I was talking with a group of teachers the other day and for the first time in a few years I didn't hear them say "We can't afford to take this position in Southwest Florida". This was not the case over the past couple of years and I think that we as a community missed out on several young teachers that could have made major differences in our children's lives if the only could afford the housing at the time.

With real estate prices moving downward and more affordability coming back into our market it now makes since for young professionals to make the move from the cold and down to 85 degree weather in February. The biggest part of the downward spiral is the ever so popular foreclosure segment of our market. Now as I can't speak for all areas of the country; Southwest Florida experienced a huge growth in a very short time and was fueled by speculators thinking the rise would never stop. Whether it was greed or pure stupidity the gravy train came to a screeching halt and started to "drain" the investors on a monthly basis. Eventually those who were unable to make obligations to their monthly payments had to surrender those properties back to the banks and now the banks need to unload them.

Move forward two years and that is where we are today, when a young professional who might only make “starter pay” can now move to our area and buy a three bedroom, two bath home under $90,000 they can make since of their payment. They can live the SW Florida dream with the rest of us and not feel that they need to go stock shelves at night or deliver pizzas just because they have a passion to teach our children or protect us while we sleep.

The foreclosures will pass over the next few years and I hope that the people who are buying today don't repeat the same cycle in the short amount of time again and the primary residents who are buying today will enjoy making fun of their friends up north while they bask in the warm sun of SW Florida.

Contact Bill Mitchell at Marc Joseph Realty

Here are some things to keep in mind when considering a distressed property purchase:

1. Foreclosures are the most problem prone and strenuous type for real estate purchase.
2. You never get a perfect house. You get price per-square-foot. You must be willing to put in the time and money to create your perfect house.
3. You must have capital to purchase a distressed property. On average, you need 10 percent market value in cash to reinvest in the property.
4. Most if not all of the time the seller has no knowledge of the properties previous history. So, the inspection process on the house is more costly. It is also recommended that the potential buyer do more than a typical inspection. For example, a potential buyer should consider paying for a “Sewer Scope,” which costs about $250.00.  Moreover, hire a contractor and get a written estimate to repair the foreclosed home.
5. In many distress properties the water and electricity is shut off. The trust company — and or the seller — will not turn them on the water and electricity. So buyers should test the plumbing and electrical systems as part of the inspection. In most cases, the buyer will have to pay to have those systems turned back on. In other words, you have to “pay to play.”
6. The house has to be livable in order to get financing.
7. Banks have a bottom line too. They will only go so low no matter what the issue is with the property. Lending institutions are loosing billions of dollars, a few hundred dollars matters to them. You have to be willing to take on the issue for the price or walk away.
8. You will be scared. You will be nervous. You will have doubt. Your Realtors job is to negotiate that price to a large enough margin; so if you screw up, you will not be upside down in your purchase.
9. If there is no commission built into the purchase price, you will have to add it to the purchase price. You are making money, and so should your Realtor. 

Contact Nova Ukariha Shank or post comments below.

Battle lines are being drawn in New York’s real estate market, pitting Freddie Mac and Fannie Mae against subprime lenders in New York.

Last week, New York Governor David A. Patterson signed into law a subprime lending reform bill (S.8143-A/A.10817-A), creating stringent lending guidelines for subprime lenders. Under the new law, investors, including loan buyers like Freddie Mac and Fannie Mae, are held liable for mortgage fraud. It also lays out requirements for brokers to act in borrowers’ best interests, and mandates all local mortgage servicers to register with the state’s banking department.

Moreover, the new bill classifies mortgage fraud as a crime under the state’s penal code, making it easier for prosecutors to pursue criminal cases and convictions.

Meanwhile, Fannie Mae — the beleaguered government-sponsored enterprise (GSE) holding billions in bad loans — reported this week that it will stop purchasing mortgage loans in New York that fall within the state’s definition of “subprime home loans.”

Fannie’s sibling, Freddie Mac, who is also reeling with bad debt, chimed in last week, saying it will pull out of the New York subprime market on September 1, 2008.

Both are in such perilous condition that the federal government has readied a taxpayer-financed bailout that could cost Americans billions of dollars.

Columnist Peter Miller explains why these are serious developments for the New York real estate market.

What are your thoughts? ForeclosurePulse wants to know.

U.S. foreclosure activity in July increased 8 percent from the previous month and 55 percent from July 2007, according to the RealtyTrac Foreclosure Market Report released today.

View state-by-state details.

Bank Repossessions (REOs) accounted for 28 percent of all activity during the month, while defaults accounted for 41 percent and auction notices accounted for 31 percent. That is in contrast to REOs accounting for just 16 percent of all activity in July 2007, while defaults in July 2007 were still at 41 percent and auction notices were at 43 percent. This shift in percentages shows that a higher proportion of properties that enter the forecosure process are ending up repossessed by lenders.

 

Things seem to be going from bad to worse for Ed McMahon, former sidekick to Johnny Carson on “The Tonight Show” and corporate spokesman for the American Family Publisher’s sweepstakes.

The Los Angeles Times reported today that McMahon is being sued by Westmoore Lending of Huntington Beach, Calif., to collect on a $250,000 loan it made to McMahon in 2006. The loan is secured by the star’s Beverly Hills home, which went into foreclosure back in June for $644,000 owed on a $4.8 million mortgage.

In interviews with Al Roker on “The Today Show” and Larry King Live on CNN back in June, McMahon admitted that poor money management, bad investments and two divorces led to the financial dilemma he and his wife Pamela now face. Ironically, the man who used to hand out millions of dollars to other people on television now could use some of that money himself.

Filed in Los Angeles Superior Court, the lawsuit alleges that loan documents show McMahon had committed to paying $3,125 a month for the first five months and then paying off the remainder of the loan in one final payment of $253,125. Carrying a 15 percent interest rate, the balance due grew to $275,000, according to the Associated Press.

McMahon’s Beverly Hills home remains on the market at $4.6 million.

The results of a new survey released today by the Federal Reserve confirms what many people looking to buy or refinance already know — it’s hard to get approved for a loan.

The Fed’s July 2008 Senior Loan Officer Opinion Survey, which covered 52 domestic banks and 21 U.S. branches and agencies of foreign banks, found that 75 percent of those banks had tightened lending standards for prime loans since the previous survey, in April. Standards were tightened even more for “nontraditional” loans — 85 percent of banks that originate that type of loan said they had tightened standards on those loans. And six out of seven banks that originate subprime loans said they had tightened lending standards on those loans in the last three months.

The outlook for the remainder of the year isn’t much friendlier for easy financing. About 45 percent of loan officers from domestic banks said they expected their banks to tighten lending standards on prime home loans in the second half of they year, and about 65 percent said they expected standards on nontraditional and subprime loans to continue to tighten during the same time period.

It’s good that banks are adopting more stringent lending guidelines than the virtually nonexistent ones they employed with the 2005 to 2007 vintage mortgages —  which turned out to be highly susceptible to foreclosure. But could the banks be overreacting with these tighter lending standards and thereby prolonging the housing slump? Or is this exactly what the market needs to ensure that home prices stay grounded in the reality of what homebuyers can truly afford?

Did anyone really expect anything else out of Ben Bernanke and the other 10 members of the Federal Open Market Committee this time around? No, they didn’t. And they got just what they expected.

As predicted by everyone from Wall Street analysts and TV commentators, to probably the corner grocery store clerk down the street, the Federal Reserve held steadfast at their meeting Tuesday and kept its short term federal funds rate at 2 percent.

The official statement released by the Committee Tuesday had a cautionary tone, noting that inflation remains a key concern as labor markets continue to soften and the housing market “contraction” remains ongoing.

All told, these concerns — along with energy prices — are going to weigh on the economy for the next few quarters. Reading between the lines, that could mean that the Fed doesn’t see the economy making any type of significant recovery until at least the second half of 2009.

Just like the Fed is doing…again…we’ll all have to just sit tight and wait and see.

In the meantime, the Labor Dept. just released its weekly report on jobless claims, noting that new claims for jobless benefits rose last week to the highest level seen in more than six years, according to the Associated Press.

What does all this mean for prospective home buyers and real estate investors looking to take advantage of present market conditions? It means that we haven’t seen a market as ripe as this one since the early 1990s, with such a vast selection of properties available to purchase at significant discounts.

Mention the word “foreclosure” and most investors conjure up images of run-down and dilapidated properties located in undesirable neighborhoods.

But now some of the ritzy residences are increasingly falling into foreclosure. As more and more well-heeled homeowners default on their mortgages and property taxes, homebuyers can scoop up these tony trophy properties.

Consider these posh properties with all the grandeur and sophistication you deserve.

11000 South Ocean Blvd.
Manalapan, Fla. 33462
Auction Price:   $40,000,000
SOLD: $22,000,000

If you think eight-figure foreclosures never happen — think again! In February, Veronica Hearst’s Manalapan trophy property — one of the most expensive foreclosures ever recorded — was sold at the Palm Beach County courthouse steps for an astounding $22 million.

Twenty two million dollars, however, doesn’t seem like a bad deal when you consider that the stately Villa Venezio in Palm Beach, Fla., comes complete with a rich history too. Sitting on 3.5 glorious acres of beachfront property, this stately 32,000 square foot (approx.) trophy mansion — complete with 52-bedrooms and 12 full bathrooms — was originally built in 1929 for the grandson of Cornelius Vanderbilt.

19 Dennis Lane
Mission Viejo, CA 92694
Cur. List Price: $1,600,000

If an eight-figure foreclosure is out of your price range, maybe this Mission Viejo, Calif. bank-owned repo will fit your budget. This 4,500 square-foot (approx.) defaulting dream home — perched in the tony hills of Orange County — is a stately steal at $1.6 million. Loaded with all the accouterments blue bloods require, this equity-rich residence is luxury living at its best. But a jewel like this can vanish. So bring your check book, before the posh perks near the Pacific Ocean disappears.

6841 Derby Circle
Huntington Beach, CA  92648
Cur. List Price: $1,750,000

Here’s another seven figure foreclosure fit for a queen. Royals will revel at this distressed damsel near the beach. Located near the ritzy Seacliff Country Club in Huntington Beach, Calif., this double-decker chalet has five spacious bedrooms and lovely four baths. For a mere $1.7 million, you can spread out all your toys in this 4,300 square foot (approx.) repo.

39497 N. 104th Street
Scottsdale, AZ 85262
Cur. List Price: $1,250,000

If ocean breezes aren’t your thing, maybe this Arizona gem will fit your budget. Scottsdale, Ariz., is one of the most popular and exclusive desert communities in the nation. Here’s a bank-owned mountain escape that includes a $320,000 golf membership. Sitting on a palatial half acre lot, this 3,756 square foot (approx.) home offers breathtaking views of the city and mountains. But hurry, somebody will sink this little birdie if you don’t tee off soon.

16 Artisan Street
Ladera Ranch, CA 92694
Cur. List Price: $984,900

Still out of your price range? Maybe you can bag this magnificent mansion for six figures. For a mere $984,900 — about what Veronica Hearst’s pays for a European vacation — you could snag this Ladera Ranch mansion in the big, bad O.C. Be the first in your neighborhood to brag about how you stole this flamboyant foreclosure from the bank. This swanky short sale — perched in posh planned community — has all the bells and whistles needed to live the racy O.C. lifestyle that only the Housewife of Orange County can live. But this polished pad won’t last long. Honey, where’s the checkbook?

ForeclosurePulse found these ritzy repos on RealtyTrac. Learn more about the best places to find flamboyant foreclosures by joining RealtyTrac.

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After listening to NBC Senior Correspondent Lisa Myers’ story on The Today Show last week, I am more convinced than ever that, as the old saying goes, people want their cake and to eat it too!

In my personal opinion*, that’s not going to happen in this economic downturn.

As Myers points out in her story, the new housing bill signed by President Bush earlier in the week will help a fraction of the families facing foreclosure. As the mortgage expert she interviewed projected, of the 3 million homeowners currently in distress in this country, this bill will help out maybe 10 to 20 percent.

Personally, what irked me the most about the piece was a couple she interviewed who are facing foreclosure and are obviously expecting this bill to be a personal bailout by the federal government. As Bush so aptly put it last year, it is NOT the federal government’s job to bail out people who bought a home they could not afford and had no business purchasing in the first place.

Both spouses work in this family with two children. As for dad, in his sound bite he said they can’t lose the house and be on the street with two kids. Well, I have bad news for him. They would not be the first people in America stuck in that situation. Whose fault is that? Let’s see…maybe…the government? I don’t think so.

Although, as Myers pointed out, this family won’t qualify for the program under the new housing bill anyway because they don’t fit the preferred profile: people who, but for their mortgage, are in “reasonably good financial shape.”

In this particular case, mom and dad not only bought a home, but then they loaded up with substantial credit card debt and car loans. I guess that’s the government’s fault too though.

As for the wife, in her sound bite she said, “It seems like no one’s there to help you out.” Now, granted that television news crews are infamous for editing a story anyway they want to. Maybe she was taken out of context. I have no way of knowing.

But, standing alone, based on what she said in the piece, my answer would be that if they want help they should seek it from the same sources everyone else does — family and friends. Or, they could consolidate their debt. Or they could speak with a financial consultant or credit counseling service. But don’t expect us — the hardworking taxpayers of America — to bail them out of a situation they shouldn’t have gotten themselves into in the first place.

We all have our own financial concerns to deal with in these troubling times.

What I think is unfair is for people like me, who play by the rules and can’t afford to buy a home in the neighborhood they want to live in, should have to pay for somebody else’s mistakes. Particularly when those people cheated the system, possibly lied, and then got to enjoy the fruits of their malfeasance.

Life’s not always fair, but as another old saying goes, you made your bed now lay in it. This couple needs a reality check. The scary thing is there are so many other people out there who are just like them and don’t deserve what they have either. These people probably signed up for option ARMs and some other type of so-called “liar loans” where they either didn’t have to qualify at all, or accepted some other option in order to get into a home.

They need to dig themselves out of the financial hole they’ve dug. Otherwise, there’s always filing for bankruptcy protection, but that won’t save the house either. It only delays the inevitable.

In any case, as Myers’ story illustrates, there’s a lot of people out there in for a rude awakening when they realize that this new housing bill does not give them a pass to financial freedom.

It’s time for a reality check folks! WAKE UP!

*This is the personal opinion of the author and does not necessarily reflect the opinion of RealtyTrac management or employees.