I’ve taken it one step further this week, and instead of only reviewing the foreclosure postings scheduled for sheriff’s sale, I took the time to review the lis pendens as well. While I’m not an attorney, I can give you a basic explanation of lis pendens. The phrase is Latin for “suit pending”, so if you’ve got a lis pendens served against you and your property, that’s not a good thing. It’s a shot across the bow, a signal of more trouble to come unless you make good on whatever terms you had agreed to make good on. In the case of homeowners, most lis pendens signal the beginning of the foreclosure process. The banks file this instrument, and you’re officially served noticed that unless you make your loan current, you’re going to be facing the big bad bear that is the foreclosure process.
In scanning the horizon for trouble in our foreclosure market, it’s important to climb to the highest perch and squint. Since the foreclosure process that begins with warning letters from the bank, progresses to a lis pendens filing, and sometimes ends with the bank taking possession of the property can take as long as a year, it’s important to identify the earliest sign of trouble. Reviewing the lis pendens filings does just that, and I spent a considerable amount of time last night researching the filings for the month of August. While the research could take days and days to figure out precise figures, I spent a good hour and by my count, lis pendens filings were actually holding steady from June and July through today. There are a couple of properties with lakerights that have been served notices, but none on the lakefront by my search, with one possible exception. I’m digging into that exception a bit deeper to figure out exactly what the circumstance is, and will let you know what I find out. (found out it’s not a foreclosure, rather a lot line dispute)
The remainder of the foreclosure scene looks all too familiar. Elkhorn, Genoa City, Sharon, the City of Delavan, and the Pell Lake area continue to see more than their fair share of foreclosure notices, but the figures for the entire county remain low. To get a gauge on the moving average, just look back to a post I wrote in December of 08, where I cited a report by foreclosurenet that said we had 53 foreclosed properties on the market. That same source for August reports 63 such properties, an 18% increase in foreclosed inventory. The same source attributed Berrien County, MI as having 166 foreclosed properties on the market in December of 08. That foreclosed inventory has risen 33% to 222 total units. I’ll let you guess which market is a safer option for your vacation home dollar…
All in all, the foreclosure scene remains the same, but it is important to watch the REO properties closely. Banks tend to cut prices every month that these properties remain unsold, which is precisely why the REO properties are at fault for driving down prices nation wide. The bank can cut prices until they find a buyer, whereas Joe Homeowner has a finite monetary threshold that he cannot and will not cross. We have REO’s in the vacation home market in Abbey Springs (1), Indian Hills and Country Club Estates, and if you’re in the entry level vacation home market, those are properties you should be looking at with me. I’m more than happy to watch these REO’s for you, and better yet, I’ll keep you posted on what’s far off in the future, but only because I like you so much.
Bob,
A war on the rich isn’t going to get us anywhere. You can’t blame banks for playing by the rules. The loan modifications are proving to be a magnificent waste of time, and if you’d read up more on the dismal success rate of those programs, you’d understand that. Thanks for reading, David
David,
It is pretty clear that you are feeding off of the current banking practices as best as you can, so I can understand why you feel that foreclosures are a good thing. Your bias is quite evident.
But perhaps you could cite an unbiased report as to the extent of loan mod failures. The fact is there haven’t been enough mods on which to base a decent study, and the banks largely have chosen not to participate in any meaningful way. The kid glove approach on the banks (and total lack of "rules") is a product of a cronyism and lobby based nightmare that will continue to haunt the world’s economy for years to come. The last half of the years is not going to look good for the banks, and they basically have brought it on themselves.
Do you truly expect me to believe mods are a wasted effort. If 2 million mods were made and half of them failed and returned to foreclosure, it would still be worth the effort. It is in your’s and the banks’ best interest to make the public believe that mods don’t work, and that foreclosure is the only way. That is simply not true.
If you want to talk about rules, you need to watch the video of Elizabeth Warren, (chair of the Senate Banking Oversight Panel) and note her talk of accounting rule changes that occurred 2 months ago.
Toxic assets still on the books. http://www.msnbc.msn.com/id…
You also need to view the report on banks’ predatory practices of soaking up fees at the expense of investors and homeowners.
Homeowners and Investors May Lose, but the Bank Wins
http://www.nytimes.com/2009…
And finally, for your understanding, you may appreciate the interview (August of last year) of Robert Shiller entitled The Subprime Solution
http://video.google.com/vid…
If you watch the above videos, you will gain some understanding of why foreclosures are NOT a good thing for this country.
Thanks for reading, Bob
Funny you mention how I’m benefiting from foreclosures. I am not an REO broker. I sell vacation homes to what is largely a cash market. Of the transactions I’ve completed this year, only one has been a foreclosure or otherwise distressed sale. So your assumption that I benefit from foreclosures on a personal level couldn’t be further from the truth.
So in your perfect world, banks would not make money? Banks would only lend to those who had 750 credit scores and 30% down payments? That way the default rate would be near zero and we’d all be happy? What about the fairness portion of allowing those who couldn’t really afford a home a real shot at the American dream? They had a shot and they booted it, and I don’t think the banks are to blame except in cases of actual predatory lending. And no, I don’t think putting someone into a house at an elevated interest rate is predatory if that’s the only program they qualified for and if they agreed to the terms.
The loan mods that I believe to be a waste of time only delay the inevitable. You have to understand why buyers are losing their homes. They’re not "losing" them because the payment is 5% too high. They’re heading to foreclosure because they either lost their job, or because they have so much negative equity that it makes sense to walk away. You know banks aren’t pursuing deficiency judgements with any vigor, so it makes plenty of sense to walk away. The stigma surrounding foreclosure has vanished, and it makes fiscal sense for many people to just flat out walk.
Loan modifications are only going to delay a real recovery in my opinion. Of course foreclosures aren’t a good thing, but the terms of the loans that buyers willingly agreed to dictated that foreclosure would be the result if they defaulted on the loan. It’s no surprise, and the banks aren’t changing the rules half way through the game. It’s the other way around actually.
I’m not pro big bank, but I am pro business. Business needs to make a profit, and I’m all for profit. Banks may indeed run on rough times this fall, as foreclosures continue and few owners are left who hadn’t already refinanced during the first two quarters of the year to create that large revenue stream. Pointing out to me that toxic assets are still on the books does little in the debate. If you’d like to get into the state of the toxic assets, look into the failure of Obama’s PPP program that was to buy up toxic assets. http://us.ft.com/ftgateway/… Along those same lines, if the banks are so unhealthy, why has the administration refused to allow banks to repay TARP funds? http://online.wsj.com/artic…
There’s more to this than our own common sense may reveal, and there’s no way to fully understand what’s happening at a corporate/government level. We’ll see how it all shakes out, but right now the only thing that is clear is that we’ll be in this for quite some time to come, whether housing trends up or down for the next 18 months. David
I’ve taken the running commentary that I’ve been having here with our friend Bob off of the comments post, in order to save you fom the partisan divide that we’re debating. I think banks ought to make a profit, and I think people ought to make good on their promises to repay loans. That’s as simple as it can be, and it supports personal responsibility as opposed to government "cures". Thanks, David
You’re off Bob, and it’s too bad. Shoot me an email to dave@genevalakefrontrealty.com and I’ll be happy to continue the conversation.
looking for a homeon Lake Geneva or in a good area….I am in Gneva National now…I am used to living on the water in Il…I need the lake breeze….Looking for a foreclosure , reo or other…I am going through a divorce and may stay only 5 years…or a rental ?????