BluegrassForeclosure.com

Well, there is a plethora of stories to choose from that made headlines.  Not just here in Kentucky, but across the country and affecting every part of globe really.  But here are the top stories for the Kentucky foreclosure industry.

1. Record number of foreclosures across all counties.  Every single county in Kentucky saw record number of foreclosures filed.  Some counties were especially hard hit, with Jefferson and Fayette leading the way.  But there isn’t a single community that didn’t feel the pinch from one of their neighbors losing their home.

2.  First time homebuyers had unprecedented options.  With so many houses hitting the market through foreclosure, the $8,000.00 tax credit from the Feds, and relatively low interest rates for those who qualified, first-time buyers could pick up the deal of a lifetime.  While it certainly had an effect on Kentucky, it had an even bigger effect nationwide.

3.  Interest rates remained low, credit difficult to obtain though.  Playing fast and loose last year caused many a bank to get burned.  But this year, banks swung wildly back the other way, tightening their grip on credit too much.  You could still get credit, but it certainly came with more strings attached and more hoops to jump through.  There must be a better way to gauge a person and/or a business’s credit worthiness.  If you know what that is, please let us know.

4.  Sub-prime was soooo 2008, the Prime market got hit in 2009.  With such high levels of unemployment, it was a matter of time before prime loans would start defaulting.  That trend is likely to continue in 2010.  See our predictions for 2010, coming next.

5.  From Nicole Mickle and her article about 2009: FDIC closed over 128 banks and more are projected to close. This is an incredible (and scary) statistic. This completely turned our economy upside down, creating many job losses and overall financial loss for many across the nation and the entire globe.  Check out her article at ezinearticles.com.

6. Also from Nicole Mickle:  Home values went completely downhill, making it a buyer’s market while sellers were completely losing their shirts. But now at year’s end, home values are starting to level off and stabilize in most real estate markets across the nation. This last part is great news!

So that’s the roundup that I came up with.  What major stories would you have added?

The Courier-Journal has an interesting article on investment that are worth taking a second look at, including commercial real estate.

“Commercial real estate — which is now experiencing trouble similar to the housing market — might be a good investment opportunity, [Josh] Gilliam said.

“In that situation, you don’t have distressed properties so much as you have distressed owners,” he said.

People who don’t have millions of dollars to buy property outright can buy into real estate investment trusts — securities that trade on stock markets, he said.

But [John] Roberts said retail bankruptcies and an oversupply of property also means there is “a lot of risk” in commercial real estate.”

In the same article was this little nugget: “the federal government has been buying mortgage-backed securities, pushing interest rates down. In the spring, the rate on a 30-year, fixed-rate mortgage dipped below 5 percent for the first time in Freddie Mac’s Primary Mortgage Market Survey, which goes back to 1971. The rate was 4.78 percent last week.  . . .

. . . “Now is a great time to purchase,” said Adam Hall, a loan officer with Fifth Third Bank and secretary-treasurer of the Mortgage Bankers Association of Kentucky. “Buyers have lots of options.”The low rates have also caused a surge in mortgage refinancing, which makes sense if the homeowner plans to keep the property at least three to five years — long enough to recoup the closing costs associated with getting a new loan at a better interest rate, he said.”

Finally, it looks like the percentages of loans going into default is up as well.  Signs again, that the unemployment rate continues to drive default rates.

As we have discussed in the past, numerous counties are continuing to see record number of foreclosure sales set.  The Master Commissioner of Casey County in Liberty, Kentucky is no exception.

“Donald Thomas (editor’s note: Casey County Master Commissioner) surveyed the crowd gathered in the Casey County Courthouse recently, looking a bit surprised.

“I usually don’t get this many people,” he said.

However, this particular Saturday morning wasn’t a typical one in Thomas’ role as Master Commissioner of Casey County. On this morning in late October, he was conducting nine sales of the 11 originally scheduled — a number that far exceeds what he is used to dealing with at one time.

. . .

And, on this coming Saturday morning, Thomas will be back in the hallway of the courthouse, conducting six more sales.”

Read the rest of the article from The Casey County News to see how some of the smaller counties are dealing with the foreclosure rates.

As I’m sure most of you have heard, lenders have finally started letting some credit flow.  Lenders in the Greater Cincinnati/Northern Kentucky area increased their lending by about 3% last quarter, far ahead of the national lending average.

Banks also in this area had over $73 million worth of foreclosed property on their books.  So the refinancing rates appear to be helping out home owners and some first time buyers.  But it looks as if there is still a glut of property out there for the investor to pick up some really incredible deals.

The complete article is worth the read.

On August 4, 2009, the mortgage company Taylor, Bean & Whitaker (TBW), was no longer a HUD-approved company.  This revocation in turn led the Kentucky Department of Financial Institutions to issue a cease and desist order to TBW.  Any loan that was in the process of being approved by TBW is hereby null and void.  All individuals that were going through the process must find another loan.  Kentucky is taking steps to make sure that current loans will be properly serviced through TBW.

This order also prevents TBW from advertising new loans.  What will happen remains to be seen.  However, HUD suspended TBW on suspicion and/or allegations of fraud.  I foresee additional lawsuits filed by various entities against TBW, so we should expect more news to come.

For more information, click here and here.

Despite a little bit of light at the end of the tunnel (we just can’t tell how far away that light really is), foreclosure rates are still rising in Kentucky.  2Q saw a rise in Kentucky on the foreclosure rate to 3.04%, up from 2.83% during 1Q, according to the Mortgage Bankers Association.  This equates to about 13,100 homes in foreclosure, including about 3,800 new cases.

Kentucky still fares better than Ohio, where the rate of foreclosure is about 4.51%, and the national rate, which is about 4.3%.  Overall, the foreclosure rate is still higher than last year.  While these number do not come close to the amount of homes that went into foreclosure during the 1930′s, it is still a problem of unprecedented numbers.

This of course, translates into a market of possible foreclosure properties for the investor of unprecedented numbers as well.  To learn more on the Mortgage Bankers Association report, click here.

Every Kentucky court is different, and every judge had his/her way of doing something.  But one thing is certain, all judges want to lessen the amount of foreclosures.  The only way they can affect this is by slowing down the process, make the lenders come to the table, and look for room to negotiate on how to bring the loan current or modify it.  Jefferson County is doing this in their courts.  Read the story here.

Jefferson County has the highest number of foreclosures going through the court system.  It probably also has the highest number of foreclosures per capita.  So I’m not surprised that the courts are trying to slow things down.  But along with making the lender come to the table, the courts should think about requiring the borrower take financial classes on how to handle money.  They are just as likely to fall back into foreclosure eventually, unless they are trained on making better decisions.  Borrowers monthly budgets need to be scrutinized, since all too often, they will make sure they have cable tv, but cannot make their loan payments.

The master commissioner sale does not have to be the final solution to this problem, but if you are going to attack a problem, you should attack it from all sides.

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.

We will review the quarterly numbers shortly, but even though the statewide average continues to climb, Kentucky is still under the national foreclosure rate. I think there are two factors contributing to this.

First, we are a little insulated with our job market not fluctuating as violently as other states. Don’t get me wrong, we still have an incredibly high unemployment rate, just hitting over 10%. But our job market has already taken numerous hits over the years, with coal being down and then up, tobacco farming being down, then dairy farming being up. We’ve weathered it before and we can do it again.

Second, trends just taking longer in Kentucky to manifest themselves. Hopefully, this doesn’t mean that we will be in for a longer downturn than other states, but I wouldn’t be surprised if we had to wait out the down period for quite awhile.

More money continues to flow out to the counties to help low income families find affordable housing.  The City of Richmond received $1.2 million to purchase abandoned, vacant, and foreclosed homes.  If you are interested in purchasing a foreclosed piece of property, but are not sure what to do with it once you have it, this is definitely worth looking into.

Over $500,000.00 similarly went to programs in Berea.  Now is the time to invest in foreclosed property.  To read the entire article, click here.