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I knew Las Vegas would get hit hard by foreclosures when my friend bought a condo there for $300k a couple years ago. With nothing but open desert for miles around there’s no way that a 2BR condo could be worth 300,000 crispies!

I don’t call this market downsizing, I call it “right-sizing”. Vegas cannot grow into perpetuity, like anything else there is a ceiling. As sad as it is, sooner or later many in construction and the businesses its’ support industries will have to find the next boomtown. In their wake will be many, many foreclosed homes that whose prices will have to come back down to earth.

Vegas was, and will probably remain to be the playground for those in the Southern California area as well as an international gambling destination. I believe, like the mountain communities surrounding Los Angeles and San Diego, many of the homes in Las Vegas will soon be vacation properties.

You might be able to buy a vacation house there for the cost of a rough weekend pretty soon!

After a flurry of foreclosures over the last 18 months the fallout from toxic subprime loans has started to wain. Foreclosure investments all the rage have impacted REO portfolios held by banks to just under 900k. This fact does not note the second wave of foreclosures to hit the market between 2009 to 2011 expected to be around 4 million.

The reason for the second waive of REO and Foreclosures is the adjustable rate prime mortgages structures on 3, 5, 7 and 10 year fixed periods after which may reset into substantially larger payments based on 1 - 2 percent rate increases or balloon forcing an accelerated payment. While mortgage backed securities typically utilized a 3% default rate for valuations some lenders are finding 12% of their portfolios in some stage of delinquency or foreclosure.

The office of the Thrift Supervision and the Controller of Currency released a 3rd quarter report putting a scare into the already fragile housing market illustrating new findings. The report, which covers the third quarter of the year, was the second such indication of the effectiveness — or lack thereof — of new efforts at foreclosure mitigation. It examined the portfolios of nine national banks and five thrifts, including JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and First Horizon (NYSE: FHN), representing more than 60% of all U.S. mortgages outstanding.

As detailed in the report, the first since the initial tabulation was put out in June, new foreclosure initiatives actually fell by 2.6% to 281,298 in the September quarter (largely due to mortgage relief programs). But a perhaps more important metric, foreclosures completed, increased by 8%, while the total number of foreclosures in process rose by 11% to 617,642.

There was also a disturbing new trend in the report released by Comptroller of the Currency John C. Dugan: More than half of the mortgages modified in the first quarter to benefit struggling borrowers had fallen back into delinquency, once again more than 30 days past due by the end of September.

Real estate investments in the foreclosure and reo space are heating up. For more information on Foreclosure investments contact Stone Equity Group

Financially troubled homeowners will get an insight into the mortgage foreclosure process and advice on avoiding it at a workshop scheduled Saturday at Gilbert Civic Center.

The workshop, part of a Valley-wide effort by the Leadership Centre and the Arizona Foreclosure Prevention Task Force to stem the rising tide of foreclosures, is aimed at teaching families about crisis budgeting and strategies for keeping their homes.

Residents who live in neighborhoods plagued by foreclosed properties will also get information on how to maintain their own property values amid the blight that often comes with abandoned houses.

Several speakers are lined up for the event, including representatives from the Don’t Borrow Trouble Campaign and Arizona Saves. The goal is to help people before it’s too late, said Cheri Horbacz with the task force, which also plans a workshop Jan. 10 in Mesa.

Similar workshops elsewhere in the Valley have brought in crowds of 500 people; one in Glendale drew 1,800.

Participants will learn how to talk to their lenders about loan modifications because about half of homeowners facing foreclosures fail to talk with their lender during the process, said Patricia Garcia-Duarte, task force chairwoman.

“We want to make sure people feel comfortable. The bank is calling, but they may have an option,” Garcia-Duarte said.

Beleaguered owners will also learn how to save money, and maybe their homes, even when facing a foreclosure. A class will teach 90-day crisis budgeting, said Jennifer Quillin with Arizona Saves.

Quillin said many lenders require money up front if a loan modification is agreed on. Even if terms can’t be reached, homeowners should still trim their budgets to save money, she said.

“If they are not able to save their home, they’ll need that money to move out,” Quillin said. “It’s not a ‘no bill holiday’ when you can’t make a mortgage payment.”

Speakers will also touch on the tax ramifications of foreclosures and what to expect during legal proceedings.

Mark Lines, an attorney with Shaw and Lines, will speak on trustee sales and personal liabilities that could be retained after a foreclosure.

Organizers hope people will leave the workshop energized to survive the down market.

“They’ll walk out feeling like they are the CEO in charge of their company and no one cares more about their money than they do,” Quillin said.

By KELLY CURRAN
December 9, 2008
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The nation’s foreclosure hemorrhage has finally slowed — slightly, mind you — from 84,534 REO properties in October to 84,291 in November, according to the 2009 outlook from ForeclosureS.com, released Tuesday. While the decline is largely likely an artifact of a growing push to halt pending foreclosures while lenders and government officials search for solutions to the nation’s housing crisis, Alexis McGee, president at the online foreclosure investing resource says that she sees a significant decline in foreclosures as buyers return in 2009, pushing home prices up and fueling a real estate recovery.

“Recovery is underway. Affordable is back in the housing market,” says McGee. “In 2009, housing will not only recover, but we’ll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market.”

That’s a pretty optimistic take, and one that stands in stark contrast to most assessments, given that well-known and respected economists including Mark Zandi at Moody’s Economy.com have suggested that the nation’s housing markets won’t be likely to see a bottom until late next year.

McGee has been preaching a brighter future for the housing market for well over a year, suggesting that investors start buying foreclosures; a cynic might suggest, of course, that she has strong self-interest in doing so.

In June of 2007, she said “the overall economy is sound, and markets will turn around,” in arguing that investors start to buy foreclosed properties. In February of this year, she suggested that investors shouldn’t “be scared off by the gloom and doom talk swirling around housing markets,” and should buy properties that were, in her eyes, on sale.

Obviously, most investors that bought in February have likely seen their investments lose money, given most regional and national home price trends this year. And as recently as November, McGee was suggesting that a drop in pre-foreclosure notices signaled a real estate bottom, rather than the more likely seasonal effect the trend has since been proven to be.

But regardless of a market that seems stubbornly unwilling to follow her predictions, McGee maintains that now is a great time for investors to buy. Low interest rates and the ability to rent out properties for positive cash flow, she says, are strong reasons to invest; of course, she also touts that investors will be able to sell their investments in late 2009 at a large profit.

Which is exactly, in our opinion, what the housing market doesn’t need right now: a swarm of investors with short-term horizons, looking to put properties on the market in late 2009, when most economists are suggesting a more organic bottom for the housing markets.

What the numbers show
ForeclosureS.com found that the number of properties repossessed by lenders following foreclosure in November is off nearly 21 percent from September’s 106,415 REO filings. “Certainly some of the drop reflects growing results of government and private efforts to keep homeowners in their homes,” said McGee, acknowledging the likely strong effect of moratorium and modification efforts.

Still, year to date, however, 12.6 of every 1,000 households nationwide have been lost to foreclosure.

The national pre-foreclosure average isn’t necessarily promising, either. Pre-foreclosures, which include notice of mortgage default and/or foreclosure auction, were up 5.57 percent in November from October’s totals, with 27.1 of every 1,000 households across the country facing some kind of foreclosure action.

McGee said pre-foreclosure numbers are likely to climb in early 2009, albeit at a much slower rate than in 2008. “Too many homeowners already are just too overextended and likely won’t seek help to work out their delinquent mortgages until after a pre-foreclosure filing against their property. That filing, it seems, is the wake-up call for many to get the help they need and sell,” she said.

“What I can tell…is that hardest hit housing markets have already hit bottom and others will follow in 2009,” she argues. “The bottom line to keep in mind: What goes down absolutely positively will go back up again.”

The only question seems to be: when? Timing, after all, is everything.

– Paul Jackson contributed to this report.

Reo Foreclsoures, foreclosures investing is timely for real estate investing.