Foreclosures continue to plague housing market

NEW YORK (CNNMoney) — Foreclosures continued to plague the U.S. housing market last quarter, while a a growing backlog has caused the length of the foreclosure process to drag on and on.

Nationwide, foreclosure filings totaled 610,337 in the third quarter, an increase of less than 1% from the previous quarter, said RealtyTrac, an online marketplace for foreclosed properties.

Even though the increase was small, it is significant since it broke the trend of three consecutive quarterly decreases, said RealtyTrac Chief Executive James Saccacio.

“This marginal increase in overall foreclosure activity was fueled by a 14% jump in new default notices, indicating that lenders are cautiously throwing more wood into the foreclosure fireplace after spending months spent trying to clear the chimney of sloppily filed foreclosures,” he said.

Month-over-month, there were fewer foreclosures. Nationwide filings totaled 214,855 in September, a decrease of 6% from August and a 38% decrease from September, 2010.

“While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up,” said Saccacio.

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The Drawbacks to Buying Foreclosures

Price-conscious home buyers are lured by the low prices advertised for properties in foreclosure. They hope to show up at the auction and win the lowest bid. However, many of these homes are not available for inspection prior to purchase. Is it smart to buy a home that you cannot inspect? Could be if the price was low enough to compensate you for the amount of work that might be required to bring the condition of the home to market standards. Before you rush forward to buy a foreclosure, stop to think about some of the drawbacks and repercussions if you can’t get in the house to inspect the interior.Who Is Living at the Property?

If the property is occupied, the successful bidder is typically responsible for removing the occupants, who may not be the previous owners. They could be relatives or friends of the owners, renters or squatters. You might have to evict them…

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5 tips for buying a foreclosed home

Buying a foreclosed home is a little different from buying a typical resale

5 steps to buying a distressed property
  1. Get preapproved for a mortgage.
  2. Find an agent specializing in foreclosures.
  3. Know how long it takes to sell a home in your price bracket.
  4. Study the sale prices of comparable homes in your area.
  5. Remember the sale is for the home as is.

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Sidestep landmines that can lead to foreclosure

There’s almost nothing more stressful – and more soul-crushing – than the specter of losing your home because you can no longer keep up with your mortgage payments. Thousands of homeowners across the United States are living with this fear, and many of them are convinced that it’s too late to avoid the worst.

That, however, might not be the case.

No matter how bleak your financial situation may seem, you still may be able to avoid having your loan servicer foreclose on your property. And foreclosure is something you absolutely want to avoid. With a foreclosure on your credit report, your credit rating will be severely damaged – so much so that it may be difficult for you to find landlords who will let you rent from them.

If you’re struggling to stay afloat – possibly because a real estate agent encouraged you to buy more house than you could afford, or because you got funneled into a toxic mortgage loan that has ballooned exponentially on you – consider the following tips, and also check out the helpful resources listed at the end of this column.

1. Face the problem head-on. Have you fallen into the habit of throwing all the ominous-looking mail you’re receiving from your mortgage lender into a big pile – and then not opening any of it? If so, snap out of this state of denial pronto! By responding to your mail quickly, you could be directed toward viable foreclosure-prevention options. That’s a good thing, not a bad thing. Credit and housing counselors say they’re approached all too often by people who waited months to stop ignoring the problem and get help. By that point, though, many of them had already received foreclosure notices in the mail.

2. Contact your lender and explain your situation. This step may scare you to death – but do it anyway. Here’s why: Depending on your circumstances, your lender may reduce your interest rate, lower your monthly payment to make it more affordable for you, or agree to a repayment plan for any payments you’ve missed. This won’t happen in every case, mind you – but you stand a better chance of getting this kind of a response from your lender if you reach out sooner rather than later. Finding the correct lender to call may prove to be your biggest challenge, though. Mortgage loans often get sold again and again, so it may require plenty of perseverance on your part to figure out who owns your loan. Start the process by calling the company that receives your mortgage payment.

3. Understand your mortgage rights. As unappealing as this task may seem, dig out that pile of loan documents you received when you bought your home. Start scanning them for the answer to this question: What can your lender do to you if you’re unable to make your mortgage payments? Being armed with this information will equip you to have smart conversations with your lender about your situation. You also need to learn about the specific foreclosure laws and time frames in your state. Contact your state government’s housing office or department to find out which rules apply where you live. To track down the correct agency, do a quick Internet search for the name of your state along with the words “state government housing office.

Should We Walk Away From Our Home?

Question: Should We Walk Away From Our Home?
A reader asks: “My husband and I bought a home at the height of the market and now it is worth less than we paid for it. Not only has our value dropped, but we owe more to the mortgage company than our home is worth.We both have good jobs and are not behind in our mortgage payments. But some family members are saying we should walk away. That it’s not a big deal, and we could start over. Is it really that easy? Should we walk away from our home?”

Answer: I can hear my mother’s voice echoing in my head, “If everybody is jumping off a cliff, should you do it, too?” The answer is most likely no. It’s not easy going through foreclosure; it’s heart-breaking, nerve-wrecking and time consuming…

10 Ways to Protect Your Neighborhood From Foreclosure Crime

When your neighbor’s home goes into foreclosure, it’s generally foreclosed by the bank quietly and with little fanfare. In a falling real estate market, many banks are understaffed and unprepared to handle the huge volumes of foreclosures, which means that home may not go back on the market for months, maybe years.

But that doesn’t mean you have to sit back and do nothing while the home deteriorates and attracts unwelcome criminal elements. Here are 10 things you can do to protect your neighborhood from the fall-out of foreclosures.

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Tips for Avoiding Foreclosure

Note: This US based article may provide tips applicable to us in the Philippines looking for foreclosed properties. Take it with a grain of salt :)

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?.

If you are unable to make your mortgage payment:

1. Don’t ignore the problem.

The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.

Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

5. Understand foreclosure prevention options.

Valuable information about foreclosure prevention (also called loss mitigation) options can be foundonline.

6. Contact a HUD-approved housing counselor.

The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

7. Prioritize your spending.

After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses–cable TV, memberships, entertainment–that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.

8. Use your assets.

Do you have assets–a second car, jewelry, a whole life insurance policy–that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

9. Avoid foreclosure prevention companies.

You don’t need to pay fees for foreclosure prevention help–use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a HUD-approved housing counselorwill provide free if you contact them.

10. Don’t lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately and if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD-approved housing counselor.

Source: HUD portal

PNB comes down from ivory tower

The Philippine National Bank was established in 1916 as a bank of the people. It was for some years.

After the Second World War, PNB slowly became the bank of the then powerful sugar block, fired by Parity Rights for American citizens and preferential sugar price under the Laurel Langley Agreement.

Under private ownership headed by the group of Lucio Tan, the PNB seems to have come down from the ivory tower and has its feet firmly planted in the ground. The bank sees no pie in the sky.

Eugene Acevedo, president and chief executive officer, told Malaya Business Insight that the bank is now the third-largest facility for remittance of funds of Filipino overseas workers.

It improved on that service by accepting payments for condominium also from OFWs. It struck a deal with a large number of property developers which now use the bank as payment facility.

The bank makes very little spread but helps a lot of Filipinos still working abroad but planning to retire to make easy the installment payments of the apartments they are buying in the Philippines, mostly in Metro Manila.

On top of the two services, Acevedo says PNB is getting aggressive on lending to small and medium-scale industries. So far, it has disbursed P8 billion on small and medium enterprises (SMEs), but Acevedo says he hopes to expand SME lending until it eats up a good portion of its P101 billion loan portfolio.

Acevedo also revealed that the bank grants as much as P100,000 scholarships every year to deserving students whose parents are either clients of the bank or use the PNB as remittance agent and for other services. PNB, according to Acevedo, is one of very few banks that guarantees a one-year fixed-term 5.5 per cent interest on housing loans.

The PNB has a distinct advantage over its many competitors. It has 105 overseas offices, five of which are full commercial, deposit-taking banks. The foreign branches are operating in New York, Los Angeles, Singapore, Hong Kong and Japan. It opened its 325th branch in Calamba, Laguna, last week.

But like all state-controlled institutions, the PNB was not professionally managed until the group of Lucio Tan took over in 1996.

The first order of the day after the takeover was hiring 70 management trainees from its competitors. There were more applications than the bank needed, Acevedo explained.

Since they already occupied junior positions in their old banks, the management trainees started at the rank of assistant vice president, Acevedo said.

What the new management and owners saw was the necessity of training people, especially those in the branches, on how to deal with clients.

“They seemed to be a bit arrogant when the bank was owned by the government,” Acevedo said.

The rents on the branches were relatively higher because they were a bit too big for the number of clients and accounts each of them handle. Many were cut down to size.

Seminars on how to deal with clients is a continuing concern, Acevedo said.

The bank is no longer a monopoly of the so-called “sugar block” which has disappeared anyway, Acevedo said.

So far, corporate loans stood at P60 billion and growing slowly but steadily. The new owners learned too many lessons from the previous lending recklessness of the bank, Acevedo said.

In fact, he said, the PNB has around P20 billion in foreclosed assets which it is slowly disposing off. He pointed out that there seems to be a particular preference for large tracts of foreclosed agricultural land.

The rest of the foreclosed assets are little establishments many of which went belly up probably because no due diligence was exercised before the loans were granted.

Efforts at rebuilding the bank, both physically and professionally, seem to be paying off.

In 2010, the bank recorded profits of P3.54 billion from P2.2 billion the previous year. Still small but the trend towards safe lending and fee-based operations such as remittances, payment facility for home buyers, and expanding demand for corporate loans should leave the bank in an extremely viable position, in the estimate of Acevedo.

The brighter prospects come from the impending merger of PNB with Allied Bank, which is also controlled by the group of Lucio Tan.

The Monetary Board has not approved the merger pending resolution of a minor problem involving the ownership of 28 per cent by Allied Bank of Oceanic Bank of California.

The investment in that US bank has to be unloaded, according to US banking rules, Acevedo said.

He said Lucio Tan is in the thick of negotiating the sale with a buyer who has long expressed interest in the investment.

Via Malaya Business Insight


Thirft banks to propose law easing rules for foreclosed asset sales

The Philippines’ thrift lenders are currently in the process of collecting and consolidating inputs to draft a proposed law that will “cut banks’ time and effort” in foreclosing and selling assets.

The proposed law is expected to assist “thrift banks in sell[ing] foreclosed assets faster so that it will have more cash to lend to farmers and small businesses, Chamber of Thrift Banks (CTB) president Pascual Garcia III said.

It takes two to five years for banks to foreclose real estate property, he explained. Period of redemption takes at least one year and even if the bank has acquired the property, it has to secure a writ of possession to physically take it, he explained during a CTB briefing on Wednesday.

“Hopefully, through that program we will initiate this year, we will invite favorable legislative consideration of improvements in the processes and therefore help banks manage this particular portfolio,” Garcia said.

However, this is just one of the group’s two pronged approach in establishing a framework rationalizing rules and requirements in foreclosure proceedings.

The group decided to proceed via legislative and judicial means, CTB executive director Suzanne I. Felix said.

The group has also been advised to “go to the judicial way” by seeking to amend the recent administrative order issued by Supreme Court Chief Justice Reynato Puno.

The Supreme Court justice was the CTB’s guest of honor at an event two years ago which discussed “the indiscriminate court issuances of temporary restraining orders,” Felix said.

Via GMA NewsTV

How do you buy foreclosed properties in the Philippines?

The most popular way to buy foreclosed properties in the Philippines would be through banks. These are commonly referred to as bank acquired assets.

You can submit a purchase proposal – and win through first come first serve basis – which means your bid comes first and is satisfactory, then you win. On the other hand, sometimes you can be the first to bid, but your proposal is not approved by the bank officials.

They usually give out listings on a quarterly basis either published on their website, through the newspapers (you can see this most often on the newspaper Manila Bulletin) or through their accredited brokers.

Downpayments are usually 10% – 25% of the amount of the property, and installment basis is also offered.