Foreclosure Listings Blog

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.

Florida continues to be among the four states with the highest foreclosure rates in the U.S, with more than 35,200 housing units notified with defaults or foreclosures in July. Its foreclosure rate of one in every 154 housing units marked an increase of nearly 7 percent from its June foreclosure rate and a substantial rise of more than 23 percent from its rate in July 2008.

In the first 6 months of the year, Florida had more than 3 percent of its housing units hit with default or foreclosure notices. More than 268,000 households across the state had defaulted, with most of them already listed for foreclosure sales.

According to Jennifer Doerfel, a top executive of the Tampa Bay Builders Association, lenders in Florida are increasingly deciding not to finance new home loans because of the continued drop in home values. It is especially difficult for new homes built near properties listed in house foreclosure listings.

Even home buyers with strong credit records and proven capabilities to pay are now being affected. Mary McCarthy had obtained a home loan from Wells Fargo in early 2008. The bank agreed to finance the construction of her three-bedroom house on a one-acre property in Lutz. With the bank’s approval, an interim lender financed the initial stages of construction.

Wells Fargo approved a loan amounting to around $266,000. McCarthy planned to pay the builder $233,000 and pay off her $55,000 home loan taken to pay the mobile home where her family is currently staying.

After the builder, AllState Homes, completed the house and submitted the construction bill to Wells Fargo, the bank replied that it can no longer provide the loan because the new home is now only worth $196,000.

Tampa lawyer John Thresher, who is representing AllState, said the builder is pursuing a case against one of the banks. McCarthy said she feels bad about the builder because he did his part of the agreement on the agreed time frame.

Another Florida borrower caught in the foreclosure crisis is Carol Robinson. Her lender Ocala National Bank was shuttered in January and the bank which took over Ocala refused to honor her loan. Robinson hired subcontractors and the house is already 60-percent complete, but other lenders have refused to give her a home loan.

According to Miami lawyers, these cases show the sad effects of house foreclosure listings, but these cases are unique and should be resolved in court.

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.

The initiative will focus on communities where abandoned or foreclosure properties are in great number, including the Middle Rivermont and the Diamond Hill. The four nonprofits that will spearhead the initiative are Lynchburg Community Action Group, Lynchburg Neighborhood Development Foundation (LNDF), the Greater Lynchburg Habitat for Humanity and Rush Homes.

The function of grants administration will be handled by Region 2000. According to market data, Virginia’s foreclosure rate increased by almost eight times since 2007. So far, over 28,000 distressed properties are on some kind of foreclosure process while over 16,000 foreclosure houses are sitting vacant.

The Virginia Department of Housing and Community Development reported that Lynchburg has not experienced a drastic increase in foreclosure rate. However, it noted that the area is showing signs of multiple risk factors.

The report pointed out that central cities in Virginia such as Lynchburg and Danville lack the statistical evidence of a growing foreclosure problem. But the cities are high-risk of foreclosure because of a notable number of subprime mortgages, high vacancy rates and growing unemployment rate.

Additionally, the report noted that without any federal assistance, these communities at risk of foreclosures will likely experience an expanded list of properties affected by the foreclosure crisis. And these repossessed homes have the potential to become blights and will pull down values of surrounding properties.

Under the original funding application, it was suggested that the initiative will rehabilitate about 15 foreclosure houses for $1.5 million. However, the nonprofits are still confident that they could purchase and repair 11 foreclosure properties using the reduced funds.

The nonprofit organizations are scheduled to meet with Virginia officials to discuss requirements and restrictions of the program. Market data showed that about 16 percent of properties in Diamond Hill were abandoned or foreclosed while 12.4 percent were repossessed in the Middle Rivermont community.

Distressed properties acquired under the program will be renovated or rebuilt for sale or rent to low-income and middle-income families.

Potential homebuyers will be assisted by partner agencies, with counseling and financing assistance made available to them.

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.

Industry analysts said that homeowners who have negative equity on their properties are facing greater risk of foreclosed homes listing. They said that homeowners who have negative equity on their houses will not have the initiative or motivation to continue paying their mortgages and thus, would walk away from their properties and let their lenders foreclosed on them.

About 54, 764 houses with active mortgages in Reno-Sparks have negative equity as of June. The figures represented 55.25 percent of all active loans in the market, an increase of 41 percent from the 33,923 properties from the last quarter of 2008.

Industry experts pointed out that the number of homeowners in Reno-Sparks who have negative equity on their properties was higher compared with the national average of 32.2 percent.

Analysts said that it is possible that a large number of homeowners would lose the equity on their properties given the history of the local real estate market. They explained that properties bought during the peak of the housing market and have still mortgages would really suffer in the current market which is reeling from price declines and rising foreclosures.

Washoe County Assessor’s office’s home sales records showed that from 2002 to last year, there were 69,000 new and existing home sales. Experts said that about 45 to 60 percent of the total home sales have mortgages.

Furthermore, about 4 percent of all homes with mortgages in Reno-Sparks are nearing negative equity. Analysts are expecting more homeowners will lose equity on their properties in the coming months. They said that unless home prices stabilize and foreclosures stop pulling home values, the real estate market in Nevada will fall further.

Statewide, 66 percent of properties have negative equity as a result of the housing crisis in Las Vegas. Nevada tops all states in terms of the number of properties with negative equity. Analysts said that negative equity is caused by a drop in property value and increase in loan debt.

They said that negative equity will continue to be a dominant factor driving the mortgage market because it will lead to foreclosure in the event that homeowners will find it difficult to pay their mortgages due to some mitigating circumstances.

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.

Salt Lake County in Utah is dotted with almost 6,000 empty single-family subdivision lots. These lots have been vacant for a long time now despite improvements made on the area such as utilities, sidewalks and roads. The only thing missing are homes and residents.

Osceola, the county with the highest rate of foreclosure in Central Florida, is set to receive around $14 million from the federal Neighborhood Stabilization Program to manage its record number of foreclosure homes.

The National Association of Home Builders has called on the U.S. Congress to extend the $8,000 federal tax credit offered to first-time home buyers or taxpayers who have not owned a home in the last three years to November 30, 2010 to give more time for potential home buyers to obtain financing and cut down inventories of new homes, existing homes and foreclosed houses. The tax credit is set to expire on December 1.

More foreclosed homes entered Treasure Coast repo house listings in June and in July, based on foreclosure records kept by the Clerk of the Circuit Court in Martin County, Florida.

A foreclosed home auction site has been in operation since November last year to enable the Clerks of Courts of Duval County, Florida to maintain residential foreclosure records and to facilitate foreclosure auctions through online auctions.