More Foreclosures Coming? How Long Do We Have to Wait?
Posted by Ashley Stuart Puetz | Visited 1250 times, 4 so far today | Leave A Comment »
Step back in time with us to the summer of 2008, where consumer confidence was shaky, but solid activity was still occurring in the market place. Short sales were increasing because of risky loans that were given to buyers who had low credit scores and no down payment, and foreclosures started to consume the market place. Foreclosures were overwhelming asset managers and banks were taking back homes in record numbers. We could see the writing on the wall, but we had no idea it would be this serious. In preparation for the tsunami of foreclosures that were sure to come, we joined a financial network that specializes in the REO (bank owned) system to gain as much knowledge as possible to assist our clients in navigating this segment of the market.
Since then, a bustling entry-level market has opened up for first time home buyers, who had been shut out of the market due to higher interest rates and unaffordable property values. In January of 2009, first-time home buyers began to see hope in homeownership. The $8,000 home buyer tax credit gave them a reason to jump off the fence. As more foreclosures and short sales hit the market and property values continued to fall with interest rates as low as 4.5%, first-time homebuyers had a new found confidence around February of 2009. We began working with FHA approved first-time homebuyers for the first time in years. Little did we know what the lending industry had in store in the months to come.
Since the government mandated moratorium on foreclosures was lifted, banks began taking back properties in record numbers. The inventory has been absorbed by cash investors and some lucky first-time home buyers, but many now are waiting for the next round of foreclosures. An asset manager at Fannie Mae said he now has 4 files on his desk, which is down from 285 files five months ago. Many of the banks are saying their inventory is down. So what’s next and how long do we have to wait? All we can say is, “if we had a crystal ball, we’d be millionaires by now!”
Below is an excerpt from a letter written by the director of training with Lionsgate Financial Network, of which we are members. We think this letter paints a clear picture of how the face of real estate has changed over the last year and what lies ahead.
“Dear Members-I have gotten quite a few questions lately concerning the fact that you are signing up, and not getting any response. This time, right now, reminds me of two distinct times in my career. I have been selling Real Estate since 1987, and every December I went to work everyday, and prepared myself for the spring. I worked getting my mailing lists together, and got my marketing pieces prepared, and got ready for the inevitable rush that came in the spring. My office was empty, I was almost always the only one working. Everyone else in my office took the entire month of December off.
The other time, was between August of 2007, and April of 2008. I went to work everyday, and spent all day signing up on registries, with VERY little results, no listings, and only a smattering of BPO’s. It was, to say the least, frustrating, but I knew that if I continued on, I would succeed. I have always believed, that if you have a course of action, and it’s the right course of action, that your best alternative if to put your head down, and continue.
That being said, we are in a season of almost NO activity in the REO world. I get 1/4, of the BPO’s I was getting 3 months ago, and in my MLS, REO listings are down 85%.
I talked to my asset manager, at Fannie Mae, and he said he has 4 files on his desk, down from 285, just 5 months ago. My asset managers, at Chase, IAS, Old Republic, all say the same thing…..they don’t have anything on their desks. Another good contact I have, David Parrish from Default School, told me last week, all his banks inventories, are way down as well.
The Obama administration has created artificial moratoriums, by their actions…The banks literally don’t know what to do with there current inventory.
Now where does that leave us?
In the perfect position, I believe…My asset manager at Fannie Mae, said this week, they are getting ready for the inevitable flood of REO’s that they will be receiving. David Parrish said that his banks, are gearing up for a rush between Oct and Jan. IAS (Integerated Asset Services) told me to “get ready”. Bank One, formerly Indy Mac, has begun to hire 4,000 NEW agents. Another company that I can’t mention yet, wants LionsGate to help with the disposition of 2,000 assets a month, starting in as soon as 90 days. Exciting things are about to happen to those that prepare.”
-Larry McKenzie, Director of training, LionsGate Financial
It remains to be seen how long we will have to wait for the next round of foreclosures, but we do know more are on the way. All we can do is stay informed and be prepared for our clients. For more information or questions contact us at our website www.stuartandstuart.com.
