Foreclosures Dark clouds have a silver lining to real estate opportunities

Over the past several decades, the United States has seemed to live a “bottle champagne” lifestyle with a “light beer” fiscal budget. While it is unwise to borrow capital to offset tax cuts for the wealthy and to defray the costs of unfunded wars and bank bailouts, the weight of financial commitments has been worsened by the inevitable economic collapse. This is evidenced by the unemployment figures and the foreclosure statistics.

Olivier Blanchard, the IMF’s chief economist, said: “Long-term unemployment is alarmingly high: in the US, half of the unemployed have been out of work for over six months, something we haven’t seen since the Great Depression.”

“We’re seeing the perfect storm of rising supply and falling demand,” said Ivy Zelman, managing director of basic research firm Zelman & Associates.

Barclays Capital experts estimate that around four million mortgage loans are in some stage of foreclosure.

California foreclosures are among the largest in the United States. These are properties that have actually been foreclosed on by financial institutions, potentially affecting households on the verge of foreclosure and disrupting the entire market.

Simply because mortgage lenders own the property outright, shadow foreclosures are not actually part of the real estate inventory available for general public sale. Banks plan to have these hidden items for sale at some point – hence the term ‘shadow’, suggesting they are not currently on the market but are likely to become a tidal wave in the market shortly during, more than likely home price levels depress far more.

Another round of low home price levels could very well push more homeowners who are currently past due on a monthly payment, or even some of them, into foreclosure.

For many Californians, the decline in home and bank lending will remain seriously real. The longer-term landscape is just as bleak. At the national level, the expected hardships are even more ominous on the horizon.

In Arizona, officials say foreclosure claims have tripled in recent years (2008-9) and legally binding contract disputes have shifted up 77 percent over the past two years.

Mortgage foreclosures in Southwest Florida have harmed large numbers of families and decimated entire communities.

“I see the ripple effects that are destroying the family structure,” Judge Jackman-Brown said.

Two distinct movements afoot in the nationwide foreclosure process may widen and deepen this crisis in the months and years to come.

In a trend, far more judges are ruling against creditors and actually canceling mortgage obligations or voiding foreclosures because mortgage companies fail horribly to produce the right paperwork. In some cases, bankers are accused of using other tactics to wrong debtors.

In the other trend, prime borrowers who are in “underwater” mortgages or negative equity are increasingly turning away from their properties.

An attorney for the Jewish Association for Services for the Aged, Hilary J. Bauer, who represents homeowners defending foreclosure, said: “Until you’re in the midst of 40 people who are afraid of losing their homes, you can’t really tell how significant the whole downturn was.”

Dennis Nolte, an LPL representative at Partners Federal Credit Union in Orlando, Fla., says. “People need to vent and then focus on what they can realistically do.”

“The government throws everything on the market except the kitchen sink,” said Peter Schiff, president of Euro Pacific Capital. “It can’t prop up housing markets forever.”

“Every dark cloud has a silver lining,” they say. What follows is the fodder in that dark cloud. It is known as a Tax Deed Sale.

Earlier this year, Richmond County, Georgia, recovered thousands of dollars in back taxes during a tax deed sale of homes whose owners were in arrears on property taxes just a few years earlier. Buyers were motivated by the cheap values ​​and wanted a quality investment.

Ben Bynum, a tax payer, said, “I like that you can control what you pay for a property,” he said. “It’s based on what you think the property is worth.”

In due course, many of these foreclosure properties end up in the “too hard basket” and end up in a tax deed sale. Once you’ve hit the bottom, the best thing to do is get down to the “bottom of the market.”