Foreclosure Listings Blog

Market studies find foreclosure listings are growing in African-American communities in Chicago, Illinois. Results showed that vacant, bank-owned properties in the city are concentrated in African-American dominated communities.

According to industry experts, many of these foreclosed properties remained unsold for longer periods of time and incurred greater losses to lenders compared with foreclosure properties in predominantly white communities.

Sixty percent of bank-owned homes from 2007 and the first six months of 2008 were located in black communities. And most of these foreclosed houses took about 25 percent longer to be sold compared with repossessed houses in communities predominantly populated by whites.

Industry experts said that when foreclosure houses were sold, lenders incurred an average loss of 35 percent per property in black communities. In white communities, lenders incurred an average loss of nearly 17 percent on each home.

Experts said that black communities, where buyers can find foreclosure listings increasing, were severely affected by the foreclosure crisis. They said that African-American communities will continue to take a beating from the foreclosure crisis for a longer period of time compared with other communities.

They said that vacant properties are highly concentrated in black communities and these properties take longer to have owners. They added that the longer foreclosure properties remained vacant, the higher the risk of communities to be exposed to the devastating effects of foreclosure homes, including declining home values and crime increase.

Experts said that the fact that many lenders are incurring large losses on foreclosure properties should make them realize that they would be better off working some solutions with distressed borrowers who want to save their properties from foreclosure. Lenders should also be aggressive in pursuing loan modifications to help contain the number of foreclosure properties.

Industry experts recommended that municipalities should be given the right to create and implement vacant property ordinances. Additionally, municipalities should have the authority to go after lenders and make them accountable for maintaining foreclosure properties and to recover costs to maintain deteriorating properties.

Experts also suggested an improved integration of home data to help local governments in evaluating the effectiveness of programs to prevent foreclosures.

Data showed that consumer bankruptcies rose over 1 million from January to September this year. And buyers can find foreclosure listings continuously rising in some parts of the country as filings went up to 1,046,449 for the period.

Lists of foreclosed homes throughout the country are expected to grow further as the rate of mortgage defaults continue to rise, based on data from the U.S. Office of the Comptroller of the Currency and the U.S. Office of Thrift Supervision.

The federal agencies reported that all types of mortgage delinquencies increased in the second quarter of 2009 and that the percentage of serious delinquencies had the highest rate of increase.

Serious delinquencies are mortgages which are already two months or more in default. These delinquencies accounted for 5.3 percent of total mortgage loans in the second quarter, a rise of 11.5 percent from the 4.7-percent level in the previous quarter.

Mortgages that were already in foreclosure accounted for 2.9 percent of all mortgage loans, marking a rise of 16.2 percent from the previous quarter’s level of 2.4 percent.

Federal officials are particularly concerned because all types and categories of home loan delinquencies increased in the second quarter. The significant increases in default rates certainly portends of more units entering lists of foreclosed homes.

Prime mortgages in default accounted for 3 percent of total mortgages, an increase of 10.5 percent from the previous quarter and an increase of 13 percent from the second quarter last year.

The percentage of defaults in Alt-A loans rose by 11.1 percent from the previous quarter to 10.3 percent and the percentage of subprime loans delinquent by at least two months rose by 12.9 percent to 17.8 percent.

Federal officials said that while the default rate for subprime loans is higher than that of prime loans, the actual number of delinquent prime loans is significantly higher than the actual number of delinquent subprime loans because of the far higher overall number of total prime loans.

The average amount of loans taken out by prime borrowers were also higher than that taken out by subprime borrowers, so lenders and investors have bigger losses when prime borrowers become delinquent.

The problem of delinquent of prime loans is now becoming a persistent concern among lenders and federal officials because of the continuing rise in problem prime mortgages.

Another type of loan being monitored is the option adjustable-rate mortgage loan. In the second quarter, 15.2 percent of all option ARMs have become seriously delinquent and 10 percent were already in lists of foreclosed homes, compared to the 2.9 percent rate for all other types of home loans.

Bank foreclosure listings from UBS, CIM and BofA now include apartment units seized or foreclosed in San Francisco.

Recently, 30 apartment buildings operated by the Lembi family have been sold by UBS, Bank of America and other lenders as foreclosure properties or have been given back to the lenders voluntarily in lieu of foreclosure.

About 20 buildings are now being sold by UBS after getting these properties back from the Lembi family in lieu of foreclosure. UBS, which took back 51 apartment buildings from the Lembis, said it is holding onto the rest of the Lembi apartment portfolio to get better prices.

Another lender, CIM Group, also took back 24 apartment buildings from the Lembi family in lieu of foreclosure and said that it is holding onto the buildings for now.

Among the apartment properties that were already sold by the banks are the seven buildings purchased by Russell Flynn, which owns and operates around 3,000 rental buildings in San Francisco. Flynn said the Lembi apartment buildings are great investment opportunities and he plans to buy more.

Flynn also added that bank forelosure listings in the past six years did not have multifamily properties that he could afford to buy and that the Lembi properties are types of properties that are good buildings and at the same time affordable to investors like him.

Stephen Pugh, managing director of Alain Pinel Investment which sold ten of the Lembi apartment buildings, said the sharp decrease in rents and the lack of new financing for apartment buildings largely caused the difficulties of the Lembis and other apartment owners.

Pugh added that most of the buyers of the Lembi properties are based in San Francisco and are already in the rental business. They just wanted to add more units to their rental portfolios.

All the apartment buildings were sold at substantial discounts – up to 40 percent lower than what the Lembis paid for the properties during the boom. But still, Stanford Skeie, a top executive of Marcus & Millichap which represented one buyer of some of the Lembi properties, said he wondered why the sales prices were not lower.

Nonetheless, Jeffrey Mishkin, managing director of Marcus & Millichap, said that the enthusiasm of the buyers of the apartment buildings indicates that the real estate market is beginning to recover and that financing is becoming available again for properties in bank foreclosure listings.

The pace of home foreclosure listing in Iowa stepped up in July while home sales declined in August, according to data from the Iowa Association of Realtors.

Foreclosure home listings are now getting the attention of homeowner associations across the country, especially condo associations.

The price reduction effects of house foreclosure listings in Florida have been forcing lenders in the state to reconsider their lending activities to home builders.

Four nonprofit organizations in Lynchburg received about $1 million from the Virginia Neighborhood Stabilization Program which aims to fight the growing foreclosure problem in the state. The group of nonprofit organizations plans to find foreclosed listings and purchase distressed properties to be rehabilitated.

Home values in Reno-Sparks, Nevada are taking a beating from the growing foreclosure problem in the area. For the first six months of this year, over 50 percent of homeowners in the area have mortgages that are greater in amount than the value of their properties.

Some homeowners in Grand County, Colorado are having sleepless nights as foreclosure continues to spread across the area. From January to June this year, filings for foreclosed home listings in the county rose by nearly 30 percent to 110 from 83 in 2008.

The first-time home buyer affordability index in California in the second quarter rose, compared to the second quarter of 2008, according to the California Association of Realtors.