Dark clouds of foreclosures hold a silver lining in real estate possibilities

Over the course of the previous decades, America seemed to be living a “bottle of champagne” lifestyle on a “light beer” financial budget. As they recklessly borrowed capital to offset tax cuts for the prosperous and cover the cost of unfunded wars and bank bailouts, the burden of financial liability has worsened due to the inevitable economic crisis. This is verified by unemployment figures and foreclosure statistics.

Olivier Blanchard, IMF chief economist, said: “Long-term unemployment is alarmingly high: in the US, half of the unemployed have been out of work for more than six months, something we haven’t seen since the Great Depression. “.

“We see the perfect storm coming with increasing supply and decreasing demand,” said Ivy Zelman, chief executive of basic research firm Zelman & Associates.

Barclays Capital experts estimate that some four million home loans are in some period of foreclosure.

In California, foreclosures are among the largest in the US The current real estate concerns in California are known as “shadow foreclosures.” These are real estate properties that have actually been foreclosed on by financial institutions, potentially involving homes on the brink of foreclosure and disrupting the broader market.

Simply because mortgage lenders own the property in general, shadow foreclosures are not actually a component of the inventory of properties available for sale to the general public. Banks plan to, at some point, offer these hidden items for sale, hence the term ‘shadow’, which suggests that they are not currently on the market, but one can think that they are likely to become a deluge that reach the market in a short time. while it will most likely depress home price levels much more.

A new round of depressed residential home price levels could very well drive more homeowners, who are currently behind a monthly payment, or even a couple of them, into foreclosure.

For many Californians, the downturn in home and bank lending will remain very real. The long-term outlook is just as bleak. Nationally, the most anticipated difficulties are becoming even more ominous on the horizon.

In Arizona, officials say foreclosure laws have tripled recently (2008-9), and legally binding contract disputes are up 77 percent in the past two years.

Foreclosures in Southwest Florida have injured large numbers of families and decimated entire communities.

“I am seeing the ripple effect that destroys the family structure,” Judge Jackman-Brown said.

The dual hallmark movements that are on the rise in the foreclosure process across the country may extend and intensify this crisis in the months and years ahead.

In a trend, significantly more judges are ruling against creditors and removing the mortgage obligation, or invalidating foreclosure sales, on the grounds that mortgage firms horribly fail to produce the correct documentation. In some cases, bankers are judged to have harmed debtors through other tactics.

In the other trend, prime borrowers who find themselves in “underwater” mortgages, or negative equity, are moving further and further away from their properties.

A lawyer for the Jewish Association for Services to the Aging, Hilary J. Bauer, who represents homeowners defending foreclosure, said; “Until you’re standing in the middle of 40 people who are worried about losing their homes, you can’t appreciate how significant the whole recession was.”

Dennis Nolte, an LPL representative at Partners Federal Credit Union in Orlando, Florida. says. “People need to blow off steam and then focus on what they can realistically do.”

“The government is dumping everything but the kitchen sink on the market,” said Peter Schiff, chairman of Europacific Capital. “It can’t prop up housing markets forever.”

“Every dark cloud has a silver lining”, or so they say. What follows is the lining of this dark cloud. It is known as a Tax Deed Sale.

Earlier this year, Richmond County, Georgia, recovered thousands of dollars in back taxes during a sale of property tax deeds whose holders were behind on property taxes from just a few years earlier. Buyers were motivated by low-cost values ​​and looking to produce a first-rate investment.

Ben Bynum, a tax deed investor, said: “I like that you can determine what you pay for a property,” he said. “It’s based on what you think the property is worth.”

In due course, a large number of these foreclosed properties end up in the ‘too hard basket’ and get caught up in a tax deed sale. When you hit bottom, the best thing to do is to get into the ‘bottom of the market’.