What is happening with the foreclosures?

Discussion in 'Economics' started by jerry11901, Oct 13, 2007.

  1. Hallo everyone. Since the working class has no money to buy homes, I was wondering what is happening with them .My friend tailed me that big companies are taking over a lot foreclosures. Is it true? If it is, what they are going to do with it, rent it?
  2. Any one?
  3. The banks that hold the debt are the ones who proceed with foreclosure proceedings after the borrower goes into default. The laws are different in every state, but it can take anywhere from a month to a year to get the previous owners out, and at that time the property goes into the bank's REO (real estate owned--by default) portfolio and they clean it up, hire a realtor, and list it for sale. Sometimes if not much is owed, or if the borrower has some financial means, the foreclosure process will be avoided and the property will go into Loss Mitigation where the lender will re-negotiate with the borrower to avoid the costly foreclosure process.

    By "big companies", your friend either means big lenders or outsource companies that specialize in REO management and liquidation of non-performing assets off of bank's balance sheets. Renting is not something banks do, so after they become vacant and are being marketed they sit empty until they are sold. If they are in very rough shape they are sometimes auctioned. The main buyers of these assets are investors who rent them to low income occupants, but during the real estate boom many homes were purchases by buyers without the financial wherewithal to make the payments on them, and this has exacerbated the problem and increased the pool of foreclosed properties coming to the market. Hope that helps, if not let me know if I can answer anything else.
  4. it will soon be a buyer's market (in seattle)

    it's taken frigging long enough

    inventory: all time high
    default rate: rising
    buyer sentiment: wait and see
    seller sentiment : get me out NOW!

  5. I would be careful if I were you!
  6. What do you think about the FDIC initiative, pushing banks to restructure the terms of these loans before they reset?
  7. summarized CBC tv story wk of Sep 21:
    In Cleveland, USA 1in 10 houses are foreclosed, houses are boarded up and thieves strip
    anything of value – inside copper plumbing, outside aluminum siding which is sold for
    scrap because of their high prices; 1 in 3 houses are foreclosed in Black neighborhoods
    which has decimated house prices. Not just ‘new builds’, many home owners re-financed
    at lower rates because of ‘mortgage companies’ sales pitches which were later re-financed
    at higher rates and ‘administration fees’ which the homeowner couldn’t then afford to pay.
    Houses that can’t be auctioned will have to be demolished which will cost the City of
    Cleveland $100M.

    "The total subprime market accounts for approximately 20 percent, or $600 billion, of the
    $3 trillion mortgage market. It was reported that more than 43 million loans were outstanding
    at the end of 2006. The total number of delinquent mortgages has increased to approximately
    $150 billion."
    and did you know
    "Auto finance is the second largest consumer credit industry in America. Federal Reserve
    analysts estimate that the subprime auto market has quadrupled over the past decade,
    up to $65 billion in loans from approximately $15 billion. However, some lenders in the
    industry have estimated that the subprime auto finance industry is reaching $125 billion
    a year."
    old news
    "There are more than 641 million credit cards in circulation in the U.S., accounting for an
    estimated $1.5 trillion of consumer spending. In the last decade credit card debt in the
    US more than tripled from $238 billion to over $800 billion. It is estimated that 115 million
    Americans carry monthly credit card debt. Approximately 35 million Americans pay only
    the required minimum on their credit cards. The average family owes roughly $8,000 ???
    on their credit cards."

    "Bondholders stand to lose as much as $75 billion on securities backed by mortgages to
    people with poor or limited credit histories because of a rise in defaults, Pacific Investment
    Management has estimated. Delinquencies and defaults on subprime loans in bonds are
    at the highest level since 1997. More than $800 billion worth of bonds is backed by
    subprime mortgages, according to Credit Suisse Group in Zurich."

    it would be interesting to know what the 2006 numbers are:
    and "Home Mortgage Market" speech March 4, 2003 by Fed Chairman Alan Greenspan

    re: http://www.elitetrader.com/vb/showthread.php?s=&threadid=106546 and
    "SIVs ... are supposed to be financed through the issuance of commercial paper backed by
    pools of home loans and credit card debt ..."

    bailout ? what bailout ?
  8. lfkc60a


  9. This all sounds like financial armagheddon.....
    am I right ?
  10. Financial Armagheddon...Not for everyone.

    The RE market in parts of the country is still thriving. Higher End Homes being bought by Baby Boomers, cashing in on gains from their "Equity Funds".

    The High End Market, which accounts for a very small % of Sales and very few "RE agents" are able to enter into that market, is attracting the Boomers who have the money.

    Financial Armagheddon is going to be felt by the middle class in debt. The poor always default and move on. The working Middle class try to keep their head above water, yet they are slowly going under.

    Money supply pumped by the FED, causing Inflation in all commodittes, from milk to eggs. The "armagheddon" is not going to be "In your face" for most of the country. It will slowly creep up on many over the next 5 to 10 years. The dollar is no where near bottom, the forclosuers will take years to work its self out, wages are dropping as inflation is sky rocketing.

    No bread lines, not a run on banks but a slow bleed for the Middle Class. They will be slaves to their jobs and may have to work odd jobs to stay afloat.

    The divison between the Rich and the middle class will widen the most it ever has in the next 5 years.
    Car sales will trickle to a hault, home's sales will sloww down to almost zero % and "Retail" sales will plummet.

    However, If you are in the right place, with the right target market, this will be one hell of a time to make a lot of money. However, many will not.

    I would not be suprised to see a strong stock market during the "armagheddon" peroid of the next decade, as foreign money poors in. We may have the first ever deep recession, for a decade, with a strong market. Does not mean that one will be able to trade it, as it will slowly move higher with key reversals to shake out longs.
    #10     Oct 14, 2007