Lake Geneva Foreclosure Update

Lake Geneva Foreclosure Update

I’m not exactly sure how many mortgages I’ve obtained. I was 18 when I was granted my first mortgage on my first house, and in the years that have flown by since I bought that first dump on Williams Bay’s Clover Street, I have been on the receiving end of more credit than most will secure in a lifetime. I would estimate that I’ve had more than 25 home loans over these years, and I have never, ever made a payment after the due date. There were times when that payment was extra painful and other times when it was remarkably painless. While I have never made that payment late, I have also never been sick to the point of being unable to work for extended periods of time. I have never lost my job, even if, at times, this job did its best to lose me.

Because of this personal history, I must admit to not fully understanding every nuance of the psychology of a foreclosure. While there hard and fast reasons why foreclosures occur, most times involving job loss or illness, this is an emotional decision by most. Does a delinquent borrower continue to strive beyond their actual means to pay a note on a home that is badly underwater? Or do they walk, as hundreds of thousands did when this ongoing foreclosure crisis fist hit? This was the question that was asked, and unfortunately for the markets and for many families, the question is still being asked with alarming frequency.

Back in 2010, during the time that most would have considered the foreclosure system to be at its peak, a 30 day search of lis pendens filings in Walworth County would have generally revealed 200-300 lis pendens notices. These are not individual records, rather 200 filings may indeed be reflective of 70 actual properties, as there is redundancy in the filings as multiple lien holders are notified of a foreclosure intent with each singular filing. That said, a 30 day search performed this morning showed 262 records, which isn’t all that wonderful and sounds like a market still embroiled in ongoing foreclosure trouble.

It should be noted that these foreclosures are largely in the primary home market, with just a scant few occurring in our Lake Geneva vacation home market. That is calloused, to dismiss foreclosures because they don’t involve the market that I serve, but I’m nothing if not calloused, so this shouldn’t come as a big surprise. The primary market remains stuck in some sort of never-ending, permanently elevated foreclosure situation. I’m guessing that owners who are now succumbing to foreclosure are those who have fought over the last several years to keep their heads above water, but have finally been dragged under by a job loss, an illness, or insurmountable negative equity. I’m betting it’s a likely combination of the three, which is absolutely deadly.

The vacation home market has, as we know, preformed remarkably well over recent years. The foreclosures that have existed have presented quick opportunities for buyers, and while they have created some drag on the market, they haven’t done much damage at all. Geneva National faced down several foreclosures last year, and it appears as though there are a couple pending in there today. The lakefront has been fiercely opposed to even a fleeting mention of that F word, though today I see one lakefront foreclosure as a 2014 possibility, and I see a likely foreclosure brewing in the South Shore Club. How can I predict something that I have no control over? Well, if a note is high, and the property is valued far below the note, and the owner has some demonstrable distress (lis pendens filing), then it’s pretty obvious that barring an outlier of a buyer who does something ridiculous, there is a foreclosure in the offing.

The lakefront condo market looks strong, with nothing in the works in that segment. Abbey Springs looks as strong as ever, as does most of the lake access market. The REO that was offered on Geneva Oaks Trail- one off the lake- is under contract, proving that buyers still find the most appealing advertising copy ever written to be a singular mention of the word f-o-r-e-c-l-o-s-u-r-e. Buyers eat that up, and I’m counting on it as I have a lakefront foreclosure coming to market at the end of this month that should attract immediate attention around the $2MM mark.

I do not envy anyone facing foreclosure. It’s a messy event that doesn’t look like fun even from my distant perch. To those buyers who have been fighting to hang on, even as others immediately let go of properties at the first hint of difficulty, I applaud your effort.

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