FORECLOSURE "BARGAINS"

RECENT  HISTORY -  Foreclosures  have traditionally run at  approximately a 1% rate of the mortgages written throughout  the years.  With conventional  20% down mortgages being the norm, the rate remained rather steady.  The traditional reasons for foreclosure were divorce and unemployment.

In recent years, the economy was good. Mortgage standards were loosened, and  "creative" mortgage products became available in such quantity that the temptation to abuse them became too much for many people.  Between "no documentation mortgages" and "0% down payment mortgages", and rapidly appreciating home prices, there appeared to be little to lose. Everyone was buying houses. 

There were unscrupulous mortgage brokers who told people they would be able to refinance out of the bad adjustable mortgages they were signing, when home prices went up a little more. 

And there was massive fraud on Wall Street as large packages of mortgages were chopped up and repackaged into financial investments that were substantially more risky than they were rated.  (some of these packages have recently resold for 20 cents on the dollar ? one fifth the value  of what they originally sold for).   

One extreme led to another, and we are all familiar with the resulting crisis in mortgage availability, falling home sales and the resulting effect on the American economy.  The constant negative news in the press, scared most people out of the market.  It became very difficult to sell your home and move. 

People are beginning to return to the housing market and some reasonable mortgage products have reappeared.  Home sales in the 1^st time buyer  price range have picked up.  The higher price ranges have some great bargains.

ARE THERE  FORECLOSURE BARGAINS OUT THERE ?     Yes, there are!

 Are there problems in purchasing some of these "bargains" ?    Yes, there are.

Buyers need good professional help if they are not experts on the foreclosure market.   By working with the banks, I have learned what they are looking for.  Short Sales and  REO´s (Real Estate Owned - by the bank) are not the average home sale.  As a NABPOP member (National Assoc. of Broker Price Opinion Professionals), I have earned the Certification for valuing foreclosed properties.

Call or email me for a discussion of your requirements, and I will send you up-to-date information on REO listings.  (541-840-5335   jack@MedfordRE.info)

THE FORECLOSURE PROCESS

It´s a sad situation for people to lose homes through foreclosure.  It´s unfortunate for banks and mortgage companies holding the mortgages as well.    They must protect their stockholders by getting the properties back on the market and re-sold.  The process is long, and often unpredictable.  Bargains are created by the process, but all foreclosure sales are not "bargains".

TYPES OF FORECLOSURES

PRE-FORECLOSURES----In trouble on mortgage payments, but not yet owned by the bank.

FORECLOSURES----The sale on the courthouse steps where most liens and 2^nd mortgages are wiped out.  The house goes back to the bank unless it is bought by a cash or line-of-credit buyer.  About 90% are going back to the bank now.

SHORT SALES ----still owned by the homeowner, or the bank, but the value is "upside down" (more money owed  than the property is worth).  The bank must take a loss to sell it.  Short Sales offer some significant opportunities for the foreclosure buyer, but not all is as it seems on some listings.  Properties still owned by the homeowner are being listed at low short sale prices without the bank´s permission.  They will then "try" to get the bank´s approval after there is an offer.  These offers can be a lengthy process of negotiating for the Realtor.

REO´S  -- Are Real Estate Owned by the bank.  When listed by the bank, some of them are short sales.  Most are marketed through Realtors and the MLS system.

As an REO specialist, I would like to point out that these bank sales have a large effect on the current market. REO´s tend to be the lower priced listings.  In this market with limited buyers, these REO listings tend to be a higher percentage of what is selling. 

There are many web sites and sources of REO listings that would like to sell a list and tell you foreclosures are easy to buy.  But, this is a dynamic and rapidly changing area, and only one information source can keep their listings up-to-date because of the large staff required.  That is the job of the Realtors´ MLS system. 

If you are interested in participating in this foreclosure market, I recommend finding a good Realtor who specializes in dealing with the financial institutions.

There is a lot of inventory on the market now, "the highest in 16 years", per the National Association of Realtors.   Is this the best time to buy?

It may be, because Fannie Mae announced, "it no longer considers Jackson County a "declining market". Now is the time to be taking a serious look at REO´s.