An interesting effect of the reduced prices of the foreclosure listings has been noticed recently. The restoration work going on at Springfield, the historic place in Jacksonville has to a great extent benefited from this, according to the report from the Council of Revitalization and Preservation in Springfield.
It has been explained by the officials of the Council that the steady increase in the number of the lowered rate of foreclosed properties has made it affordable for the people to buy the properties. This has increased the sales and the proceeds are being used for the renovation of the historical buildings of this area.
The Springfield has a rather old history. Founded in the year 1869 the place is known for its eighteen hundred old buildings of great historic importance. All of these are being restored to their former glory.
Due to its historical significance this place has been pretty expensive. Buying property here is not easy. The dropped prices of the houses from four million to nearly just two millions have given the people the power to purchase properties here.
The total number of foreclosed properties in Jacksonville in the first half of this year crossed 13500, which means that every forty three houses one property was foreclosed. When compared to the latter half of last year, a rise, in the number of foreclosures by twenty five percent, is noticed. Since the beginning of last year the rise has been by fifty nine percent.
It is estimated that counting the different areas including Paxon, the southern Trout River area and the lower Jacksonville the foreclosed houses were nearly sixty eight percent of the total number of houses sold.
Foreclosures are pinching pockets and telling adversely on newspaper sales. The newspaper lying on the porches and driveways of Michigan homes is no longer a familiar sight.
In trying to see to the survival of the newspaper in this digital era the Detroit News and Detroit Free Press have cut down home delivery services to only three days per week – the days that advertisers love – Thursdays, Fridays and Sundays. The editions have been slimmed down but the prices are the same. These will be available from newsvendors and ordinary shops on the other four days.
By taking this step the publishers of Detroit hope they will be able to significantly cut costs without cutting down on newsroom staff. The recession has increased losses because the numbers of advertisements have dwindled over the past twelve months. Michigan has especially been mauled by unemployment and foreclosures emanating from the collapse of the automobile industry.
In the last one-year over 80 newspapers across USA in the more modest markets, have dropped one publication day. Last week the Christian Science Monitor published its last edition. Others have met the same fate in Maryland, Oregon, Tennessee and Wisconsin. They have cut down on frequency of publications. Of these a limited number have gone online. Detroit is trying to experiment with the hybrid trick – it is continuing with daily publications but reducing the days of home delivery.
The newspaper industry is hopeful that by maintaining the legacy of print and raking in lower profits by cutting down on production and delivery they will be able to continue with their staff, survive this downturn to resurface again as a timeless heritage by hooking on to more profitable avenues of expression like the Internet, mobile phones and other similar gadgets.
To do so they are expediting operations in changing from the print to the digital technology. By doing so they are of course taking a risk according to media analyst Ken Doctor. The biggest causality will be the risk of breaking the newspaper habits of clients. If the readers realize that they can get through without having the newspaper on their doorsteps four days a week they might decide to opt out of the other three days. This would lead to a drop in circulation and with it the revenue coming from advertisements would also suffer.
Michigan Foreclosures for Sale by Top Cities
The picture is dismal – USA foreclosures increased by 81% in 2008. The states fared no better with increase in foreclosure numbers. Across the country 2.3 million have been ensnared by foreclosures according to RealtyTrac. In December the foreclosure postings increased by 17% in comparison to November and by 41% against the figures of December 2007.
Michigan recorded 145,365 foreclosure filings on 106,058 units and came to rank 6th in the country. It was a spike of 21.6% from 2007 and an increase of 107.9% from 2006.
Wayne County dropped to occupy 10th place in 2008. In 2007 it had ranked first. The fall was by 7.7%. The other counties in metro Detroit (inclusive of the counties of Oakland, St. Clair, Livingston and Lapeer) came to rank 25th with an increase of 42.6% from 2007 (30,817 filings).
The unemployment rate in Michigan was 9.6% in November 2008.
There was a 19.3% increase in bank repossessions in Michigan during 2008. The figures increased from 46,780 in 2007 to 55,801. Across the country there was a drop in bank repossessions during November by 8%. In Michigan it was by 2%. Most probably this was due to the fact that the two mortgage giants Fannie Mae and Freddie Mac kept on hold ongoing foreclosures.
The increase in December came as a surprise because it was hoped that due to the several measures being taken by the government and the mortgage institutions the borrowers would have been spared the trauma of foreclosures during the festive holiday season. It is feared that after 31st January there will be flood of foreclosures when the artificial cap on the process will be lifted. The numbers are expected to triple.
In 2008 the highest foreclosure activity was noted in Arizona, Florida and Nevada. California recorded the highest number of properties that had been foreclosed upon – 523,624. The credit crunch combining with the gloom in the employment sector gave people little options for refinancing.
But all are not pessimistic. Alexis McGee of Foreclosures.com can see some good signs. The number of affordable houses has increased, mortgage interest rates are low and the population of the country continues to grow. This is bound to generate demand. The unemployment figures are still below the numbers of the 1980’s.McGee commented that the bank repossessions have reached a level of 5,000 per month in the recent months in Michigan.
Michigan Bank Foreclosures by Top Counties
A woman in Massachusetts could not bear the strain of foreclosure and took her own life. The troubled days of foreclosure linked suicides is opening up another angle of the crisis – the mental stress on society. Carlene Balderrama of Massachusetts had faxed to her lender that by the time they would foreclosure on her house she would be dead. It came to be true according Raymond O’Bera the police chief of Taunton.
According to reports, PHH Mortgage Corporation had been conducting foreclosure proceedings against the house occupied by Carlene. She took her life at a critical time when within few hours the house was going to be auctioned. Bidders had started to roll in. By that time she had fatally shot herself with her husband’s rifle.
Though this case has been closed it underlines the traumatic times the country is passing through. Locally the incident sent shock waves throughout the community consisting of about 60,000 residents who live here about 40 miles to the south of Boston. Many are talking as many are in the foreclosure net. Financial stress is beginning to show up in an ugly way in tragedy. With no end in sight psychologists opine that cases like this are beginning to become quite common.
Dr. Charles Nemeroff chairperson of psychiatry at Emory University, Atlanta said that stress is a big factor in triggering off suicidal tendencies. Today stress is related to the foreclosure crisis. Dr. Nemeroff is the president of the American Foundation for Suicide Prevention. Dr. Harold Koenig of Duke University Medical Center, Durham, said, “Suicide is certainly a response to hard economic times.” He citied the instance of the 1929 stock crisis, that was followed by a spate of suicides. Nadine Kaslow of Grady Memorial hospital Atlanta and of Emory University, said that this type of financial pressure is often connected with important psychological problems. There is no doubt that the foreclosure crisis is responsible for this. Dr. Bruce Cohen of Harvard Medical School aptly comments that the loss of a home equates to the loss of a loved one or loss of a job.
Meanwhile according to RealtyTrac foreclosures shot up by 121% during the second quarter this year in comparison to the second quarter of 2007. It calculates to 739,000 houses being foreclosed upon which tantamounts to a foreclosure rate of 1:171 houses. Houses are occupied by families – human beings that laugh or cry. In Massachusetts the count is 16,173 foreclosures being affected like the Balderramas.
Massachusetts Bank Foreclosures by Top Counties
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In May there was a stream of bargain hunters in the Inland real estate market. Foreclosures accounted for over 57% of the house sales in Riverside County and above 54% in San Bernardino County. Riverside is the only county that witnessed May-to-May increases in house sale. This is raising hopes that the end of sales decline is nearing an end.
Steve Johnson of MetroStudy, a real estate consultancy firm in Riverside compares this trend to a rousing response to the foreclosure market causing many who were in the sidelines to jump into the fray and snap up bargain deals. Lenders are offering discounts in a desperate attempt to get rid of innumerable foreclosed units that are weighing them down. In May the average price of Riverside County was $290,000 that calculated to a fall of $116,000 from what it was one year previously. In San Bernardino County the average price in May was $250,000, marking a fall of $111,500 from May 2007. DataQuick Information Systems released the figures.
The opinion of analyst Andrew LePage of DataQuick is that the Inland real estate market prices have dropped at a faster rate than the neighbouring regions. This caused an increase in house sales year-over-year in Riverside and San Bernardino counties. Buyers are once again vying with each other for a slice of the cake. There have been many offers on a single house within the price range of $300,000. To take an instance – when the price of a house in Moreno Valley was slashed down to $125,000 from $199,000 the selling agent received 18 offers within the short span of three days.
San Bernardino and Riverside were the two top rankers in Southern California as regards sale of repossessed houses. In the entire area inclusive of Orange, San Diego, Los Angeles and Ventura, repossessed sales comprised of 37% of all the existing units sold.
The new-home market however continued to flounder. It saw a year-to-year fall in numbers of sales from 11,75 to 688 units in Riverside County. In San Bernardino County the numbers fell from 503 to 369. In Riverside County 3,444 units were sold in all in May marking 4.1% increase from May of the previous year. In San Bernardino County house sales fell by 6.5% - it being the worst May since 1993. Sales of existing houses in San Bernardino increased by 3.4% as compared to the previous year.
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With the number of foreclosures running into thousands the banks in Cleveland are finding themselves drowning from the load. They are being compelled to offer these houses for sale at one-third their original price. This has led to the valuation of other houses not in foreclosure to drop.
The sale of foreclosed houses have gone up four times in Cleveland and Cuyahoga County since the turn of the century. During the past seven years 24,000 residential estates had been listed in foreclosure sales. This is 8.8% of the total residential units in the city and 3% of those in the suburbs. The matter does not end with prices – the spill over is far more dangerous. Abandoned houses are attracting criminal activity and vitiating the entire region making it unsafe for human habitation.
While a house is in foreclosure the authorities do not have to be paid taxes. It is the buyer who pays all past tax dues before getting the title deed. With thousands in the foreclosure zone and with no buyers in the market collection of taxes has drastically dropped. The city of Cleveland sued 21 giant banks alleging that their sub-prime lending operations have made them to be public nuisances. Property value and tax collection has been badly affected because of them.
The report drafted by Claudia Coulton has been circulated among civic committee working members. She hopes that the observations will help the lawsuit.
The second such challenge came from Baltimore city. Baltimore sued Wells Fargo for intentionally selling high rate interest mortgages more to the blacks than to the whites. This is in gross violation of federal laws. The bank however has denied the charges saying that its activities are not based on race consideration.
Last November a report was compiled by a conference of Mayors. It apprehended that in 2008 as many as 361 metropolitan regions would be hit by a loss of $166 billion because of the foreclosure fiasco. More and more houses were being abandoned. This was causing a loss for all concerned – lenders, borrowers and society at large.
The value of foreclosed houses is calculated by dividing the sale price by the market value as assessed by the county auditor. Coulton commented that in 2006 the real estate scenario was upbeat because of overestimation of market values.
Deutsche and Wells Fargo bought most of the foreclosed properties in the foreclosure auctions in 2006-2007.
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Last Saturday hundreds of harassed foreclosure victims crowded around many local officials in the chambers of Oakland City Council worried about how to tackle the menace. This epitomizes the severity of the national crisis on the Bay Area. The Mayor of Oakland, Ron Dellums was loud and clear in this being the ‘local response to what is a national epidemic’.
The town hall was humming with all kinds of foreclosure related activity – modification of loans and refinancing. Counselors were also tackling issues related to lenders and their loan servicers. The tables of the non-profit housing agencies were overflowing with brochures as they met the residents individually.
Truth’n Youth is one such non-profit agency run by James and Eleanor of Oakland. Their focus is on assisting the young. They said that when within two days there were poised to lose the house that had been their home for the past 30 years in a public auction, they were helped by an agency to negotiate on favourable terms. James Warren stressed that it is this type of positive help that is the call of the hour.
Last year foreclosures had become an epidemic with millions across the country losing their houses because of high spike in mortgage rates. It was so steep that the people just could not afford it. In the Bay Area nearly 11,000 suffered foreclosure during 2007, as per public records. In 2008 even more will tumble in, as the rates are about to rise.
At the workshops there were some suggestions that were highlighted. One was the FHASecure programme that was backed by HUD. It allows refinancing into fixed rate mortgage. Till last year this scheme was open only to those whose loan amount is more than the value of the house and to those who are behind in mortgage payment schedule. Most of the delinquency was due to the abnormal rise in interest rates.
Sandre Swanson, an Assemblyman, opined that for this mess both the corporate bodies as well as the individuals are responsible. People did not take a lesson from the dot.com crash that what goes up tends to come down. Thus it is necessary to think before inking.
The event itself is a pointer to the state of foreclosures and it prominence. In Oakland a similar workshop held in October had drawn 150 people but this time the number had doubled. Many had to stand because all the seats were occupied.
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Desperate times need desperate measures. The foreclosure crisis is showing no signs of mellowing down. Senator Frank Padavan is thinking about bringing in legislation to help foreclosure victims.
Comptroller William C. Thompson Jr of Queens is also coming forward. He has set up Foreclosures Prevention Helpline. Thompson had been working at solutions from April 2007 by launching the Helpline for Foreclosure Prevention. It links the caller with HUD or US Department of Housing and Urban Development. There is a monitor that checks on each case going through to HUD. Thompson is also observing Banking Days at many banks to bring about financial awareness so that house owners can understand their specific problem. He has also published a guidebook on related lines.
Queens has been one of the worst hit boroughs in this foreclosure crisis. About 1,338 houses were marked by foreclosures in November 2007 – it being a double hike over last November’s figures. According to another source 2,848 houses filed foreclosure documents this last November.
Padavan says that one bill would be for imposing a ban for a year on those foreclosures that had been initiated by court orders. The borrowers would have to make a fair minimum payment that would not affect the financial stand of either of the parties. In the second bill the State of New York Mortgage Agency (SONMYA) would be empowered to issue bonds worth $3 million to help refinance sub-prime mortgages. The interest of the bonds would be lower than that of the sub-prime mortgages. This would help thousands struggling with increased payments.
Padavan felt that although steps have been taken by the Federal, State and City governments to alleviate the crisis much more has to be done to see that eviction does not take place and the dream of ownership of houses does not become an American nightmare. The two-pronged legislative action will effectively help those drowning under foreclosure waves.
Assembly member James Brennan (D – Brooklyn) is also coming forward to stand beside Padavan. The latter expressed the fear that with the ARM’s all set to rise early this year there seems to be no possibility of the crisis blowing over. The 2008 legislative session will give top priority to the foreclosure problem. Speedy moves will help the real estate market get back on rails and give a punch to the sagging economy. The outlook is a long-term approach.
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There is not much to celebrate during this happy season. The end of the year saw 10,000 houses struck down by foreclosures. The lenders repossessed almost all, except for 10%, of these houses. The houses are a headache for the banks also. They will be sitting around unless buyers pick them up for prices less than the price it was bought for in the recent past.
December turned out to be the cruelest month. In the Valley 1,617 houses were foreclosed. Last year in the same month there had been 213 foreclosures. All this is a fall out from the sub-prime crisis with rates doubling or trebling to unmanageable proportions.
What really rose were the notice-of-trustee sales. It shot up to 30,124 in 2007. These are precursors to foreclosures – the rumblings of the storm ahead. In December it rose to a record high of 3,852. There are no signs of the weather clearing.
An expert in the information market, Tom Ruff, opines that by the end of the first quarter of this year many of these notice-of-trustee sales will become foreclosures. The first three months alone might witness 5,000 foreclosure listings.
In 2005 there had been less than 2000 foreclosures. At that time the real estate market was in good health and it was not difficult to sell the house and pay off old loans or even refinance. The point is that the house owners facing trouble at that time did not have sub-prime loans with interests about to spike.
The only consolation is when one region points to another and feels comparatively better off. Otherwise the scenario offers little comfort. Nevada has more foreclosures than Arizona. Clark County of Las Vegas fame had more than 26,000 foreclosure listings in 2007. In size Maricopa County is almost double that of Clark County but it has only 3,000 more pre-foreclosures.
Searching for a silver lining it may be observed that according to Phoenix housing analyst R.L. Brown, more houses were sold than built – a good pointer to a recovering market. Some builders are more at a disadvantage than others. The situation is so grim that these groups may not be able to tide over the crisis and have to go into liquidation. But a pick up in the sale might tilt the balance in favour of the general market – that might be good all round news.
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Nebraska Supreme Court will give a second chance to two defendants to plead their case. Their contention is that they were cheated out of their houses. In 2005 the High Court of the State had taken up 13 cases against Mid-America Financial Investment Corporation. Of these 11 cases were adjudged to be instances of defrauding by the financial body. All of the plaintiffs said that they while signing the papers they were under the impression that loan papers were being signed to stop foreclosures. But they had no idea that actually they were handing over the titles of their estates to Mid-America by agreeing to rental agreement. They were made to understand that these were loan papers. The whole thing was rushed through before foreclosure.
Two of the plaintiffs – William Street and David Welton are given special consideration by the Supreme Court. A previous bankruptcy court ruling complicated Street’s case. Mid-America now holds that under the circumstances Street could not sue them for damages. So far the courts have been in favour of Street. In the case of Welton the Douglas County District Court had ruled that he no damages had been proved by him. But the Supreme Court did not agree and instructed the lower court to find out how much was due to Welton from Mid-America.
Both the plaintiffs, Street and Welton, won damages to the tune of approximately $35,000 together with legal fees of about $12,000 at the re-hearing at Douglas County Court. Mid-America pleaded that they did not owe anything to either Street or Welton; even if it was so, their advocate argued, the amount was much less. They also stressed that the terms had been clearly stated in the agreement.
There are three models of foreclosure scam tactics taken by the scammers. Mid-America has followed one of these setlines of cheating, reports the National Consumer Law Centre.
States are coming forward with legislation to protect house owners from nefarious tactics employed by downright cheats. Already eight states have taken positive steps. Nebraska’s legislature is yet to pass the law. The laws vary in detail from state to state but the broad line is that the agreements must be clearly written giving a chance to the borrowers to cancel within few days of signing it.
Supreme Court ordered Mid-America to return 11 of the titles and also to pay penalties.
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