Here are two very important articles with respect to the national foreclosure inventory.
Shadow inventory
Foreclosure re-financing
If you have any questions about these articles, please let me know. I would love to start a discussion on one or both of them!
Wednesday, September 29, 2010
Saturday, September 25, 2010
Market Saturation?
What percentage of the current Tallahassee real estate market do you think is made up of short sales and foreclosures? 10%? 20%? 50%?
Presently, there are 2702 active residential listings in the MLS for sale in Tallahassee. Of those, 178 (6.6%) are foreclosures and 418 (15.5%) are prospective short sales. So, in total, just over 1 in 5 (22.1%) of all the homes for sale in Leon County are "distressed" sales.
While that number may seem high, it represents only 1 in every 140 households that is affected by a short sale or foreclosure. And that is good news for our community.
Presently, there are 2702 active residential listings in the MLS for sale in Tallahassee. Of those, 178 (6.6%) are foreclosures and 418 (15.5%) are prospective short sales. So, in total, just over 1 in 5 (22.1%) of all the homes for sale in Leon County are "distressed" sales.
While that number may seem high, it represents only 1 in every 140 households that is affected by a short sale or foreclosure. And that is good news for our community.
Friday, September 24, 2010
Foreclosures vs. Short Sales
Short sales and foreclosures are often misunderstood and confused for one another. If they are differentiated, then they are usually considered to be inextricably linked together, though that is not the case. So, in this blog, I am going to compare and contrast the two.
Short sale - a short sale is a situation where 1) A property owner owes more on a piece of real estate than it is worth and 2) the owner desires to sell the property and 3) the owner does not have the means and/or desire to bring to closing the difference between the amount owed and the final sales price and costs associated with closing.
If a homeowner starts to get behind on his payments, then he may try to short sell the property before going into foreclosure (this is a good idea, although a recent report by cdpe.com showed that only 3 in 10 homeowners facing foreclosure actually speak to a real estate professional).
The biggest difference between a short sale and a foreclosure is the issue of ownership. In a short sale, the borrower still owns the home, and has the right to decide whether or not to sell. Once a property has been foreclosed upon, the borrower no longer owns the property and no longer has that right. As a bank owned property (or REO), the lender (or an agent or subsidiary) decides when and for how much to sell the property.
Foreclosure - can be a noun or a verb, "to foreclose" refers to the legal process of exercising a lender's right to take ownership of a property that was pledged as security for a now non-performing loan. A "foreclosure", as a noun, refers to a property that has been foreclosed upon and is now corporately owned (rarely, private individuals lend money that is secured by a mortgage on real estate, and they too may foreclose).
Here is a list of similarities and differences with respect to short sales and foreclosures:
Similarities Differences
1. Bank involvement 1. Bank owns a foreclosure, not a short sale
2. Additional paperwork 2. Foreclosures close more quickly
3. Longer contract time 3. Quicker foreclosure response time
4. Downward price pressure
Short sale - a short sale is a situation where 1) A property owner owes more on a piece of real estate than it is worth and 2) the owner desires to sell the property and 3) the owner does not have the means and/or desire to bring to closing the difference between the amount owed and the final sales price and costs associated with closing.
If a homeowner starts to get behind on his payments, then he may try to short sell the property before going into foreclosure (this is a good idea, although a recent report by cdpe.com showed that only 3 in 10 homeowners facing foreclosure actually speak to a real estate professional).
The biggest difference between a short sale and a foreclosure is the issue of ownership. In a short sale, the borrower still owns the home, and has the right to decide whether or not to sell. Once a property has been foreclosed upon, the borrower no longer owns the property and no longer has that right. As a bank owned property (or REO), the lender (or an agent or subsidiary) decides when and for how much to sell the property.
Foreclosure - can be a noun or a verb, "to foreclose" refers to the legal process of exercising a lender's right to take ownership of a property that was pledged as security for a now non-performing loan. A "foreclosure", as a noun, refers to a property that has been foreclosed upon and is now corporately owned (rarely, private individuals lend money that is secured by a mortgage on real estate, and they too may foreclose).
Here is a list of similarities and differences with respect to short sales and foreclosures:
Similarities Differences
1. Bank involvement 1. Bank owns a foreclosure, not a short sale
2. Additional paperwork 2. Foreclosures close more quickly
3. Longer contract time 3. Quicker foreclosure response time
4. Downward price pressure
Tuesday, September 21, 2010
Foreclosure Basics, Part 2
Yesterday we covered the idea of lien-theory and the two basic documents which detail and secure an obligation to repay in a standard financed real estate purchase (the promissory note and mortgage).
Some more important terms to know when dealing with foreclosures are:
Lis Pendens - A recorded notice of the pendency of an action.
In Latin, this means literally "suit pending". The lis pendens is the first document filed in the foreclosure process. It names the parties in the suit (the lender as plaintiff and the borrower as defendant) and expresses the lender's desire to foreclose. It used to be that the lis pendens was filed almost immediately after the second or third missed payment and the foreclosure could be consummated within 6 months. Today, however, the lis pendens may not be filed for 6-12 months after the first missed payment with the foreclosure not being consummated for an additional year to year and a half.
Final Summary Judgment of Foreclosure - A judicial decision finally disposing of a foreclosure suit.
The final summary judgment (FSJ) is a judge's decision that the plaintiff (lender) has shown sufficient grounds to foreclosure, and he grants the lender the right to take back the property. The FSJ will contain an itemization of the outstanding principal balance as of the time the foreclosure suit was filed, the accrued interest charges, attorney's fees, insurance and taxes that were paid by the lender, and so on.
After the FSJ is issued, it normally takes about a month or two to schedule the property for a courthouse sale. At the courthouse sale, the public has an opportunity to purchase the property. If a bidder's offer is insufficient to cover all, or most (at the bank's discretion), of the bank's money in the property, then the bank will outbid those bidder's and take the property back. Most often, the bank takes the property back with no contesting bids.
Ten days after the courthouse sale is finished, a Certificate of Title (CoT) will be filed to transfer title to the bank/lender/institution (securitization has made all of this a bit more complicated). Once the CoT is filed, then the bank legally owns the property.
Certificate of Title - Certified statement as to land ownership based upon examination of record title.
NOTE: Florida is not a redemption state, so the borrower (former owner) does not have the right or ability to get the property back after the final summary judgment is filed unless he can prove that the suit was filed improperly (that is the reason for the ten days between the courthouse sale and the recording of the CoT).
That lays a great framework upon which we can build our future discussions on foreclosures. Please let me know if you have any questions.
P.S. Remember, while I am a very successful real estate agent with a thorough knowledge of real estate law, I am not a real estate attorney, and do not and cannot practice law. For legal advice regarding real estate, please call Blake Hayward or John Grant of Hayward & Grant at (850) 386-4400.
Some more important terms to know when dealing with foreclosures are:
Lis Pendens - A recorded notice of the pendency of an action.
In Latin, this means literally "suit pending". The lis pendens is the first document filed in the foreclosure process. It names the parties in the suit (the lender as plaintiff and the borrower as defendant) and expresses the lender's desire to foreclose. It used to be that the lis pendens was filed almost immediately after the second or third missed payment and the foreclosure could be consummated within 6 months. Today, however, the lis pendens may not be filed for 6-12 months after the first missed payment with the foreclosure not being consummated for an additional year to year and a half.
Final Summary Judgment of Foreclosure - A judicial decision finally disposing of a foreclosure suit.
The final summary judgment (FSJ) is a judge's decision that the plaintiff (lender) has shown sufficient grounds to foreclosure, and he grants the lender the right to take back the property. The FSJ will contain an itemization of the outstanding principal balance as of the time the foreclosure suit was filed, the accrued interest charges, attorney's fees, insurance and taxes that were paid by the lender, and so on.
After the FSJ is issued, it normally takes about a month or two to schedule the property for a courthouse sale. At the courthouse sale, the public has an opportunity to purchase the property. If a bidder's offer is insufficient to cover all, or most (at the bank's discretion), of the bank's money in the property, then the bank will outbid those bidder's and take the property back. Most often, the bank takes the property back with no contesting bids.
Ten days after the courthouse sale is finished, a Certificate of Title (CoT) will be filed to transfer title to the bank/lender/institution (securitization has made all of this a bit more complicated). Once the CoT is filed, then the bank legally owns the property.
Certificate of Title - Certified statement as to land ownership based upon examination of record title.
NOTE: Florida is not a redemption state, so the borrower (former owner) does not have the right or ability to get the property back after the final summary judgment is filed unless he can prove that the suit was filed improperly (that is the reason for the ten days between the courthouse sale and the recording of the CoT).
That lays a great framework upon which we can build our future discussions on foreclosures. Please let me know if you have any questions.
P.S. Remember, while I am a very successful real estate agent with a thorough knowledge of real estate law, I am not a real estate attorney, and do not and cannot practice law. For legal advice regarding real estate, please call Blake Hayward or John Grant of Hayward & Grant at (850) 386-4400.
Monday, September 20, 2010
Foreclosure Basics, Part 1
If you are interested in foreclosures, then we must start with some basic terms which provide a framework for our discussion. A solid understanding of these terms will help us navigate the foreclosure waters and will help me to better help you.
Below are some of the most important real estate terms relating to foreclosures (taken from the Chicago Title Real Estate Dictionary). I have included some explanatory notes.
Lien-Theory State - A lien-theory state is a state in which a lien is placed on a property to secure a debt. The borrower takes title to the property. By contrast, title-theory states are those states where the lender becomes the title owner and the borrower only takes title to the property once the debt (loan) is paid off.
Florida is a lien-theory state.
Promissory Note - An unconditional written promise, signed by maker, to pay, absolutely, a sum certain in money, either to the bearer or to a person therein designated or his/her order.
The note will contain the initial principal amount of the loan (the amount borrowed) along with the term (length) of the loan (typically 15 or 30 years), the interest rate, whether or not there is a pre-payment penalty associated with the loan, and some other legal basics.
Mortgage - A two party security instrument pledging land as security for the performance of an obligation.
When purchasing real estate in Florida, the buyer/borrower gives a mortgage to the lender. The buyer is called the mortgagor and the lender is the mortgagee (the -or ending denotes giving, the -ee ending denotes receiving). The mortgage creates a lien against the real property (land and improvements, if any) and pledges the real property as collateral for the loan. The mortgage outlines the terms under which the mortgagee may rightly foreclosure.
The most common reason for foreclosure is for non-payment or payment not in keeping with the terms of the promissory note, although not maintaining insurance or letting the property become dilapidated are also reasons why a lender might rightly foreclosure (not common at all).
Check back tomorrow for more important real estate terms relating to foreclosures.
Below are some of the most important real estate terms relating to foreclosures (taken from the Chicago Title Real Estate Dictionary). I have included some explanatory notes.
Lien-Theory State - A lien-theory state is a state in which a lien is placed on a property to secure a debt. The borrower takes title to the property. By contrast, title-theory states are those states where the lender becomes the title owner and the borrower only takes title to the property once the debt (loan) is paid off.
Florida is a lien-theory state.
Promissory Note - An unconditional written promise, signed by maker, to pay, absolutely, a sum certain in money, either to the bearer or to a person therein designated or his/her order.
The note will contain the initial principal amount of the loan (the amount borrowed) along with the term (length) of the loan (typically 15 or 30 years), the interest rate, whether or not there is a pre-payment penalty associated with the loan, and some other legal basics.
Mortgage - A two party security instrument pledging land as security for the performance of an obligation.
When purchasing real estate in Florida, the buyer/borrower gives a mortgage to the lender. The buyer is called the mortgagor and the lender is the mortgagee (the -or ending denotes giving, the -ee ending denotes receiving). The mortgage creates a lien against the real property (land and improvements, if any) and pledges the real property as collateral for the loan. The mortgage outlines the terms under which the mortgagee may rightly foreclosure.
The most common reason for foreclosure is for non-payment or payment not in keeping with the terms of the promissory note, although not maintaining insurance or letting the property become dilapidated are also reasons why a lender might rightly foreclosure (not common at all).
Check back tomorrow for more important real estate terms relating to foreclosures.
Friday, September 17, 2010
Foreclosure News Coming...
In desiring to provide the Tallahassee community with important and timely information about the real estate market, I have decided to start a second blog that specifically features foreclosures.
For more general information about the market, please subscribe to my first blog at http://www.realestatetallahassee.blogspot.com/. To learn more about foreclosures specifically (new listings, tips on avoiding foreclosure or purchasing a foreclosure, etc), please visit this blog regularly.
I'll start posting information next week. If you have any questions in the meantime, please call or email me at 850-251-6643 or jasonpicht@gmail.com.
For more general information about the market, please subscribe to my first blog at http://www.realestatetallahassee.blogspot.com/. To learn more about foreclosures specifically (new listings, tips on avoiding foreclosure or purchasing a foreclosure, etc), please visit this blog regularly.
I'll start posting information next week. If you have any questions in the meantime, please call or email me at 850-251-6643 or jasonpicht@gmail.com.
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