BluegrassForeclosure.com

More banking reports from around the Commonwealth.  Huntington Bank is not locally based, but has quite a few local banks has this to report on its mortgage portfolio:

“Demand for home equity loans remained weak, reflecting the impact of the economic environment and depressed home values. The decline in residential mortgages reflected the impact of lower market interest rates, the related increase in fixed-rate refinancing activity, and our practice of selling virtually all of our longer-term fixed-rate production. It also reflected the more conservative position on loss recognition, active loss mitigation and troubled debt restructuring efforts, as well as the sale of some underperforming loans.”

See their complete report here.

More reports coming out for the third quarter, including Kentucky based bank, Community Trust.  The full report is here.  However, here is the excerpt concerning their foreclosed property.

“Foreclosed properties increased during the third quarter 2009 to $36.6 million from the $20.1 million at June 30, 2009 and the $9.4 million at September 30, 2008, as problem real estate loans are slowly moving through the legal system, which remains strained due to current economic conditions, and CTBI continues working through a prolonged foreclosure process. Sales of foreclosed properties for the nine months ended September 30, 2009 totaled $3.9 million while new foreclosed properties totaled $29.1 million. Our nonperforming loans and foreclosed properties remain primarily concentrated in our Central Kentucky Region.”

If you know of any Kentucky based banks that issued their earnings reports, let us know and we’ll check them out.

Here are some highlights of the Federal Economic Survey broken down by various regions.  It’s an interesting snap shot of what’s going on around the country.  For the most part, it appears that the economy is moving, but very sluggishly.  Click here to check it out.

Third Quarter Reports are hitting the news from various banks and the ones I’ve seen are showing that banks are staying afloat, albeit, they are showing little to no profit.  Here is one sample from Farmers Bank, based in Frankfort, Kentucky.  It is a good example showing what’s going on across the board.

Here’s an excerpt: “Other real estate owned, which represents properties acquired through foreclosure, declined $255 thousand or 1.3% to $19.7 million. The Company’s level of nonperforming assets continues to be high as it and most of the banking industry struggles to cope with one of the most severe recessions in many decades. The deterioration in the overall economy and real estate markets in particular has negatively impacted the Company’s lending portfolio. Loans to real estate developers and related businesses have shown the most signs of stress within the Company’s customer base.”

Not only are there a multitude of homes on the market for the investor to choose from, but the credit crisis has really squeezed many individuals to the point that they cannot get credit nor do they have the 20% down it takes to get a loan.  Thus, as we’ve already discussed, many would be homeowners are now forced back into renting.  Little to no money down along with somewhat reasonable rental prices and rental demands are on the rise.

As Cincinnati.com is reporting, home ownership nationally is at its lowest level in six years.  According to the article, increased rental rates will be seen in neighborhoods where the median value of the homes is $100,000.00 or less.  If you begin finding potential properties to own in those areas, it will be worth consideration, since you have a fairly large pool of potential renters to choose from.

Even though home sales are up in Central Kentucky, overall foreclosures continue to climb.  According to the Courier-Journal, foreclosures are up 12% for the third quarter of 2009, as compared to the third quarter of 2008.  The article goes on to forecast that the unemployment rate is still the biggest contributor to the foreclosure rate and that it is not likely to peak until sometime next year.  Even it is does peak next year, that is certainly no guarantee that employment will increase, because we are most likely going to have a jobless recovery.  In Kentucky, we are losing coal in the east, tobacco all over the state, and our car industry is down.  If we don’t find new industries or at least try to attract some new businesses, we will be in for a very long and slow recovery to say the least.

With so many first time buyers taking advantage of the federal tax credit, there is credit moving, as well as houses being bought.  According to Business Lexington, 4,105 Kentuckians have taken advantage of this tax credit.  However, the article correctly points out that the cost of this program may exceed $15 billion, yep, that’s with a “B”.

As stated in the earlier posts, some of the credit for stabilizing the market can be given to this tax credit and people taking advantage of it.  I guess we will have to see if it is enough to turn the economy around.  But, is it costing us too much in the long run?  Let’s hope we don’t have to wait to find that out . . .

The entire article is worth reading.

The Wall Street Journal runs an article regarding the increase in rentals.  The forebodes well for the foreclosure investor.  With so many homeowners losing their homes, they still have to have somewhere to live.  Since mortgage loan requirements have tightened considerably, most of these individuals have to go back to renting.  Which means that homes or apartment complexes near schools, or multiple bedrooms are poised to increase, simply because families with children will need that extra space.  While they may not have been able to afford owning a home, they will go back to renting, where you don’t have to have a big downpayment, you don’t have to carry insurance if you choose not to, and credit checks are mostly minimal.

Now is a great time to flip a foreclosed home back to renters or invest in multi-family units.  Check out the WSJ article.

As you have probably already read, accroding to the Mortgage Bankers Association, a record 12% of homeowners are either in foreclosure status or are behind at least 1 month on their mortgage payment.  One ray of hope is that the MBA is forecasting national GDP to finally stop its downward slide.  However, the good news basically stops there as the unemployment rate looks to hover around 10% for the next several quaters.  It appears that we are in for a jobless recovery and one where we won’t see real job growth until 2011 or later.  Click here for the full report.