BluegrassForeclosure.com

From the Huffington Post: “Sen. Jim Bunning, the Kentucky Republican who single-handedly delayed unemployment benefits for 400,000 desperate Americans and forced an unnecessary furlough of another 2,000, should be a figure regarded with wonderment.

The awesome power he held in his hands! The utter disregard for vulnerable Americans he exhibited while wielding it!”

Hero or villain?

Bunning certainly brought many issues to the table.  But really, the only question that should be asked is, “where was his conscious 8 years ago?”

What’s your thought?

4Q 2009 showed improvement over 4Q 2008.  “A number of factors contributed to the year-over-year improvement in quarterly earnings. Noninterest income was $21.7 billion (53.2 percent) higher than in the fourth quarter of 2008, as several categories of noninterest income that were negative a year ago swung back into positive territory. Trading revenues totaled $2.8 billion in the quarter, compared with $9.2 billion in trading losses a year earlier. Servicing income also rebounded strongly, from a $390 million loss a year ago to a gain of $8.0 billion. Loan sales produced $1.3 billion in gains, versus $1.3 billion in losses in the fourth quarter of 2008. Another significant contribution to the improvement in earnings came from a $16.2 billion (14.2 percent) decline in noninterest expense. This decline was the result of an $18.1 billion (77.2 percent) reduction in charges for goodwill impairment and other intangible asset expenses. . . .

Noncurrent loans and leases continued to rise through the end of the year, with a few notable exceptions. The total amount of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) increased by $24.3 billion (6.6 percent) in the fourth quarter, to $391.3 billion, or 5.37 percent of all loans and leases at yearend. This is the highest level for the industry’s noncurrent rate in the 26 years that all insured institutions have reported noncurrent loan data. The increase in noncurrent loans in the quarter was largely driven by noncurrent residential mortgage loans, which rose by $23.2 billion (14.9 percent).”

Read the full FDIC Report.

From the Courier-Journal.com: “RealtyTrac Inc. said Thursday that the number of U.S. households facing foreclosure in February grew 6 percent from a year ago, the smallest annual increase in four years. . . .

One in every 2,365 Kentucky homes received a foreclosure filing, ranking the state 40th for foreclosures per household, according to RealtyTrac.Filings in the state slowed about 30 percent last month from January but were still up 35 percent from February 2009. . . .

While that was a surprising piece of positive news, foreclosures were still at record high levels. The number of borrowers who have either missed a payment or are in foreclosure was at 15 percent.”

Many banks still on FDIC “troubled” list.

“The number of troubled banks in the United States jumped to 702 in the fourth quarter, according to the latest report by the Federal Deposit Insurance Corp.

The FDIC said U.S. banks essentially broke even in the October-December period. They earned $914 million in the quarter, compared with a $37.8 billion loss in the fourth quarter of 2008.

For all of 2009, U.S. banks earned $12.5 billion, up from $4.5 billion in 2008.

Still, the number of banks on the FDIC’s confidential “problem” list increased to 702 from 552 in the third quarter, the most since the height of the savings-and-loan crisis of the early 1990s.”

Clearly, we are not out of the woods yet.  Should foreclosures continue to climb, more banks may go on this list.

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.