Foolish Banks Foreclose Again

This article, The Abysmal State Of Mortgage Finance As Shown By One House, Two Foreclosures, absolutely hits the nail on the head and shows that bankers regularly hit their thumbs with hammers. This "lending into sink hole" needs to stop. "Saving" the housing market cannot be defined as artificially propping up housing prices with taxpayers paying up the huge losses on the long way down to the bottom that result from this foolish and reckless policy. I personally know of a very similar situation involving a home in Murfreesboro Tennessee, but this one is even worse. A builder defaulted on a construction loan secured by a vacant lot and the house next door that was 99% complete. On 10/20/2008, the bank (Pinnacle Financial Partners – The "Official bank of the Tennessee Titans"), foreclosed and took the properties back as REO's. On 5/29/2009 the bank resold the house and lot to a home buyer through an online auction company for $264,400 (including the 5% auction premium). At that time I was personally interested in buying the house (not the lot - it has little value in this market), but was only willing to pay in the $190K's including the auction premium. Obviously, I was grossly outbid by this foolish buyer (I wonder if they were a tax credit buyer?). Here is the really scary part. The bank, Pinnacle Financial Partners, loaned that buyer $236,696 (i.e. about 90% of the purchase price) on a "non-qualifying" basis. This means the buyer essentially got a no-doc/stated income type of mortgage loan from Pinnacle Bank. Of course the reason the bank did this was to artificially inflate the price that they would get for the property when they were selling it as an REO. Less than 6 months after this bogus sale closed I received a postcard in the mail from a REALTOR marketing this same house for sale. Apparently, the buyers of this home needed to sell rather quickly after buying it! Their attempt to sell the property failed (they were asking in the low $300K's), and, as a result, on 10/12/2010 the bank foreclosed on the house and lot for the 2nd time in less than 2 years. The really, really scary part is that I personally know that this very same bank did the same exact thing with other properties with the same bad, but, predictable, results. This bank was practicing what I call "incestuous lending", which is very similar to what Fannie Mae, Freddie Mac and the FHA are doing when they offer all types of incentives and special financing to entice buyers to buy their foreclosures so the banks can essentially take a dead asset off one side of their books and replace it with a questionable asset on the other side of their books. It's like saying someone who never repaid the personal loan they owe you and you just say OK and let their brother or sister guarantee the payments even though they are just as reliable. Meanwhile, you still haven't received any actual money, just a promissory note with another name on it. A person who works for a major bank recently told me that once a home is foreclosed on there is an 80% chance that it will be foreclosed on again within 10 years. Now I know why. The banks keep inflating the prices of their REO's by obtaining buyers who are lured into the purchase by the banks' artificially easy to get and artificially cheap financing. In other words, the banks are getting generally unqualified and ignorant buyers who are overpaying for the foreclosed properties. Therefore, it should be no surprise that these same home buyers end up in financial trouble in such a short period of time at such an alarming rate. In addition to the buyers who bought homes at the top of the market, those who bought homes with no-doc/stated/exotic mortgages, those who bought homes with subprime loans, prime borrowers who have lost their jobs or suffered a reduction in income, we now have to add the foolish foreclosure buyers who overpaid in a declining market to the list of homeowners who have a high risk of defaulting on their mortgage loans. This mess just keeps getting worse. Home prices are going to keep declining for quite a while (see: Home Prices Decline Again and The Truth About Home Prices).  As a result of all of this, I know there is going to be a lot of short sales and foreclosures over the next several years.

Nashville and Middle Tennessee Short Sale and Foreclosure Help and Assistance for Homeowners and Property Owners in Financial Distress. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee, La Vergne Tennessee, or Middle Tennessee homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Nashville Tennessee and Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR, Expert and Real Estate Investor. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN). If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR, Real Estate Expert and Real Estate Investor.

FHA Loans More Difficult and Expensive

FHA Loans More Difficult and Expensive

According to this MSN Money article, Last chance for lowest-cost loans (Coming soon to FHA-backed loans: Higher FICO scores and more cash at closing. The changes are needed to help keep the agency afloat.), Federal Housing Administration (FHA) loans are about to get more expensive and more difficult to obtain due to the financial problems that the FHA is experiencing that are a result of record FHA mortgage loan default rates. Simply put, the FHA is paying more out to cover loan losses than it collects in Mortgage Insurance Premiums (MIP) from FHA borrowers and, as a result, the FHA is going bankrupt. As usual, I am ahead of the curve and told you about this in my blog posts: FHA Will Tighten Underwriting and FHA in Deep Trouble: Default Rates Skyrocketing.  The debt hot potato game continues with private debt becoming public debt.  Rest assured that the end result will be more short sales and foreclosures.

According to the article, the Obama Administration announced that there will be 4 changes to the FHA loan process that are aimed at lowering the FHA default rate. Those changes are as follows:

• Increasing the minimum down payment required to obtain a FHA insured loan.
• Raising the minimum credit score needed to qualify for a FHA insured loan.
• Raising the cost of the FHA Mortgage Insurance Premium (MIP) and possibly changing how FHA mortgage insurance premiums are collected.
• Reducing the amount of the buyer's closing costs that the seller will be allowed to pay (i.e. possibly reducing this amount from 6% to 3%).

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Record Mortgage Delinquencies in 2009 Q3

Record Mortgage Delinquencies in 2009 Q3

According to this TransUnion press release, TransUnion.com: Mortgage Loan Delinquency Rates on Course to Hit Record in 2009 - Deceleration in Rate Climb Continues for Third Consecutive Quarter, in the 3rd quarter of 2009 the rate of mortgage loan delinquencies (the ratio of borrowers 60 or more days past due - a precursor to future foreclosures) increased 58% over the 3rd quarter of 2008 to reach an all time record of 6.25% (up from 3.96%). The rate of mortgage loan delinquencies has now increased for the 11th consecutive quarter. Below are the quarterly rates of increase in the rate of mortgage loan delinquencies in 2009:

• 2009 Q3: approximate 7.57% increase from 2009 Q2.
• 2009 Q2: approximate 11.3% increase from 2009 Q1.
• 2009 Q1: approximate 14% increase from 2008 Q4.

The release goes on to quote FJ Guarrera, vice president of TransUnion's financial services division, as saying "The third quarter provided a mixed bag of economic indicators. Many companies' third quarter results are coming in above analysts' expectations. The unemployment rate like the mortgage delinquency rate is still climbing, but has decelerated in the number of monthly job losses during the quarter. While housing starts improved during the first four months of the year, a drop was seen during this quarter and consumer spending still remains anemic or cautious at best. The economic peaks and valleys that we experienced during the quarter will most likely continue into the first half of 2010. While it continues to be a positive sign that the increase in mortgage borrower delinquency rates has slowed for three consecutive quarters, we have to keep things in perspective. Delinquency rates are rising and expected to peak at record levels. Until the housing market can consistently demonstrate several months of home value appreciation and the unemployment rate improves, mortgage delinquency will likely continue to rise. Many of these delinquencies in places like Nevada, California and Florida will result in foreclosures, potentially keeping home values depressed in these areas."

Personally, I think that Mr. Guarrera is being overly optimistic. I see no reason why mortgage loan delinquencies, foreclosures and short sales will be lower in the near future. Job losses, even at a slightly slower pace, are still job losses and people who do not have jobs tend to have a difficult time paying their mortgages. Beyond that, the housing market still has too much new construction and too many "shadow foreclosures" (homes that should be foreclosed due to mortgage non-payment, but are not) that will come onto the market within the next year.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.