Recent figures from the Mortgage Bankers Association suggest that the worst of the housing industry downturn may be over. For the first time in three years, fewer homeowners are falling behind on their mortgage payments; this spells good news for mortgage lenders as well as borrowers. While economists hesitate to say that the worst is [...]
Recent figures from the Mortgage Bankers Association suggest that the worst of the housing industry downturn may be over. For the first time in three years, fewer homeowners are falling behind on their mortgage payments; this spells good news for mortgage lenders as well as borrowers. While economists hesitate to say that the worst is over, the reduction in new delinquencies is generally regarded as a positive sign by housing industry experts and real estate agents throughout the country. Even in Austin, where housing prices remained surprisingly resilient throughout the nationwide woes, these figures offer fresh hope that an economic upturn is on the way.
Current national figures estimate that fifteen percent of all mortgages are at least thirty days delinquent; this includes homes currently in foreclosure as well as seriously delinquent loans. The worst figures are seen in the subprime mortgage field, where twenty-five percent of loans were thirty days or more delinquent. The state of Texas has fared somewhat better as a whole than the nation, but fifteen percent of the Texas subprime mortgage market loans are seriously delinquent by sixty or more days, and many of these are currently facing or undergoing foreclosure proceedings. Only two percent of all mortgage loans in Texas are currently in foreclosure, which represents a markedly better performance than the national rate of approximately five percent. Texas is one of only seven states currently showing foreclosure rates of two percent of less.
Austin foreclosure rates have remained lower than both the national and state averages, with one percent of loans in foreclosure in December 2009. These low figures will likely shield Austin from the brunt of the foreclosure crisis expected when banks finally begin unloading already foreclosed homes on the housing market. Certain hard-hit regions are expected to see plummeting home prices due to the depreciation caused by this expected glut of homes on the market; as many as six million foreclosed homes may be sold by banks over the next three years, according to economic analysts at Barclays Capital.
The strong housing market and stable home values in Austin make it one of the most desirable places to live in the U.S. Austin’s vibrant computing, healthcare and green tech sectors provide outstanding employment opportunities and have cushioned the Austin metropolitan area against the worst effects of the recession. With mortgage delinquencies on the decline and the national economy showing signs of recovery, there’s never been a better time to consider moving in or moving up in the Austin community.
Once you have established you are the owner of the foreclosure property, have reviewed it with your agent and lawyer you are faced with a significant choice. Should you evict the current tenants or should you continue with the lease they have already? Do you want to initiate a new lease with the current tenants? [...]
Once you have established you are the owner of the foreclosure property, have reviewed it with your agent and lawyer you are faced with a significant choice. Should you evict the current tenants or should you continue with the lease they have already? Do you want to initiate a new lease with the current tenants? Those are crucial choices that must be made.
Rental properties purchased through the foreclosure auction process are often one wrought with choices. Typically, a foreclosure purchased rental does not require the current lease be honored, like when it is sold prior to foreclosure. Generally speaking, the new owner has the opportunity to evict the current tenants. This also allows for the new owner to establish a new lease with the current tenants.
Should you chose to accept even one rental payment while still under the previous agreement; you are, in effect, honoring the lease they are in. This means that you, as the new owner, would be bound by those terms until the lease expires and a new one is drawn up. Eviction after such an accepted payment would be difficult if they do not violate the rules of that lease.
By taking some time to understand the rules of the process, you are protecting yourself and the tenant. Should you desire to purchase a property like this, it is prudent to discuss all of your options with a real estate attorney and a real estate agent prior to purchase.
A new law means there are some caveats! Here is a summary from the Legal Aid Society of Cleveland
Upon a Foreclosure Sale of Residential Rental Property,
the Lease or Tenancy Continues with the New Owner1. Issue. Upon a foreclosure sale of residential rental property, what is the effect of the sale on the tenant’s lease or month-to-month tenancy?
2. New federal law. Protecting Tenants at Foreclosure Act of 2009. S. 896, Pub. L. No. 111-22, §§ 701-704.
3. Effective date. May 21, 2009 (or, more precisely, May 20, 2009, at the time that the
President signed the bill).4. Application of effective date. The federal law applies to any existing bona fide lease
or tenancy for residing in a property when the property is sold at a foreclosure sale, if
the sale occurs on or after the law’s effective date.5. Bona fide lease or tenancy. The federal law applies only to bona fide leases and
tenancies, which means:
• The tenant is not the child, spouse, or parent of the mortgagor (former landlord);
• The lease or tenancy was the result of an arms-length transaction; and
• The rent is not substantially less than the fair market rent (or the rent is reduced
or subsidized due to a Federal, State, or local subsidy).6. Tenants with a bona fide lease. Upon a foreclosure sale, the lease continues with
the new owner as the landlord and, absent cause for termination, it continues until
either (i) the end of the lease term or (ii) the new owner elects to use the property as
a primary residence and provides the tenant with a 90-day notice of termination.7. Tenants with a bona fide month-to-month tenancy. Upon a foreclosure sale, the
tenancy continues with the new owner as the landlord and, absent cause for
termination, it continues until either (i) the new owner provides the tenant with a
90-day notice of termination or (ii) the tenant provides the owner with a state law
30-day notice of termination.8. Tenants with a Housing Choice Voucher (aka Section
lease. Upon a
a foreclosure sale, the voucher lease (which may be a written month-to-month
tenancy after the first year) is treated the same as other leases (see item 6, above) and
other month-to-month tenancies (see item 7, above). In addition, upon a foreclosure
sale, the housing assistance payments (“HAP”) contract continues, with the new
owner subject to the terms of the HAP contract. The new owner may not terminate
the voucher lease on the “other good cause” business ground that it will assist in the
sale of the property.
If you’ve conducted meticulous investigations on a foreclosure home and effectively placed the winning offer at public auction, it may still take time to be able to move in or start making repairs. There’s a possibility the previous owners of the newly purchased property may yet be living there, making it complicated to take possession. [...]
If you’ve conducted meticulous investigations on a foreclosure home and effectively placed the winning offer at public auction, it may still take time to be able to move in or start making repairs. There’s a possibility the previous owners of the newly purchased property may yet be living there, making it complicated to take possession. If you’re not equipped for that possibility, you may possibly be in for an arduous as well as messy eviction. Properties arrive on public foreclosure auction platforms at the conclusion of a pre-foreclosure phase, after property owner’s failure to pay the monthly mortgage expenses.
A hectic eviction procedure can be avoided with careful research in addition to effective planning. Though regulations and procedures differ from state to state, these procedures can be of assistance in learning the eviction process and how to avoid a lengthy eviction process.
First – establishing ownership
At the conclusion of the auction, make sure you are given every one of the essential documents from the auctioneer to prove you have made the purchase and are the new owner. At that time speak with the auctioneer and a real estate attorney concerning further steps that have to be taken before taking custody of the property. In several states the auctioned sale is confirmed by the court within a specified period of time, potentially up to 3 months. Verify as soon as the auction is completed.
For some locations and states there is a redemption period. This is designed to allow the original owners to purchase the property from you for the price paid at auction, plus applicable fees. In some states this period is as brief as one month or as long as one year. Review your state here: Applicable State Laws to identify if and how your state fits into this. This is often a reason given by the previous owners for not vacating the property..
Understanding the eviction process
Every state, and at times every county has a different eviction law and process. It is vital that before you enter the auction, you contact a local real estate attorney or the county sheriff. They are best equipped to prepare you for the eviction process in the location you are reviewing for purchase. By doing this you will be protecting everyone involved with the sale and purchase of the home, every step of the way.
The court process often takes months, so knowing your rights and the rights of the previous owner are vital. Contacting the court system for the eviction process should occur at the soonest possible moment, to assure everything is handled correctly and fairly. As the case comes to an end, the judge will give you are writ of possession and order the local sheriff to evict the occupant. AT this time the sheriff will serve the notice and remove the occupant 24 hours later.
Obviously this is general, so verify locally to make sure you are aware exactly what the process is.
It is certainly no secret by now that we are in a recession. The start of our current situation was first recognized when the national real estate market began to flounder on 2007. While some areas of the country were hit harder than others, Texas has stayed fairly level throughout the recent crisis. The main [...]
It is certainly no secret by now that we are in a recession. The start of our current situation was first recognized when the national real estate market began to flounder on 2007. While some areas of the country were hit harder than others, Texas has stayed fairly level throughout the recent crisis. The main reason for this is that while many states experienced a dramatic increase in home values and prices, Texas remained outside the bubble. When it burst, the state was hardly touched. Even now, as foreclosure rates skyrocket, Texas has stayed among the healthiest real estate markets in the nation.
The main reason that the real estate market burst its bubble is actually very simple. When the economy was healthy and house values were increasing, many lenders forgot how to properly handle a mortgage application. Credit scores, and even employment records, became a thing of the past. Creative lending practices came into play where there was little to no down payment necessary.
While the initial payments were certainly something that home buyers could afford, later down the road these monthly payments would jump significantly and the new homeowners were unable to pay them. Add to this already stressed market that home values began to decline. Now, not only could the mortgage not be paid, but the house was no longer even worth that amount. There was nowhere to go but down.
Throughout this trying ordeal, Texas, and several of its larger cities, has maintained an excellent real estate market. Texas as a whole made less risky loan choices, so it has basically avoided the real estate bubble burst. Supply and demand in Texas has remained stable throughout the last few years. While the state has seen an increase in foreclosures, it remains much lower than the national numbers. Texas is expected to stay on the edges of our worsening economy and fare better as a state than most others.
The housing market is where we first started to see the inkling of a recession. For several years, lenders had offered mortgage options for those with less than perfect credit, including adjustable rate mortgages and $0 down payments. The result of which is our current real estate market. Homeowners began having trouble keeping up with [...]
The housing market is where we first started to see the inkling of a recession. For several years, lenders had offered mortgage options for those with less than perfect credit, including adjustable rate mortgages and $0 down payments. The result of which is our current real estate market. Homeowners began having trouble keeping up with monthly payments and foreclosure listings began to skyrocket. Austin has increased as well, though not nearly as badly as other areas in the country. Home values have remained fairly steady in the area. The crisis has brought down loan rates for both new mortgages and refinancing options.
It is this side effect of the real estate crisis that has increased the number of new mortgage and refinances applications. According to the Mortgage Bankers Association, applications went up more than 11% nationally for the week ending March 6 from the previous week. That is up 5.7% from a year ago. Of these applications, about 68% are requests for refinancing. The low rates have given homeowners the ability to refinance at a rate of around 5% for a thirty year loan. Fifteen year fixed rates are closer to 4.5%, sparking the increase in applications.
As lenders begin to use more traditional methods of credit and loan practices, the real estate market is expected to level out. It is now considered a great time to buy for those able to do so. Many experts feel at this point that up is the only way the real estate market can go.
Every industry has its own jargon. The real estate market is no exception and this often leaves home buyers and sellers in a state of confusion. This can be avoided, or limited, with a few helpful definitions passed from agents to their clients.
The term ‘foreclosure’ is in the news almost daily, so that is a [...]
Every industry has its own jargon. The real estate market is no exception and this often leaves home buyers and sellers in a state of confusion. This can be avoided, or limited, with a few helpful definitions passed from agents to their clients.
The term ‘foreclosure’ is in the news almost daily, so that is a good place to start. Foreclosure is defined thusly: The legal approach taken by a lender which deprives a borrower of the property purchased through a loan arrangement. Foreclosure is not a haphazard legal process. This legal approach is never started unless the borrower is grievously behind on their payments, and the property purchased maintains value. Typically foreclosure ends with a forced sale of the mortgaged property, either by public auction or by private arrangement through a real estate agent.
An option out is called a deed in lieu of foreclosure. The borrower signs the deed to the mortgage lender instead of following through a foreclosure procedure. This allows the borrower to avoid the paperwork being filed for the foreclosure. This saves the borrower the taxing issue of creating a public record of the foreclosure process. The debt itself will likely appear on credit reports, however, by not going to court, it saves money, time, and public records of the foreclosure of the given property.
Complaints about late payment, partial payment or no payment at all are starting to grow louder and more insistent as the California-based developers face foreclosure and lien action on many of their projects in the central Texas area.
Just three years ago, Pacific Summit Partners entered the Austin development arena with a $100 million investment in [...]
Complaints about late payment, partial payment or no payment at all are starting to grow louder and more insistent as the California-based developers face foreclosure and lien action on many of their projects in the central Texas area.
Just three years ago, Pacific Summit Partners entered the Austin development arena with a $100 million investment in land from southwest of Austin to Liberty Hill. They planned ambitious projects consisting of thousands of homes in four development sites: Highland Meadows, Lakeline Station, Fairways at Steiner Ranch, and Aviara. Now, Lakeline Station is headed for foreclosure, the 230 acre Liberty Hill land has been foreclosed and is back on the market, and construction seems to have stopped at both Aviara and the Fairways.
The theory is that Pacific Summit is taking its spectacular nose-dive in the wake of major real estate woes on the west coast, rather than any development slowdown in the central Texas market. The Austin region remains fairly sheltered from the troubles affecting the rest of the nation. Still, financial problems with large development companies who do business in central Texas translates into trouble for local companies who supply building materials and local developers who partner with them.
Pacific Summit owes dozens of local contractors and suppliers for just about every aspect of home building, from major sewer, drainage and water systems and concrete for foundations and driveways to the small details and finishing touches such as carpeting, marble counter tops, and light fixtures.
Pacific Summit Partners is a group formed especially to develop properties in the Austin area. Formed of Pacific Century Group and Summit Partners, the partnership now looks toward a bleak future as it faces numerous liens and lawsuits for breach of contract and lack of payment.
There is a troubling rise in home foreclosures in the Travis County area, causing some to believe the Central Texas region is not, after all, to be shielded from the real estate crisis hitting the rest of the nation.
In the first half of 2008, one out of every 133 homes in Travis County has succumbed [...]
There is a troubling rise in home foreclosures in the Travis County area, causing some to believe the Central Texas region is not, after all, to be shielded from the real estate crisis hitting the rest of the nation.
In the first half of 2008, one out of every 133 homes in Travis County has succumbed to foreclosure proceedings, compared with the 2001 figures which show one in every 265 homes was foreclosed on. Over in Williamson County, one of every 95 homes went under foreclosure – another troubling rise when compared to one in 225 homes in 2001.
Some contend that the rise in foreclosures is simply due to an increased volume of homes in the area, and while “that is certainly one of the components’, other factors are involved, including the sub-prime mortgage scandal and heretofore lenience toward potential mortgagees’ financial situations.” So says George Roddy Sr., who is president of Foreclosure Listing Service Inc., an Addison based company which traces foreclosure trends in some Texas cities. According to Roddy, the people bearing the brunt of the foreclosure pains are those whose homes are valued at under $200,000. “79 percent of the homes posted [for foreclosure] during the first part of this year [are] valued at under $200,000″, he reports.
Yet, the higher end is beginning to feel the pinch as well. Houses valued between $300,000 and $500,000 came under foreclosure at a rise of 44 percent compared with 2007. Foreclosures on homes valued at between $500,000 and $1 million increased 22 percent and those over $1 million were up 18 percent.
Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair surprised Congress with a proposal bypassing the Federal Housing Administration to make use of the Treasury as a financial resource for cash strapped mortgagees. The low cost “gap” financing would help to reduce the principal balance on a loan as much as 20 percent over the next [...]
Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair surprised Congress with a proposal bypassing the Federal Housing Administration to make use of the Treasury as a financial resource for cash strapped mortgagees. The low cost “gap” financing would help to reduce the principal balance on a loan as much as 20 percent over the next five years. Ms. Bair announced the plan at the end of April 2008, just as the House and Senate were negotiating with the FHA for a proposal that would assist the troubled homeowners with their unaffordable mortgages.
Ms. Bair’s plan would be limited to those borrowers who are determined to stay in their homes and avoid foreclosure proceedings and wouldn’t cost the Treasury anything as the five years worth of interest would be paid up front by participating lenders. The borrower would then begin to pay down the principal with no interest for five years. After five years, the borrower would begin to pay off the FDIC loan at the low Treasury rate for the rest of the mortgage. The mortgage would hold a lien on the property and it would be paid off first should the borrower sell or succumb to foreclosure.
The program would be limited to those borrowers who could qualify for a lower fixed rate mortgage. The home owner’s mortgage lender would apply for the gap loan on the home owner’s behalf.
The idea is to lower the borrower’s debt-to-income ration to a more manageable 35 percent and to take advantage of lower Treasury borrowing rates to assist homeowners into more affordable fixed-rate loans. This plan is not for everybody, but Ms. Bair thinks it could make a difference for up to a million homeowners who don’t qualify for any other relief plans. It’s certainly something worth looking into.
