I had lunch with an attorney last week. He is one of the largest foreclosure firms in the State of Connecticut. We spent a lot of time talking about the robo-signing mess and how that impacted the foreclosure process and how it brought the process to a screeching halt.
He said the breaks are off and the mortgage servicing companies are beginning to move forward with more foreclosures. He told me that he had a tremendous backlog already in the pipeline, most of which they will have to start all over, but many are in various stages.
The bottom line, more foreclosed properties will be hitting the market, going forward.
Foreclosure Pipelines Refilling Nationwide, Led By East Coast States
By: Dan Green
Banks Catch Up On Foreclosure Backlog
In July, for the third straight month, the foreclosure-tracking firm RealtyTrac reports that foreclosure pipelines are filling up. As compared to July 2011, last month’s foreclosure starts climbed 6 percent to more than 98,000 units nationwide.
The term “foreclosure start” in a blanket term comprising both default notices and scheduled foreclosure auctions. In some states, as compared to one year ago, foreclosure starts surged:
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Connecticut : 201% increase in foreclosure starts
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New Jersey : 164% increase in foreclosure starts
- Pennsylvania : 139% increase in foreclosure starts
Not surprisingly, each of the above states are judicial foreclosure states which means that all foreclosures must go through the state court system. Last year, there was uncertainty about how foreclosures should be processed. Now, as a result of the recent $25 billion mortgage servicer settlement, rules are more clear and foreclosure activity has restarted.
Foreclosure starts should remain elevated for the next several quarters, at least.
Buying A Foreclosure? Buy Smart.
Buying a foreclosed home is different from buying a “regular home”. Whereas a regular home is sold in move-in condition (presumably), with a foreclosed home, there is no such presumption. Foreclosed homes are typically sold “as-is” which means they may be defective to the core.
When you buy a foreclosed home, you may be buying a home with faulty electrical, gutted plumbing, and worn-down roofing. You’re allowed an inspection in most cases, but fixes and repairs are the buyer’s responsibility — not the seller’s. And for serious damage — damage that renders the home uninhabitable — buyers will find that banks are unwilling to offer financing until said repairs are completed.
No wonder foreclosed homes sell so cheaply!
As compared to comparable, non-distressed homes, foreclosures typically sell for 20% off. Homes in great condition, however, won’t sell for nearly that cheap. This is why foreclosure-shopping home buyers — especially first-time home buyers — are advised to work with a real estate agent. If you don’t know what to look in a home for when you’re buying from a bank, you’re more likely to get the short end of the bargaining stick.
You may not get a mortgage, either.
Foreclosures : Eligible For Low- And No-Down payment Mortgages
The good news is that foreclosed properties are eligible for the same low- and no-down payment mortgages as every other home for sale. Via the FHA, home buyers have the option to make a minimum 3.5% down payment. Via the VA and USDA, eligible home buyers can finance 100%.
Even the FHA’s construction loan — the 203k mortgage — is an option.
If you’re buying a foreclosed home, or just thinking about it, take a look at today’s mortgage rates. See how the home’s expected monthly payment will fit into your household budget
image:renjith krishnan/freedigitalphotos.net
Joe Petrowsky, NMLS #6869
Right Trac Financial Group, Inc. NMLS #2709
110 Main St.
Manchester, Ct. 06042
Office: 860 647-7701 x116
Fax: 860 647-8940
Cell: 860 836-9294 Email: joe@righttracfg.com
