BluegrassForeclosure.com

Just a tidbit of information from Integra Bank.

“Non-performing assets were up 14.1% from September 30. Total non-performing assets were $246.9 million at December 31, an increase of 30.6 million from September 30, while delinquency decreased 66 basis points 0.98% [ph] of the total loans.”

From Cincinnati.com: “Home sales slid in Southwest Ohio and Northern Kentucky in January compared to a year ago, but home prices landed sizable gains on both sides of the Ohio River, according to local boards of Realtors.

Homes sales fell 7.8 percent in Southwest Ohio last month, with 851 sales, the Cincinnati Area Board of Realtors reported Friday. Northern Kentucky saw a more than 23 percent slide in activity with 188 sales, the Northern Kentucky Association of Realtors said. . . .

Realtors say momentum in sales is expected to build locally and nationally as an April 30 deadline looms for buyers to take advantage of federal tax credits worth up to $8,000 for first-time buyers and $6,500 for repeat buyers. . . .

Experts say that until a backlog is of discounted foreclosure and bank-owned properties are sold off, home prices will struggle to recover. The properties are often sold at extreme discounts – up 20 percent or more off their last purchase price. ‘

Is this is small silver lining?  Or just a harbinger of further problems?  Property prices need to stabilize, but with the “experts” saying that a backlog of foreclosed properties are now hitting the market, we’ll see what happens.

From the NYTimes.com: “Increasingly, financially strapped homeowners who owe more than their homes are worth are trying a so-called ”short sale’‘ as an alternative to foreclosure. In a short sale the lender agrees to accept less than the homeowner owes on a mortgage.

Before 1990, short sales were rare. Last year, the National Association of Realtors estimates there were 500,000 short sales, about 10 percent of all sales. . . .

A short sale can hurt a borrower’s credit score as badly as a foreclosure, but won’t last as long. The blemish from a short sale depends, in part, on how the lender reports the sale to the credit rating agencies, Experian, Equifax and TransUnion. Occasionally, a lender will agree to report the loan as ”paid,” which according to Experian would not negatively impact credit scores. However, the agency also notes, that doesn’t happen often. . . .

The good news is that after a short sale, a borrower’s credit score starts to improve within the first 24 months. One benefit of a short sale is that consumers usually can buy another home in two to three years, rather than five to seven as is the case with a foreclosure.”

There are a lot of factors that go into completing a short sale.  This is certainly one of those factors that as an investor trying to get a short sale deal done, you must be aware of and be able to deal with.

What have you seen while you have been setting up your short sale deals?

It’s just not houses being affected here in Kentucky, but horses as well.  Many horses are financed through lending and other means, just like taking a mortgage out on a house.  Now many banks are calling in the notes on the horses.

From the BloodHorse.com: “Financial institutions long thought of as allies of the state’s $4-billion equine industry have been forced to become less friendly to clients already struggling against oppressive economic dynamics.

Lending programs from banks servicing the historic equine industry of Central Kentucky have plummeted by 60% in the last two years, according to David Switzer, executive director of the Kentucky Thoroughbred Association, from an estimated $1 billion in 2007 to a current level of about $400 million. . . .

[B]anks are becoming increasingly spooked by the always-volatile Thoroughbred industry, which has recently seen a 40% to 50% decline in auction sale prices—a key for loan collateral appraisal value. Adding to banks’ wariness is not only the length of time it takes for a breeder to yield a sales result from a mating, but possible pitfalls along the way that can hurt a foal’s value.

From RealtyTrac.com:  “Whether you are a first-time buyer who qualifies for the $8,000 tax credit, or a current homeowner who wants the $6,500 tax credit, you have only until April 30, 2010 to take action. Federal deficits, budget cuts and political jousting make it highly unlikely that Congress will approve another extension of these popular tax credits, and many economists expect interest rates to increase soon.”

Which begs the question, will there be more pressure on the Congress to continue trying to do something about the foreclosure crisis, or more pressure to try and cut down on the deficit spending?  At this point, it’s anyone’s guess.

What do you think, should Congress continue assisting home owners?  Or should Congress begin worrying about the deficit?  Leave a comment.

Continuing in our series on tips for finding property and bidding on the property at the foreclosure auction, let’s discuss how an entity gets judgment and what they can do with that judgment.

As discussed in our previous posts, once a bank or other financial entity has filed a foreclosure lawsuit, they have to add any and all parties that have an interest in the property.  Depending on the liens against a property, this could be quite voluminous.

Once all of those entities have been added to the suit, the Plaintiff (usually the bank), must get service on all of the defendants.  This includes the spouses of the actual borrower.  KRS 392.020 provides a “dower” and “curtesy” interest in a spouse’s property.  Thus, a bank often must add the “unknown spouse” of John Debtor, to extinguish any right that unknown person may have, simply by virtue of the statute.

Service on these individuals includes having a sheriff or constable delivering a copy of the complaint directly to them.  Or, the Plaintiff is able to have the Defendant sign for certified mail personally.  Either of these methods is commonly accepted as personal service.  If the Plaintiff cannot get personal service, as in the case of the unknown spouse (you cannot really serve an unknown person . . . ), the Plaintiff must obtain what is called constructive service on a defendant.  In Kentucky, the Plaintiff must request a “warning order attorney” be appointed.  The warning order attorney then sends out notice to the individuals that cannot be found, makes his/her report back to the court, and then the Plaintiff must wait 50 days to proceed.

Once service is made on everyone, the Plaintiff may then file a motion with the court for judgment and order of sale.  The court will then entertain all motions before the court and unless there is good cause showing, the court will enter judgment for the Plaintiff.  Along with the judgment is an order of sale, which directs the Master Commissioner to sell the property.

The Master Commissioner now has the authority to sell the property.

Next up – the sale notice, what information does it contain and how can you use it to your advantage.

Questions?  Leave a comment or question and let us know if these tips are helping.

If you can avoid foreclosure, then please do so.  But I think this goes a little too far.  “If I can’t have it, no one can . . .”

With the onslaught of so many foreclosures and with the market being flooded by cheap housing, many current home owners are seeing the value of their homes declining.  Even to the point where they owe more on their mortgage than their house is worth.  This is called being “upside down” where your house is worth less than your mortgage, so that even if you wanted to sell, you probably couldn’t since there wouldn’t be any buyers who would want it at that price.

Across the Ohio River in Cincinnati, a report was done showing how much was owed on the home compared to the value of the home.  “The 45206 ZIP code, which covers the East Walnut Hills neighborhood, had an average mortgage balance nearly $88,000 higher than the median home value.”

So in this particular neighborhood, individuals owed $88,000.00 more than their home was worth.  They were upside down.

On the positive side, most homeowner’s equity is on the rise.  “Statewide averages for Ohio, Kentucky and Indiana show positive equity balances, according to Nielsen PreView, although other states have higher home equity averages.

Ohio has average home equity of $10,169 and ranked 32nd in the nation. Kentucky ranked 38th with $7,490. And Indiana ranked 40th with $5,945. Hawaii ranked first with equity of $219,433. New York was second, and New Jersey was third.”

For the full story, click here.

Foreclosure numbers finally are declining in the last three months of 2009.  Further, less mortgages are becoming delinquent, which may mean that foreclosure numbers will finally ebb this year.

From Cincinnati.com: “Fewer late payments are significant because it means the number of people going into foreclosure will continue to decline this year. That’s important for all homeowners in areas where cheaply priced foreclosures are bringing down neighboring values.

As of Dec 31, 2009, Ohio had the seventh-highest foreclosure rate in America with 4.7 percent households with mortgages in foreclosure. Kentucky ranked 25th with 3.3 percent of mortgages in foreclosure. . . .

In Kentucky, about 4,200 fell into foreclosure during the fourth quarter – about 100 or 2 percent fewer than the third quarter. At the end of 2009, there were 14,100 households in foreclosure and 42,100 behind on mortgage payments.”

With so many individuals still behind on their mortgages, it is a matter of time to tell if they will be able to catch up or if we see continued record foreclosure rates.

From Cincinnati.com: “Foreclosures in Greater Cincinnati and Northern Kentucky hit 15,200 in 2009, a 5.5 percent increase from the 14,410 homes foreclosed in 2008, according to Ohio and Kentucky court records.

While still on the rise, local foreclosures grew by the slowest rate in the last five years. In 2006, for example, the region saw a more than 20 percent increase in foreclosures and in 2008 the caseload had increased by 10 percent.

Foreclosures in Kentucky picked up steam in 2009 – including in Northern Kentucky – with cases increasing 9.4 percent statewide and rising 15.1 percent in Northern Kentucky, Kentucky state court records show.”

It begs the question, what will happen in 2010.  Will the foreclosure rate flatten out, or rise?  Either way, with unemployment rates projected to continue to remain at 10% or so, the foreclosure rate will definitely not decrease.