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Foreclosures Soar

Discussion in 'General Appraisal Discussion' started by Rich Hahn, Dec 21, 2004.

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  1. Rich Hahn

    Rich Hahn Senior Member

    0
    May 2, 2003
    Professional Status:
    General Public
    State:
    Colorado
    http://www.rockymountainnews.com/drmn/real...3413969,00.html

    sorry if its been posted already,,,didnt see it, interesting read.

    Rich



    Foreclosures soar
    Home defaults hit highest level since oil bust days of '88

    By John Rebchook, Rocky Mountain News
    December 21, 2004

    More than 11,000 real estate foreclosures have been filed in the seven-county Denver area through November, about 18 percent more than in all of last year.

    And public trustees are estimating that 2004 will end with about 12,290 foreclosures, making it the second-worst year on record.


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    Only 1988, when there were 17,122 foreclosures, topped this year. Last year, 9,431 foreclosures were filed, which had been the second-worst year.

    And there's no sign of a slowdown, even as the economy picks up steam.

    "They just keep coming in droves," said Bonny Kovtynovich, deputy public trustee in Adams County.

    Mary Wenke, public trustee for Arapahoe County, is seeing the same trend.

    "They just keep escalating," she said. "We opened 40 (foreclosures) in one day. They never seem to be leveling off for any period of time. We could probably easily go over 3,200 this year (in Arapahoe County), maybe 3,300."

    Economist Tucker Hart Adams said she's not surprised that foreclosures have risen so much. She expects even more foreclosures next year, although the rate of increase may slow.

    "It certainly is a matter of concern," Adams said. "I think the worst is not over, because they are a lagging indicator. Colorado and the Denver area have been through a pretty rough patch since 2000, and we're just barely starting to claw our way out in terms of job gains. If you do not have a job, it's pretty hard to make a payment on your house."

    Adams said that she thinks that lenders have made it too easy to buy a home and then borrow on it, which is contributing to rising foreclosures.

    "People who could never qualify to buy a home before are now moving from apartments," she said. "Rising homeownership rates, now approaching 70 percent, is good news and bad news. It's good for most people, but not if you live in your home for only a year or 18 months before losing it in a foreclosure."

    Peter Lansing, president of Universal Lending, one of the largest locally based mortgage bankers in the metro area, said both lenders and consumers are to blame for the increase in foreclosures.

    "I believe my industry has some responsibility," he said, noting that almost every day many people receive unsolicited mail telling them they are pre-approved for loans.

    "But I also think there is blame from the consumer who asks us for the credit and is using his house like an ATM machine," Lansing said. "Some of that is OK, but some people take it too far."

    Also, if overall home values rise by less than 4 percent this year, there will be parts of the metro area where homes are showing no appreciation or are even losing value, he said. That makes it almost impossible to sell homes in those areas if the owner gets divorced, loses a job or becomes too sick to work, he said.

    However, the market is not as dire as it was in 1988, when Lansing was chairman of a long-disbanded foreclosure task force.

    "I don't see it as an epidemic like we did in the late '80s when the oil industry was leaving Colorado," Lansing said.

    If the projections are correct, slightly more than 1 percent of the homes in the metro area will end up in foreclosure this year, compared with an estimated 2.3 percent of the total homes on the market in 1988.

    And the rate of foreclosures has slowed dramatically from the beginning of the year, when foreclosure activity was up 67 percent from the first quarter in 2003.

    Lansing noted that home sales are still high, and a record $13.6 billion in previously owned homes already have sold.

    "It's not the out-of-control snowball rolling down the hill. We're not seeing the crisis we saw in the late 1ate 1980s," he said.

    However, he said that also means people aren't seeing the home buys available in the late 1980s, when lenders and the U.S. Department of Housing and Urban Development were offering huge discounts on homes in order to unload them. At one point, HUD was the largest landlord in the Denver area, and in some cases would pay people to take houses off its hands.

    And the reason money is so readily available for home loans is because many parts of the country are seeing huge housing appreciation and foreclosures are low. On a national basis, Wall Street packages 100 percent first and second mortgages and sells them as bonds, because the overall risk of default is relatively low, he said.

    "If your home is going up 9 percent or in some places 18 percent a year, you will be able to liquidate your home if you lose your job and need to sell it," he said.




    rebchookj@RockyMountainNews.com or 303-892-5207





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  2. Dee Dee

    Dee Dee Elite Member

    1
    Jan 16, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Good catch, Rich.

    Not sure if you caught it in one of my other posts, but one of my friends was talking to the electric meter reader that comes to his house, and the guy told him that WAMU is paying the electric bill on over 1,200 houses in Jefferson county alone. That's just one lender in one county.

    I wonder what the true numbers would be if all of the short sales, cash for keys and negotiations between struggling borrower and lender were counted along with the foreclosures. I don't remember the lenders being so compromising and negotiable back during the 80's bust.
     
  3. Mike Garrett RAA

    Mike Garrett RAA Elite Member
    Gold Supporting Member

    56
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    What it doesn't say is the late 90s had record low numbers of foreclosures and the number of housing units has nearly doubled in the last 16 years. 1% doesn't seem extreme.

    Does the line ....125% Equity Loans...ring a bell. That is what is coming home to roost. Combine that with Mr Cisneros, Secretary of HUD saying "everyone in the United States should be entitled to home ownership with no investment" and you have increasing foreclosures.

    Some of the foreclosures I have been in are less than three years old and have an effective age of 15 to 20 years. If you have no equity... you don't care what it looks like or if you lose it.
     
  4. TEL2002

    TEL2002 Elite Member

    2
    Jan 16, 2002
    Professional Status:
    Retired Appraiser
    State:
    Louisiana
    YOu CO folks are gonna be REO busy...that is for sure.
     
  5. Non Sequitur

    Non Sequitur Elite Member
    Supporting Member

    420
    Feb 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Louisiana
    Oh please, the sky ain't falling.

    I wonder how many people will bother to read the whole article and get to this factoid.

    Now lets be fair and adjust the numbers using the above.

    2004 - 12,290 (forecasted)

    1988 - 17,122 (actual), 39,380 (adjusted)

    It isn't close.
     
  6. Don Clark

    Don Clark Elite Member

    46
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Virginia
    B) Mike,

    I agree with you. 125% mortgages. 0% down. Equity out. Go buy a new car on credit. And, here locally you can get a house full of furniture and not make the first payment until 2007. Ain't life great? :beer: Hey, when the bottom falls out I'll just declare bankruptcy :dance:

    On the bright side. The stock market closed today at a 3.5 year high. My mutual fund is looking better every day :santa: Merry Christmas
     
  7. Tawfik Ahdab

    Tawfik Ahdab Senior Member

    14
    Feb 19, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Oregon
    Yeah, especially mortgage brokers such as Lansing!
     
  8. Ross (CO)

    Ross (CO) Senior Member

    0
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    The constant barrage of television and radio advertising.....the non-stop solicitations and "pre-approved" offers for yet another new credit card we ALL receive in our mailboxes,.......and then a new TV ad to show folks chopping up their credit cards and re-financing "before rates go up".....and then perhaps the real news of a rebounding stock market and economy (but, not in all parts of the country).........

    ........of course, everybody wants to participate in a process of either having cash-in-pocket or plastic-in-pocket and the easiest way to do that has been to turn to one's real property and begin a process which, for some, can become the TOTAL extraction of all equity in that property. Then, there are those who will go so far as to reach for 125% lending. Of course, if you initially purchase with only 1.5% down, the only way you can move is up !

    I really do not believe that the role of the mortgage broker is to counsel the borrower. Their job is to sell another loan, and from that sale they earn a commission. To what extent can one expect that the borrower/consumer is fully cognizant of exactly what they are doing as they sign yet another loan document ? Who's left to play a role in imparting any element of subtle influence upon these processes ? You guessed it, it is us. When many of us do our job well, and state opinions that might limit or thwart the known or unknown intentions of other players we have been ridiculed, impugned, threatened in some way and been told quite clearly that we are disliked and considered as not "having a clue" what we are doing.

    Back in the summer we visited good friends of our's in the Denver area. They have a daughter in mid-20's who married two summers ago. They shared with us their recent need to have a serious sit-down with the young couple......once it was learned about the extent to which these young folks had become very entangled in a mortgage, credit card and spending mess, bordering on a potential nightmare. My friend began for them a very focused process of re-establishing fiscal sanity into the daily lives of this young couple by basically commandeering their checkbooks, credit cards and even their daily pocket-cash. He also created a budgetary structure whereby the young folks realized that they were going to be experiencing austere times......despite whatever comments their peers would be unloading on them ! Total love, and common sense, were the fundamental premises upon which my friends had to act. Do they teach fiscal and monetary economics as a one semester module within senior year high school math class ?....anywhere in the country ?

    Thay had to do this to literally salvage this young couple from financial ruin, fortunately discovered before all was too far gone......and likely now to at least assure that they do not lose the roof over their head ! Just one family, among the many, where irresponsible lending and irresponsible spending are as harmful to the human spirit as entrenched run-ins with dangerous drugs or alcohol.

    Money does not grow on trees. There is no such thing as a free lunch. Debts are supposed to be paid back.........well, at least that's what our parent's and grandparent's generations used to say around the dinner table while we were making colorful piles with our mashed potatos, green peas and that raft of butter floating in the center.
     
  9. Ray Miller

    Ray Miller Elite Member

    0
    Feb 20, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Wisconsin
    Ross,

    I agree with you completely.

    ------------------------


    This day and age not many teach the younger generations to be conservative with money or to operate on a budget and have savings.

    As I have said its buy, buy and buy more. When the cash runs out, we go to the credit cards, when the credit card money runs out, we re-mortgage or get a second on the home. Then spend all that money.

    I have yet to see a loan officer give on hoot about who they are lending the money too or why. They are just as bad as the one borrowing the money. All seem to be running on the edge. Hand to mouth. To me it seems to be out of control in a lot of areas.

    Maybe it because I am seeing 5 or 6 REOs a week, maybe it because I am getting a lot of merchandise in to sell at the auction house. Items that are not even a year old, but the owners are needing the cash. Maybe it because I am seeing people spending less and less or not able to spend for items at the auction.

    The homeless numbers are increasing, the jobless are falling off the unemployment list but they are still unemployed. I have two mothers working for me that there husbands have been unemployed for over a year. They are off the government list, but still unemployed.

    I don’t think the government has a handle on what is really happening.

    The article in the “Wall Street Journal yesterday “Countrywide Writes Mortgages for the Masses”. It seems to me that it is just write and write and write, don’t really worry about who you are lending the money too. Just hope and pray they can make the mortgage payments in a few years.

    Just driving around I see all the new cars and trucks sitting on the car lots, then that coupled to the ones sitting in yards with for sale signs on. Never have seen the like before. It just not cars and trucks, it boats and motors, campers, RV’s. People are trying to sell and not having any luck. I have got 15 RV Trailers big ones setting at our Auction house now to sell. Go to Ebay and take a look at all the large ticket items for sale. Seventy thousand dollar horse trailers, Trucks, RV trailers.

    I have always heard when things are tight the market for large boats, planes and horses fall. The horse market is the lowest I have seen it in 44 years. I have been selling horses across the block for $20 a head. Killer buyers are not even buying them.

    Maybe I am doom and gloom, but I can see the 70’s and 80’s all over again. I think the country as a whole is walking on very thin ice right now.

    The only loan officers that care are the ones in the smaller banks that are using their in house money. And they care only because to many poor loans could cost them their job.
     
  10. Mike Garrett RAA

    Mike Garrett RAA Elite Member
    Gold Supporting Member

    56
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    You would think horses would be worth more than that for meat! :p
     
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