Foreclosure is not the same as bargain

If you ask a few people who have actually purchased foreclosured properties, you’ll discover it’s not as easy as you’ve been led to believe.

The Foreclosure Article describes a typical scene.

Foreclosures often take cash and effort to be restored.

Foreclosures are not always a steal (regardless of what your friends and relatives who have never purchased a foreclosed property tell you).

The statistics  tell the story better than me.  The final sale prices are a higher percentage of list price than in a “normal” market.

Getting caught in the hype and listening to people who don’t have a clue got us into this mess in the first place.  Don’t let it happen again.

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California Foreclosure Report

The most recent foreclosure report published by ForeclosureRadar has some good news and some bad news.

  • Notices of Default – the first step in the foreclosure process – increased 26% and reached a record peak in March 2009 with 54,268 filings (previous peak was April 2008)
  • Notices of Trustee sale – which set the auction date and time – increased from February by 82.3% to 33,178 filings
  • Sales at auction decreased 41.4%.  While there is a lag between the foreclosure filings and the sales, this will catch-up eventually.

Your status as a buyer or a seller will determine whether or not this is good news or bad news.  The perfect storm of low mortgage interest rates and low real estate prices make this a great time to buy, but that can be a little tricky if you need to sell your property before you can buy another one.

Why you can’t afford NOT to buy the book today…coffee and beer

There are only a few hundred remaining copies of the first edition of Mangled Mortgage.  After this, you’ll have to buy them at a bookstore and track me down to get a signature.  While I’m happy to sign them if you ask, it will cost you coffee or a beer to get a signature if you buy the book somewhere other than here.  And, I make it hard to find me these days.

Email info@mangledmortgage.com to learn how to buy one of the remaining copies from the first run.  There are several payment options and they’re all easy.

Where else are you going to go for information on what happens next in the housing market?

I can’t think of any other place either.

Jon

Why there are more foreclosures on the way

In many parts of the country, the current lack of housing inventory has create multiple-bid situations for many buyers.  The shortage of inventory won’t last long, though.

There are a few simple pieces to the puzzle.

First, the big banks put a moratorium on new foreclosure filings toward the end of 2008.  Since it takes a few months to get from filing the notice of default (NOD) to a foreclosure sale, you can see the impact of November and December 2008 on today’s market.

Secondly, the number of NODs filed in January 2009 was at a higher level than we have ever seen.

Lastly, over half of the loan modification consumers are back in default after six months.  Some people simply don’t have the financial capacity to own real estate.

The good news is mortgage interest rates are extremely low and there is a new tax credit for first-time buyers who buy real estate before December 31, 2009.  Those two factors make the state of the market largely irrelevant.  We know it is a great time to buy real estate today.  Although prices could continue to decline, we won’t know the bottom until it starts to climb again.

Short sale and foreclosure tip

When you are trying to reach an asset manager or loss mitigator, try calling them on Saturday morning.  Most of them are working extra hours these days, and the gatekeepers (aka receptionists) don’t work on the weekends.  That means the people you are trying to reach are the ones answering the phones.

This tip works if you’re trying to reach anyone with layers of receptionists protecting them from people like you.  I have found it to be especially useful in the distressed property world.

National Housing Market Report by Region

This report is produced by Steve Murray at Real Trends.  As you can see, real estate is a local business and saying anything about the “national housing market” is like talking about the “national temperature being 65 degrees today.”  Talk to a local expert in your area to learn more about the specifics of your market.

Housing Market Report

February 2009                     January 2009

Closed Sales   AVG Price      Closed Sales   AVG Price

National
-18.1%             -22.2%            -17.5%           -17.3%

Regional Report

Northeast
-29.1%             -22.7%             -28.7%          -23.7%

South
-21.3%             -12.4%              -22.0%          -11.7%

Midwest
-18.9%              -16.1%             -21.5%          -15.5%

West
+36.2%             -42.4%             +15.3%         -31.2%

List of foreclosures in California

Are you looking for foreclosures in California?  We have the access.  Send a message to info@mangledmortgage.com with “foreclosures” in the subject line.

National debt vs. national income

American Debt

American Debt

This is an interesting chart from Michael Hodges showing the total debt load in America versus the national income.  When I say, “interesting” what I really mean is “disturbing.”

You don’t have to be an economist or statistician to understand the relationship between the blue line and the red line.  Simply put, Americans as a whole are spending much more than Americans are making.  Our entire consumption-based society is a house of cards.

I’m not an alarmist and I don’t have a crystal ball, but it certainly seems unlikely that this situation is sustainable.  Could we be in for another bailout?  Another market crash?  What will that mean for inflation?  You can visit the inflation calculator if you’re curious about the history of it all.

If the average American household is buried in debt, the average American household will inevitably have trouble making the mortgage payment every month.  If you consider the unemployment rate and decreasing home values across the country, you can see why I’m camped-out in mortgage default capital of the country.  Our housing and economic woes are not going to be resolved anytime soon.

For professionals working in the real estate industry, Mangled Mortgage will teach you everything you need to know to serve your clients in this market.  Follow the link for ordering instructions.  Luck favors those who take action.

REO Asset Manager List Swap

Due to overwhelming requests to make asset manager lists available, I’m starting a swap program.  If you have a list of asset managers, email info@mangledmortgage.com to get the ball rolling.

There is no charge for this service. I have an abundance mindset, therefore I know there is more than enough business for all of us, even if we were to share asset mangers in the same market.

I will collect the lists in a spreadsheet format and distribute them to all contributors each time there is an update.  Please do not send copyrighted lists or a list of banks and their main branch telephone numbers.

Where did all the foreclosures go?

Notices of default were low late last fall, which is why there is a temporary shortage of inventory right now.  January and February 2009 show us the NODs are higher than they have EVER been before. This means there are many more foreclosures on the way.  If you need to sell your house in 2009, TODAY is a good day to do it.  If you wait until the next wave of foreclosures hits the market, the law of supply and demand will not work in your favor.

In February, a short month, there were 5287 Notices of Default filed in Riverside County (second only to Los Angeles County).  That’s a lot of late payments.

Learn how to capitalize on the distressed housing market.  Order a copy of Manged Mortgage today.

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