Texas Real Estate Foreclosures
Investing, Real Estate Investments, Investors, HUD, Houses, Foreclosure Homes
Foreclosures hold steady
North Texas home foreclosure postings for the first month of 2007 were basically unchanged from December, Foreclosure Listing Service reported. But they are still up more than 20 percent from a year ago. More than 3,500 Dallas-Fort Worth area homes are posted for foreclosure in January's sale. Foreclosure volumes in the D-FW area have hovered at that level for a couple of months. "If there is anything good to be said, we haven't seen another spike like we saw in October, when we got up close to 4,000 postings," said George Roddy, president of the Addison-based firm that tracks foreclosures. "But it's still at a pretty unhealthy level." The biggest jump in pending foreclosures is in Collin County, where postings were 61 percent ahead of last year. Tarrant County had the smallest increase, up 17 percent. This year, 38,809 D-FW area homes were posted for foreclosure, an increase of 19 percent from 32,513 postings in 2005. It's the largest number of home loans in default since the 1980s regional
recession. The Washington-based Mortgage Bankers Association predicted that nationwide home foreclosures will continue to rise because of higher payments on adjustable-rate mortgages. Almost 5 percent of U.S. mortgage payments were delinquent in the third quarter, the latest period with statistics available. California, Florida and Texas top the nation in the number of homes lost to foreclosure.
[Dallas Morning News]
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Why Buy a Foreclosure?
What is the big deal about government foreclosures? Four percent of all homes sold in the United States will eventually go to foreclosure. There are several types of foreclosures and we will explain the process, pros and cons of each throughout USHUD.com. Divorce, loss of employment or loss of life are the most common reasons for a foreclosure to occur. When one of these three things transpire and the home buyer is not adequately prepared a foreclosure is most likely to be the end result. Soon after one of the big three occur the homeowner is several months behind and the mortgage holder will not negotiate with the homeowner as special exemptions cannot be made for every home owner going through difficult times.
It seems evil and possibly oppressive but very often a foreclosure can be the best thing for the homeowner. Removing the pressure and allowing the homeowner to potentially live in the house for several months free of charges.
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What are Bank REO (Real Estate Owned) Properties?
Benefits of buying a Bank foreclosure Positives: Equity Sometimes the bank will hold the financing and give you a preferred rate. Negatives: Nonrefundable deposit Lots of work and no guarantee the house will ever be sold. The most time consuming and most complicated foreclosures to become involved in. Time consuming because no information is easily obtainable. A great deal of research is required and the only way to do it is to spend countless hours in the county courthouse. Or you can search for REO properties at reozone.com There is a financial risk as well because after the research is done and the potential purchaser is prepared to go to the auction a nonrefundable cashiers check is required for normally 10 to 50 thousand dollars. It is possible to find the higher price ranges in this arena but the house may not be vacant and gaining access is sometimes difficult.
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Most Bank REOs have a third-party manager who is responsible for the upkeep of the property while the bank owns it, and they are your liason with the bank. Offers must be made through them, and they will relay counter-offers from the bank. In general, banks do not negotiate much on prices, so if you offer less than asking price be prepared to go through the negotiation process several times for a minimal discount. USHUD.com obtains its bank REO lists from the following sources: Bank of Ocwen (Residential Properties) Bank of America First Union Bank (Property Finder) There are different financing options and incentives from time to time for different properties. For the best strategy to meet your particular needs visit website: USHUD.com
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How to Stop a Foreclosure
How to Avoid Foreclosure The guidance below (and in the "How to Avoid Foreclosure" pamphlet) is applicable to homeowners with FHA Insured loans. While a good deal of this information may apply to all homeowners in danger of losing their homes, not all of the foreclosure avoidance tools mentioned may be available to you if you have a VA or conventional loan. Additionally, HUD/FHA does not have any Loss Mitigation oversight over VA or conventional loans. Please contact your lender or a housing counseling agency. Q: What Happens When I Miss My Mortgage Payments? Foreclosure may occur. This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. If that happens, you not only lose your home, you also would owe HUD an additional amount. Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if possible.
Q: What Should I Do?
Judicial Foreclosure: A foreclosure that is processed by a court action.
Non-Judicial Foreclosure: The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default.
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Risks and Rewards of Foreclosure Investing
Foreclosure Investing
Comparing the Risks and the Rewards The mortgage foreclosure process creates three sets of real estate investing opportunities: the "Default/Pre-Foreclosure" phase, the "Auction/Sale" phase and the "REO" phase. This article discusses the risks and the rewards of each opportunity. Buying Pre-Foreclosures Buying pre-foreclosures involves working directly with the homeowner and sometimes the lender. Your goal is to create a Win-Win scenario. One win is for the homeowners (they make a sale) and one win is for yourself (you buy the property at a substantial discount). To accomplish a successful purchase, most experts recommend the following:
- Locate loans in default,
- Evaluate and narrow selections to pursue
- Inspect the property,
- Evaluate the property owner's needs,
- Determine the market value of the property, fix-up costs, potential sales price and profits,
- Arrange default work out by negotiating with the owner and the lender,
- Close on the property, repair and resell it quickly.
Pros: This is a great investing opportunity if done correctly. Discounts off market value can range from 20% to 35% on average. A low cash down payment is possible if structured properly. You have ample time to research properties. Unique and flexible sales agreements are possible.
Cons: It is sometimes difficult to contact the property owner. You will usually have a lot of competition. The court house research can be cumbersome. You may need to negotiate with the lien holders. Buying At The Auction Buying on the court house steps at the auction can be the most rewarding way to buy properties and the most dangerous at the same time. The property is publicly auctioned off to the highest bidder, and the process moves very quickly. When bidding at the auction, you compete against the lender and other investors.
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Auction buyers
- Research properties prior to the sale date,
- Pursue realistic opportunities
- Calculate values and potential profits
- Determine bid price and
- Follow the property to the auction and participate.
Pros: Very good to excellent discounts. Investors can achieve 35% to 45% savings off market values and earn an excellent return on investment. This is the only investing method where you can really hit the jackpot.
Cons: Auctions are frequently postponed, wasting your time and effort. It is rarely possible to inspect the property. To be safe, you should have a title search performed, which can be costly. Unusually large cash outlays deter most investors (note that this can also be seen as a benefit). Certified checks for 10% of the purchase amount may be required with the balance due in weeks, days or even hours. Improper research can lead to devastating results.
Buying REOs
Perhaps the easiest way to buy foreclosed property is buying REOs ("real estate owned"). An REO occurs when the lender takes back the property to gain possession and cut its losses. The lender, however, does not want the property because it is not in the real estate business and is therefore usually motivated to move the property quickly.
Pros: The lender is almost always the senior lien holder, thereby wiping out all other liens at the auction. This means an REO will always have clear title, which saves a lot of time, expense and worries when buying foreclosures. Most likely, the lender will also have paid any property taxes in arrears. The lender may either repair the property to acceptable standards or allow a discount to the buyer to accomplish the repairs.
Cons: Rewards follow risk. This is a low risk investing method and the rewards can be on the low side as well. Average savings may range from only 5% to 15% off market value, although discounts of 25% or more are possible if you know how. Investing in foreclosures can provide excellent profits. Each of the three foreclosure opportunities presents both rewards and certain risks. Be sure to do your homework before you buy.
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Real Estate Foreclosure Resources
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