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Defective Foreclosres and How to Avoid Them


What are Defective Foreclosures?

Every two years I have to take a legal and ethics updates class to renew my brokers license. Besides being apprised of all the new real estate forms and procedures taking place you need to  keep a score card as far as what the banks are doing in controlling the market.

You’ve heard about the robo signings in main stream media but have you heard how it applies to real world real estate?   The course I took was a two day class and a big brand brokerage who will remained anonymous declared they had experienced 3 defective foreclosures this year.  What does that mean?  The explanation was the bank didn’t do it right!  What! How can you not do a foreclosure right?  That’s robo signing at its finest.  Probably a clerical, hourly – “nit wit” determining whether you stay or leave your home.
Sounds bad and it is….

So what happens in a defective foreclosure?  The new buyer that spent months and lots of money looking for that perfect home gets kicked out.  The original owner probably had filed a suit against the bank and because the bank couldn’t proved they owned or much less found the note, the foreclosure was declared defective.  Yes, it’s happening all over America.

What can you do to avoid the whole experience?  One way is not to purchase a foreclosure.

But because foreclosures are attractive to many buyers that’s not going to happen.  One way is to investigate the lending process history and sales of the property.  The amount of information that’s available to brokers is amazing if only agents would use it.  Seems like the title companies would find out who owned the property before it was sold again, don’t you think…

One call out of a robo signing foreclosure would be the absurd number of times a property changed hands during the past 8 years.  The other “for sure thing you can do” is ask the bank to prove their ownership by providing the note.  Alas, that’s a different department…imagine that!  One county of Ohio actually has a certificate of readiness that the bank must prove they own the note before the judicial process can start, Texas is a non-judicial state.  That process should be a given to protect the consumer.

The point being is there’s a tremendous amount of information out there so as not to waste a buyers time or money!  I can’t imagine buying a home and then being told you had to move out because it was a defective foreclosure.  And so it goes…it ain’t over yet!

Distressed vs Traditional Sales


Foreclosure Distressed vs Traditional Resales

Every Quarter the CCAR (Collin County Association of Realtors) publishes a detailed report on foreclosure activity for NTREIS (North Texas MLS).  You won’t find this information everywhere.  The chart shows by quarter the last 3 years of foreclosures vs traditional resale activity.  As you can see foreclosure sales were down 14.3% from 2008.

Better Deals

I think this is because resales became a better value to the consumer. And most banks are much more difficult to work with.  As you can see the share of lender activity is still above 20% and will continue to be so for a while.  You really have to drill down specifics to county, city & neighborhood to get an accurate picture of foreclosure vs resale (regular seller) activity.  I can tell you that in Plano zip codes: 75093, 75024 & 75025 foreclosures listings have doubled since 2008.  For example: the inventory used to be 25 properties and now hovers around 50 as the banks definitely control the flow of inventory. Foreclosures and distressed sales


Banks don’t know how to sell real estate

It seems these days that banks or lenders really don’t want to sell their REO (real estate owned) properties. You might find that odd since everyone knows they need to dispose of these foreclosed homes. Well, things just seem to take longer and more complicated. Why? Because they are so inundated with listings, offers and don’t understand the process plus don’t have the man power to complete a time is of the essence transaction. Doesn’t seem right, does it? Like I’ve said before banks can’t sell real estate.

Out of 4 contracts we are working now – we have yet to get any signed paperwork back after 2 weeks, a short sale scenario just got a negotiator to work the contracts after being submitted March 3rd. That’s right! So if you are involved in a foreclosure or per foreclosure, please know you are not alone.

One recommendation I would make is even if you have a solid closing date be prepared to extend your moving as the lender or bank might not sign on the day you close. You need patience, along with stamina to complete the purchase of your new home. Just keep looking for that light at the end of the tunnel – It will be worth it because you got such a sweet buy!

https://dallashomesandland.com/440/

Where to Find the Most Foreclosures in Texas


Trends in Texas Foreclosures

Texas_Foreclosures_-_PK

There was search done on this site “was there another point in history where the amount of foreclosed homes rate was similar to it was now in Dallas, Texas”.

So here is a google trend chart since 2005. Texas has always been a very good foreclosure market, usually in the top 10.  What we are seeing now is more homes at all price levels (yes, even in neighborhoods you would not expect).

Here’s a national trend chart to compare – Richardson comes in # 2 and Dallas # 7.

Almost every buyer will ask about foreclosures and there are some that don’t need too much work.  There is not one site that has all foreclosure listings – a title company is the best source to target local information.

However, don’t think these are easy deals to make, just as the market has changed the lenders and banks want their money too – The process is much slower, you should really have several choices and don’t be disappointed if they won’t take your low ball offer.  Keep trying….someone will.  Chart below is Top 10 Texas cities with foreclosures.
Foreclosures_in_TX_-_PK
This is an In depth look at the Texas foreclosure market from the Real Estate Center at Texas A&M University.

Texas_forclosures

The truth is Texas has become a victim of the predatory lending practices that took the market by storm the past few years.  All of us will have to work through it and buyers who purchase now will be making some very wise investment decisions.

Do you want to Buy a Foreclosure?


Foreclosures and your mortgage

The Dallas area has always been a foreclosure market, in fact we consistently rank among the nations highest. A recent article in the Dallas Morning News, reports that home foreclosures are up 18% from a year ago. Dallas County was up 11% with 1597 homes set for auction and Collin County up 40% with 456 homes set for April auction.

There are a lot of reasons for the foreclosures: sub prime loans, 100% financing, job loss, divorce and a thing called life. There has always been a sub prime market and always will be. The problem with the last few years is that lenders made it easy to borrow money. Right now, lenders have tightened their lending practices for everyone because of the defaults prevalent all over the country.

What does that mean to you if you are in the market for buying a home? Go ahead and get pre-qualified or pre-approved for a mortgage. This should be the first step before you even go out and start looking for a home. It surprises me that most people do this after they find a home only to find out they can’t afford what they want or can’t get the exact loan they want. Remember, you are living with the house and the loan, both are equally important.

Also, find a mortgage broker or lender that will actually service the loan. Escrow is the most complained about aspect of the real estate process, that is closing your home. A good broker or lender will explain and walk you through the process in a professional manner, no surprises on fees and other miscellaneous charges at the closing table.

Just like getting to know your real estate agent, it is a good idea to physically meet the person that is helping you get the loan. The loan you get should not just be about the interest rate it should be about the whole package.

Now with your pre qualification or pre approval letter you are in a perfect position to buy that foreclosure, pre foreclosure or short sale or whatever the market bears. Just remember the process for finding and buying a foreclosure is much different than just a resale or new home. It will take more time and you probably will be putting more money into a distressed property. A Real Estate Owned property (REO) which is a lender or bank owned do not work on the weekends and usually will try and bid the property up with multiple offers, you really need to know what the home is worth.

I pull up foreclosure activity on the MLS every week for 75093 and 75024 and 25 homes came up in prime neighborhoods, all 10-30% below appraisal value. Some are a very good buy and some you should not even look it. Knowing the neighborhood and where to find these buys are extremely important. Don’t assume anything.

The number of foreclosures have more than doubled within the past year and there are good deals to be made. With the interests staying low (and I believe they will) make sure you get your mortgage qualification done first then go find your deal. In case you would like some help, we have done many foreclosures and can make this whole process a professional and profitable experience.