FDIC) is planning to use an estimated $24 billion in federal funds to help nearly 1.5 million homeowners in the United States avoid foreclosure.

The program includes providing guarantees to 2.2 million loans that have been modified, particularly risky loans by borrowers with small down payments or weak credit. With modified loans, borrowers will have longer loan terms and pay lower interest rates.

The FDIC explained that the U.S. government’s support will encourage the lending industry to make changes on loan terms because if borrowers failed again to make loan payments, the American taxpayers will shoulder the losses.

According to the FDIC, under its plan, 1.5 million homeowners could still avoid foreclosure even if borrowers failed to meet again their payments for their modified loans.

The total monthly payments for modified loans should not be over 31 percent of the pretax monthly income of homeowners.

Furthermore, a $1,000 payment would be given to loan servicing companies, collector and distributor of mortgage payments, for every loan they modify.

The FDIC plan would also cover about 4.4 million mortgage loans that are about to become delinquent by the end of 2008.

The estimated loans exclude those handled by Fannie Mae and Freddie Mac. These mortgage finance companies have introduced their own program that offer reduced interest rates to a borrower so that he will not spend over 38 percent of his pretax income on loan payments.

Officials of the FDIC have proposed to use a portion of the financial industry’s $700 billion bailout package to pay for its foreclosure prevention program.

The FDIC has been aggressive in its campaign to provide relief to the foreclosure crisis. Earlier, it introduced a mortgage loan modification program in which a 3 percent interest rate was pegged for five years.

FDIC senior adviser Michael Krimminger said that avoiding foreclosure is provide stability to the housing market.

The owner and developer of Renaissance Grand Hotel in St. Louis, Missouri, HRI Properties, has presented its foreclosure forbearance proposal to bondholders, their lawyers and trustees.

HRI made the proposal to bondholders as part of an effort to find a restructuring program that can help improve the lodging market’s conditions and the hotel’s value.

The Renaissance Grand, which started operations in 2003, has incurred a total debt of $98 million and its revenue often failed to cover the hotel’s interest payments. Because of this, Kimberley-Clark, which owns 85 percent share in the property, was forced to contribute about $14 million to reinforce operating expenses.

HRI and Kimberly-Clark representatives said that both companies have decided that they would not provide funds to offset the hotel’s $1.4 million revenue shortfall to meet its interest payment of $3.5 million due on December 15.

Kimberley-Clark is negotiating the transfer of its ownership share in the Renaissance Grant to HRI. In the process, the company has turned over all restructuring efforts for the property to HRI.

Included in the foreclosure forbearance plan presented to bondholders is a proposal to give HRI and Marriot Corp., Renaissance Grand’s manager, until the 31st of December 2009 to boost the hotel’s performance to avoid filing foreclosure proceedings.

In its presentation, HRI outlined the Renaissance Grand’s operations and its projection that the hotel’s profit for 2009 would total $1.4 million, a decrease from $5 million total earnings in 2007 and $3.8 million total in 2008.

HRI also included in the presentation its projection that the hotel’s occupancy would be reduced to 60 percent in 2009, a decrease from 64.8 percent total occupancy in 2007 and 63.2 percent total in 2008.

If bondholders approved the foreclosure forbearance option, HRI is willing to serve as the bondholders’ asset manager at no cost until the 31st of December 2009.

Job loss or unemployment has been triggering the rise of repo home listings, defeating old reasons like bad loans and its effects. So far this year, Americans who lost their jobs reached almost one million; resulting to a lot of foreclosures due to non-payment. Economists believe that this number will still increase and national delinquency rate has a long way to go.

One of the reasons for the millions of homeowners homeless due to foreclosure is predatory lending practices. These were perpetrated by both mortgage lenders and servicers who did not care about the homeowners at all but were only concerned about their commission. To make matters worse, the same homeowners are now becoming victims to fraudulent mortgage rescue operations.

Last week, the chairman of the Senate Banking Committee Chris Dodd sent a letter to President Bush, urging him to concentrate on looking for solutions to the enduring foreclosure crisis. The letter also contained criticism about the way the Bush administration handled the problems in the housing industry.

The foreclosure crisis, which left millions of Americans homeless or on the verge of being one, was always considered to be the result of predatory lending practices. When the mess in the mortgage industry revealed this to be true, many of those who engaged in such aggressive practices are now battling lawsuits.

As a consumer, it is only natural for you to gravitate towards items sold at bargain prices. This could also be true for home buyers considering the thousands of affordable foreclosure homes for sale. But despite the large inventory, many potential buyers are still having a tough time looking for good deals especially online.

Homeowners facing foreclosure actually have a lot of options available to them to stop it. One of the favorite options is the short sale. Although a short sale transaction is rather simple, there are still quite a few homeowners who are confused of how it works. In order to finally understand, here is a very simple explanation.

In a few weeks, the very controversial US presidential election will finally be held. One of the controversies surrounding the election is the alleged plan of the Michigan GOP to challenge the residency of voters by referring to foreclosure listings.