Mark Saunders has a list of foreclosed houses given to him by Fannie Mae. He knocks from door to door as he goes through the list. The poor condition of the foreclosed houses appalls him. These houses enter the regular market after they fail to attract buyers in court auctions.
Mark has to first ensure that the houses are empty. He drives past at night to see if any lights are burning. He often has to check if the utilities have been switched off. By the time Saunders saunters in, 80% of the foreclosed houses are empty. To gain entry he has to be prepared to break in if the door is kept locked. He carries with him burglar tools – screwdrivers and crowbars. He avoids breaking in through windows because later these would have to be repaired. Crowbars are the best all purpose tools.
Having entered he tunes himself to the chirp of the smoke alarm and cautiously looks around for any left-behind pets. Coming across chained dogs is not unusual. Once there was a big snake in an aquarium. There have been cats also. Immediately the SPCA is contacted.
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The blight of foreclosed houses on neighbourhoods can be serious. Officials estimate that there are 7,000 such units in Akron. Barberton has 200 to 600 derelict houses. Experts say that Akron is relatively better off in numbers than other parts. Gene Krebs a former lawmaker of the state said, “You’re actually punching above your weight and you’re doing things better than other communities.” But those people who live bang next door to vacant houses are not much impressed with this sort of statement.
Ted Bednarik is a resident of Barberton. Next to his house is a cottage type of house on Robinson Avenue that had been repossessed by the bank. Bednarik observes that it just sits there yawning and empty attracting trouble and unnerving families living in homes near it. For him it has been a regular battle chasing away teens, smoking and carousing on the porch with drinks. The overgrown lawns make him shudder as the wild moves on towards his own house. He just hopes and prays that a new buyer soon moves in. Bednarik was worried that it would be bringing down the value of the houses around him and foreclosures will become something infectious. Others too are giving up their houses as days roll on. Read the rest of this entry »
With more cases being brought to the notice of tenants suffering because of not knowing about the landlord being in foreclosure measures are being taken. Renters who are facing trouble in foreclosed houses will now be getting assistance.
Tita Mendoza and her husband set up home in a condo in Miami Beach in July. They have been very particular in remitting $1,800 rent timely every month. Yet any day they will be evicted. Few weeks ago they were handed over court papers informing them that their landlord was being foreclosed on and this meant they too should walk out on to the streets. A distraught Mendoza just could not believe that this was happening because people were so irresponsible. They had just shifted from Chicago and are now waiting to see which way the tide turns.
Across the country thousands of renters are facing the same sort of problem arising from foreclosures albeit for no fault of theirs. As a result they have lost their security deposits and their lives turned topsy-turvy as they continually try to find new places to live. Sometimes they move from the frying pan into the fire of another foreclosed house.
Recently some states have enacted or thinking about passing laws for the protection of tenants. It will require the lenders to give the tenants sufficient time before enforcing eviction. In Illinois and Michigan the Sheriffs have been most active on this score.
Danilo Pelletiere of National Low Income Housing Coalition said that the issue is of great importance and has recently been focused upon. Till now the problem of the renters had not got much attention because the center of attention had been on the foreclosed house owners.
Of the 15 million renters, 40% occupy single-family houses, townhouses, duplexes or condos according to data provided by Census. RealtyTrac notes that one third of 378,250 units having valid postal addresses were in foreclosure in May and were not occupied by the owners. It indicated that the owners had rented these out and kept as investments.
Recently Tom Dart the Sheriff of Cook County took the bold step inviting the displeasure of both landlords and lenders by refusing to evict renters. In Genesee County the Sheriff, Robert Pickell put on hold eviction of tenants for two weeks. Ohio state Reps Ted Celeste as well as Mike Feloy, both being Democrats, suggested the enactment of Ohio Renter’s Protection Act. It is good news for the hapless tenants.
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The bulk of the houses sitting on the shop shelves in the real estate market are foreclosed houses that banks have repossessed. Buyers are being wooed by the banks with huge discounts but purchases of foreclosed houses are laced with problems that need to be mulled over. Most of these houses have been standing vacant for a long time.
A trade group, the Home Warranty Association of California (HWAC) suggests that the potential buyer should ask for a house warranty and also the right to inspection before proceeding. David Goodwin of HWAC explains that during a traditional sale of property the seller provided the house warranty. This has been the procedure that has been followed in about 90% of the deals in California. Today the scenario has changed with the majority of the sellers of foreclosed units being the banks or mortgage bodies. They will be not willing to pay towards house warranty fees. Moreover a seller who is not in occupation of the house does not know the real condition of the unit – the details of its fittings, fixtures and amenities. As such it is not in a position to give this information to the buyers.
Taking into account the changed circumstances the buyers should insist on their real estate agent to arrange for the both inspection of the house and its warranty. A thorough inspection will expose the real condition of the house. Added protection will be provided by the warranty if unexpected repair costs surface during the first year of ownership of the house. Since the houses have been lying vacant for long periods of time the buyer should not expect the house warranty to cover the typical items of default that are noticed during a typical inspection. In a foreclosed house there is every likelihood of the plumbing to be clogged along with other problems relating to appliances, fittings and fixtures.
Goodwin warned that although there are some really bargain deals in a market that is dominated by foreclosed houses, one should not be blind to the lurking problems that might not be visible to the casual glance. The house warranty assures a peace of mind but it cannot be expected that the house will be in the shipshape condition prior to its foreclosure. The house warranty covers the important operating systems against sudden breakdowns in the first year of use and occupancy.
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The ubiquitous foreclosure is all embracing – enfolding in its grip both the landlords and the renters. Yesterday’s householders become today’s tenants forcing the demand for rented accommodation to rise. The result is inevitable. Rents begin to increase by leaps and bounds as foreclosures prowl across the nation. The situation is grim because the tenants who have been foreclosed cannot get the green signal required to take loans and buy a house. Others are not buying because they are waiting for further falls in the real estate. All this combined is making the sun shine in the rented market.
Statistics tells the story. Vacancy rates are less than last year. The rise in rents is expected to be 5.3% - a jump of 3.1% from the increase recorded in 2007. In some metropolitan areas the rise has gone up by a double digit figure, according to National Association of Realtors. For instance in San Francisco it increased by 14.6% compared to last year. In Seattle the average rise was by 10.3% and in Washington D.C. by 5%.
The number or renters increased by leaps and bounds. In April 2007the jump was higher than the total of the previous five years. 1.2 million families joined the tenants group from 2004 to 2006. The years from 2002 to 2004 had seen a slump in renting. Right now the rental market is very strong with signs that it will get even stronger as the demand for accommodation rises in proportion to increasing foreclosures. Rental markets are hot in Salt Lake City, Nashville, Philadelphia and Austin.
The health of the economy is connected to the rental market. As demands rise there is bound to be a related construction activity. Alreadythis is being noticed in some metro areas. To avoid the cost and hassle of commuting from the suburbs the demand of the renters is focusing on the urban areas.
The factors that are helping to goad on the demand for renting is that potential house buyers are not willing to invest in houses of their own right now. They are biding their time for the real estate to stabilize anticipating further drops. Many are observing a wait and watch policy while continuing to stay on as a tenant. The mortgage market is tight. Loans are hard to get. This acts as a deterrent for buyers. Thus there is a big shift in the national trend from house ownership to rented accommodation.
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The real estate market is sliding down from bad to worse. Unable to continue with the responsibility of paying taxes and maintaining the ever increasing number of foreclosed houses, the banks are letting them go at dirt cheap rates in auctions. It is a sign of desperation in South Florida. In Fort Lauderdale on Saturday 200 houses were put up for auction.
There were many types of units – smart utilitarian one bed roomed condo, five bed roomed spacious houses and many others representing the American dream turned sour into a nightmare of foreclosures. It all boiled down to stamp sized photos in the auction brochures. Each house has a bittersweet story to tell.
A three bed roomed two bathroom unit in Wilton Manors came on top with the highest bid of $161,000. The initial asking price had been $229,000. Another three bed roomed property that had been bought for $460,000 two years back was sold at the auction for $177,500. Another house in Coral Gables that had been bought for $670,000 in 2005 now got a bid for $300,000. A bidding war broke out over a condo in South Beach that has view of the water. It is located on West Avenue.
Most of the houses have been sitting on the shop shelves from 3 months to one year waiting to be sold. The properties had become ‘stale’ according to real estate jargon. Hudson & Marshall is conducting most of the bank auctions. The houses are not all dilapidated and crumbling.
The Saturday auction was reserved. It meant that the banks had the right to accept or reject the highest offers. By the middle of the week the successful bidders would be able to find out if the banks had given the green signal. 20% of the sales were ‘absolute’ – there were no strings attached to these. After the auction was over the potential buyers have to sign and submit 5% brokerage fees plus the bid amount. Within 30 days the full balance has to be paid for the deal to be finalized. On that particular day there were 300 bidders.
Hudson & Marshall has 400 properties to auction across the state. Another auction will be held in Orlando on Sunday. Then it will be back again to Florida for another round of sales. Large foreclosure auctions are also being held in Las Vegas and Detroit.
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There is a difference between foreclosed houses and dilapidated houses. The latter are rundown without any amenities, whereas in the case of foreclosed houses there is every possibility of the heat being on and water supply running. Thus foreclosed houses are ideal targets for squatters like Bando, an ex-convict. Bando dislikes being hemmed in by rules in shelters and much prefers the ambience and freedom of abandoned foreclosed houses – especially now that these are easily available. He has become quite a connoisseur and comments that the best bets are the new foreclosed units. Even with utilities being snapped off the foreclosed houses are ideal for the homeless. In turn the latter run the risk of bumping into drug peddlers, prostitutes, thieves and of course the police. Fires from use of candles often break out. But despite the negative points many find in foreclosed houses a great opportunity for shelter and privacy – all for free!
A survey conducted by Northeast Ohio Coalition for the Homeless found that the number of those sleeping out in the open had dropped from 40 to 17. One reason for this was cited the easy availability of foreclosed houses apart from other reasons like aggressive cleaning of streets and footpaths and as well as setting up of homeless feeding centres. In Cleveland and suburban Cuyahoga County 15,000 units are ready to be foreclosed. It is not uncommon to see fires starting off from careless candles being lit. It just shows the determination of the homeless to find the best available shelter.
Larry James of Central Dallas Ministries in Texas comments that it is not surprising for many holing up in creeks and campgrounds to sneak into vacant houses.
Sheila Wilson is 50 and has been prowling around for years. She was vociferous during the regular check ins where the homeless underwent medical checkups, hair cuts and were served hot meals. She too prefers deserted foreclosed houses to anything else. It is great while it lasts. If one becomes too hot there is always another one. There seems to be no end to it.
Cleveland has a high foreclosure showing and consequently an increased number of vagrants moving into abandoned foreclosed units. If the homeless are thrown out the criminals and prostitutes move in. It is a vicious circle. Extra police protection is becoming necessary in places where there is a large concentration of foreclosed houses.
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