According to records released by the New Jersey judiciary, almost 50 percent of REO properties in the second quarter were posted in June.

Industry experts pointed out that the rising number of commercial property foreclosures is another indication of how the economic downturn is severely affecting the commercial real estate, a market that includes shopping centers, office buildings, apartments and industrial sites.

And just like in residential real estate market, commercial property mortgage borrowers who are facing drastic drops in rental income or revenues have stopped making payments. This prompted loan servicers and lenders to ask courts to turn the ownership of properties to them.

An example of the current commercial property foreclosure crisis is Linens ‘n Things Inc.’s former headquarters in Clifton. The retailer rented the building from Daibes Enterprises. According to the repossession complaint filed in court, when the retailer stopped paying the rent early this year, Daibes also ceased making payments on its almost $15.2 million mortgage.

Daibes Chairman and developer Fred Daibes said that his company will lose the equity it has placed on the property but it has no plan to contest the foreclosure.

Nationwide, market data showed that over $31 billion commercial properties are on the brink of becoming REO properties. In New Jersey alone, 73 commercial properties are considered distressed, with a combined value of $3.3 billion. Included in the listing is the office building of Morristown Plaza valued at $18.8 million last year.

Meanwhile, Herrick, Feinstein law firm partner Gary Eisenberg said that the commercial foreclosure rate does not show the real extent of the problem because banks have been making some stop gap efforts, such as expanded short-term loans. He said that lenders are waiting for bailouts or incentives that the federal government will offer.

On the other hand, New Jersey Bankers Association co-chief executive officer and president John McWeeney said that less than 10 of his organization’s 121 members were affected by the REO properties crisis. He pointed out that many banks underwrite only residential loans and their loan portfolios are well-diversified.

REO Properties Rate Triples in the 2nd Quarter is a post from: Foreclosure Homes Investing

A study released by the Brookings Institution showed that D.C. economic recovery would be hampered by the drastic decline in housing values and the growing number of repo houses for sale.

In its MetroMonitor report, Brookings Institution ranked the D.C. area among the top 100 metropolitan regions in terms of the performance of economic indicators in the first three months of this year. D.C. ranked 10th among regions with low employment rate decline and 11th in low unemployment rate criteria. Additionally, the region ranked in smallest decline in gross metropolitan product.

Brookings Institute’s Metropolitan Policy Program research director Alan Berube said that it is still too early to tell whether the positive economic trends can boost job creation or whether the problem with the growing number of repo houses for sale will dampen the growth trend and hold back the area in some way.

According to the report, housing prices in Washington area declined by 8.8 percent compared with the first quarter 2008 total. The price drop in the area was worse compared to the 6.3 percent national average decline. This placed the D.C. area at number 77 compared with home values in other regions.

Furthermore, D.C. also ranked number 98 among regions with high number of repo houses for sale, with 6.49 out of 1,000 houses in foreclosures, compared with the 3.06 national average foreclosure rate.

The report noted that many homeowners in Washington took out the same high-interest subprime mortgage that caused the deluge of foreclosure properties across the country. Of note is the high foreclosure rate in Prince George’s and Prince William counties.

According to Berube, Washington is the only top 20 metropolitan area in terms of economic performance that is affected by the housing crisis in such huge proportions.

He pointed out that the top 3 metropolitan areas in the Brookings Institute’s rankings, San Antonio and Austin in Texas and Oklahoma City, have not experienced the high home prices and growing number of repo houses for sale happening in Washington.

High Number of Repo Houses for Sale in D.C. Area is a post from: Foreclosure Homes Investing

In 2008, more than 106,000 housing units in Michigan received foreclosure notices. With one unit in 309 residential properties receiving foreclosure notices, Michigan was sixth in RealtyTrac’s ranking of foreclosures by state in terms of foreclosure rates. In the month of January this year, Michigan slightly improved, going down to seventh in the ranking of foreclosure rates.

In Detroit, home prices have gone so low that more than 1,800 housing units are advertised for below $10,000. These homes were priced more than ten times more during the housing market boom, when Michigan’s high ranking in foreclosures by state lists in unimaginable. These figures have attracted buyers from as far as Australia and Great Britain.

Detroit real estate broker Mike Shannon said he has just accepted a deal from ten new out-of-state clients looking for as many cheap but good units as he can find. He has sold 30 homes to only one buyer in just one day of talks and has sold 6 units to an investor from England who wants more.

Foreign and out-of-state investors have been attracted to Detroit because of its auto industry background and its landscape which is not dominated by high-rise residential buildings but by single-family homes. They have also been attracted to its numerous repo properties and its bargain prices, prompted by Michigan’s top-ten ranking in foreclosures by state.

Homes sold by the U.S. Housing and Urban Development in Detroit are also being advertised at the very low prices of $6,035. These homes were priced at $8,692 in 2008 and $46,702 in 2003.

California-based Michael Alexander is one of out-of-state investors capitalizing on Michigan’s foreclosures by state. Alexander has purchased more than 150 units in the city and has appointed a Detroit-based property manager to manage the rentals and work with renters interested in eventually owning the homes. Douglass Diggs, the city’s planning director, said they are encouraging tenants to try lease-to-own or rent-to-own contracts so that they could capitalize on low home prices partly caused by Michigan’s high foreclosures by state.

Detroit Put Michigan High on Foreclosures by State Rankings is a post from: Foreclosure Homes Investing

Fourth quarter 2008 data showed that more and more Americans lost their jobs, fell behind their mortgages, bank owned foreclosure increased and cheap houses for sale continued to multiply by the day as real estate prices keep going downhill.

According to Mortgage Bankers Association, seasonally adjusted numbers of mortgage delinquencies increased by 7.88 percent for the fourth quarter of 2008, the highest recorded figures since 1972.

The number of foreclosures due to mortgage delinquencies rose to the all-time high of 3.30 percent, leading to an unprecedented number of cheap houses for sale in the country.

Data from First American CoreLogic showed that unemployment increased by 6.9 percent for the last quarter of previous year, the highest recorded since 1993. The slumped in the labor market affected many sectors, particularly the real estate which lost an estimated $2.4 trillion the previous year due to the rapid pace of foreclosures and uncontrollable spread of cheap houses for sale.

This vicious cycle is expected to continue as recession enters its second year. Mortgage Bankers economist Jay Brinkmann said that unemployment is the root cause of mortgage delinquencies, unrestrained foreclosures and increasing number of cheap houses for sale which dragged real estate values into an abysmal level.

He noted that if the problem is loan structure, solutions can be worked out. However, Brinkmann added, if unemployment is the main issue, the only way to avoid a foreclosure is to find a job.

According to Mortgage Bankers, loans in foreclosures and one mortgage past due have a combined percentage of 11.18 while percentage of loans delinquent for 60 days, 90 days and more have surpassed records set in the last quarter of 2008.

Furthermore, home prices dropped by 12 percent last quarter of 2008 from a year ago. National Association of Realtors noted that almost 50 percent of cheap houses for sale were foreclosed homes.

CoreLogic said that over 8.3 million Americans owed mortgages that surpassed the fair market value of their distressed properties as the current economic recession clipped the housing market values by almost $2.4 trillion last year.

And if home prices keep tumbling at its current pace, 2.2 million more borrowers are expected to get into the bandwagon of mortgage delinquencies and defaults, and eventually, foreclosure.

Unemployment, Defaults, Cheap Houses for Sale Increase is a post from: Foreclosure Homes Investing

The decision of some banks to do away with mortgage brokers could also affect homeowners, especially those who are facing the threat of foreclosure. Fewer mortgage brokers mean homebuyers will be deprived of a competitive marketplace and will have to face expensive home loans.

And in this current economic crisis, higher home loans would just exacerbate the increasing number of repo homes.

Guardhill Financial founder Alan Rosebaum opines that banks want to do away with mortgage brokers because they want to reduce competition in the market. He points out that mortgage brokers used to handle about 80 percent of the U.S. mortgage lending business. Now, he adds, mortgage professionals only handle 70 percent of the market and the percentage continues to drop.

Big banks such as JP Morgan Chase and Citigroup have already announced that they will fund loans through their own offices and not through mortgage brokers.

Brokers argue that they have been providing important consumer services such as monitoring offers from lenders and picking out the best mortgage loan deals to help homeowners avoid foreclosures.

According to brokers, the services that they provide to consumers help reduce interest rates that allow homeowners to save their properties from foreclosures.

National Association of Mortgage Brokers President Marc Savitt believes that big banks such as JPMorgan and Chase want to eliminate the middlemen because they think that they can increase their profits.
On the other, Mortgage Bankers Association President John Courson does not believe that banks’ decision to stop dealing with mortgage professionals could lead to the downfall of the lending industry and an increase in the number of foreclosure properties.

For him, the development could only lead to a competitive environment because brokers will be forced to show higher surety bonds and net worth.

Foreclosure Watch: Bank Lending Spells Doom to Mortgage Brokers is a post from: Foreclosure Homes Investing