Mixed News: Foreclosures

RealtyTrac, the online marketer of foreclosure properties, has just released their report detailing nationwide foreclosure filings in February.

Last month, foreclosures fell 4% from January’s levels, but there was a 60% increase from February 2007.

As a closing attorney for real estate investors, we are definitely seeing the effects. More and more of our clients are buying REO properties and funding those acquisitions with hard money. We’ve also seen a dramatic increase in the number of short sales prior to foreclosure.

What we’re seeing less of these days: mortgage reinstatements.

The RealtyTrac report seems to indicate that all of the recent governmental efforts to help borrowers avoid foreclosure aren’t really helping.

Again, investors should plan on these levels of foreclosures continuing for the foreseeable future.

Photo: R ------------------------------------> L, originally uploaded by johanna.

Foreclosures Skyrocketing

RealtyTrac just released January’s foreclosure report, and the number of homes in some stage of foreclosure rose 57 percent from January of last year.

And it does not appear that the foreclosure train is showing signs of slowing down anytime soon; - the rate of foreclosure filings rose 8 percent from December.

As James J. Saccacio, the chief executive officer of RealtyTrac noted: "January's foreclosure numbers demonstrate that foreclosure activity is continuing on its upward trend, substantially increasing from a year ago in many states"

Georgia ranked in the top ten of states with the highest foreclosure activity, with over 10,000 reported properties in some stage of foreclosure.

As a closing attorney who works with investors, what do I think we can, and should, take from this?

First: while a number of governmentally-sponsored foreclosure prevention plans have been enacted, they do not seem to be having any effect on the overall number of foreclosures.

Second: these monthly increases in foreclosures should not surprise anyone, and will most-likely continue as more and more adjustable-rate mortgages reset to higher rates.

Third: Increasing number of foreclosures represents an increasing number of REO properties on the market that investors will have to compete with as they try and sell their properties.

Fourth: Increasing number homes in foreclosure means that there are more potential deals out there, and investors can really take their time and cherry-pick the best ones.

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Hudson and Marshall Acution on CNN

CNN report on the recent REO auctions in Atlanta.

Atlanta Foreclosures Hit Record High

From the AJC: Metro Atlanta foreclosure notices in January hit a record 6,992 according to Equity Depot, up 45% from a last year.

One of the main culprits? Resetting interest rates of adjustable rate mortgages. And as subprime mortgage resets don’t peak until later in the year, the number of foreclosures, already at an all-time high, should increase.

This is not anything really new; we’ve been saying for months that the number of foreclosures is going to keep increasing.

For investors, as with much of the housing news these days, this is mixed news. On one hand, investors looking to sell houses are competing with these foreclosures, and as we know, prices are being driven down and it is becoming increasingly harder to sell property.

On the other hand, the opportunities for buying houses are unprecedented. Almost every property these days presents a short sale possibility. Hudson and Marshall is conducting cut-rate REO auctions. And with an unprecedented wave of REO properties coming, the number of opportunities presenting themselves to investors is only going to increase.

Investor Alert: REO Auction

Hudson & Marshall, the country’s largest REO auction firm will be auctioning off more than 500 Atlanta-area foreclosure properties between January 15th and the 20th.

The auctions will be conducted throughout the state, though the great majority will be held in here in Atlanta.

A full listing of auction times, locations, and available properties is available on the Hudson & Marshall web site.

There are no minimum bids for the properties to be auctioned. Winners will be required to make a deposit of $2,500.00 or 5% of the bid price, whichever is greater. Buyers then should have 30 days to secure financing.

Estimated values of the properties range from $30,000.00 to $700,000.00 according to the Hudson & Marshall press release. Homes additionally come with owner’s title insurance, paid for by the sellers.

This is not the first REO action of Atlanta-area properties held by Hudson & Marshall, and a number of our clients who attended the first auction reported that properties were being sold at tremendous discounts.

For real estate investors looking at REOs, either as long-term holds or as quick turnaround sales, these upcoming auctions may present a tremendous opportunity to acquire properties at significantly below-market prices.