Foreclosures Blog – Foreclosure Listings Nationwide

The attractive prices of repossessed houses have pushed down sales of new single-family houses in May, based on home sales data released this week by the U.S. Commerce Department.

In May, sales of new single-family houses declined by 0.6 percent to an adjusted yearly pace of 342,000 from April, representing a nearly 33 percent drop from the May 2008 adjusted yearly sales pace of 509,000. April’s adjusted yearly rate was 344,000.

Homebuilders expect the adjusted yearly rate to increase to 360,000 or more in the coming months.

In contrast, the sales of previously owned homes in May increased by 2.4 percent, as prices declined by almost 17 percent from price levels in May 2008.

A bank economist remarked that newly constructed houses cannot match the bargain prices of repossessed houses. Besides, many first time homebuyers taking advantage of the federal tax credit are buying repossessed houses because these are the ones they can afford.

Based on real estate sales in May, one-third of all existing-home sales were bank-owned foreclosure homes.

Additionally, in the past several months, for every 14 foreclosure homes sold, only one new home was sold. Housing analysts say that the ratio of existing-home sale to new-home sale will stay high for a time, as repossessed houses become affordable to more homebuyers.

Homebuilders hope that it would not take a long time for the ratio returns to its historical level of six to one. Shares of home builders have been fluctuating in the stock market these past months, as investors base their decisions on various reports related to housing market recovery.

Large homebuilders have been trying to survive the competition with bargain-priced foreclosure houses by reducing their home construction activities, controlling their home inventories and cutting costs.

Some builders have reduced the size of houses they are building and have developed home products that can compete with the prices of repossessed houses.

Meanwhile, smaller home builders have been accepting home repair contracts and home building projects from owners who want to be more involved in the design and construction of their homes.

Although housing starts increased by 17 percent in May to an adjusted yearly pace of 532,000, much of the jump arose from multifamily construction contracts.

The median price for newly constructed houses rose to $221,000 in May, higher than the $173,000 median price for repossessed houses and other previously owned homes.

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States and cities are just starting to spend the millions they received from the federal Neighborhood Stabilization Program to buy repossessed houses for sale, rehabilitate them and then sell them to lower-income families.

Nearly $6 billion in NSP funds were allocated by the federal government to states and cities to help cut down repossessed houses for sale, help save deteriorating communities and help renters and lower-income families acquire their first homes.

In August last year, the amount of $3.92 billion to fund the NSP was approved by Congress as one of the provisions of the U.S. Housing and Economic Recovery Act.

Congress required that the funding must be used in neighborhoods with the highest number of borrowers with subprime loans and biggest number of foreclosures. State and city governments were also ordered to ensure that all buyers of fixed foreclosure houses were earning only 120 percent or less of the median household income in their areas.

Also, the repossessed houses for sale should be used by the buyers as their primary residences.

Since the NSP provided only general guidelines for the use of the money, state officials have crafted different plans to suit the needs of their constituents.

Arizona, which got $121 million, will spend the money to buy, repair and sell foreclosures homes at big discounts to lower-income families.

Wisconsin will use its allocation to subsidize the home loans of qualified applicants buying repossessed houses for sale. Qualified homebuyers can use the subsidy for the down payment, closing costs or repair costs.

The city of Charleston in South Carolina made an easier approach. It hired the nonprofit Lowcountry Housing Trust to use the NSP money to buy around 70 repossessed houses for sale and then operate about 60 units for rental and sell the rest to qualified families.

The NSP program of Las Vegas has three schemes: homebuyer assistance, lease-to-own, and rental housing. The first scheme will help qualified home buyers with the down payment, closing costs and repairs. The second scheme will enable low-income families to rent a house in a rent-to-own deal while the third scheme involves the purchase of foreclosed houses and condos to be offered as affordable rental housing.

In some cities where many repossessed houses for sale have been abandoned, the NSP money will be spent to demolish them and then prepare the land for further development.

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• VA Foreclosed Homes – Homes Sold To The General Public
• Bank Foreclosed Homes – Easy And Safe

Across the country, thousands of homeowners are trying to make ends meet, paying their bills and keeping up with their mortgages so as not to go through the trouble of foreclosure. But many are finding out that they could still lose their properties to repo list even if they pay their mortgage payments diligently.

Non-payment of homeowners’ association dues may also lead homeowners to lose their properties. Most of these homeowners and condominium associations have the tasked of keeping the neighborhood safe and livable, such as overseeing security patrol, planting flowers, mowing lawns or keeping the community swimming pool clean. And they also have the right to place a house on repo list for non-payment of dues, as stated in purchase agreements signed by homeowners.

In the event that a homeowner defaulted on his dues, the homeowners’ association will turn over the task of collecting unpaid dues to outside management companies.

Management companies and homeowners’ association boards argued that the practice of foreclosing on houses because of non-payment of dues is their way of maintaining the neighborhood and preserving the property values of other members.

Merit Property Management executive vice president Andrew Schlegel said that the homeowners’ associations have compassion for every individual but they also have to consider those homeowners who are diligently paying their dues.

Homeowners’ associations in California have the authority to place houses on repo list after a year of missed dues or $1,800. But homeowners’ associations are exhausting all ways to help members remain in their properties. In fact, most delinquent homeowners end up keeping their properties.

Homeowners’ associations do not want to lose their dues-paying residents who are also suffering from the impact of the economic crisis and the housing collapse. Normally, they would work with delinquent homeowners to create solutions or come up with a compromise that would be beneficial to both parties.

Meanwhile, in Florida, attorney Bob Tankel said that he increased the number of his staff since last year to cope up with the rising caseload of about 3,500 homeowner and condominium associations’ open collections.

Data from the Community Association Institute showed that over 59 million are living in nearly 300,000 communities governed by homeowners’ associations. And most houses placed on repo list because of non-payment of dues have mortgages held by lenders.

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• Funding to Renovate Properties on Bank Foreclosure List

Kent County and the cities of Great Rapids and Wyoming in Michigan received over $11 million from the Neighborhood Stabilization Program. The funds will be utilized to buy homes in Bank Forclosure List in neighborhoods greatly affected by the foreclosure crisis.

More middle-priced homes will be added to foreclosure listings in Pasadena and many other parts of California this 2009 and in the next couple of years, according to studies of mortgages and foreclosures in the state.

Foreclosure list prices in the Santa Cruz area of California are still down, compared to prices 12 months ago.

Over 6,000 properties in Dallas-Fort Worth Metroplex in Texas were added on repo homes listings scheduled for auctions in July. The figures were 62 percent higher than the same month last year.

North Carolina was able to help nearly 1,000 homeowners avoid REO properties for sale under the State Home Foreclosure Prevention Project. The program started seven months ago as an emergency response to over 6,000 homeowners in North Carolina who took out subprime loans and are facing the threat of losing their homes to foreclosure.

Option adjustable rate mortgage loans worth around $230 billion are set to adjust to higher loan rates this year until 2012 and are expected to add larger numbers of foreclosed properties into the housing market which is already loaded with foreclosures.

Foreclosed home listing sales, existing home sales and new home sales in Southern California increased for the 11th straight month in May, according to market data released this week.